January 26, 2015 by Rachael Harrington and Shani Zakay, Esq.
The CC&Rs are the central ingredient of what makes a Common Interest
Development tick. Homeowners and associations alike use the CC&Rs
as both a sword and a shield. If you have ever asked, "can Jon Doe
or Mary Anne do this," the CC&Rs were likely the first place
you went in search of the answer!
The CC&Rs have an additional function that makes them that much more
powerful: the prevailing party of a legal action taken to enforce the
CC&Rs may be awarded attorneys' fees. This particular prowess
comes not from the CC&Rs, but from the Civil Code.1 Essentially, it means all those invoices from your attorney will be paid
for by the party that lost.
There are three requirements that must be met to be awarded attorneys' fees:
(1) the action taken must be to enforce governing documents;
(2) the governing documents must be for a Common Interest Development; and
(3) the party seeking attorneys' fees must be the prevailing party.
Sounds easy, right?
In the 2015 case of Patterson v. Sherwood Valley Homeowners Association,
we learn, however, that it is not always so cut and dry. In this case,
the development happened to be located next to a park, and both the development
and the park had their own sets of CC&Rs. The association was given
authority to manage both the park and the development, and in doing so,
the association planted trees that eventually obstructed Patterson's
view of the lake. Patterson sought to have the CC&Rs enforced, and
alleged, among other things, that the association created a nuisance by
"'extensively over-planting'" the park "'with
a variety of rapidly growing trees.'" The trial court eventually
determined that Patterson "did not have a right to an unobstructed
view of the lake," and that she could not actually seek to enforce
the park CC&Rs. The association, therefore, prevailed in the action
and sought attorneys' fees.
The association was not, however, awarded the attorneys' fees, which
may seem to go against what has been stated above. So, why did this happen?
The answer: the park, while it had CC&Rs, was not a Common Interest
Development as defined by the Civil Code, and the plaintiff sought enforcement
of the park's CC&Rs, not the development's CC&Rs. Therefore,
(1) an action to enforce governing documents; and
(3) a prevailing party;
but there were no (2) governing documents from a Common Interest Development
being enforced, since the CC&Rs being referenced were that of the park.
Thus, while requirements 1 and 3 were met, requirement 2 was not and the
prevailing party could not, therefore, be awarded attorneys' fees.
Associations should take caution to ensure that the documents being enforced
are those of the Common Interest Development and not a different neighboring
entity. While the association may still have to enforce the neighboring
entity's governing documents as in Patterson, it should be aware that
there may not be a right to recover attorneys' fees.