Interpretation of Civil Code section 1354(c) Leads to Result
In Grossman v. Park Fort Washington Association, Case No. F063125 (5th Dist. Dec. 19, 2012) (Franson, J.) (unpublished), the Court of Appeal held that the trial court correctly awarded fees for pre-litigation mediation to homeowners involved in a tussle with their homeowners association over construction of a backyard cabana and fireplace. How did the court get to that result?
Outdoor fireplace built by U.S. Forest Service. Russell Lee, photographer. 1942. Library of Congress.
Civil Code sections 1354(c) reads: “In an action to enforce the governing documents, the prevailing party shall be awarded the reasonable attorney’s fees and costs.” The homeowner’s association, which resisted paying attorney’s fees, argued that fees incurred in pre-litigation mediation are not incurred “in the action”, and hence, should not have to be paid.
Nope, said the Court of Appeal. “This text does not explicitly limit the recovery of attorney fees and costs to those items incurred in the lawsuit itself.” (italics in the original). Three things are important: (1) the existence of an action to enforce the governing documents; (2) a prevailing party; and (3) reasonable fees and costs. The Grossmans, who were plaintiffs and respondents, easily satisfied the first two conditions. As to the question of reasonableness, because the Legislature has required ADR, “a party acts reasonably when it spends money on attorney fees and costs during pre-litigation ADR.” Thus, the third condition was also satisfied by the Grossmans.
The pre-litigation attorneys fees related to 38.1 hours of work at $350/hour (i.e., $13,335) and pre-litigation costs were an additional $875 – a fraction of the total requested ($116,165), and a fraction of the total awarded ($112,665).