Authors: Shani O. Zakay, Esq. and Jake Gallick
In a recent, unpublished opinion, the California Court of Appeal, 2nd District, allowed recovery of reasonable attorneys’ fees after the Association dismissed the case without prejudice. (Sungate Country Owners Association v. Stephens, 2014 WL 2203878).
Sungate County Owners Association is the Association for an RV community in Riverside County. In 2011 the defendant, Stephens, began living on his property without an approved recreational vehicle (RV) and was building a permanent structure in direct conflict with the Associations CC&R’s. The CC&R’s provide that lots are used exclusively for parking and residing in recreational vehicles and no permanent residential structures are allowed. Sungate filed a complaint with the court asking for injunctive relief to stop Stephens from building the structure and living on the land without an approved recreational vehicle.
The trial court granted the injunction and instructed Stephens to deconstruct the structure. Stephens then, without a court order, sold the lot to a third party and Sungate dismissed its action without prejudice. Sungate asked the court to award attorneys’ fees. Sungate reasoned that they are the prevailing party, for purposes of recovering fees, because they succeeded in having Stephens comply with the Association’s CC&R’s. The trial court awarded Sungate the attorneys’ fees and Stephens appealed.
The Court of Appeal found that substantial evidence exists to support the trial court’s findings that Sungate is the prevailing party and entitled to attorneys’ fees. Since Sungate’s action against Stephens was to enforce compliance with the governing documents, Sungate is the prevailing party. Determining the “prevailing party” is based on a practical level and if the moving party achieved its main litigation objective. Simply, a prevailing party is one that has motivated a defendant to modify his behavior through the lawsuit.
The court found that Sungate succeeded in preventing Stephens from continuing to reside on his lot without a proper recreational vehicle and building an unauthorized structure. Sungate’s dismissal of the case was proper and did not concede anything to prevent the Association from recovering reasonable attorneys’ fees.
This case teaches us that some courts will allow recovery to Associations when their legal action to compel compliance with the governing documents drives the violating owner out of the community permanently.