Litigation

HOA Collection Procedures: Strict Compliance Required

Published on: August 12, 2013 | by Steven J. Tinnelly, Esq.

*New Case Law hoa foreclosure

The California Civil Code requires community associations (“HOAs”) to levy regular and special assessments as necessary to perform the HOA’s obligations under its governing documents. However, when a homeowner fails to pay those assessments, HOAs are often left with no alternative other than to pursue the owner in accordance with the collection methods sanctioned under the HOA’s governing documents and the Civil Code. Because those methods could result in the foreclosure of the delinquent homeowner’s property, it is paramount that HOAs strictly comply with the statutory procedures and requirements applicable to assessment collection (i.e., transmittal of notices, dispute resolution procedures, votes to initiate foreclosure, etc.).

The recent case of Diamond v. Casa Del Valle Homeowners Association 2013 DJDAR 9176, which has been certified for publication, illustrates how failing to comply with those procedures and requirements can result not only in the invalidation of a HOA’s assessment lien, but also an award of attorney’s fees and costs to the delinquent homeowner…

TLG Secures Favorable Settlement and Obtains a 100% Attorneys’ Fees Award for HOA Client in Newport Beach

Published on: August 1, 2013 | by Steven J. Tinnelly, Esq.

accolade ribbon-blog.png The Tinnelly Law Group has secured a favorable settlement in a breach of contract case for one of our HOA clients located in Newport Beach, California.

The Defendant homeowner was refusing to grant the HOA access to the Owner’s condominium unit for the limited purpose of placing a protective safety barrier between the sliding glass balcony door and the balcony while the HOA performed structural repairs to the underside of the balcony. After Internal Dispute Resolution failed and all efforts were exhausted to secure a non-judicial resolution, the HOA was forced to file a lawsuit seeking injunctive relief. After securing injunctive relief for our client, our attorneys then obtained a 100% attorneys’ fees and costs award. Such 100% attorneys’ fees awards are incredibly rare.

The Tinnelly Law Group strives to resolve our clients’ disputes through non-judicial means wherever possible. However, when issues do result in litigation, our clients take comfort in knowing that our attorneys provide the highest quality representation available, and that our entire team remains committed to securing the best possible outcome.

HOA Gets ‘Smoked’ in Nuisance Enforcement Case

Published on: March 19, 2013 | by Steven J. Tinnelly, Esq.

smoking-hoa

The problems posed by second-hand smoke have become a burning issue for California homeowners associations (“HOAs”), expecially condominium developments. A HOA typically does have the authority to adopt operating rules that prohibit smoking in common areas and exclusive use common areas; however, those rules may be insufficient to address problems posed by second-hand smoke emanating from inside an owner’s unit. Prohibiting that type of activity generally requires language to that effect contained in the HOA’s recorded CC&Rs. Where there is no such language, HOAs often refuse to get involved and opt to treat those situations as a “neighbor-to-neighbor” disputes.

However, we have written before about how a HOA may have an obligation to enforce the nuisance provisions contained in its CC&Rs to address problems posed by smoking within units. An Orange County jury recently affirmed this fact in the first ruling of its kind in California. The jury in Chauncey v. Bella Palermo Homeowners’ Association, et al., OCSC Case No. 30-2011-00461681, found the defendants HOA and its management company negligent and also found the HOA in breach of its CC&Rs for failing to enforce its nuisance provision protecting the plaintiffs’ rights to their “quiet enjoyment” of their unit. The jury held the HOA liable for doing nothing to abate the alleged nuisance resulting from the second-hand smoke, despite the fact that the CC&Rs contained no provision specifically prohibiting smoking within the units.

More and more municipalities are adopting “no-smoking” ordinances within multi-dwelling residential units. However, where there are no such ordinances, or any similar restrictions contained in a HOA’s recorded CC&Rs, a HOA may be still be obligated to enforce its nuisance provisions to address problems posed by second-hand smoke emanating from the interior of a unit. Where the problems persist, a HOA should consult with its legal counsel and also consider a formal amendment to its CC&Rs to prohibit smoking throughout the entire development.

Content by TLG attorney Terri Morris

Recovering Pre-Litigation Attorney’s Fees in HOA Disputes

Published on: March 13, 2013 | by Steven J. Tinnelly, Esq.

*New Case Law

In our recent blog post entitled “Are Attorney’s Fees for ADR Recoverable?” we touched briefly on the recently decided case of Grossman v. Park Fort Washington Association (2012) 212 Cal. App. 4th 1128 (“Grossman”). In response to requests for more information on this issue from our clients and industry partners, we felt it necessary to further address the reasoning behind the court’s ruling in Grossman.

In Grossman, a dispute between a homeowners association (“HOA”) and a homeowner relating to a claimed architectural violation was resolved by the trial court in favor of the homeowners. In awarding the homeowners attorney’s fees and costs arising from both pre and post-litigation activities, the trial court cited Civil Code Section 1354(c), which states that “[i]n an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” (Emphasis added.)

The HOA objected to the award based on its argument that the statute did not authorize awarding pre-litigation attorney’s fees (fees incurred in participating in ADR) because such fees were not incurred as part of the action (the lawsuit) to enforce the governing documents. However, the appellate court disagreed with the HOA and ultimately affirmed the ruling, noting several key points…

Are Attorney’s Fees for ADR Recoverable?

Published on: February 25, 2013 | by Steven J. Tinnelly, Esq.

*Asked & Answered ADR california hoa law litigation.jpg

Asked – Are our HOA’s attorney’s fees recoverable when we participate in ADR with a homeowner?

Answered – Maybe. Civil Code §1354(c) states that “in an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” Alternative Dispute Resolution (“ADR”) does not technically constitute an “action” as contemplated by Civil Code §1354(c). When a homeowners association (“HOA”) and a homeowner agree to participate in ADR, Civil Code §1369.540(c) states that “the costs of [ADR] shall be borne by the parties.” Accordingly, each side pays its own attorney’s fees, and the mediation fees/costs are split between the parties unless the parties negotiate a different arrangement.

However, if the ADR results in a settlement of the dispute, then the attorney’s fees are allocated according to the settlement terms. If the ADR does not result in a settlement and a lawsuit ensues, then the “prevailing party” in the resulting lawsuit may recover its pre-litigation attorney’s fees incurred for ADR. In the recent case of Grossman v. Park Fort Washington Association (2012) 212 Cal. App. 4th 1128, the prevailing party (the homeowners) were awarded their attorneys’ fees incurred in pre-litigation ADR:

“…[B]ecause the Legislature has required ADR, a party acts reasonably when it spends money on attorney fees and costs during pre-litigation ADR. The alternate view–that such expenditures are categorically unreasonable–is contrary to the strong public policy of promoting the resolution of disputes through mediation and arbitration…Thus, when attorney fees and costs expended in pre-litigation ADR satisfy the other criteria of reasonableness, those fees and costs may be recovered in an action to enforce the governing documents of a common interest development.” Grossman.

Attorney’s fees incurred in ADR are typically not recoverable absent language to that effect in the terms of the ADR settlement. However, if no settlement is reached and a lawsuit ensues, the public policy factors recognized by the court in Grossman suggest that these attorney’s fees should be recovered by the prevailing party (e.g., the HOA) in the lawsuit.

Content provided by Tinnelly Law Group attorney Bruce Kermott

To submit questions to the HOA attorneys at Tinnelly Law Group, click here.

Turning up the Heat on Residential Design Professionals

Published on: February 4, 2013 | by Steven J. Tinnelly, Esq.

*New Case Law hoa law firm residential design professionals architects.jpg

California’s 1st District Court of Appeal recently ruled that “design professionals” may be liable under both common law and Senate Bill No. 800 (“SB 800”) to third party purchasers for construction defects.

In Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP et al., the defendants (the “Architects”) had performed architectural and engineering services, as well as construction administration and construction contract management, for a 595 unit condominium project located in San Francisco. The plaintiff homeowners association (the “HOA”) alleged that multiple construction defects in the project were caused in part by negligent architectural and engineering design. Included in those defects was the presence of “solar heat gain” allegedly caused by the Architects’ approval of cheap and non-functional windows paired with a defective design that failed to provide for adequate ventilation within the units. During periods of high temperatures, the solar heat gain had rendered many of the units “uninhabitable, unhealthy and unsafe.”

The Architects successfully argued at the trial court level that they could not be held liable for the alleged defects because, under common law, the Architects owed no duty of care to third parties (to the HOA or its members). The trial court agreed, holding that the Architect could not be held liable for negligent design and that the HOA was required to show that the Architects had “control” in the construction process; the Architects had to have “assum[ed] a role beyond that of providing design recommendations to the [developer].” Accordingly, the trial court sustained the Architects’ demurrers and the HOA then appealed…

Legislative & Case Law Update (2013) Now Available!

Published on: January 7, 2013 | by Steven J. Tinnelly, Esq.

hoa laws Our annual “Legislative & Case Law Update” newsletter for the year 2013 is now available in our library!

The Legislative & Case Law Update provides an overview of the new legislation and case law impacting California Homeowners Associations (“HOAs”) as we head into 2013. The new legislation includes, among other items, bills that impact Bank foreclosures, the re-organization of the Davis-Stirling Act, EV Charging Stations and fees charged by HOAs in producing certain records. The new case law includes rulings that may impact the architectural restrictions placed on the installation of solar panels, arbitration provisions for construction defect disputes, “no-cost” HOA collections contracts, election disputes and defamation claims. The Legislative & Case Law Update also addresses some new Fannie Mae and FHA regulations impacting condominium insurance and certification requirements.

Click here to read our Legislative & Case Law Update (2013)

Have questions on any of the new legislation or case law? Click here to send us a question online.

Assessment Collections Fees in “No-Cost” Collections Contracts

Published on: October 22, 2012 | by Steven J. Tinnelly, Esq.

*New Case Law hoa law firm

The United States Bankruptcy Court in California recently ruled in a case that may impact the terms under which Homeowners Associations (“HOAs”) contract with collections companies to pursue delinquent assessments.

In In re Antonio Cisneros, the debtor, Cisneros, owned two properties within the HOA and had fallen behind on his assessment payments. Cisneros ultimately filed Chapter 13 bankruptcy in order to save his properties and cure his assessment arrears. The HOA had contracted with a collections company to recover the delinquencies from Cisneros. That contract specifically stated that if the collections company was “unable to collect fees or costs from the delinquent Owner or other responsible party, [then the] Association shall not be responsible for such fees or costs.” (Emphasis added.) Accordingly, under the terms of the contract, the HOA was under no true obligation to pay the fees or costs incurred by the collections company. That contractual provision was what the Bankruptcy Court relied upon in disallowing the collections company’s claims to recover its roughly $14,000 in collections fees and costs from Cisneros…

Recovering Attorneys’ Fees in HOA Election Disputes

Published on: September 26, 2012 | by Steven J. Tinnelly, Esq.

*New Case Law

The California Court of Appeal’s recent ruling in a case underscores how crucial it is for HOAs to strictly comply with the Civil Code’s election procedures and requirements.

The court in That v. Alders Maintenance Association (2012) applied Civil Code § 1363.09 to hold that a HOA’s attorneys’ fees and costs are generally not recoverable by a HOA should it prevail against a member in an election dispute. However, the same is not true for a member should she instead prevail against her HOA.

TLG Secures Favorable Settlement and Obtains a 100% Attorneys’ Fees Award for HOA Client in Fullerton

Published on: August 22, 2012 | by Steven J. Tinnelly, Esq.

The Tinnelly Law Group has secured a favorable settlement in a breach of contract case for one of our HOA clients located in Fullerton, California.

The Defendant security company entered into a contract with the HOA to install an integrated entry gate system for several streets leading into and out of the community. Shortly after the installation was completed, the HOA began experiencing severe mechanical problems with the gate operators and other aspects of the integrated gate entry system. When the Defendant refused to take the appropriate action to repair the system and ensure it’s permanent functionality, the HOA filed suit for breach of contract.

The terms of the settlement required a judicial determination as to the prevailing party and the “reasonable” attorneys’ fees amount to be awarded with respect thereto. After arguing those issues via a motion for attorneys’ fees, the court declared our client the prevailing party and found that all of our client’s attorneys’ fees (nearly $200,000) were reasonable. Such 100% attorneys’ fees awards are incredibly rare.

Our client’s Board of Directors and management praised attorney Bruce Kermott and the entire TLG team for their efforts in securing such a fantastic outcome for the HOA and its membership:

“This is truly great news! Thanks Bruce for all your hard work on this case!”
“Thanks again for your dedication and hard work!”
“Your thoroughness, communication and responsiveness throughout this process was fantastic. Thank you!”

The Tinnelly Law Group strives to resolve its clients’ disputes through non-judicial means wherever possible. However, when issues do result in litigation, our clients take comfort in knowing that our attorneys provide the highest quality representation available and that our entire team remains committed to securing the best possible outcome.