One Association’s Loss Could Prove To Be a Future Victory for Others

When an owner drops a lawsuit against a community association, the association can recover its attorneys’ fees, right? Not necessarily. A California association recently learned this lesson the hard way. Ironically, though, the court’s ruling could prove helpful for other associations.

In 2008, the association obtained majority approval from the members to spend about $5.3 million for improvements to the common areas, including the installation of traffic signals at the entrances at Gates 1 and 6.

In 2017, the association informed its members that it had received county approval to install lights at Gates 2 (instead of Gate 1, as originally approved) and 6. A month later, it let them know it was in the process of collecting bids and traffic signals would be installed within six months.

The owners of a property adjacent to Gate 2 sued. They alleged the association violated the CC&Rs by failing to request a vote and obtain approval from its members before entering the contract. They claimed the CC&Rs required a vote for any capital expenditure exceeding 5 percent of the annual budget for the year allocated or $200,000 for the relevant time period. The contracted price was estimated to be $430,000.

The court granted a temporary restraining order blocking the project. A short time later, it granted a preliminary injunction blocking the association from constructing the signal at Gate 2 while the trial was pending.

The following month, the association asked the court to remove the injunction. The association by then had requested a vote and obtained majority consent to proceed with construction of the signal at Gate 2, even if the cost exceeded 5 percent of the budgeted expenses for the year. After the court dissolved the injunction, the plaintiffs eventually dismissed their lawsuit.

Both the owners and the association subsequently sought to recover their attorney fees, each claiming to be the winner.

Read the full story now and learn why one of our experts says the case is “great for everybody”:

Association’s Ultimate Victory Doesn’t Guarantee Attorneys’ Fees Award

Best regards,
Matt Humphrey
President