6th DCA Reverses Lower Court Denial Of Pre-Litigation Fees Based On ADR Statutory Provision.
In Rice v. Rancho Palm Grande Homeowners Assn., Case No. H038763 (6th Dist. Sept. 1, 2015) (unpublished), HOA defeated a homeowner’s assessment challenge under the governing CC&Rs and the Davis-Stirling Act fee-shifting provision (Civil Code former section 1354(c)). The lower then awarded litigation fees and costs to HOA, but refused to award pre-litigation costs under the theory that Civil Code section 1369.570(b) evinced a legislative intent to deny such fees because, in ADR contexts, each party was to bear their own fees and costs.
On a cross-appeal by HOA, the Sixth District reversed. It ruled that section 1369.570(b) truly only dealt with ADR expenses, not formal pre-litigation work incurred after ADR failed. The reviewing court found instructive the reasoning in Grossman v. Park Fort Washington Assn., 212 Cal.App.4th 1128, 1132-1133 (2012) to the same effect.
Homeowner also argued that fees were not “incurred” by HOA because they were paid by an insurer. The Sixth District rejected this argument, analogizing it to similar holdings in the Civil Code section 1717 area. (See, e.g., Staples v. Hoefke, 189 Cal.App.3d 1397, 1410 (1989).)