Rancho Sante Fe Assn. v. Dolan-King

Filed 3/9/06 Rancho Sante Fe Assn. v. Dolan-King CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a postjudgment order of the Superior Court of San Diego County, Lisa Guy-Schall, Judge. Affirmed; motion for attorney fees granted.

This is the third appeal in a long-running dispute involving Patricia Dolan-King, a former homeowner in the residential community of Rancho Santa Fe (appellant), and the Rancho Santa Fe Association (the Association; respondent). The issues currently before us are whether the trial court erred or abused its discretion in awarding attorney fees, pursuant to Civil Code section 1354,^[1] to the Association after it prevailed in the second appeal in the dispute, in light of the nature of the previous proceedings and rulings by this court. (Rancho Santa Fe Assn. v. Dolan-King (2004) 115 Cal.App.4th 28, 46.)

We reject appellant's contentions that the trial court misapplied the statute or abused its discretion, and affirm the order of attorney fees on appeal to the Association as the prevailing party. The Association's separate motion for attorney fees on appeal is granted.

FACTUAL AND PROCEDURAL BACKGROUND

A

Previous Proceedings

Originally, appellant brought an action seeking a judicial determination regarding the validity and enforceability of the Association's unrecorded guidelines that were used to reject her land use applications for remodeling and fence construction. (Dolan-King v. Rancho Santa Fe Assn. (2000) 81 Cal.App.4th 965 (referred to as "Dolan-King I").) Although appellant prevailed in that matter at trial, the judgment was reversed on appeal in favor of the Association. (Ibid.)

Next, the Association brought an action against appellant to enforce its protective covenant and related unrecorded regulatory code, regarding a different fence construction project. (Rancho Santa Fe Assn. v. Dolan-King, supra, 115 Cal.App.4th 28 (referred to as "Dolan-King II" or the prior opinion).) Appellant filed a cross-complaint, which was unsuccessful. The Association obtained judgment in its favor for injunctive and declaratory relief and an order awarding attorney fees at trial, both of which were affirmed by this Court on appeal. With regard to the attorney fee award to the Association under section 1354, subdivision (f), in the amount of $318,293.50 for trial services, we stated in that opinion that although appellant had provided a copy of the order in that record, she had not provided any copies of the moving and opposing papers on the fees matter. On that sparse record, we summarized her argument and then concluded:

"The only argument made in the opening brief is that this large award will have a chilling effect on discouraging legitimate opposition to the Association's business practices, which she labels as questionable. [Citation.] [¶] The party seeking to challenge an order on appeal has the burden to provide an adequate record to assess error. [Citation.] Where the party fails to furnish an adequate record of the challenged proceedings, his claim on appeal must be resolved against him. [Citations.] [¶] Ordinarily, an award of attorney fees under a statutory provision, such as section 1354, subdivision (f), is reviewed for abuse of discretion. The Association remains the prevailing party here. We have been presented with no support for Dolan-King's claims of abuse of discretion with respect to the time expended, the hourly rate billed, or the nature of the costs assessed after the motion to tax was ruled upon. Accordingly, the proper course is to uphold the award. [Citation.] The respondent's brief does not seek an award of attorney fees on appeal. The ordinary costs on appeal will be awarded to the Association, however." (Dolan-King II, 115 Cal.App.4th at p. 46; italics added.)

B

Subject Motion/Fees and Ruling

On remand of Dolan-King II, the Association sought an award of attorney fees on appeal, on the ground that it was the prevailing party on appeal within the meaning of section 1354 and it was therefore entitled to recover reasonable attorney fees from appellant in the amount of $86,353. It supplied its billing records and an attorney declaration explaining that both the Association's counsel (Musick firm) and its insurance counsel (Lucas firm) had participated, but payment for only 1.2 hours of insurance counsel's time was being requested in the motion.

Appellant submitted points and authorities in opposition, contending that not only the reasonableness of the $86,353 requested was in issue, but also the statutory entitlement to fees in the first instance. Appellant contended that section 1354 was not applicable because Dolan-King II only raised issues concerning the enforcement of the unrecorded regulatory code, as opposed to enforcement of the basic recorded declaration of restrictions, and therefore the action should not fall within the statutory language.^[2] She also objected that some of the fees sought only pertained to the Association's peripheral concerns about (1) its ability to seek enforcement of the judgment, since she had recently sold her property, and (2) whether publication of the opinion should be sought on policy grounds, which was not her problem.

The Association submitted reply papers, arguing that this court's opinion in Dolan-King II accomplished a determination that the Association was a prevailing party in the action, which should control the appellate fee determination as well. Further, the Association argued that the regulatory code was a governing document of the Association and therefore an action for its enforcement fell within the scope of the fee statute, section 1354, as sufficiently closely related.^[3] Further, the Association argued all the fees sought were reasonably charged for services ancillary to the appeal, because the need for those services was proximately caused by appellant's continued pursuit of appellate remedies.

At oral argument, the trial court confirmed a tentative order to grant the motion and explained its reasoning as follows: "Well, I'm relying on the documents each of you filed in this case and to the specificity that you provided me at the time I reviewed the billing itself. I believe [the Association attorney] has a more correct statement of law. I'm following and adopting his argument and making my tentative final in this regard. [¶] They were the prevailing party in this matter. Within the Civil Code Section 1354, they are entitled to recover these reasonable fees. [¶] And the breakdown I reviewed, and, noting your objections and opposition thereto, I believe that the billing properly reflects the kind of work that was provided for [in] this particular case. I don't see a duplication of fees nor do I see any duplication of work effort by the two different agencies [law firms] in this regard."

Appellant filed this appeal. The Association submitted a motion for an award of attorney fees on appeal, which was addressed at oral argument.

DISCUSSION

We first outline appellant's arguments challenging the order awarding attorney fees on appeal to the Association, and decide how the law of the case doctrine limits the extent of the issues currently before us. We then address her substantive challenges to the award and the abuse of discretion claims regarding the amount awarded.

I

ISSUES PRESENTED

Appellant is contending that pursuant to the version of section 1354 in effect at the time of this hearing, this type of action brought by the Association to interpret and enforce the unrecorded regulatory code did not qualify as an action to enforce "covenants and restrictions in the declaration" as "enforceable equitable servitudes." (§ 1354, subd. (a); see fn. 2.) She argues that the former version of the statute regarding fees (in § 1354, subd. (f)) referred specifically to actions "specified in subdivision (a)" to enforce governing documents, and that this language was very restrictive and could apply only to actions concerning equitable servitudes themselves. She reasons that even if unrecorded guidelines or regulatory codes can constitute "governing documents" under this statutory scheme (§ 1351, subd. (j)), those regulations are not as important as equitable servitudes and should not have given rise to a fee entitlement.

Further, appellant contends that our prior opinion affirming the award of attorney fees at trial did not necessarily authorize the current award of attorney fees on appeal, because she is not raising the same legal arguments, and the law of the case doctrine should be deemed inapplicable for lack of identity of issues. We discuss that claim first, then turn to her statutory interpretation arguments.

II

LAW OF THE CASE

Rules for application of the law of the case doctrine are set out in Bovard v. American Horse Enterprises, Inc. (1988) 201 Cal.App.3d 832, 841-842 (Bovard): "[W]here an appellate court states in its opinion a principle of law necessary to its decision, the principle becomes the law of the case for later proceedings, including appeals. [Citation.] The general rule is that the doctrine applies only to issues which were both presented and determined in a prior appeal. [Citation.] 'Where the particular point was essential to the decision, and the appellate judgment could not have been rendered without its determination, a necessary conclusion in support of the judgment is that it was determined. With respect to such a point, the appellate decision is law of the case even though the point was not raised by counsel or expressly mentioned.' [Citation.]"

To apply these rules, we ask whether the subject issue was essential to a determination of the first appeal, such as whether the record contained sufficient information to decide it at that time. (Bovard, supra, 201 Cal.App.3d at p. 842.) If not, the court in the first appeal could not have decided it on that record nor could it have considered or expressed any views on the particular question. (Ibid.)

The Supreme Court in In re Rosenkrantz (2002) 29 Cal.4th 616, 668 clarified the application of the doctrine of law of the case, by distinguishing between decisions made on similar issues, but by separate decision makers at different times. Specifically, the court said, "The doctrine of law of the case, however, governs later proceedings in the same case [citation] with regard to the rights of the same parties who were before the court in the prior appeal. [Citations.]" (Ibid.) Thus, two separate petitions with similar goals, brought in different forums, had to be considered as separate cases for purposes of using the law of the case doctrine, because they were made by different authorities.

The Association is arguing that since this Court affirmed the trial court's award of fees for the trial of this matter, and since those fees were sought pursuant to section 1354, our affirmance of the prior judgment and order necessarily involved a determination that section 1354 authorized a further award of fees in this case. However, our prior opinion merely stated, "The respondent's brief does not seek an award of attorney fees on appeal. The ordinary costs on appeal will be awarded to the Association, however." (Dolan-King II, supra, 115 Cal.App.4th at p. 46; italics added.) The prior award of attorney fees for the trial proceedings was made in 2002, and was upheld on appeal in 2004. The subject motion was brought and the resulting award of attorney fees on appeal was made later in 2004, albeit in the same trial judge's courtroom. (Cal. Rules of Court, rule 870.2.)

We think that for purposes of following the rules of law of the case to determine what were the essential issues before this court in the previous appeal, the later award of attorney fees on appeal should be regarded as a separate decision, even though it followed an initial prevailing party determination made in 2002 in connection with the trial proceedings. Simply because that fees decision regarding trial was later upheld on appeal does not mean that the later proceedings seeking and awarding attorney fees on appeal were one and the same, even in light of the prevailing party determination. It was not a foregone conclusion that the Association would in fact prevail on appeal. We accordingly conclude that the subject issue, entitlement to fees on appeal, was not essential to a determination of the first appeal, because the record was not dispositive of that issue at that time. (Bovard, supra, 201 Cal.App.3d at p. 842.)

The Association contends, however, that appellant should be foreclosed from making her new statutory arguments at this stage of the proceedings, because she could have raised these substantive issues earlier with regard to the award of attorney fees for the trial proceedings. In Dolan-King II, supra, 115 Cal.App.4th 28, she only opposed the fee award based on its alleged "chilling effect," and she did not raise these particular statutory interpretation issues. (See Bovard, supra, 201 Cal.App.3d at p. 842 [an appellate decision is law of the case even though an essential point fundamental to the decision was not expressly raised by counsel before]; also see Amato v. Mercury Cas. Co. (1997) 53 Cal.App.4th 825 [waiver of issues on appeal].) In the trial court, she did generally object to the legitimacy of any fee entitlement regarding fees on appeal. We acknowledge having some sympathy with the Association's objections on this point, because the prevailing party determination regarding trial is so closely related to such a determination regarding appeal, as to raise legitimate concerns about allowing multiple bites at the proverbial apple.

In any case, an appellate court determines the meaning of a statutory provision de novo, through the resolution of pure questions of law. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432.) Whether statutory criteria have been met on undisputed facts is likewise a question of law. (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1169.) Because of the nature of this dispute and the particular sequence of events here, we think it most appropriate to turn to the statutory language to resolve the fee entitlement issue de novo.

III

SUBSTANTIVE CHALLENGES TO THE AWARD

According to appellant, the Association's action brought to interpret and enforce the unrecorded regulatory code should not qualify under former section 1354 as an action "specified in subdivision (a)" to enforce "covenants and restrictions in the declaration." (Former § 1354, subds. (a), (f).) She argues the regulatory code is a separate set of rules, subject to enforcement only under a reasonableness test, and accordingly it was not deserving of the same dignity as are equitable servitudes, nor should it create any fee entitlement arising from such enforcement.

As noted in the Law Revision Commission Comments for the 2004 amendments to section 1354, the substance of former subdivision (f) was continued in subdivision (c), regarding attorney fee awards. (Cal. Law Revision Com. com., 8 West's Ann. Civ. Code (2006 supp.) foll. § 1354, p. 101.) The question here is whether subdivision (a), as referred to in former subdivision (f), limited the type of actions which could give rise to an attorney fee entitlement, to those seeking enforcement of equitable servitudes only.

Several recent cases have treated the fee entitlement created by section 1354 more broadly than appellant would allow. In Kaplan v. Fairway Oaks Homeowners Assn. (2002) 98 Cal.App.4th 715, 718-719 (Kaplan), the appellate court interpreted section 1354, together with section 1351, subdivision (j), to conclude that the 1993 statutory amendments of that section were intended "to broaden the availability of attorney fee awards by authorizing attorney fees in an action to enforce the governing documents rather than just the declaration." By statute, the governing documents may include documents such as bylaws. (Ibid.)

To determine attorney fee entitlements, it is appropriate to look at the "gist of the action, as revealed by the record," to consider whether the particular action fell within the scope of section 1354 as involving enforcement of governing documents. (Kaplan, supra, 98 Cal.App.4th 715, 720.) If such an action is adversarial and seeks to enforce the governing documents, or to interpret the propriety of action by the homeowners' association regarding membership rights, "[t]he legislative policy underlying an attorney fee award to a prevailing party, be it homeowner or association, applies equally to both types of enforcement actions." (Id. at p. 721.)

In Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 87 (Villa De Las Palmas), the Supreme Court interpreted section 1354, subdivision (a) as allowing enforcement of association declarations of covenants and restrictions, as amended, even if they do not meet common law requirements for equitable servitudes, on the theory that the Legislature evidently did not intend to incorporate technical requirements for enforcement of equitable servitudes into the current statute. The trend appears to allow a broad reading of the "governing documents" definition and the fee entitlement statutes.

To determine the identity of the prevailing party, the trial court may look to whether, on a "practical level," that party "achieved its main litigation objective." (Villa De Las Palmas, supra, 33 Cal.4th 73, 94.) An abuse of discretion test is used on appeal to evaluate that determination, as well as the amount of fees awarded that party. (Ibid.; Dolan-King II, supra, 115 Cal.App.4th at p. 46.)

We agree with the court in Kaplan, supra, 98 Cal.App.4th 715, that the 1993 statutory amendments of section 1354 served "to broaden the availability of attorney fee awards by authorizing attorney fees in an action to enforce the governing documents rather than just the declaration." (Id. at p. 719.) Also, the 2004 statutory amendments of that section were consistent with that approach. Both on the undisputed facts and the applicable law, we agree with the Association that the subject action falls within the scope of section 1354. The objects of the subject action and appeal were to obtain interpretations of lawful regulations created pursuant to the powers conferred by the covenant, regarding matters properly within the Association's sphere of influence (i.e., the definition of major versus minor construction; Rancho Santa Fe Regulatory Code, § 31.0302). When the Association prevailed on appeal, the statutory fee entitlement was definitively invoked, and there was no applicable restriction otherwise created by section 1354, former subdivision (f). The legislative policy allowing an attorney fee award to a prevailing party applies here and the trial court's award of fees was consistent with the statutory scheme. (Kaplan, supra, 98 Cal.App.4th at p. 721.)

IV

ABUSE OF DISCRETION ARGUMENTS; FEES ON APPEAL

Finally, appellant contends the trial court abused its discretion in awarding the full amount of attorney fees requested, because in her opinion, some of them were unrelated to the handling of the appeal, and the trial court failed to make an adequate inquiry into the bills submitted. She bases these arguments on the trial court's comments at the oral argument on the motion, and says "the record suggests that the court was not inclined to review the specifics of the bills in order to verify that all of the claimed charges were reasonably related to pursuit of the appeal." Appellant accordingly seeks modification of the order to reduce the award by the amount of $14,237 (to a total award of $72,116).

In order to obtain reversal of an attorney fee award, an appellant must supply a record that is adequate to support an appellate court's conclusion that a trial court abused its discretion in determining a requested fee was reasonable. (Vo v. Las Virgenes Municipal Water Dist. (2000) 79 Cal.App.4th 440, 447.) We first take note that appellant apparently misinterprets the Association bills, because they did not actually include approximately $4,000 of the challenged amounts, because insurance counsel's work was not actually billed even though it is listed in the moving papers (with regard to appellant's challenges to items 4, 5, and 6, the Lucas firm).

With respect to items 1, 2, and 3 (the approximate balance of $10,000, for the Musick firm), appellant now contends that only hypothetical considerations, not reasonably related to the appeal, were covered by these challenged bills (regarding her sale of the subject property, the status of the pending appeal and enforcement efforts, and the benefits versus risks to the Association of seeking publication of the appellate opinion). However, her papers at the trial level were in the form of points and authorities that were not as specific as the arguments newly made on appeal, and in any case those papers lacked any actual evidence to support her claims of excessive billings. The Association's attorney declaration and attached exhibits were facially regular regarding the time spent and the reasons for it.

Here, as in the prior appeal, appellant has failed to create a record that would support any claim of abuse of the trial court's discretion in setting the fee amount. We must accordingly deny her requests to this court to reverse the award and remand for purposes of allowing the trial court to delete certain items, or to make modifications to the order. (Code Civ. Proc., § 906.) Rather, we defer to the trial court's exercise of discretion in evaluating the showing actually made before it, in light of its familiarity with the issues presented.

Pending oral argument, this court received the Association's motion seeking an award of further attorney fees on this appeal, in the amount of $13,560. The motion was presented as being contingent on the Association's position on appeal being successful, and we have determined that it is. At oral argument, we gave counsel for appellant the opportunity to respond to the motion, and counsel did not dispute that the procedure followed was appropriate, or that the amount requested was within a reasonable range. Accordingly, rather than having the Association follow the normal procedure of applying in the trial court and possibly undergoing another appeal, we find that the requested award is within the scope of the authorizing statutory scheme and is properly before this court. (Cal. Rules of Court, rule 870.2.) We grant the motion to award the Association additional attorney fees on appeal in the amount of $13,560, payable on finality of this opinion, along with the normal costs on appeal.

DISPOSITION

The order is affirmed. The Association's motion for attorney fees on appeal is granted in the amount of $13,560. Costs on appeal to the Association.

HUFFMAN, Acting P. J.

WE CONCUR:

NARES, J.

O'ROURKE, J.

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^[1] All further statutory references are to the Civil Code unless noted.

^[2] At the time of this hearing, section 1354, subdivision (f), allowed an award of attorney fees to a prevailing party "in any action specified in subdivision (a) to enforce the governing documents . . . ." (Italics added.) Subdivision (a) has consistently defined this type of covenants and restrictions in a declaration as equitable servitudes and provided for their enforcement. As amended in 2004, the version of section 1354 currently in effect regarding fees, subdivision (c), does not include the former (italicized) language ("specified in subdivision (a)"), and more generally provides as follows: "(a) The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both. [¶] (b) A governing document other than the declaration may be enforced by the association against an owner of a separate interest or by an owner of a separate interest against the association. [¶] (c) In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney's fees and costs." (Italics added.) Under section 1351, subdivision (j), " 'governing documents' means the declaration and any other documents, such as bylaws, operating rules of the association, articles of incorporation, or articles of association, which govern the operation of the common interest development or association."

^[3] Section 1354 was amended and reorganized regarding alternative dispute resolution options in 2004, but has otherwise remained essentially similar from 1993 to 2004, as will further be discussed; see footnote 2, ante, and part III, post.