Court Finds Homeowners’ Association to be the Prevailing Party
in a Dispute with a Homeowner regarding Covenants, Conditions and Restrictions
In Almanor Lakeside Villas Owners Association v. Carson, a California Appellate Court awarded a homeowners association (“HOA”) over $100,000 in fees and costs. In Almanor, defendants Carson purchased two properties on Lake Almanor in Plumas County. The properties were zoned for commercial use and had been historically used as a hunting, fishing and vacation lodge. The Carsons sought to continue to use the properties in that manner. At the time of the purchase, the properties were part of an HOA and subject to Covenants, Conditions and Restrictions (“CC&R’s”), which banned short-term rentals. However, the HOA did not enforce those CC&R’s and the Carsons successfully operated their properties as short-term guest rentals. Subsequently, the Almanor HOA’s Board of Directors changed and the new Board sought to enforce the CC&R’s precluding short-term rentals. The HOA fined the Carsons for their ongoing violations. The Carsons refused to pay the fines and the HOA filed suit. The Carsons cross-complained disputing both the fines and the HOA’s authority to enforce the rules restricting short-term rentals. The Carsons argued that the rules constituted unlawful and unfair use restrictions on their commercially-zoned properties.
After a trial, the court ruled against the Carsons on their Cross-Complaint, but rejected as unreasonable many of the fines that Almanor sought to impose. The court reduced the fines to $6,620. The HOA filed a motion for attorney’s fees and the court awarded the HOA over $100,000. The Carsons appealed, arguing that they were the prevailing party given that the fines were significantly reduced. The court of appeals affirmed holding that the reduction in the fines did not make them the prevailing party. The court found that the pivotal issue at trial was whether the fines were enforceable under the CC&R’s and under California law. Because the court found they were, the HOA was the prevailing party.
Shannon B. Jones, Partner, email@example.com