Case Law Update: What a Recent Appellate Decision can Tell Associations Seeking Their Attorney’s Fees for Litigation
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Florida’s Third District Court of Appeals recently handed down a decision in the matter of Gonzalez v. Int’l Park Condominium I Association, Inc. that is instructive for associations and their attorneys when associations become involved in litigation and seek payment of their fees from the home or unit owner.
The facts of the case were relatively straightforward: almost 25% of the units under the International Park Condominium Association’s control were delinquent in the payment of assessments, and the Association, having been unable to compel payment, petitioned the court for appointment of a receiver for the delinquent units. The court granted the petition for receivership, and, as part of the order related thereto, subsequently granted the receiver the blanket authority to cast votes on behalf of the delinquent owners. In response, one of the non-delinquent owners, Gonzalez, filed an emergency motion to limit the receiver’s authority to cast any votes on behalf of the delinquent owners, arguing that it was in direct violation of the Association’s governing documents, and contrary to the Condo Act.
Gonzalez’s motion was denied by the court and she then filed a separate action against the Association, seeking to compel it to comply with the condominium’s declaration, articles of incorporation, bylaws, and the Condo Act with respect to the voting rights for unit owners ineligible to vote due to their delinquent assessments. While this case was pending, the court discharged the then-serving receiver and appointed a new one. As part of appointing the new receiver, the court stripped him of the authority to vote on behalf of the unit owners- essentially granting Gonzalez the remedy she sought in her separate action. Resultantly, both the Association and Gonzalez moved for summary judgment and the trial court, stating that she had already stripped the receiver of his voting rights, granted judgment in the Association’s favor.
The Association then moved for an award of its fees pursuant to §718.1255 (for litigating after alternative dispute resolution) and §718.303 (for being the prevailing party in an action to enforce the Declaration), and was awarded $9,150.00. Gonzalez appealed the award of fees, arguing that she was the prevailing party, as she had ultimately received the relief she was requesting.
Section 718.1255 provides that a party who files a complaint for a new trial following the mandatory, non-binding arbitration required by the Condo Act, will be assessed the other party’s fees and costs if the judgment obtained at trial is not more favorable than the arbitration award. The Third District reversed the Association’s award of fees pursuant to §718.1255, finding the result obtained by Gonzalez was more favorable than the arbitration decision; she had succeeded in stripping the receiver of its erroneously-awarded power. Further, §718.1255 requires that a judgment have been rendered in the new trial, which did not occur in Gonzalez’s direct action. Given all of the foregoing, the appellate court reversed the award of fees under this section of the Condo Act.
Under §718.303, the prevailing party in a case by or against a condominium association is entitled to recover its fees; in order to be the prevailing party, one must succeed on a significant issue in the litigation, and achieve some of the benefit he sought in bringing the suit. Under this analysis, the Third District found that, though judgment was entered in the Association’s favor, Gonzalez was more successful: she achieved that which she was seeking, barring the receiver from voting on behalf of the delinquent owners. Resultantly, the appellate court found that the Association’s award of fees on this basis was erroneous as well.
Associations and their attorneys should be mindful of this decisions in their future operations for a few reasons. First, it shows that associations should consider their litigation strategically, and determine not only whether it is in their best interest to defend or prosecute certain actions, but also whether success is likely in light of their governing documents and the law. Though it can be a bitter pill to allow a problem resident, who may be causing the association headaches on other issues, to force the association into doing something it doesn’t want to do, but probably should or must do, then giving in to the resident’s demands is likely a smarter decision than fighting the resident over a matter of pride and stubbornness. Further, associations should not assume that, just because they believe they have a valid claim and that the Condo or HOA Acts provide for an award of attorney’s fees, they will be awarded their fees and costs by the court. The judge may refuse to award fees on a technicality, or the association simply may not prevail on the merits of its case. When developing their litigation strategy, associations and their attorneys should always ensure close consultation, so as to ensure the association not only has the best chance of prevailing in its case, but also to ensure that, if it does prevail, it will be able to obtain its fees if allowed to do so by law.