Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County No. 03CC11691, Charles Margines, Judge.
Swedelson & Gottlieb and Joan E. Lewis-Heard for Defendants and Appellants.
Law Office of Richard A. Bunt and Richard A. Bunt for Plaintiff and Respondent.
OPINION
MOORE, J.
In 2003, plaintiff Jay Chen sued his homeowners associations along with several other entities, including Association Lien Services and its partners, Sandra Gottlieb and David Swedelson. After years of litigation, including a failed attempt to certify the case as a class action, Chen dismissed the case. ALS then sought prevailing party status and attorney fees under Civil Code section 1354, which permits homeowner associations and homeowners to recover attorney fees in actions to enforce an association’s governing documents. The trial court denied ALS’s motion. ALS now appeals, and because we find that section 1354 only permits recovery of fees by homeowners and homeowners associations, we affirm the order.
The exact business form of Association Lien Services has been a source of some confusion. Defendants now state the proper business name is Swedelson & Gottlieb, dba Association Lien Services, David C. Swedelson and Sandra L. Gottlieb. For convenience, we refer to defendants collectively as ALS.
Subsequent statutory references are to the Civil Code.
I
FACTS
The facts are stated in full in our prior opinion in this matter. (Chen v. Association Lien Services (June 1, 2006) G035402 [nonpub. opn.] (Chen I).) In short, Chen believed his home had been wrongfully foreclosed upon by his two homeowners associations while he was out of the country. In 2003, he filed the instant lawsuit against the associations, the management company, and ALS, alleging wrongful foreclosure, rescission and restitution, breach of fiduciary duty, willful misconduct and accounting. A first amended complaint added claims against certain defendants for unfair business practices, violation of the Fair Debt Collection Practices Act, RICO, quiet title, and declaratory relief. Although not initially filed as a putative class action, Chen later sought to certify a class for three of his claims, for breach of fiduciary duty, unfair business practices, and for violation of the Fair Debt Collection Practices Act, the last against the ALS defendants only. The court denied the class certification motion, and in our prior opinion, we affirmed. (Chen I, supra, G035402.)
After remand, ALS moved for summary judgment or alternatively, summary adjudication. Summary judgment was denied, but the trial court granted summary adjudication on Chen’s claims for rescission and restitution, breach of fiduciary duty, violation of the Fair Debt Collection Practices Act, quiet title, and declaratory relief.
In October 2007, Chen settled his claims against the homeowners associations, receiving $175,000, and he apparently settled with the management company as well. Chen and ALS proceeded to trial in April 2008, and the trial concluded with a hung jury and mistrial. The case was set for a new trial in September 2009.
In April 2009, Chen’s attorneys substituted out of the case, leaving Chen in propria persona. In June, under circumstances that are unclear from the record, Chen filed a request for dismissal without prejudice on his own behalf. In September, ALS filed a motion seeking to be declared the prevailing party and requesting $1,076,227.14 in attorney fees.
Despite the lack of written opposition by Chen, the trial court denied the motion, stating: “Moving parties claim that, as the prevailing parties, they are entitled to these fees pursuant to... § 1354(c). Subsection (c) must be read in its proper context. Section 1354 states that CC&Rs are enforceable by both an HOA and an individual owner unless they are unreasonable; that other governing documents are similarly enforceable; and, ‘(c) [I]n an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.’ Quite plainly, the instant lawsuit was not an action to enforce the governing documents. It was an action by a homeowner against third parties alleging, in essence, improprieties in instituting a collection and foreclosure process on behalf of an HOA. Thus, attorneys’ fees and costs are not awardable pursuant to that code section.”
ALS now appeals.
II
DISCUSSION
Chen argues that, as a threshold matter, ALS does not have standing to recover attorney fees under section 1354. The parties agree that this is a pure question of law, subject to de novo review. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.)
Section 1354 states: “(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.”
We subsequently refer to the subdivisions of section 1354 as 1354 (a), 1354 (b), and 1354 (c), respectively.
Section 1354 is part of the Davis-Stirling Act (the Act), which governs common interest developments in California. (§ 1350 et seq.) Section 1351, subdivision (j) of the Act defines “Governing documents” as “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.”
Section 1354 (c) requires an award of attorney fees and costs in actions “to enforce the governing documents.” Chen argues that section 1354 only permits homeowners and associations to recover attorney fees, while ALS argues that the statute should be broadly interpreted to include third parties.
“In ascertaining the meaning of a statute, we look to the intent of the Legislature as expressed by the actual words of the statute. [Citation.] We examine the language first, as it is the language of the statute itself that has ‘successfully braved the legislative gauntlet.’ [Citation.] ‘It is that [statutory] language which has been lobbied for, lobbied against, studied, proposed, drafted, restudied, redrafted, voted on in committee, amended, reamended, analyzed, reanalyzed, voted on by two houses of the Legislature, sent to a conference committee, and, after perhaps more lobbying, debate and analysis, finally signed “into law” by the Governor....’ [Citation.]” (Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1117-1118.)
We therefore begin with the language of section 1354 (a), which states that the covenants and restrictions in the declaration (commonly known as the CC&Rs) are “enforceable equitable servitudes.” (§ 1354 (a).) “What is bound by an equitable servitude enforceable under CC&R’s is a parcel, a lot, in a subdivided tract, not an individual who has no ownership interest in the lot.” (Martin v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1036.) Section 1354 (a) also explicitly states that unless otherwise stated, the “servitudes may be enforced by any owner of a separate interest or by the association, or by both.” Nowhere are third parties mentioned.
Section 1354 (b) then goes on to state that governing documents other than the CC&Rs “may be enforced by the association against an owner of a separate interest or by an owner of a separate interest against the association.” Again, third parties are nowhere mentioned. In the context of sections 1354 (a) and 1354 (b), 1354 (c) then creates an entitlement to attorney fees by the prevailing party in “an action to enforce the governing documents.”
It seems clear to us from the plain language that the Legislature did not contemplate or intend for attorney fees to be available to third parties under the statute. ALS is unable to point us to any case law where a third party - who is neither a homeowner nor an association - has been awarded attorney fees under section 1354. While case law has permitted the application of section 1354 by homeowner associations in situations where a non-homeowner plaintiff did not have standing to sue the association at all, none have allowed recovery of attorney fees by a third party who is neither a homeowner nor an association. (See Martin v. Bridgeport Community Assn., Inc., supra, 173 Cal.App.4th 1024; Farber v. Bay View Terrace Homeowners Assn. (2006) 141 Cal.App.4th 1007 (Farber).)
In Farber, this court concluded that the seller of a condominium did not have standing to sue an association for declaratory relief regarding a dispute over a roof repair because she was no longer a member. (Farber, supra, 141 Cal.App.4th at p. 1012.) We held the association was entitled to fees under section 1354 because the action was clearly one to enforce the CC&Rs (which this is not, as we will discuss post). Martin v. Bridgeport Community Assn., Inc., supra, 173 Cal.App.4th at p. 1039, adopted Farber’s rationale without comment.
As a matter of public policy, it makes perfect sense for associations, which are non-profit, mutual benefit corporations, to be protected against the costs of lawsuits brought without standing by permitting the recovery of attorney fees under section 1354. We find no reason, however, for extending this rationale to third parties or to cases where standing is not an issue. If a third party which chooses to enter into a contract to perform services for an association is concerned that it might not be able to recoup its attorney fees if it is sued by a homeowner, it has the option of negotiating an appropriate indemnity clause with the association as part of its service contract. An association sued without standing has no such option, and to pass the cost of defending such a suit onto the members rather than recouping them from the party who brought the lawsuit is fundamentally unjust.
Section 1354 is “narrow statutory language.” (Gil v. Mansano (2004) 121 Cal.App.4th 739, 745.) As a narrowly drawn statute, we give section 1354 a narrow reading, and the only reading that is consistent with its plain language - that it allows recovery of attorney fees by homeowners and associations only. Had the Legislature intended the statute to apply to any action involving a homeowner association, it would have said so. Simply put, it did not, and we decline to give it such a reading.
ALS’s attempts to apply general contract law to the analysis are therefore unpersuasive.
ALS also argues that the 2004 Law Revision Commission Comments indicate an “intent to broaden the availability of attorneys’ fee awards.” The portion that ALS does not highlight, however, is that the Law Review Commission was referring to 1354 (b), which had been amended to permit fee awards in actions to enforce the governing documents beyond the CC&Rs, such as the bylaws. It does not indicate any intent to permit attorney fee awards to anyone other than the two groups mentioned by the statute - homeowners and associations.
Further, even if we did hold that third parties should have standing under section 1354 in general, we would agree with the trial court that this case was not an “action to enforce the governing documents.” Despite ALS’s many quotations from the complaint and other documents, with respect to his claims against ALS, Chen never truly sought to “enforce the governing documents, ” which ALS was not a party to. The gravamen of his claim against ALS was simply that he believed ALS engaged in foreclosure procedures which he claimed were unfair and unlawful. The complaint alleged, among other things, that defendants, including ALS, changed their collection procedures to use non-judicial foreclosure as “a tool of oppression and extortion” and failed to properly follow proper foreclosure procedures. At the heart of it, this is what Chen’s case against ALS was about, not enforcing the CC&Rs, bylaws, or other association documents.
As such, we would reach the same conclusion regarding fees if Chen were the prevailing party.
III
DISPOSITION
The order is affirmed. Chen is entitled to his costs on appeal.
WE CONCUR: BEDSWORTH, ACTING, P.J., IKOLA, J.