California Appeals Court

Nellie Gail Ranch Owners Association v. Colombo

NELLIE GAIL RANCH OWNERS ASSOCIATION, Plaintiff and Respondent,

v.

RALPH COLOMBO, Defendant and Appellant.

G040957

Court of Appeals of California, Fourth Appellate District, Division Three

September 9, 2009

Not to be Published in Official Reports

Ralph Colombo, in pro. per., for Defendant and Appellant.

Neuland, Nordberg, Andrews & Whitney, Richard P. Neuland, Frederick T. Whitney, and Steven L. Rader for Plaintiff and Respondent.

OPINION

SILLS, P. J.

I. INTRODUCTION

Ralph Colombo appeals from two attorney fee orders made in the wake of our previous decision, Nellie Gail Ranch Owners Ass'n v. Colombo (March 24, 2008; G038603) [nonpub. opn] 2008 WL 762008 (Colombo I). The fee orders provide for a recovery by the Nellie Gail Ranch Owners Association of about $66,000 for the last appeal and about $122,000 for work previous to the appeal.

The attorney fee orders were made pursuant Civil Code section 1354, which states that in an action to enforce CC&Rs, the prevailing party shall be awarded its attorney fees. Since the enforcement of CC&Rs is usually a matter of equity, ascertaining who really is the prevailing party can sometimes be a problem, when, as here, each party might walk away from the litigation having gained something in the way of the ultimate orders. That is, in contrast to, say, section 1032 of the Code of Civil Procedure, which makes net monetary recovery the test of who is a prevailing party in monetary relief cases, section 1354 usually deals with a situation that requires judgment as distinct from a mere quantitative comparison. So things can be a bit debatable, even murky.

Case law, however, has solved the problem of the potential murkiness of a qualitative comparison of litigation outcomes by vesting discretion in the trial judge to determine who was the real "prevailing party" in an action under section 1354. (See Heather Farms Homeowners Association v. Robinson (1994) 21 Cal.App.4th 1568, 1574.) Here, despite a few emendations which this court made to the trial judge's order (basically to prevent the Association from eating up time which Colombo otherwise had in which to obtain plan approvals), the trial judge determined that the Association was indeed the prevailing party. Tested under the classic standard of abuse of discretion standard — was the trial judge reasonable in making the determination? — we must affirm.

II. FACTS

Ralph Colombo obtained the approval of the Nellie Gail Ranch Homeowners Association to build a house, a retaining wall, and a barn on his Nellie Gail lot back in 2001. Nellie Gail CC&Rs require that work on any construction projects must be completed within a year of approval. Even so, by 2003, Colombo still had not begun construction of the house, and the Association gave Colombo notice that it would begin mediation proceedings to resolve the construction delays. Colombo did not heed the notices, the mediation proceedings fell through, and the Association filed suit against Colombo, requesting an injunction to require him to stop construction on the improvements on his lot and to substantially build the house within the year. The Association requested further that if Colombo did not substantially build the house within the year, then the Association would have access to Colombo's property and would be able to tear down the improvements on his lot.

At the conclusion of the trial, the court issued an injunction against Colombo which contemplated the possibility that the Association might actually come onto the property and demolish half-completed structures. But there was an important safety valve. To quote what we wrote the last time: "The February 2007 injunction has a built-in, albeit now obsolete, safety valve: If the Colombos had submitted plans for the construction of a single-family house 30 days within of February 5, 2007, and a good faith review by the architectural review committee had resulted in approval of those plans, and if construction had commenced within 120 days of February 5, 2007, and if the Colombos had, thereafter, `diligently undertake[n]' that construction, and the construction was entirely completed within one year from February 5, 2007, then the injunction would have been stayed, by its own terms." (Colombo I, supra, 2008 WL 762008 at p. 1, (original italics deleted).)

However, we further noted that a stay issued by this court, "perhaps improvidently" as we would later fess up to, created some confusion in what would have otherwise been the workings of the trial court's "well-crafted" order: "The pendency of this appeal, has itself, however, had an unforeseen effect on the trial court's well-crafted injunction, not the least of which was this court's own, perhaps improvident, stay of trial proceedings during the pendency of this appeal. The appellate stay may have created some confusion as to the operation of the safety valve provided for in the injunction and may have cast doubt on the ability of either party to do anything during the pendency of the appeal. We thus find ourselves in a situation of reviewing an injunction which contained an important safety valve which this court itself may have inadvertently turned off." (Colombo I, supra, 2008 WL 762008 at p. 6.)

The modifications we subsequently made were, as we explained, undertaken to best approximate, as we could, what the trial court had initially done, but which might have been distorted by the stay issued by this court: "Having jurisdiction over that injunction now, we will therefore use our authority under sections 43 and 187 of the Code of Civil Procedure to modify the judgment to closely approximate in the post-remittitur time frame what the trial court did in the pre-appeal time frame." (Colombo I, supra, 2008 WL 762008 at p. 6, italics added.)

So we modified the injunction to provide the following: "(1) The Colombos will have 30 days from the date of the remittitur to submit plans for the construction of a single family house. [¶] (2) The architectural review committee will perform a good faith review of those plans. . . . [¶] The Colombos will have 120 days after approval by the architectural review committee to commence construction." (Italics added.) The one flaw in the trial court's "well-crafted injunction" was that the injunction as structured "permitted the architectural review committee to eat up the Colombos' allowed time." Thus, construction must be completed "one year from the date of the remittitur plus the time from the date the Colombos submit plans to the date those plans are approved by the architectural committee and approved by the relevant municipal authorities. To use the taxi metaphor, the meter on the one year will not run during any period of plan approval over which the Colombos have no control."

On remand, the trial court ordered $122,244.80 in attorney fees at the trial level and $65,759.25 on appeal to be awarded to the Association as the prevailing party. Colombo, now in pro per, appeals those orders.

III. DISCUSSION

A. Prevailing Party

1. "Dream" Versus Realistic Objectives

We have already referred to the governing rule: In a case of first impression and, after canvassing analogous law (e.g., fees under disability law as discussed in Donald v. Cafe Royale, Inc. (1990) 218 Cal.App.3d 168), the court in Heather Farms Homeowners Assn. v. Robinson, supra, 21 Cal.App.4th at page 1574 announced the following rule for section 1354 cases: "Winick [Corp. v. Safeco Insurance Co. (1986) 187 Cal.App.3d 1502], Donald [supra,218 Cal.App.3d 168], and Elster [v. Friedman (1989) 211 Cal.App.3d 1439] all share a common theme. In each case, the court declined to adopt a rigid interpretation of the term `prevailing party' and, instead, analyzed which party had prevailed on a practical level. Donald and Elster further clarify that the trial court must determine who is the prevailing party, and that the court's ruling should be affirmed on appeal absent an abuse of discretion. We conclude similar rules should apply when determining who the `prevailing party' is under section 1354." (Heather Farms Homeowners Assn. v. Robinson, supra, 21 Cal.App.4th at p. 1574.)

In short, the determination of the winner under section 1354 is left up to the discretion of the trial judge. (By the way, section 1032, subdivision (a)(4) prescribes the same rule for cases involving "other than monetary relief.") Thus it is possible, for example as indeed happened in Heather Farms, that a trial court can determine that there was no prevailing party, and that determination, if reasonable, will be upheld on appeal. (See Heather Farms, supra, 21 Cal.App.4th at p. 1572.)

Here, as in Heather Farms, the trial court's determination was certainly reasonable. The Association achieved its main litigation objective of obtaining an injunction against Colombo with specific deadlines, and with the ultimate ability to go onto his property to tear down half-completed structures.

To be sure, Colombo has obtained some additional delay in the process by his appeal (and our earlier stay), and the Association acknowledges that stalling itself may be a litigation objection, though not a legitimate one. (We agree; delay in litigation for its own sake is not legitimate. (See § 128.5.)) Yes, Colombo managed to eke out extra time by taking his appeal. Even so, injunction obtained by the Association was affirmed, and you don't have to obtain your "dream" litigation objective to be a prevailing party, as illustrated by Ritter & Ritter, Inc. v. Churchill Condominium Ass'n (2008) 166 Cal.App.4th 103 (Ritter & Ritter).

In Ritter, homeowners sued their association after it denied their request to repair certain "slab penetrations" — basically holes in concrete to allow for plumbing and piping. These holes were supposed to be fireproofed, as required at the time of original construction, but never were. Odors prompted an investigation; the homeowners' expert thought that the holes constituted a fire hazard and should be "filled or fire-stopped." (Ritter & Ritter, supra, 166 Cal.App.4th at p. 110.) The homeowners wanted the association to undertake the expensive repair work, the association denied their request. And, to add insult to injury, the association required the homeowners to spend their own money to fill holes adjacent to their own units and began assessing fines to make them do so. The homeowners sued, seeking to make the association fill all the slap holes in the building plus asked for damages based on the diminution of value to their units, the association counter-sued to require the homeowners to fill their own holes and for $77,000 in unpaid fines.

The result in Ritter & Ritter was a somewhat mixed bag. A jury returned a verdict to the effect that the homeowners won for their claim that the CC&Rs had been breached, that the association had breached its fiduciary duty to them, that the association had been negligent, and that the association should not prevail on its cross-complaint. But — the jury also found the homeowners partially negligent and awarded them the stingy sum of $4,620 as economic losses. Further, after a jnov motion, the trial court issued a judgment on the equitable claims. The judgment required a meeting, but more than that it ordered the association to fill up the holes adjacent to the homeowners' units at its expense. Most importantly, the homeowners didn't get their request for an injunction requiring the association to pay for filling in the holes in the entire building.

The homeowners in Ritter & Ritter thus didn't get everything they wanted. So what? The trial judge still ordered the association to pay the homeowners' attorney fees as the prevailing party, and that order was affirmed. As against the argument that the homeowners didn't get everything that they wanted (the filling of all the holes), the Ritter court held that they still "accomplished" their "main litigation objective. . . . While correction of the entire structure might have been a litigation `dream,' it cannot be considered the main litigation objective." (Ritter & Ritter, supra, 166 Cal.App.4th at p. 127.)

In the case before us, it was eminently reasonable for the trial court to conclude that the injunction we affirmed in Colombo I — requiring completion of the house within specific deadlines with the ability to enter the property and tear down structures if certain conditions were not met — embodied the Association's "main" litigation objective. Consider: The Association would no doubt prefer a beautiful, completed set of structures — particularly a house — on the property, since such structures would add the most to the surrounding ambiance and property values. The sanction of going in and tearing down half-completed structures is itself only a palliative measure, a kind of best of evils. But, after ten years and in the face of equity's well-known loathing against actual demolitions, the Association obtained a realistic objective, namely an injunction forcing Colombo to either complete his buildings, or to have the Association tear down what was already there.

2. Cost Apportion in

Colombo I

What about our cost disposition in the last appeal? We said that "in the interest of justice each side will bear its own costs on appeal." Did such a disposition by this court — within the exercise of our discretion — somehow limit the trial court's discretion to determine that the Association was the prevailing party?

No. Essentially the same thing happened in Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918. In Butler-Rupp, commercial tenants sued their landlords on tort and breach of contract claims. (Id. at p. 922.) The tenants won on both, but on the first appeal lost the tort award. Given the mixed result, the cost order was that each side was to bear its own costs on appeal. The trial court later ordered attorney fees to be awarded to the tenants and the landlords appealed, based on the split cost award. (Ibid.)

To no avail. The split cost award was merely "the typical and traditional means of awarding costs when the judgment is affirmed in part and reversed in part. It did not preclude the trial court from awarding respondents reasonable attorney fees incurred in successfully defending their judgment on the contract cause of action." (Butler-Rupp, supra, 166 Cal.App.4th at p. 927.)

To be sure, Butler-Rupp involved an award pursuant to contract, while here we have an award pursuant to a prevailing party statute, but the principle remains the same: The appellate court's discretion on cost awards (we have even sometimes awarded costs to the losing party on appeal where we thought the interests of justice required it!) does not bind the trial court's discretion on prevailing party determinations. We need only add that, if one studies Colombo I, structurally it is set up as a series of refutations of Colombo's challenges to the trial court's order, with our own modifications to the affirmed judgment added at the end, and then only to counterbalance any anomalies that occurred because of this court's own decision to stay the trial court's injunction during the pendency of the appeal. That is, if a part-reversal, part-affirmance did not restrict the trial court in Butler-Rupp, a fortiori an affirmance as modified should not restrict the trial court here.

B. 998 Offer Issue

Colombo's centerpiece argument is that the trial court abused its discretion because he was willing to give the Association most of what it ultimately got in a "998" offer. (That's debatable, but we need not get into the minutia of what was and what was not offered.) Even if Colombo did make an offer which gave the Association most of what it obtained, that fact hardly makes the judge's exercise of discretion as to who exactly had prevailed unreasonable. A section 998 offer requires 10 days' notice before trial. The letter to which Colombo refers, dated September 19, 2006, was sent no more than six days before the trial date of September 25, 2006.

More importantly, the Association clearly received a more favorable judgment at trial: one that contemplated demolition. Even after our tweaking, demolition remained a substantial possibility, perhaps even a probability.

IV.

DISPOSITION

The attorney fee orders are affirmed. In the interests of justice, the Association will recover its costs on appeal.

WE CONCUR:

RYLAARSDAM, J.

MOORE, J.

Footnotes

1. Colombo's wife Ida died in 2008. He is now the sole defendant in the case.

2. Civil Code section 1354, subdivisions (a), (b), and (c) state:

"(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."

Civil Code section 1351, subdivision (j) provides: "`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."

Further references to "section 1354" are to the Civil Code. References to "section 998," to "section 1032" or to "section 128.5" are to the Code of Civil Procedure.

3. Our modifications in full:

"(1) The Colombos will have 30 days from the date of the remittitur to submit plans for the construction of a single family house.

"(2) The architectural review committee will perform a good faith review of those plans. We will also add this: Since the injunction reviewed arises out of a failure to implement plans approved in 2001, the Colombos may simply re-submit the plans already approved in 2001 by the association. If they do, the association is estopped to not approve those already approved plans. If the Colombos submit new plans, those plans may not be disapproved on the basis of more stringent or costly architectural standards adopted after 2001.

"(3) The Colombos will have 120 days after approval by the architectural review committee to commence construction. This is the one flaw in the trial court's safety valve — requiring the Colombos to start construction 120 days after a date certain, but not giving the architectural committee a deadline by which to approve the plans. (As originally structured, the injunction permitted the architectural review committee to eat up the Colombos' allowed time.)

"(4) The construction must all be completed within this time frame: One year from the date of the remittitur plus the time from the date the Colombos submit plans to the date those plans are approved by the architectural committee and approved by the relevant municipal authorities. To use the taxi metaphor, the meter on the one year will not run during any period of plan approval over which the Colombos have no control.

"(5) If the construction is not completed within the time frame specified above, the February 2007 injunction will allow the Association to do what the injunction here otherwise allows it to do.

"However, we must add these elementary cautions. `Those who seek equity, must do equity and have "clean hands."' [Citation.] `Equitable estoppel also may be asserted when equitable relief is sought' [Citation.]

"It therefore follows that if the Colombos can show that the Association's failure to voluntarily subordinate its lis pendens is a substantial factor in the Colombos' failure to obtain reasonable financing for reasonably anticipated construction, that failure may be a yet future defense to the association's enforcement of the injunction.

"With those modifications, the judgment providing for the injunction is affirmed. In the interest of justice each side will bear its own costs on appeal."

4. This is an appeal from two attorney fee orders made in the wake of Colombo I. Hence, events concerning the subsequent progress by Colombo in proceeding with his house, or lack of it, since Colombo I are not before us, though both sides devote considerable space to those issues. We leave them for the trial court in further proceedings. However, we do note that the Association now complains that our "tweaking" of the trial court's injunction has allowed Colombo to avoid demolition "by never actively seeking approval from [the Association] and the City of his plans to construct a house." (Resp. br. at p. 6.) Obviously, our "tweaking" of the injunction was never intended to allow Colombo to circumvent any time limit he has control over.

5. Code of Civil Procedure section 998, subdivision (b), provides in relevant part: "Not less than 10 days prior to commencement of trial . . ., any party may serve an offer in writing upon any other party to the action to allow judgment to be taken . . . in accordance with the terms and conditions stated at that time."