Chula Vista HOA v. Irwin (CA2 7/27/18)

The question presented is whether a supersedeas bond should include the amount of a fee award. City Center (2015) settled that; this case follows it, adding a bit of additional discussion of exceptions that don’t apply here.

Plaintiffs sued their homeowners association. They won, receiving some declaratory relief, $5000 damages, costs, and $35,000 attorney’s fees on a contract claim. The HOA file a notice of appeal. It argued that the amount of its supersedeas bond should not include the fee award; the trial court ruled that it should. So the HOA filed this special action.

The Court of Appeals accepts review and grants relief. The part of Rule 7 at issue here bases the bond on the “total amount of damages.” It is hornbook law that attorney’s fees are not “damages.”

But there are exceptions. The trial court apparently followed Desert Mountain (2010): “when one party’s breach of contract places the other in a situation that ‘makes it necessary to incur expense to protect his interest, such costs and expenses, including attorneys’ fees, should be treated as the legal consequences of the original wrongful act and may be recovered as damages.'” But Desert Mountain was a claim against an insurer to recover amounts — including fees — paid by an insured for claims the insurer refused to cover. The holding was that in that context the fees fell under the policy language of things the insured was “legally obligated to pay as damages.” The fees in this case didn’t arise from litigation with a third party. (It might be worth noting, though the court does not utilize the distinction, that Desert Mountain also did not use the standard legal definition of “damages”; instead it used the “plain and ordinary meaning” standard applied to insurance policies.)

Some provisional remedies are also exceptions, so Plaintiffs argued that their slander-of-title claim was “akin” to a provisional remedy. The court points out that the claim is statutory and that the statute (33-420), although allowing fees, does not define them as part of the “damages.”

(Opinion: Chula Vista Homeowners v. Irwin)