(originally published in Winter 2002)

Moran v. Oso Valley Greenbelt Association (2004) 117 Cal.App.4th 1029.

The California Court of Appeal recently ruled on the issue of whether attorneys fees should be awarded where the prevailing homeowner did not incur any attorneys fees and where the homeowners association satisfied the claim before the lawsuit proceeded to trial. The court held that the award was appropriate under the facts of this case involving turnover of association minutes and records.

In Moran v. Oso Valley Greenbelt Association (2004) 117 Cal.App.4th 1029, the plaintiff, Ms. Moran, lived in the Oso Valley Greenbelt Association (“Association”). Moran sent a letter to the association’s management company requesting a convenient time to review the Board of Directors meeting minutes. Two months later, Moran had yet to review the minutes. The Association questioned Moran’s motives for requesting the minutes. Since she was a paralegal employed by the attorneys representing her, the Association suspected she was seeking the minutes on behalf of the law firm rather than in her interest as a homeowner. Moran similarly suspected the Association was stalling because it had not been keeping proper records or because it was attempting to conceal an impropriety.

Moran filed an application for an order compelling production of the minutes and payment of attorneys fees and costs. While the application was pending, the Association informed Moran it was prepared to turn over the minutes, but intended to charge her $200.00 for time spent by the management company to retrieve the documents. Moran responded that the Association did not have the right to charge for the management company’s time and suggested the question of the $200.00 charge be reserved for the court.

At the court proceeding, Moran retained an expert in the homeowner association industry, who testified that management companies keep minutes readily available in order to provide the prompt review required by the Civil Code and Corporations Code. Moran’s expert further testified that it would be improper to charge members for the costs of retrieving the minutes. The Association did not offer any contradictory testimony. After hearing oral argument, the court held the Association had to make its books and records available for inspection, and the association was not entitled to charge $200.00 for compiling the minutes. The court also denied attorneys fees for both sides. Moran appealed the order denying attorneys fees. The Court of Appeal reversed and remanded to the trial court for reconsideration. On remand, the trial court found that attorney fees were appropriate and awarded Moran over $58,000.00, in attorney’s fees. The Association appealed, raising only the issue of whether an attorneys fee award was proper.

On appeal, the Association offered several arguments in support of its contention that the attorneys fees award was inappropriate. Specifically, it argued that: (1) the lawsuit was filed solely for the purpose of obtaining attorneys fees, not to obtain the minutes; (2) Moran was not entitled to attorneys fees because she did not pay or incur them; (3) the Association never failed to comply with Moran’s request; (4) an award of attorneys fees was unreasonable in this case; and (5) fees were inappropriate under the standards suggested by the appellate court’s earlier ruling.

As part of its first argument, the Association claimed it had already promised to provide the minutes before any work had been done on Moran’s petition. The court rejected this argument, holding the Association’s promise of the minutes meant little by the time matters escalated to the extent that attorneys were involved on both sides, and that production of the minutes was what mattered, not promises that might or might not have been kept. Furthermore, the court determined that regardless of the association’s promises, the petition was necessary in light of the Association’s demand for $200.00 in management costs. The court also observed that the Association did not argue that no legal work had been done by the time the minutes were finally produced.

Regarding the Association’s second argument that Moran was not entitled to fees since she did not incur any, the court stated modern jurisprudence does not require a litigant seeking attorneys fees to have actually incurred the fees. Quoting Lolley v. Campbell (2002) 28 Cal.4th 367, 373, the court stated, “in cases involving a variety of statutory fee-shifting provisions, California courts have routinely awarded fees to compensate for legal work performed on behalf of a party pursuant to an attorney-client relationship, although the party did not have a personal obligation to pay for such services out of his or her own assets.”

The court refused to consider the Association’s third argument that attorneys fees were inappropriate because it did comply with Moran’s demand and that any delay was justifiable. The court stated the Association was effectively asking it to review the initial trial court’s decision that the minutes were “wrongfully” withheld form Moran, and indicated the Association should have cross-appealed from Moran’s first appeal if it wished to raise this issue.

In its fourth argument, the Association asserted an award of attorneys fees to Moran would be unreasonable because the Association ultimately provided the minutes on the day the lawsuit was filed. The court rejected this argument, reasoning as it did in relation to the Association’s first argument, that despite “promises” that the minutes were forthcoming, they were not actually delivered until after the lawsuit was filed. The court determined that the circumstances under which attorneys fees were incurred in this case did not make an award unreasonable.

The court also rejected the Association’s fifth argument that this case did meet the standards that the court set forth in its previous opinion. These standards include weighing the necessity for the lawsuit, the likelihood that the problem would have been solved by other means, and the likelihood of the recurrence of the unlawful act in the absence of the lawsuit. Given the history of the dispute before the lawsuit was filed, the court held that a reasonable trial court could have found that the lawsuit was necessary, the dispute was unlikely to be resolved by other means, and that the Association would continue to stonewall homeowners seeking records. The court ultimately affirmed the award of attorneys fees and granted Moran her costs on appeal as well.

The effects of the Moran case have broad implications for homeowners associations in California since requests to inspect records are a frequent occurrence within the homeowner association context. Such requests are frequently viewed with suspicion and, as in the Moran case, may lead to “stonewalling” when responding to a member’s request. Statutory law places safeguards on an association’s ability to ensure that such requests from homeowners are not being made for improper purposes. Statutory law also penalizes associations from improperly withholding and/or charging for access to the association’s records that a member has a right to inspect, as well as members who use such records for improper purposes.

In light of the Moran decision, associations should ensure that they comply with a member’s request in a timely manner. Such compliance is not automatic, however, in that associations may also ensure that the member’s request is reasonably related to purposes of that member’s membership within the association. If an association is not sure how to respond to a request for inspection of records, it should contact legal counsel as soon as the request is made.