Artus v. Gramercy Towers Condominium Assn. ( 2022 )

Filed 3/30/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
KAZUKO ARTUS,
Plaintiff and Appellant,
A161265
v.
GRAMERCY TOWERS (San Francisco County
CONDOMINIUM Super. Ct. No. CGC-17-
ASSOCIATION, 561765)
Defendant and Appellant.
A condominium owner sued her homeowners’ association alleging five
causes of action, seeking injunctive and declaratory relief as to election and
voting rules and sale and leasing guidelines. One cause of action fell to a
demurrer, another to an anti-SLAPP motion to strike, and the parties
stipulated that the last three were mooted when the association amended its
rules and guidelines. Both sides moved for attorney fees as the prevailing
party under the Davis-Sterling Act (Civ. Code, § 4000 et seq.); the homeowner
also sought fees as the successful party under Code of Civil Procedure section
1021.5. Following lengthy hearings, the trial court denied attorney fees to
both sides, in a comprehensive and thoughtful order. Both sides appeal. We
affirm.
1
BACKGROUND
The General Setting
Gramercy Towers is a residential condominium development in San
Francisco. It is managed by Gramercy Towers Condominium Association
(GTCA or the Association), a non-profit mutual benefit corporation founded
under the Davis-Sterling Common Interest Development Act (Davis-Sterling
Act), at Civil Code section 4000 et seq. Management of GTCA is centralized
in a seven-member board of directors, which retains or employs non-board
and non-member agents and employees, including a general manager.
The governing documents of the GTCA consist of: (a) First Restated
Articles of Incorporation filed March 20, 2008, as amended in 2010; (b) First
Restated Bylaws executed March 11, 2008, and various Amendments; and
(c) Declaration of Covenants, Conditions and Restrictions executed
February 29, 2008. GTCA also has operating rules and guidelines adopted by
the board of directors.
Kazuko K. Artus, Ph.D., J.D., (Dr. Artus), owned three units at
Gramercy Towers, and as such is a member of the GTCA. Over the years Dr.
Artus has had various disputes with GTCA, which generated three prior
lawsuits by her, one of which led to a published opinion by Division One of
this court affirming a ruling by the San Francisco Superior Court that denied
Dr. Artus injunctive and declaratory relief and her claim to attorney fees:
Artus v. Gramercy Towers Condominium Association (2018) 19 Cal.App.5th
923 (Artus I).
The Lawsuit Here
On October 10, 2017, Dr. Artus filed a complaint against GTCA,
followed soon thereafter by the operative first amended complaint. It alleged
five causes of action, styled as follows: “(1) Injunctive Relief and
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Appointment of Monitor; (2) Injunctive Relief Against Enforcement of the
‘Restated Election and Voting Rules’; (3) Injunctive Relief Against
Enforcement of the ‘Sale and Leasing Guidelines’; (4) Declaratory Relief
Against Enforcement of the ‘Restated Election and Voting Rules’ Adopted
November 22, 2016; and (5) Breach of Contract and Covenant of Good Faith
and Fair Dealing.”
In late December, Dr. Artus sought a preliminary injunction.
Following numerous pleadings, on January 23, 2018, the Honorable Harold
Kahn granted it, preliminarily enjoining GTCA from enforcing the
alternative election rules during the pendency of the lawsuit. As will be seen,
it was Judge Kahn, a most experienced Superior Court judge, who presided
over the case through its conclusion—a vigorously contested case, it must be
noted, that generated a 32-page register of actions.
In response to the complaint, GTCA had filed a demurrer and a special
motion to strike (anti-SLAPP). Dr. Artus filed oppositions, GTCA replies and
the matters came on for hearing on March 15. On March 27, Judge Kahn
entered his order, sustaining the demurrer without leave to amend as to the
first cause of action; granting the anti-SLAPP motion as to the fifth cause of
action; and overruling the demurrer as to the second, third, and fourth causes
of action. With only the three causes of action remaining, the case was
limited to the election rules and the rules for listing condominium units for
sale, narrowing significantly the focus of the litigation. As Dr. Artus would
later acknowledge, “My counsel and I chose not to appeal the March 27 and
28 orders [demurrer and anti-SLAPP ruling], and thereby to narrow the
scope of the instant litigation.”
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GTCA Amends the Rules and Moves for Summary Judgment
In 2018, the GTCA revoked the 2016 Alternative Election Rules, and in
their place adopted Restated and Amended Election Rules (2018 Election
Rules). At the same time the board rescinded the Sale and Leasing
Guidelines that had been in place (usually referred to as the Alotte
Guidelines) and adopted a new set of “Sale and Leasing Guidelines.”
GTCA brought a motion for summary judgment/adjudication on
grounds that, the earlier election rules and guidelines having been rescinded,
there was no longer a controversy upon which effective relief could be granted
to Dr. Artus, that the case was moot. And on August 6, 2019, Dr. Artus and
GTCA stipulated that the remaining causes of action were moot.
The Motions for Attorney Fees
Civil Code section 5975, subdivision (c), part of the Davis-Sterling Act,
provides as follows: “In an action to enforce governing documents, the
prevailing party shall be awarded reasonable attorney’s fees and costs.” And
the Declaration to the Act provides as follows: “12.12 COSTS AND
ATTORNEY’S FEES. The party who prevails in an arbitration, civil action,
or other proceeding to enforce or interpret the Governing Documents shall be
entitled to recover all costs and expenses, including reasonable attorney’s
fees, but the arbitrator, judge or other decision maker shall have final
discretion to allocate such costs and expenses between the parties in a
manner that will accomplish substantial justice.”
In September 2019, both sides filed motions for attorney fees based on
Civil Code section 5975, arguing that it was the prevailing party. Dr. Artus
also sought attorney fees based on Civil Code section 5145, subdivision (b)
and Code of Civil Procedure section 1021.5 (section 1021.5), the private
attorney general doctrine.
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Both sides sought over $300,000 in attorney fees, in pleadings and
documents that can only be described as voluminous: from September 2
through October 18, the motions, memoranda, declarations, and exhibits in
support of and opposition to the motions totaled 1867 pages!
The motions first came on for hearing on October 8, 2019, prior to
which Judge Kahn had issued a tentative ruling denying attorney fees to
both sides. Both sides contested, and a lengthy hearing ensued, in the course
of which it was determined that the parties would prepare charts setting
forth their respective positions, with the motions to be set for further hearing.
Both sides filed their charts and their further positions based on those
charts, adding an additional 217 pages of material filed between May 19 and
June 5, 2020. So, over 2000 pages of material had been presented to Judge
Kahn when the motions came on for hearing on June 5, a lengthy hearing
that generated a reporter’s transcript of 58 pages. And one reading that
transcript—with Judge Kahn’s questions, his comments, and his colloquy
with counsel—cannot but be impressed by the depth and breadth of Judge
Kahn’s understanding of the litigation.
On September 2, Judge Kahn issued a 20-page order denying fees to
both sides, with an analysis that will be discussed in more detail below in
connection with the particular issue to which it pertains. Suffice to say here
that Judge Kahn concluded that Dr. Artus had four main litigation objectives
and that she “achieved only one of her four main litigation objectives,” limited
to a procedural victory under the second objective when GTCA “changed its
ways of providing notice of proposed rules changes” in amending its election
rules. And even as to this, he added that Dr. Artus did not obtain any
substantive victory on this second objective, and it was “the least
consequential for her since, while it requires GTCA to provide better
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paperwork when it proposes changes to its rules, Dr. Artus’[s] success on her
second main litigation objective does not significantly constrain GTCA’s
ability to change its rules or what it includes in its rules.”
Judge Kahn also denied Dr. Artus’s request for fees under section
1021.5, concluding that she did not meet the “successful party” standard
under that section. He further found that Dr. Artus failed to show that her
lawsuit resulted in “significant benefit” to the “general public or large classes
of persons.”
As to GTCA’s claim for fees, Judge Kahn “reject[ed] GTCA’s argument
that it prevailed in this lawsuit because it remained free of court restrictions
to change its rules.” As he saw it, GTCA’s main litigation objective “was to
reduce, and hopefully end, the wasteful use of its resources in fighting Dr.
Artus, particularly litigation expenses and the time of its volunteers and
employees.” Given the possibility of another lawsuit over the rules amended
by GTCA and “over the vehement and repeated objections of Dr. Artus
[GTCA has not] reduced, much less eliminated, the governance disputes
between GTCA and Dr. Artus and their attendant costs and staff and
volunteer time.” Finally, Judge Kahn added, “it would be strange indeed for
a defendant, as a result of his own unilateral conduct taken without a court
order or other indicia of court approval, to be considered a litigation winner.
If this were the case, surely defendants would frequently take such unilateral
actions, declare victory, and ask for fees.”
On October 22, Dr. Artus filed her appeal, and on October 30, GTCA its
cross-appeal.
DISCUSSION: Dr. Artus’s Appeal
Dr. Artus asserts two fundamental arguments on appeal, that:
(1) Judge Kahn erred in finding she was not a prevailing party, and (2) she
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was entitled to attorney fees under Code of Civil Procedure section 1021.5.1
Both arguments are based on a claimed standard of review that is wrong, and
we thus begin with the standard of review.
The Standard of Review
Dr. Artus asserts that the standard of review is de novo, on the claimed
basis that “entitlement to attorney fees under [Civil Code section] 1354,
subdivision (f) is a question of law.”2 The two cases she cites—Walker v.
Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158 and Salawy v.
Ocean Towers Housing Corp. (2004) 121 Cal.App.4th 664—are not relevant.
The relevant cases hold that the standard of review is abuse of
discretion. Rancho Santa Fe Assn. v. Dolan-King (2004) 115 Cal.App.4th 28(Rancho Santa Fe) is illustrative, a case involving the predecessor to the very
statute involved here: “Ordinarily, an award of attorney fees under a
statutory provision, such as [Civil Code] section 1354, subdivision (f), is
reviewed for abuse of discretion.” (Rancho Santa Fe, at p. 46.) As an earlier
case put it, a court’s ruling on who is the prevailing party “should be affirmed
on appeal absent an abuse of discretion.” (Heather Farms Homeowners
Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1574 (Heather Farms).) As we
ourselves have put it, “the trial ‘ “ ‘court is given wide discretion in
determining which party has prevailed . . . .’ ” [Citation.]’ ” (Sears v.
Baccaglio (1998) 60 Cal.App.4th 1136, 1158.)
1 As briefly noted below, Dr. Artus also makes two other arguments,
one of which has no support, the other of which requires little discussion.
2 We note that Dr. Artus mentions only Civil Code 1354, subdivision (f)
in her argument for a de novo standard of review and fails to mention any
other statute under which she sought fees. We also find quizzical her
reference to “section 1354,” as effective January 1, 2014, as part of the
renumbering and reorganization of the Davis-Sterling Act, Civil Code section
1354 was renumbered as 5975.
7
The same standard of review applies to Civil Code section 5145.
(Rancho Mirage Country Club Homeowners Association v. Hazelbaker (2016)
2 Cal.App.5th 252, 260 [suggesting that the prevailing party inquiry is the
same for all Davis-Sterling Act fee provisions]; see generally Artus I, supra,
19 Cal.App.5th at p. 944.) And also for fee orders in section 1021.5 cases.
(Karuk Tribe of Northern California v. California Regional Water Quality
Control Bd., North Coast Region (2010) 183 Cal.App.4th 330, 363 (Karuk)
[“ ‘ “normal standard of review is abuse of discretion” ’ ”].)
Not only do the cases demonstrate the discretionary nature of the trial
court’s analysis, but other principles also come into play in a court’s
discretion, two of which were in fact quoted by Judge Kahn in his order here:
(1) “ ‘The analysis of who is a prevailing party under the fee-shifting
provisions of the [Davis-Sterling] Act focuses on who prevailed “on a practical
level” by achieving its main litigation objectives.’ (Rancho Mirage Country
Club Homeowners Association v. Hazelbaker, supra, 2 Cal.App.5th at p. 260
quoting Heather Farms, supra, 21 Cal.App.4th 1568)”; and
(2) “ ‘[T]he test for prevailing party is a pragmatic one, namely whether
a party prevailed on a practical level by achieving its main litigation
objectives.’ (Almanor Lakeside Villas Owners Association v. Carson (2016)
246 Cal.App.4th 761, 773.)”
And on top of all that is the observation by our Supreme Court, that “in
determining litigation success, courts should respect substance rather than
form, and to this extent should be guided by ‘equitable considerations.’ ”
(Hsu v. Abbara (1995) 9 Cal.4th 863, 877.) In short, abuse of discretion it is—
along with practicality and equity.
Dr. Artus has not shown any impracticality in Judge Kahn’s ruling.
Nor any inequity. And most fundamentally, she has shown no abuse of
8
discretion. As to what such showing requires, it has been described in terms
of a decision that “exceeds the bounds of reason” (People v. Beames (2007)
40 Cal.4th 907, 920), or one that is arbitrary, capricious, patently absurd, or
even whimsical. (See, e.g., People v. Bryant, Smith and Wheeler (2014)
60 Cal.4th 335, 390 [“ ‘ “arbitrary, capricious, or patently absurd” ’ ”];
People v. Benavides (2005) 35 Cal.4th 69, 88 [ruling “ ‘ “falls ‘outside the
bounds of reason’ ” ’ ”]; People v. Linkenauger (1995) 32 Cal.App.4th 1603,
1614 [“arbitrary, whimsical, or capricious”].) In its most recent observation
on the subject, our Supreme Court said that “A ruling that constitutes an
abuse of discretion has been described as one that is ‘so irrational or
arbitrary that no reasonable person could agree with it.’ ” (Sargon
Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747,
773 (Sargon).) Those adjectives hardly describe Judge Kahn’s ruling here.
Dr. Artus Has Not Demonstrated an Abuse of Discretion
Dr. Artus’s first argument, that Judge Kahn erred in not finding her a
prevailing party, asserts she “prevailed” in three particulars: (a) “on her
election-rule challenge to force the Association to adhere to Civil Code
[section] 4360’s rule-making procedure”; (b) “on causing major substantive
revisions to the election rules”; and (c) “on her challenge to the sales and
leasing guidelines by forcing the Association to adhere to proper rule making
procedures.” She also argues that, even if she did not achieve all her
objectives, a victory as to election rules requires attorney fees award under
the Davis-Sterling Act.
Passing over the fact that Dr. Artus’s brief misrepresents the record in
many respects, her arguments fall way short, as they do little, if anything,
more than regurgitate and reassert the same arguments thoroughly
analyzed—and rejected—by Judge Kahn in his analysis.
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As indicated above, Judge Kahn determined that Dr. Artus had four
main objectives in her lawsuit, which he described as follows, giving
appropriate record references:
“(1) To obtain redress for ‘both current substantive and historical
violations’ of the [Davis-Sterling Act] by GTCA and its ‘systematic and
habitual mismanagement’ by the appointment of a ‘monitor’ to ensure that
GTCA is in full compliance with its obligations under the [Davis-Sterling Act]
and its governing documents. (Dr. Artus’[s] memorandum in opposition to
GTCA’s anti-SLAPP motion filed February 15, 2018 pp. 9−10 (referring to
this objective as the ‘gravamen’ of the complaint); see also the first cause of
action in Dr. Artus’[s] first amended complaint and Dr. Artus’[s] application
for approval of complex designation filed October 10, 2017 pp. 2−3 (explaining
that this objective makes this case suitable for complex treatment)).
“(2) To enjoin the enforcement of the 2016 election rules. (Dr. Artus’[s]
application and supporting papers for an order to show cause for why the
court should not issue a preliminary injunction to enjoin enforcement of the
‘restated election and voting rules’ filed December 26, 2017; see also the
second and fourth causes of action in Dr. Artus’[s] first amended complaint).
“(3) For a determination that GTCA is required to use the 2007 election
rules as amended in 2014 unless Dr. Artus consents and the court permits
because those rules were enshrined in the 2013 settlement agreement and
the 2014 stipulated order. (Deposition of Dr. Artus taken on August 22, 2018
pp. 63 and 65; Dr. Artus’[s] August 2, 2018 email to Ms. Bires section (2);
Dr. Artus’[s] September 4, 2018 email to Ms. Bires pp 5−7; Dr. Artus’[s] first
amended complaint pars. 48 and 56−57).
“(4) For a determination that GTCA may not impose any restrictions on
members and their real estate agents that Dr. Artus believes ‘unreasonably
10
interfere [with] alienation rights, including but not limited to limitations on
advertising, limitations on the use of the “Gramercy Towers” name and
address on listing and photos of the building for marketing purposes.’ (Dr.
Artus’[s] August 2, 2018 email to Ms. Bires section (7); see also the third
cause of action in Dr. Artus’[s] first amended complaint and Dr. Artus’[s]
September 4, 2018 email to Ms. Bires pp. 7−11 (‘I can see no reason why
GTCA can be allowed to seek information regarding real estate agents its
members retain’)).”
Having defined the four main litigation objectives, Judge Kahn then
went on to analyze them, one-by-one, to conclude that Dr. Artus had
prevailed in only one, holding as follows:
“Dr. Artus achieved only one of her four main litigation objectives. If
on a practical level that one objective was equal to or greater than the other
three, [Davis-Sterling Act] fees case law might support an award of fees to
Dr. Artus. In my estimation, however, Dr. Artus’[s] procedural win on her
second main litigation objective is nowhere close in value to the wins she
failed to achieve on her first, third and fourth main litigation objectives.
Indeed, of her four main litigation objectives, the second one is the least
consequential for her since, while it requires GTCA to provide better
paperwork when it proposes to change its rules, Dr. Artus’[s] success on her
second main litigation objective does not significantly constrain GTCA’s
ability to change its rules or what it includes in its rules. Accordingly, per
the above pragmatic analysis of Dr. Artus’[s] main litigation objectives, I find
that Dr. Artus is not entitled to an award of fees per either [Civil Code
section] 5145[, subdivision] (b) or [Civil Code section] 5975[, subdivision] (c)
because she only achieved a very modest portion of her main litigation
objectives. (Accord Declaration of Plaintiff Kazuko K. Artus, Ph.D., J.D., in
11
Support of Plaintiff’s Motion for Attorney’s Fees filed September 12, 2019,
par. 54 (Dr. Artus acknowledged that she has ‘yet to accomplish my objective
of having [Gramercy] comply with rules regulating it’)).”
Dr. Artus’s arguments, however lengthy they be, demonstrate nothing
to the contrary. Dr. Artus’s opening brief is 44 pages long, with the
arguments quoted above, arguments that fundamentally make three points:
(1) she achieved her primary litigation objective when GTCA amended its
election rules and guidelines effectively revoking the prior versions; (2) GTCA
mooted the case once she achieved her objectives; and (3) the preliminary
injunction order supports her position that she prevailed. None of these
arguments is persuasive—not to mention all were rejected by Judge Kahn.
Contrary to her argument that she obtained her primary litigation
objective when GTCA properly adopted new election rules by informing the
“purpose and effect” of those rules, the record shows that her primary
objective was to compel GTCA to use only the election procedures. Dr. Artus
alleged that she sought to require “GTCA to follow the Election Procedures”
and to conduct elections and all other related activities under the Election
Procedures; her testimony was similar: that GTCA should be only using the
election procedures and “no other election rules.”
As to Dr. Artus’s claim of mootness, that she “had no choice but to
agree with GTCA’s position” on mootness, Judge Kahn concluded otherwise:
“Dr. Artus could have stood her ground and continued to litigate. The 2018
rules and guidelines included several provisions from the prior rules and
guidelines that Dr. Artus contended were invalid in the first amended
complaint. As but two examples, the 2018 election rules did not place any
limits on inspector compensation and the 2018 sales and leasing guidelines
contained significant restrictions on advertising members’ units. Dr.
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Artus’[s] claims regarding those provisions did not become moot merely
because those provisions were now included in new sets of rules and
guidelines. Nor, as discussed previously, did her claim—one of her main
litigation objectives—that GTCA lacked authority to adopt any election rules
other than the 2007/2014 rules without her consent and permission of the
court become moot merely because GTCA adopted yet another set of election
rules at variance from the 2007/2014 rules she contended that ‘GTCA cannot
touch.’ (Dr. Artus’[s] May 21, 2018 email to John Zappettini.”
And Dr. Artus’s reliance on the preliminary injunction is not only
unavailing, it is premised on a gross overstatement of the record. That is, Dr.
Artus’s brief asserts that the preliminary injunction enjoined “GTCA from
using the alternative election rules during the pendency of this lawsuit.” In
fact, Judge Kahn’s preliminary injunction was limited to the one election, in
early 2018, and four procedural requirements on that election under the
Election Procedures: (1) the appointment of three inspectors; (2) those
inspectors would appoint and oversee ballot counters; (3) abide by the
communications provision of the Election Procedures; (4) and abide by the
ballot retention procedures of the Election Procedures.
Dr. Artus’s attempted recharacterization of the preliminary injunction
order was in fact contradicted by Judge Kahn’s order which stated: “Yet it
must be kept in mind that the preliminary injunction order was a
preliminary, not a final, order and only applied to a single election. As Dr.
Artus knows from the 2014 lawsuit she filed against GTCA, a later trial can
eviscerate an earlier preliminary injunction victory and deprive her of the
ability to receive fees.”
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Dr. Artus Has Not Demonstrated the Right to Attorney Fees
under Code of Civil Procedure section 1021.5
As noted, Dr. Artus also sought attorney fees based on section 1021.5.
Judge Kahn rejected it, concluding that Dr. Artus was not a “successful
party” under that section, and for the “further reason [that she] failed to
show, as required for a [section] 1021.5 fees award, that this lawsuit resulted
in a ‘significant benefit’ to the ‘general public or a large class of persons.’ ” As
he went on to explain, “Her one real win—which requires GTCA to incur
greater effort in preparing its notice materials for proposed rules changes—is
of questionable significance to the vast majority of GTCA members and will
likely result in higher assessments to GTCA members to pay for the
increased costs to ‘dot every i and cross every t’ in the notice materials to
avoid disputes from Dr. Artus. Indeed, crediting the declarations of GTCA’s
staff and volunteers it appears that few of the governance disputes raised by
Dr. Artus are of concern to other GTCA members. Dr. Artus has made no
contrary showing.”
Dr. Artus’s argument that she is “entitled” to attorney fees under
section 1021.5, has six subparts: (1) she “obtained some benefit on a
significant issue in the litigation”; (2) “interim and partial success is
sufficient under [section] 1021.5”; (3) Judge Kahn “did not apply the correct
test”; (4) the ruling “that the action did not confer a significant benefit on the
general public, or a large class of persons was incorrect as a matter of law”;
(5) “necessity and financial burden of private enforcement make [an] award
appropriate”; and (6) “there was no monetary recovery.” The argument is not
persuasive.
Section 1021.5 provides in pertinent part: “Upon motion, a court may
award attorneys’ fees to a successful party against one or more opposing
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parties in any action which has resulted in the enforcement of an important
right affecting the public interest if: (a) a significant benefit, whether
pecuniary or nonpecuniary, has been conferred on the general public or a
large class of persons, (b) the necessity and financial burden of private
enforcement or enforcement by one public entity against another public
entity, are such as to make the award appropriate, and (c) such fees should
not in the interest of justice be paid out of the recovery, if any. . . .”
In Karuk, supra, 183 Cal.App.4th 330, we discussed at length
section 1021.5 and its operation, included within which was this explanation
how an award made pursuant to this statute is reviewed:
“ ‘ “The Legislature adopted section 1021.5 as a codification of the
private attorney general doctrine of attorney fees developed in prior judicial
decisions. . . . [T]he private attorney general doctrine ‘rests upon the
recognition that privately initiated lawsuits are often essential to the
effectuation of the fundamental public policies embodied in constitutional or
statutory provisions, and that, without some mechanism authorizing the
award of attorney fees, private actions to enforce such important public
policies will as a practical matter frequently be infeasible.’ Thus, the
fundamental objective of the doctrine is to encourage suits enforcing
important public policies by providing substantial attorney fees to successful
litigants in such cases.” [Citation.]’ ” (Karuk, supra, 183 Cal.App.4th at
p. 362.)
“Put another way, courts check to see whether the lawsuit initiated by
the plaintiff was ‘demonstrably influential’ in overturning, remedying, or
prompting a change in the state of affairs challenged by the lawsuit.
(E.g., Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668,
687; RiverWatch v. County of San Diego Dept. of Environmental Health (2009)
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175 Cal.App.4th 768, 783; Lyons v. Chinese Hospital Assn. (2006)
136 Cal.App.4th 1331, 1346, fn. 9.) ‘ “Entitlement to fees under [section]
1021.5 is based on the impact of the case as a whole.” ’ (Punsly v. Ho (2003)
105 Cal.App.4th 102, 114, quoting what is now Pearl, Cal. Attorney Fee
Awards (Cont.Ed.Bar 2d ed. 2008) § 4.11, p. 100.) As for what constitutes a
‘significant benefit,’ it ‘may be conceptual or doctrinal, and need not be actual
and concrete, so long as the public is primarily benefited.’ (Planned
Parenthood v. Aakhus (1993) 14 Cal.App.4th 162, 171.)
“Thus, a trial court which grants an application for attorney fees
under section 1021.5 has made a practical and realistic assessment of the
litigation and determined that (1) the applicant was a successful party, (2) in
an action that resulted in (a) enforcement of an important right affecting the
public interest and (b) a significant benefit to the general public or a large
class of persons, and (3) the necessity and financial burden of private
enforcement of the important right make an award of fees appropriate.
“ ‘ “On review of an award of attorney fees . . . the normal standard of
review is abuse of discretion. However, de novo review of such a trial court
order is warranted where the determination of whether the criteria for an
award of attorney fees . . . have been satisfied amounts to statutory
construction and a question of law.” ’ (Connerly v. State Personnel Bd. (2006)
37 Cal.4th 1169, 1175, quoting Carver v. Chevron U.S.A., Inc. (2002)
97 Cal.App.4th 132, 142.)” (Karuk, supra, 183 Cal.App.4th at p. 363.)
Applying those rules, we went on in Karuk to reverse an award of
$138,000 in attorney fees, concluding that three of the statutory requisites to
an award under section 1021.5 were absent. (Karuk, at p. 364.) Likewise
here.
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It is perhaps enough to note that Dr. Artus does not specifically address
the threshold requisite of demonstrating she was a “successful party.” Nor
does she demonstrate any significant benefit to the general public or a large
class of persons.
Bowman v. City of Berkeley (2005) 131 Cal.App.4th 173, 175−176
(Bowman), cited by Dr. Artus in claimed support of her argument she
achieved a significant benefit, is not to the contrary. The facts there included
a petition by a group of owners to overturn the city’s approval of a housing
project for seniors, which succeeded in overturning the initial approval. The
project was ultimately re-approved and the trial court denied the remainder
of the groups’ claims. (Id. at p. 177.) The trial court thereafter granted
attorney’s fees in connection with the due process achievement. Division
Four of this court affirmed. Doing so, the court noted the redo of the approval
by the city, in light of plaintiffs’ petition, “resulted in a great deal of
additional public input on the project, including substantial new written
submissions, and oral statements to the city council, from city staff as well as
proponents and opponents of the project”; and the trial court determined “
‘both parties used the opportunity to supplement the administrative record to
provide additional evidence intended to sway findings made by the council
members.’ ” (Id. at p. 180.) The setting here is a far cry.
Here, only Dr. Artus filed suit to challenge GTCA’s governance. She
did not show that other members objected to GTCA’s ways or its rules. And
she did not achieve any significant benefit to other members when GTCA
undertook to amend its election rules and sales guidelines, let alone benefit to
the public.
Likewise unavailing is La Mirada Avenue Neighborhood Assn. of
Hollywood v. City of Los Angeles (2018) 22 Cal.App.5th 1149 (La Mirada),
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where plaintiffs filed writ petitions to invalidate variances granted by the city
in approving a Target retail store and obtained a judgment “invalidating six
of the eight municipal code variances, enjoining any actions ‘in furtherance of’
those variances, and ‘immediately . . . restrain[ing] . . . all construction
activities’ [and] also authorized plaintiffs to seek attorney’s fees.” Both
parties appealed, and during the appeal, per Target’s urging, the city
amended its zoning which mooted the appeal. (Id. at p. 1154.) The court
dismissed the appeals as moot but left the judgment intact and ultimately
awarded plaintiff attorneys fees. (Id. at p. 1155.) The significant benefit was
an order requiring the city to comply with the legal requirements to grant the
variance. (Id. at pp. 1158−1159.)
Unlike in La Mirada, Dr. Artus did not obtain a judgment invalidating
any of GTCA’s governance that she challenged; the mootness of this action
was not found by Judge Kahn but by Dr. Artus’s stipulation; and GTCA did
not take any action to change its rules because of Dr. Artus’s urgings.
Dr. Artus argues that partial or interim success is enough for an award
of attorneys’ fees under section 1021.5, citing to Bowman, supra,
131 Cal.App.4th at p. 178 and La Mirada, supra, 22 Cal.App.5th at p. 1160.
To the contrary, as Dr. Artus herself knows, she has already failed on a
similar argument in Artus I, supra, 19 Cal.App.5th at p. 927, where Division
One noted the “well-established principles that fees and costs are ordinarily
not granted for interim success, and that the prevailing party is determined,
and fees and costs awarded, at the conclusion of the litigation.”
As indicated, Dr. Artus makes two other arguments, numbered six and
seven: (6) “Trial court abused its discretion in denying fees to [Dr. Artus]
because she stopped litigating after the controversy was mooted by GTCA,”
and (7) “The Court of Appeal should reconsider or reformulate the interim
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attorney’s fees rules as it applies to associations that moot controversies.”
Neither argument merits discussion. The third argument, all of five lines,
has no support. And the fourth argument essentially asks us to change some
language in the earlier opinion by our colleagues in Division One. It is most
inappropriate.
DISCUSSION: GTCA’s Appeal
GTCA Has Not Shown an Abuse of Discretion
Cross-appealing Judge Kahn’s denial of attorney fees to it, GTCA has
filed a 22-page opening brief that has an introduction, a statement of facts
and procedural history, and fewer than 12 pages described as “discussion,”
fewer than two pages of which could even be considered argument.
The discussion begins with this assertion: “GTCA’s issue on appeal is
the trial court erred in ruling that its litigation objective was to reduce its
resources and end the fighting with Dr. Artus; rather, GTCA’s litigation
objective was to prevent Dr. Artus from dictating how GTCA should operate
and what rules it should adopt. To that end, it prevailed and should be
awarded attorneys’ fees per Civil Code section 5975, subdivision (c) and its
Declaration.”
And what might be called the argument that follows consists of these
three brief paragraphs:
“The trial court’s basis for determining GTCA’s litigation objective drew
from ‘GTCA’s memorandum in support of its anti-SLAPP motion to strike
filed January 16, 2018’ and declarations in support. The trial court found
these declarations ‘replete with extremely high costs that GTCA has incurred
in both its in-court and out-of-court disputes with Dr. Artus.’ The arguments
and declarations from the anti-SLAPP motion on the use of GTCA’s resources
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and costs fighting Dr. Artus’[s] continuing disputes with the board were made
in the context of the Association’s argument that the matter was of public
interest to the community to warrant protection of the anti-SLAPP statute.
See Civ[il] Code [section] 425.16. Anti-SLAPP public interest arguments do
not equate to GTCA’s primary goal in this litigation was merely to reduce the
use of the community’s resources to fight Dr. Artus. If that was the goal,
GTCA would have capitulated early in the litigation without any strategic
motion practice on a demurrer, anti-SLAPP motion, discovery, or summary
judgment motion; or GTCA would have sought early settlement.
“Instead, GTCA’s stance and objective throughout the litigation was to
not give into Dr. Artus’[s] demands or desires for GTCA to be governed by her
terms and her rules, and for Dr. Artus to not obtain any relief on her claims
that GTCA was operating improperly. As stated by GTCA’s president: ‘It
has been the Board’s objective in this litigation to not allow a single owner to
dictate how the Board should function or bully its decision-making.’
“Thus, even under an abuse of discretion standard, the trial court’s
determination of GTCA’s litigation objective and that it did not prevail on
that objective cannot stand.”
That is essentially it. It is unpersuasive, as it utterly fails to come to
grips with Judge Kahn’s detailed analysis, which includes the following:
“Because this lawsuit ended as a result of GTCA’s unilateral decision to adopt
revised election rules and sales and leasing guidelines, which GTCA could
have done at any point in the lawsuit and for which it needed no order or
approval from the court, on a pragmatic and practical level GTCA did not
achieve its litigation objectives. It would be strange indeed for a defendant,
as a result of its own unilateral conduct taken without a court order or other
indicia of court approval, to be considered a litigation winner. If this were
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the case, surely defendants would frequently take such unilateral actions,
declare victory, and ask for fees. In my almost 40 years as a civil litigator
and a judge handling civil cases, I have never seen anyone do this before.
And, despite my extensive efforts to find such a case, I could not locate any
published California decision which holds or suggests that a defendant can be
a prevailing party for purposes of a fees award as a result of its own
unilateral actions that moot the plaintiff’s claims. I therefore reject GTCA’s
argument that it prevailed in this lawsuit because it remained free of court
restrictions to change its rules. Cutting to the chase, the fatal defect in
GTCA’s argument is that it remains free of court restrictions because it took
unilateral action to avoid rulings on court restrictions and, in doing so,
simply ‘kicked the can down the road’ as to whether a court would place
restrictions on its rule changes.
“The three cases cited by GTCA to support its position that it prevailed
in this lawsuit are readily distinguishable. In Almanor [Lakeside Villas
Owners Assn. v. Carson (2016) 246 Cal.App.4th 761] the determination that a
homeowners’ association was the prevailing party came after a trial where
the parties fully litigated the claims and cross-claims of both parties.
In Salehi v. Surfside III Condominium Owners’ Association (2011)
200 Cal.App.4th 1146 the court held that the defendant homeowners’
association was a prevailing party because the plaintiff dismissed his claims
on the eve of trial due to the unavailability of a witness without seeking a
continuance. In Villa De La Palmas Homeowners Association [v. Terifaj]
(2004) 33 Cal.4th 73 a plaintiff homeowners’ association was the prevailing
party because it obtained an injunction which achieved its main litigation
objective. Unlike this lawsuit, in none of the cases relied on by GTCA did the
prevailing party association take any action outside the lawsuit, unilateral or
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otherwise, that precipitated dismissal of its member’s claims based on
mootness or any similar ground.[3]
“In all events, viewed on a pragmatic and practical level GTCA’s main
litigation objective in this lawsuit, as it appears to have been in most or all of
its dealings with Dr. Artus on governance issues, was to reduce, and
hopefully end, the wasteful use of its resources in fighting Dr. Artus,
particularly litigation expenses and the time of its volunteers and employees.
(See GTCA’s memorandum in support of its anti-SLAPP motion to strike filed
January 16, 2018 p. 4 (in two years GTCA received over 400 emails from Dr.
Artus with complaints about GTCA’s governance. ‘Nine out of ten complaints
the Association [GTCA] receives from its members are from [Dr. Artus]. . . .
Considerable time and community resources are expended to ensure each of
[Dr. Atrus’s] requests are addressed out of fear that any issue, no matter how
trivial, may result in litigation.’)) The declarations of GTCA’s representatives
are replete with the extremely high costs that GTCA has incurred in both its
in-court and out-of-court disputes with Dr. Artus. As the August and
September 2018 emails by Dr. Artus to Ms. Bires and the many declarations
of Dr. Artus filed in this lawsuit reveal, neither this lawsuit nor GTCA’s
unilateral adoption of revised election rules and sales and leasing guidelines
in 2018 over the vehement and repeated objections of Dr. Artus has reduced,
much less eliminated, the governance disputes between GTCA and Dr. Artus
and their attendant costs and staff and volunteer time. In this lawsuit,
GTCA turned tail, instead of addressing Dr. Artus’[s] claims on the merits. It
should not be rewarded for doing so by an award of fees.”
3 Salehi and Almanor are the two cases GTCA relies on here.
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We end our opinion quoting the concern, the counsel, of Judge Kahn:
“Sad to say, unless the past is a poor predictor of the future or the parties are
no longer able or willing to devote the huge resources they have devoted
previously, it is likely that there will be a fifth Artus v. GTCA lawsuit. This
fourth lawsuit, especially the way it concluded, accomplished little or nothing
to prevent that from occurring. In that regard, I conclude this order by
repeating a statement I made almost three years ago at the final hearing in
the third Artus v. GTCA lawsuit: ‘I’m aware that there has been a long
history of disputes between Dr. Artus and this association, I’m trying to send
a message here. And that message is, don’t run to court. Run to try to work
things out. Both sides.” To that we say “Amen.”
DISPOSITION
The order denying attorney fees is affirmed. Each side shall bear its
own costs.
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_________________________
Richman, Acting P. J.
We concur:
_________________________
Stewart, J.
_________________________
Mayfield, J. *
Artus v. Gramercy Towers Condominium Association (A161265)
*Superior Court of Mendocino County, Judge Cindee Mayfield,
sitting as assigned by the Chief Justice pursuant to article VI, section 6
of the California Constitution.
24
Trial Court: San Francisco Superior Court
Trial Judge: Honorable Harold Kahn
Attorney for Plaintiff and Millstein & Associates, David
Appellant Kazuko Artus: J. Millstein, Owais Bari;
Attorney for Defendant and Angius & Terry LLP, Cang N.
Appellant Gramercy Towers Le, Joshua D. Mendelsohn;
Condominium Association: Tinnelly Law Group, Cang N.
Le, Joshua D. Mendelsohn.
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