Suing Your HOA? Be Careful. You May Have to Pay the Association’s Attorney Fees!

            We often advise both homeowners associations (HOAs) and individual homeowners on the financial risks and high costs involved in legal disputes. It’s rare, however, to see an HOA awarded a significant sum like $48,000 in attorney’s fees simply because the homeowner decided to drop their case against the HOA.

            This is precisely what happened in the recent California case of Haidet v. Del Mar Woods Homeowners Association (2024). This case serves as a crucial reminder of the procedural traps that can ensnare anyone in HOA litigation.

            In a recent decision, the California Court of Appeal upheld the dismissal of a homeowner’s lawsuit—and confirmed that $48,000 attorney’s fee award—because the homeowners failed to correct their complaint after a legal challenge (a “demurrer”) was sustained by the court.

Background of the Dispute

            Noisy Neighbors and Floors. The homeowners, Gregory and Kathleen Haidet, sued their HOA because they claimed their upstairs neighbors had installed improper hardwood flooring that caused excessive noise, making their lives miserable. They argued this was a nuisance and violated the HOA’s governing documents (CC&Rs).

            The HOA’s Liability? The HOA argued that their CC&Rs were entirely silent on the need for homeowners to get HOA consent before installing hardwood flooring. They also argued they had no fiduciary duty regarding structural violations and that their decisions were protected by the “business judgment rule.”

 The Procedural Misstep:

            The homeowners initially filed a lawsuit against the HOA. The HOA then filed a “demurrer,” which is a legal challenge essentially saying, “Even if everything the homeowners say is true, their complaint doesn’t state a valid legal claim against the HOA.”

            The trial court agreed with the HOA’s demurrer, dismissed one of the homeowners’ claims, and gave homeowners a chance to amend (fix) two other claims against the HOA. Instead of fixing their complaint, the Haidets completely removed the HOA from their complaint, essentially dropping the HOA from the lawsuit.

            Because the homeowners failed to timely amend their claims against the HOA, the HOA asked the court to dismiss them from the case “with prejudice” (meaning the homeowners couldn’t sue them again on the same claims) and to award them attorney’s fees. The court agreed, ruling that by omitting the HOA, the Haidets had “acquiesced to the sustaining of the demurrer” and lost their right to voluntarily dismiss the HOA without prejudice. The result? A stunning $48,229.08 attorney’s fee award against the homeowners.

What Does This Mean for You?

            The Haidet v. Del Mar Woods decision is a powerful reminder that in legal disputes, following proper procedure is just as crucial as the facts of your case. Missing a deadline or failing to correct a legal filing can lead to your case being thrown out, and worse, leave you responsible for the other side’s legal fees.

            The Haidet case offers vital lessons for everyone involved in an HOA:

•             For Homeowners: Don’t go it alone! Navigating Covenants, Conditions, and Restrictions (CC&Rs), nuisance claims, and complex California civil procedure rules can be incredibly complicated. Missing a deadline or procedural step can lead to you losing your claims forever and you being ordered to pay the HOA’s legal fees.
•             For HOAs and Board Members: This case highlights the importance of understanding legal procedures and acting decisively when faced with a lawsuit. It also underscores that procedural victories can lead to significant cost recovery for the HOA.

            Whether you’re a homeowner struggling with an HOA dispute or an HOA board member trying to avoid costly litigation, understanding these legal intricacies is paramount. Our firm is dedicated to helping clients like you navigate these “murky waters” and achieve the best possible outcome.

Conclusion

            Haidet v. Del Mar Woods is a stark reminder that in litigation, substance and procedure go hand in hand. When a party misses a deadline or declines to amend, they may find themselves not only out of court—but also on the hook for the other side’s legal fees.

            If you are dealing with an HOA dispute and need clear, expert guidance, contact us today to discuss your situation.

            Irina Naduhovskaya a civil litigator at Porter Simon, where she specializes in unlawful detainer and other real property matters. Irina is licensed in California. She can be reached at irina@portersimon.com or http://www.portersimon.com