Attorney’s Fees and Community Association Litigation Introduction (Community Association Quarterly)

Community association litigation is a complex topic that does not lend itself to generalizations. Condominium and homeowners associations are sued for as many reasons as the human experience will allow. If you can imagine it, there’s no doubt someone somewhere has attempted to use it to support a lawsuit. When most people think of community association litigation, however, they think of covenant enforcement disputes. As is well known, community associations, including condominiums, homeowners associations and cooperatives, are governed by a set of covenants and restrictions that set forth the respective rights and obligations of the owners and the community association itself. These governing documents restrict use of property and provide for the maintenance thereof. When most people think of community associa­tion litigation, they think of disputes involving restrictions on use of real property; and they think of disputes to enforce or contest an owner’s obligation to pay maintenance assessments.

Covenant enforcement litigation requires a funda­mentally different approach that is eminently sensitive to the motivations driving the underlying dispute. First and foremost, at the heart of this litigation is real property. There is perhaps no greater catalyst to irrational behavior than perceived threats to person, family, job or property. The owner is often driven by a fundamental sense of entitle­ment to absolute and unrestricted use and control of his or her real property. Typically speaking, on the other side of the dispute is the community association’s board of directors. These individuals have their own set of motiva­tions. They may have been driven to volunteer for their thankless tenure on the board of directors by a desire to help promote community health, happiness, safety, and welfare. On the other-hand, if the condo commando stereotype holds true, then they are driven by ego, and lust for power and control.

These two forces threaten to manifest themselves in a dispute between diametric opposites. The owner sees himself as the last bastion against a communistic threat on private property ownership. The board of directors, of course, sees itself as the only safeguard preventing the community from sinking into an anarchic slum. Both sides are often willing to stand or fall on principle. The only commonality shared by both sides is an overwhelming desire to prove the other wrong and to punish them for their differences.

If left unchecked, the factors motivating the dispute will drive and shape the litigation. One would hope that the economics of lengthy and aggressive litigation would force a more reasonable and amicable approach. A victory against your neighbor may be satisfying – but at any cost? Most prudent people will give pause if faced with the prospect of paying tens or even hundreds of thousands of dollars to their attorney. This one hope at a reasonable approach, however, is counteracted by the very real possibility that the winner in these disputes will emerge entirely unscathed, having had his or her attorney’s fees paid as the prevailing party.

In drafting the various community association acts, the legislature has seen fit to include provisions allowing for prevailing party attorney’s fees in litigation involving covenant enforcement disputes and litigation to enforce an owner’s obligation to pay maintenance assessments. This fact operates in several different ways to exacerbate the dispute. First and foremost the parties are given a new category of injury to bemoan. They now perceive the other party as being indebted to them for their attorney’s fees. The more they fight - the more they litigate - the more the other party owes – the greater the injury – the harder they should fight, etc. The attorney’s fees incurred in the dispute become their own perverse motivation. This is a vicious circle that can be impossible for some parties to escape.

This calls for a unique approach to community association litigation that appreciates the underlying motivations. Emotions and fees oftentimes drive these claims. To resolve them quickly one must force the parties to reflect on their competing perspectives and the sense of duty or entitlement that has made their differences irreconcilable. This can be difficult, as the client will likely be hostile to what they will perceive as an attack on their driving principles. Most parties, however, can be convinced to seek an amicable resolution if they are made to understand that litigation is often self-destructive, particularly when it becomes an end in itself.

Strategies should be immediately employed to set the stage for early resolution. For instance, both parties should be encouraged to engage in swift, informal evaluation of their competing claims. Formal discovery and depositions can be time consuming and expensive. The claimant should be given early nuisance settlement offers. The parties should be encouraged to participate in pre-suit alternative dispute resolution. Early proposals for settlement should be employed to quickly shift risk. If the matter cannot be settled infor­mally, then the parties should try formal mediation.