This case involved a dispute between a homeowner (Owner) and his homeowners association (Association) over Owners liability for unpaid assessments that Association alleged Owner owed, and an award of attorney fees to Association following a trial on the issues.
When Owner purchased his home in 2014, it was subject to the provisions contained in the Declaration of Covenants, Conditions and Restrictions (CC&Rs) affecting all of the properties within the community. One such provision was a requirement for the homeowners in the community to pay annual assessments or charges to Association. After Owner refused to pay the annual assessments for both 2015 and 2016, which totaled $280.00, Association sent Owner a letter demanding payment of the $280.00 plus an additional $100.00 for attorneys fees allegedly incurred by Association. Owner continued to refuse to pay and Association notified Owner that his nonpayment was going to result in Association filing a lien on Owners property. In response, Owner, acting in pro per, filed a complaint against Association contending that Association violated provisions in the governing documents in calculating the amount of the assessments and as a result, the lien filed on Owners property was invalid. Association filed an answer that denied Owners claims in response to the action filed by owner, and a counterclaim against Owner which alleged a claim for breach of contract based on Owners failure to pay the assessments required under the CC&Rs. Additionally, Association alleged that it was entitled to recover its costs and attorney fees under the terms contained in the CC&Rs.
The trial court found in favor of Association in dismissing Owners claims and awarding Association judgment on its counterclaim for the unpaid assessments totaling $280.00. Notwithstanding the small amount owed for the assessments, Association requested an award of over $32,000.00 for costs and attorney fees. Association contended that the bulk of the fees were incurred in defending against the claims made by Owner, which were directly related to Associations efforts to collect the assessments owed by Owner. Owner argued that Association should not be awarded fees and costs relating to the defense of Owners claims, which amounted to all but $1,500.00 of the amount claimed by Association. The trial court found that the case really involved Associations right to collect the annual assessments that Owner refused to pay and which gave rise to Owners lawsuit against Association. Because the gravamen of Owners lawsuit was to avoid having to pay the two years of annual assessments, the trial court found that Association was entitled to an award of attorneys fees in the amount of $28,372.06. Owner then appealed contending that the trial court committed error in awarding attorney fees to Association.
The appellate court stated that the sole issue centered on the trial courts interpretation and application of the attorneys fee language contained in the CC&Rs, which stated, in part:
The Association may bring an action at law against the Member personally obligated to pay the same, or foreclose the lien against the Lot or Lots subject to prior mortgages or Deeds of Trust upon the Lot or Lots, then belonging to said Member; in either of which events, the Association may collect from the said Member interest, costs and reasonable attorneys fees. (emphasis added)
The above language clearly provided for the recovery of attorney fees that are incurred in an action brought by Association to recover unpaid assessments, but it did not specifically state whether the attorneys fees incurred in the defense of an action were recoverable.
In analyzing various court precedents, the appellate court found that a successful defendant cannot recover attorneys fees where it did not assert a claim for affirmative relief, such as a claim for breach of contract, against the plaintiff. Thus, because Association had filed a counterclaim for breach of contract against Owner, and prevailed on all claims (defense of Owners claims and prosecution of its counterclaim), and the claims were clearly interrelated as they both concerned the validity of the assessments and the lien, the appellate court concluded that all of the fees incurred by Association fell within the ambit of the language contained in the attorneys fees provision contained in the CC&Rs. Accordingly, the appellate court affirmed the trial courts award of $28,372.06 for attorneys fees and costs to Association. Further, because Association prevailed on the appeal, the costs of the appeal were taxed against Owner as well.
Tennessee Appellate Court decision (June 13, 2019).
See case decision: Parker_v._Brunswick_Forest_Homeowners_Ass’n