The Missouri Supreme Court affirmed a Boone County Circuit Court’s decision to deny attorney fees and litigation expenses to a homeowner’s association.
The circuit court properly applied Section 18(d)(2) of Arrowhead Lake Estates Subdivision’s Declaration of Covenants, Easements, and Restrictions by considering whether it was deemed appropriate to award Arrowhead Lake attorney’s fees and costs, according to the June 15 opinion.
“The Declaration’s language required the circuit court to award attorney’s fees and costs when it deemed that award would be appropriate,” wrote Missouri Supreme Court Chief Justice George W. Draper III, in the decision. “The record demonstrates the circuit court was appraised of this issue," Draper wrote. "The record further reflects the circuit court previously considered awarding attorney’s fees to Arrowhead Lake, but that after submission of the post-trial motions and proposed judgments, the circuit court changed its decision regarding attorney’s fees. The final judgment still taxed the court costs to Homeowner. The circuit court’s decision-making process also is reflected by its physical modification of the proposed judgment it adopted.”
As previously reported, Arrowhead Lake Estates Homeowners Association originally sued defendants Ajay Aggarwal and Megha Garg to enforce subdivision restrictions and covenants and although Boone County Circuit Judge Kimberly Shaw ruled in favor of Arrowhead, she failed to award attorney fees and litigation costs.
“The attorney who drafted the declaration made a mistake,” said St. Louis Attorney Sid Chase. “He or she just threw out language without realizing the implications. They gave away the right of costs and attorneys fees to a judge. It wasn't necessary but they left it up to the judge and the judge in his discretion said no.”
Arrowhead’s arguments in their pleading to the Missouri Supreme Court included that the trial court erred in not awarding attorney’s fees and litigation expenses because there was a contract in place, which required the award of prevailing party attorneys fees and litigation expenses.
But Chase said Arrowhead forfeited its rights when it gave the court discretion to make its own decision on attorney's fees in the declaration.
“The court looked at the facts and ruled that the American rule should apply and that there should be no attorney's fees,” Chase said. “That's it. The Judge has the right to do it because the contract gave him the right to rule.”
Under the American Rule, in the absence of statutory authorization or contractual agreement, litigants pay the expense of their own attorney fees. For example, in civil rights cases, attorney's fees are awarded.
“In Europe, there's a lot less litigation because that's not the rule,” Chase said. “The rule in Europe, England, and the continent is simple. You lose, you pay the other side's attorney's fees and costs within reason.”
The amount of attorneys fees in question in the Arrowhead case is $83,677.60.
“This is what's known as a conservative opinion,” Chase said. “The dissenting justice thought they should have remanded it and allowed the court to reconsider.”
The dissenting Missouri Supreme Court Judge was Paul Wilson.
“I respectfully dissent because the only reasonable construction of this provision is that it requires an award of attorney fees to the prevailing party but gives the circuit court discretion in determining the amount of such an award,” Wilson wrote in his opinion.