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Court of Appeal:
Judicial Estoppel Bars Contesting Awardability of Fees
Defendants, When They Won on Summary Judgment in 2019, Insisted Prevailing Party Had Right to Award; Opinion Says They Can’t Take Contrary Position After C.A. Reversed and, on Remand, They Lost
By a MetNews Staff Writer
Defendants in an action over the height of their flagpole are judicially estopped from contesting the entitlement of the plaintiffs, who clearly prevailed in the trial court in 2022, to an award of attorney fees, Div. One of the Fourth District Court of Appeal has held, pointing to the defendants’ successful stance, after they were awarded summary judgment in 2019, that they had a right to such fees.
Mary Ann Rowan and Drew F. Sprague, as trustees of a living trust, in 2018 sued Carl B. Hilliard Jr. and Sharon E. Hilliard, as trustees of their family trust, contending that their flagpole was not in conformity with a restrictive covenant burdening their land. Rowan and Sprague live across the street from the Hilliards in Point Loma, a seaside community in the City of San Diego.
San Diego Superior Court Judge Richard S. Whitney granted summary judgment in favor of the Hilliards, declaring the restrictive covenant to be unenforceable; the Court of Appeal reversed, concluding that the Hillards “did not meet their burden of demonstrating they are entitled to judgment as a matter of law”; on remand, San Diego Superior Court Judge Timothy Taylor found in favor of the plaintiffs, following a bench trial.
Thursday’s unpublished Court of Appeal opinion reversing Taylor’s postjudgment order denying attorney fees was authored by Justice Terry B. O’Rourke. He also wrote the Dec. 22, 2020 unpublished opinion reversing Whitney’s grant of summary judgment.
Decision on Remand
A provision in the recorded declaration of restrictions says:
“This Agreement shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto, for the benefit of the benefited property, and in the event either party is required to bring legal action to enforce or interpret this agreement, the court shall have authority to award the prevailing party reasonable attorney fees.”
Taylor agreed with the defendants that the words “the court shall have authority” rendered an award discretionary. He said:
“Here, replacing ‘shall’ with ‘has a duty to’ or ‘is required to’ would render the phrase ‘have authority to’ redundant and meaningless.”
In exercising his discretion, he opted to award no attorney fees.
O’Rourke’s Opinion
On appeal, the plaintiffs argued that the word “shall” renders an award mandatory. O’Rourke said:
“We do not reach that question….[D]efendants’ inconsistent positions on the meaning and import of the contractual attorney fee provision estops them from challenging plaintiffs’ entitlement as the prevailing parties to an award of reasonable attorney fees.”
He explained:
“[U]nder basic principles of judicial estoppel and its underlying policies, defendants cannot now challenge plaintiffs’ entitlement to reasonable attorney fees under the declaration’s attorney fee clause. Before our reversal on appeal, defendants succeeded in convincing Judge Whitney to grant their attorney fee motion after expressly arguing that the fee clause was a prevailing party attorney fee provision requiring an award of reasonable fees to them as the prevailing parties. They argued the court could not deny fees ‘on equitable considerations or other grounds’ to a party, like them, who had ‘obtain[ed] a simple, unqualified win....’ ”
O’Rourke went on to say:
“It is inconsistent to argue on the one hand that the nature of the clause is such that the court cannot deny them fees as prevailing parties under it, and then to argue on the other when it benefits them that its language grants the court discretion to not award fees to the undisputedly prevailing plaintiffs.”
Abuse of Discretion
The justice said that if Taylor did have discretion, he abused it. He noted that Taylor, in denying fees, alluded to Whitney having granted summary judgment in favor of the defendants, with an appeal ensuing, and explained:
“There are overlapping and inconsistent evidentiary presumptions which must be sorted out (and the court tried to do its best to do so despite having little more to work with after the trial than what was available at the summary judgment stage). The case presents thorny issues regarding restrictions on the free use of property and the competing right to restrict such uses in favor of harmonious neighborly relations. In these circumstances, justice suggests the wisdom of the default rule: each side bears his/her/its own attorneys’ fees.”
O’Rourke declared:
“That reasoning is flawed. The procedural history is not pertinent where the court in the present matter decided that plaintiffs had prevailed. And the difficulty of the case (even if we were to accept that the issues were difficult or complex) does not take away from plaintiffs’ unqualified win. Rather, in our view, that circumstance would give the court all the more reason to award the prevailing plaintiffs reasonable attorney fees in securing that success. In reaching this conclusion, we express no opinion on the amount of reasonable attorney fees that the court in its discretion may award.”
The amount the plaintiffs had sought was $328,120.43. On remand, they are bound to seek a higher sum, covering fees incurred in the appeal and in further proceedings in the trial court.
The case is Rowan v. Hilliard, D081687.
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