Background
Bahrookh, LLC owns two lots in the Johnson Ranch development. A 2005 recorded declaration imposed restrictive covenants but did not create a homeowners association, though it stated that the declarant could assign its rights and obligations to lot owners or an association.
In 2018, several lot owners formed Johnson Ranch Water CO-HOA, LLC to pursue water rights and later assessed fees against owners, including Bahrookh. Bahrookh sued, seeking declarations that the 2005 declaration did not contemplate a homeowners association and that the water company was not Johnson Ranch’s homeowners association. After the lot owners recorded an amended declaration creating an authorized association, the district court dismissed the case as moot and denied Bahrookh’s sanctions request.
The Court’s Holding
The Colorado Court of Appeals affirmed the denial of Bahrookh’s request for attorney fees under paragraph twenty of the 2005 declaration. That provision permits fees when a person violates or threatens to violate a provision of the declaration.
Bahrookh alleged that defendants lacked authority to act as an association and assess fees; it did not allege, and the district court did not find, that defendants violated or threatened to violate a specific provision of the 2005 declaration. The court held that an assertion of unauthorized conduct does not trigger this narrower fee provision, even though Bahrookh had been designated the prevailing party for costs after the case became moot. The court also denied defendants’ undeveloped request for appellate attorney fees, while recognizing their entitlement to appellate costs upon compliance with the appellate rules.
Key Takeaways
- A covenant-based fee provision applies according to its stated trigger, not merely because litigation concerns the declaration.
- Alleging that an association exceeded its authority is not the same as alleging a violation of a covenant.
- A prevailing-party designation for costs does not independently establish entitlement to contractual attorney fees.
Why It Matters
The decision underscores the importance of matching a fee request to the exact language of the governing declaration. A provision limited to violations or threatened violations of covenants does not reach every dispute involving a homeowners association or a declaration.
The court distinguished Colorado’s broader statutory fee provision under the Colorado Common Interest Ownership Act because Bahrookh did not bring a claim under that statute.