Daily Development for Tuesday, March 21, 2000

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

I have set forth the DD in "standard format" below. But the story as colorfully told by Harris Ominsky, from whom I shamelessly = plagiarized the bulk of the report, is much better in the original format, which I have attached as a WordPerfect File and as a Word File for those who, = like the editor, delight in Harris' wit and wisdom.

ATTORNEY'S FEES; LIENS: Condominium association can collect $46,500 in attorney's fees in dispute over a $500 lien. Mountain View Condominium Association v. Bonersbach, No. 285 (C.D. Pa Comm., July = 13, 1999

http://www.aopc.org/OpPosting/CWealth/out/285CD99.pdf,

A stubborn owner stopped paying monthly assessments to the association because of a dispute she had with it. The condominium declaration permitted recovery of "reasonable attorney fees incurred in collecting delinquent assessments" from owners. That authority to collect reasonable fees is also provided in Section 3315 of the Pennsylvania Condominium Act (68 Pa. C. S. =A73315).

When the delinquency reached $1200, the association sued to collect the assessment, and while the owner eventually agreed to pay the $1200, she refused to pay the Association's attorney's fee which was then $500. At a later date the owner finally paid her delinquent assessment, which by that time had risen to $3800, but she still refused to pay the attorney's fee which by then went up to $3100. Approximately ten years later the attorney's fees had escalated to = over $46,000 as a result of the Association's continuing efforts to collect the original $500!

At the trial, the Association's expert witness opined that the fee was fair and reasonable and the legal services necessary. This conclusion was based on itemized rates and actual time spent by the Association's attorney.

On the other hand, the owner's expert witness testified that the fee was not reasonable because the Association should have employed a "collection attorney." That theoretically lowpriced attorney "may" have agreed to collect the delinquent assessment for a contingent fee. The court didn't buy that argument, presumably because a claimant has the right to use its regular real estate attorney, even if that = attorney doesn't accept contingent fees.

The Commonwealth Court was then faced with deciding whether the fees from the "real" attorney who handled the case were "reasonable", and it found they were because the defendant had engaged in what the court characterized as "trench warfare." It stated:

A simple complaint [by the Association] was greeted by a veritable pleadings onslaught which I imagine would have rendered any competent "collection attorney" shellshocked. However, the issue before me is not whether the Association should have used a different attorney, rather is it whether = the fees charged by the attorney it did use were fair and = reasonable."

The debtor argued that the Association should have mitigated its = damages by accepting the owner's compromise offer. Also that the Association was not entitled = to collect attorneys' fees spent in collecting attorneys' fees .

The debtor emphasized that the original assessment was only $1,200 and = the original attorneys fees only $500. She argued that no reasonable entity would = spend $46,000 to collect such a small debt.

The court responded that the Association did not have to accept = anything less than the full sum to which it was entitled. It had the right to stand on principle = to uphold the law and collect its attorney's fees in doing so. In a flourish of = alliteration, Judge Narick wrote that any holding to the "contrary would cause chaos in condominium = associations whose compliant members would have to bear the cost of dealing with = noncompliant members." According to the court, the delinquent owner had numerous opportunities = to reevaluate her position and end the litigation, but she didn't do that.

Judge Doris Smith dissented because "it is totally unreasonable, and = perhaps unconscionable, to allow $46,548.64 in attorney's fees in this case when the record = leaves absolutely no doubt that Appellee shares responsibility with Appellant for the continuation = of this litigation now in its tenth year." Also, she opined, both parties should bear = responsibility for the "trench warfare" in the case.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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