Chula Vista Homeowners Association, an Arizona non-profit corporation, Petitioner,
Hon. Charles Irwin, Judge of the Superior Court of the State of Arizona, in and for the County of Cochise, Respondent, and Rodney Olson and Gloria Olson, husband and wife, Real Parties in Interest.
Special Action Proceeding Cochise County Cause No.
CARPENTER, HAZLEWOOD, DELGADO AND BOLEN LLP, TUCSON BY JASON
E. SMITH AND KAYCEE S. WAMSLEY COUNSEL FOR PETITIONER
STACHEL & ASSOCIATES P.C., SIERRA VISTA BY ROBERT D.
STACHEL JR. AND ALBERTA CHU COUNSEL FOR REAL PARTY IN
Judge authored the opinion of the Court, in which
Vásquez Presiding Judge and Espinosa Judge concurred.
The question presented in this special action is whether
attorney fees awarded on claims for declaratory relief,
violation of the open meeting laws, and slander of title
under A.R.S. § 33-420(A), are damages for purposes of
determining the amount of the supersedeas bond under A.R.S.
§ 12-2108 and Rule 7, Ariz. R. Civ. App. P. We accept
jurisdiction because a party who wishes to challenge a trial
court's order setting a supersedeas bond has "no
equally plain, speedy and adequate remedy by appeal."
City Ctr. Exec. Plaza, LLC v. Jantzen, 237 Ariz. 37,
¶ 2 (App. 2015), quoting Salt River Sand & Rock
Co. v. Dunevant, 222 Ariz. 102, ¶ 7 (App. 2009);
see also Ariz. R. P. Spec. Act. 1(a). Because the
respondent judge erred when calculating the bond by including
attorney fees he had awarded real parties in interest Rodney
and Gloria Olson in their underlying action against
petitioner Chula Vista Homeowners Association, he thereby
abused his discretion and we grant relief. See Ariz.
R. P. Spec. Act. 3(c).
and Procedural Background
The Olsons own property in Cochise County that is situated
within the geographic boundary known as Chula Vista and is
subject to certain covenants, conditions and restrictions
(CC&Rs). Petitioner Chula Vista Homeowners Association
(the HOA) is a non-profit corporation, organized pursuant to
the CC&Rs. In 2009, the Olsons obtained a permit to build
a 6, 000-square-foot steel structure on the property, which
they intended to be ancillary to the residence they planned
to build. At some point, the Olsons determined they were
financially unable to build a primary residence on the
property, and obtained a permit from Cochise County that
allowed them to convert the structure into a family
residence. In 2011, the HOA rejected the Olsons' request
for approval of their plan to convert the structure into a
residence, claiming it did not comport with the CC&Rs,
but granted them a three-year variance, permitting them to
live in the structure while they built a residence.
The Olsons did not build another home, and, in 2015, the HOA
took the position they were in violation of the CC&Rs
because the structure was "nontraditional" and was
not a "First Class Private Dwelling" within the
meaning of the CC&Rs as amended in 2007. The HOA recorded
a Notice of Violation of Chula Vista Protective Covenants,
which it removed shortly thereafter. It filed a second Notice
about a month later, stating, as it had in the initial
Notice, that the purpose of the recording was to adversely
affect the Olsons' "ability to convey marketable
title" to their property. The HOA also imposed fines for
the violation and denied the Olsons' appeal of its
In February 2016, the Olsons sued the HOA. In the first two
counts, they sought declaratory relief, asking the court to
determine that the 2007 amendment to the CC&Rs was
invalid because it was not signed by a sufficient number of
property owners, and that the relevant section was vague,
ambiguous, and unenforceable. Alleging the CC&Rs are a
contract, the Olsons requested attorney fees and costs
pursuant to A.R.S. §§ 12-341.01 and 12-341. In
count three of their complaint, the Olsons claimed the HOA
had violated the open meeting laws under A.R.S. §
33-1804(A)(5), and requested an award of costs under §
12-341. In the final count they alleged a claim of slander of
title under § 33-420(A), seeking damages pursuant to
§ 33-420(A), the greater of $5, 000 for each plaintiff
or actual damages caused by the slander of title, and
attorney fees and costs pursuant to § 33-420(A),
§§ 12-341.01 and 12-341.
After a trial, the respondent judge entered Findings of Facts
and Conclusions of Law and Amended Judgment, ruling in favor
of the Olsons on all counts. He found the HOA had violated the
open meeting laws, slandered the Olsons' title and was
"liable to Plaintiffs for damages caused by the
recording, and attorney's fees an[d] costs
incurred," adding that the action arose out of contract
because CC&Rs are a contract, and as the successful
parties, the Olsons were entitled to attorney fees under
§ 12-341.01. The respondent directed the HOA to record a
Notice of Removal of Violation of Protective Covenants to
clear title to the Olsons' property and awarded them
statutory damages in the amount of $5, 000 pursuant to §
33-420(A). He also vacated the penalty the HOA previously had
imposed and awarded the Olsons $318 in taxable costs and
reasonable attorney fees in the amount of $35, 000. The total
amount of the judgment was $40, 318.
The HOA filed a notice of appeal and a motion for supersedeas
bond. It asserted in the motion that under Rule 7, Ariz. R.
Civ. App. P., and § 12-2108, the amount of the bond had
to be based on $5, 318, "which is comprised of the
damages awarded to the Plaintiffs in the form of a $5, 000.00
statutory penalty pursuant to A.R.S. § 33-420(A) and
court costs." Relying on City Center, 237 Ariz.
37, and AOR Direct L.L.C. v. Bustamante, 240 Ariz.
433 (App. 2016), the HOA argued the supersedeas bond should
not include the amount of attorney fees awarded. However, the
Olsons argued that the attorney fees were part of the damages
in this case, relying on United States Fidelity &
Guaranty Co. v. Frohmiller, 71 Ariz. 377 (1951),
Kresock v. Gordon, 239 Ariz. 251 (App. 2016), and
Desert Mountain Properties Ltd. Partnership v. Liberty
Mutual Fire Insurance Co., 225 Ariz. 194 (App. 2010).
The respondent judge concluded that "the attorney's
fees were incurred to protect the Plaintiff's interest
based upon the breach of contract of the homeowner's
association, and therefore are a legal consequence of the
original wrongful act and are recoverable as damages."