Arrowhead Lake Estates Homeowners Ass'n, Inc. v. Aggarwal

• Decision Date: 15 June 2021
• Docket Number: No. SC 98772,SC 98772
• Citation: 624 S.W.3d 165
• Court: Missouri Supreme Court
• Parties: ARROWHEAD LAKE ESTATES HOMEOWNERS ASSOCIATION, INC., Appellant, v. Ajay AGGARWAL and Megha Garg, Respondents.

624 S.W.3d 165

ARROWHEAD LAKE ESTATES HOMEOWNERS ASSOCIATION, INC., Appellant,

v.Ajay AGGARWAL and Megha Garg, Respondents.

No. SC 98772

Supreme Court of Missouri, en banc.

Opinion issued June 15, 2021

The homeowners association was represented by Thomas M. Harrison, Joshua J. Sieg and Brian R. Hajicek of Van Matre Law Firm PC in Columbia, (573) 874-7777.

The residents were represented by Susan Ford Robertson and J. Zachary Bickel of The Robertson Law Group LLC in Kansas City, (816) 221-7010.

George W. Draper III, Chief Justice

Arrowhead Lake Estates Homeowners Association, Inc. (hereinafter, "Arrowhead Lake") appeals from the circuit court's judgment declining to award it attorney's fees.¹ Arrowhead Lake asserts it is entitled to attorney's fees based upon the language of the "Declaration of Covenants, Easements, and Restrictions of Arrowhead Lake Estates Subdivision" (hereinafter, "the Declaration"). The circuit court's judgment is affirmed.²

Factual and Procedural History

Drs. Ajay Aggarwal and Megha Garg (hereinafter and collectively, "Homeowner") own property in Arrowhead Lake Estates. All of the property in Arrowhead Lake Estates is subject to the Declaration. In April 2017, Homeowner submitted plans to Arrowhead Lake for approval of additional exterior features, including a swimming pool, a hot tub, a fire pit, a fence, and decking. Arrowhead Lake approved Homeowner's plans and communicated that, if there were additional changes, Arrowhead Lake would need to be informed and the changes would need to be approved.

In August 2017, Arrowhead Lake learned Homeowner was constructing a swimming pool building that was not part of the original plan submitted. Arrowhead Lake sent a cease-and-desist letter, demanding Homeowner stop construction and remove the building from the property. Homeowner refused.

Arrowhead Lake filed a petition in the circuit court for injunctive relief. Arrowhead Lake sought to have the unapproved building removed and to be awarded attorney's fees and costs associated with the litigation.

Following a bench trial, the docket sheets state the circuit court considered all of the evidence and made the preliminary injunction permanent. Further, both parties were ordered to pay their own attorney's fees. The docket sheets then state the circuit court clarified its judgment, finding in Arrowhead Lake's favor on all counts and ordering Homeowner to pay $83,677.60 in attorney's fees. Arrowhead Lake and Homeowner filed motions for amendment and clarification of the judgment and proposed judgments. The docket sheets then indicate the circuit court reviewed both parties’ motions for amendment and clarification of the judgment and determined each party should bear its own attorney's fees. The circuit court then adopted Arrowhead Lake's proposed judgment, but physically placed a series of "x"s over the line awarding it attorney's fees. The circuit court ordered Homeowner to remove the unapproved building and taxed all of the court costs to Homeowner. The circuit court did not award Arrowhead Lake attorney's fees. Arrowhead Lake appeals.³

Request for Attorney's Fees

Generally, not every successful litigant is awarded attorney's fees. Berry v. Volkswagen Grp. of Am., Inc. , 397 S.W.3d 425, 431 (Mo. banc 2013). "Missouri courts follow the American Rule, which provides that, in the absence of statutory authorization or contractual agreement, with few exceptions, parties bear the expense of their own attorney fees." Wilson v. City of Kan. City , 598 S.W.3d 888, 896 (Mo. banc 2020). Arrowhead Lake argues the circuit court abused its discretion in not awarding it attorney's fees and litigation expenses because the Declaration provides prevailing parties are entitled to attorney's fees and litigation expenses.⁴

The Declaration is a contract. DeBaliviere Place Ass'n v. Veal , 337 S.W.3d 670, 676 (Mo. banc 2011). Accordingly, contract law principles apply when interpreting the Declaration. Trs. of Clayton Terrace Subdivision v. 6 Clayton Terrace, LLC , 585 S.W.3d 269, 280 (Mo. banc 2019). In interpreting the Declaration, this Court seeks to determine "the intent of the parties and give effect to that intention." Veal , 337 S.W.3d at 676. To ascertain the parties’ intent, contract language is given its plain, ordinary, and usual meaning. 6 Clayton Terrace, LLC , 585 S.W.3d at 280. "When a contract is unambiguous, the intent of the contract is discerned solely from the contract's language." Arbors at Sugar Creek Homeowners Ass'n v. Jefferson Bank & Tr. Co., 464 S.W.3d 177, 183 (Mo. banc 2015). "Additionally, each term of a contract is construed to avoid rendering other terms meaningless." Dunn Indus. Grp., Inc. v. City of Sugar Creek , 112 S.W.3d 421, 428 (Mo. banc 2003).

Arrowhead Lake states there are two Declaration provisions entitling it to receive attorney's fees, costs, and litigation expenses.⁵ Arrowhead Lake argues it was the prevailing party, and the circuit court's failure to award it attorney's fees, costs, and litigation expenses was erroneous.

Section 18(d) Allocation of Costs Resolving Claims

Arrowhead Lake argues because the Declaration uses mandatory language to provide for the prevailing party's attorney's fees and costs, the circuit court is required to award it attorney's fees and costs. Section 18(d)(2) of the Declaration states:

Each party shall bear their own costs (including the fees of its attorney or other representative) incurred after the Termination of Mediation under subparagraph c, (3), and shall share equally in the costs of conducting any voluntary arbitration proceeding (collectively, "Post Mediation Costs"), except as otherwise provided in this Declaration; provided, however, if the Claim is litigated in whole or in part, the prevailing party shall be entitled to receive an aware [sic] of attorney's fees and court costs as deemed appropriate by a court of competent jurisdiction.

Accordingly, the Declaration's plain language provides an exception to the American rule for attorney's fees. Wilson , 598 S.W.3d at 896. "Entitle" is defined as "to give a right or legal title to: qualify (one) for something: furnish with proper grounds for seeking or claiming something." WEBSTER'S NEW INTERNATIONAL DICTIONARY 758 (3d ed. 2002). This language clearly and plainly allows a circuit court to award attorney's fees and court costs to a prevailing party. The Declaration's language providing "the prevailing party shall be entitled to receive" an award qualifies the prevailing party to receive attorney's fees.

Arrowhead Lake and the dissenting opinion argue this is the end of the analysis and the circuit court is required to award attorney's fees to Arrowhead Lake. In support of its argument the circuit court erred by not awarding it attorney's fees and costs, Arrowhead Lake cites multiple cases finding a party is entitled to an award when supported by a written contract. See Lake at Twelve Oaks Home Ass'n, Inc. v. Hausman , 488 S.W.3d 190, 202 (Mo. App. W.D. 2016) (remanding for a judgment "for all costs, expenses, including attorney's fees, and damages"); Desu v. Lewis , 427 S.W.3d 843, 845 (Mo. App. E.D. 2014) (allowing litigation costs "including reasonable attorney's fees"); Brooke Drywall of Columbia, Inc. v. Building Const. Enter., Inc. , 361 S.W.3d 22, 27 (Mo. App. W.D. 2011) (finding the prevailing party "shall ... be paid by the non-prevailing party all attorney fees" (alteration in original)); In Their Representative Capacity as Trs. for Indian Springs Owners v. Greeves , 277 S.W.3d 793, 800 (Mo. App. E.D. 2009) (finding a prevailing party "shall recover attorney's fees and court costs"); Sheppard v. East , 192 S.W.3d 518, 523 (Mo. App. E.D. 2006) (allowing recovery of "the cost of litigation including reasonable attorney's fees"); Hills v. Greenfield Vill. Homes Ass'n, Inc. , 956 S.W.2d 344, 350-51 (Mo. App. W.D. 1997) (reversing the denial of attorney's fees when an association agreement provided for "interest, costs, and reasonable attorney's fees of any such action shall be added to the amount of such assessment"). In all of these cases, the controlling language of each contract only stated the prevailing party shall be entitled to some monetary recovery. The shifting of attorney's fees and court costs was appropriate in those cases because the provisions provided for an award without any additional qualifying language.

However, none of these cases are germane to the dispute in this case because the contractual language does not mirror the Declaration's provision. The Declaration clearly qualifies the exception to the American rule as only allowing an award of attorney's fees and costs "as deemed appropriate" by the circuit court. None of the cases Arrowhead Lake relies upon allowed the prevailing party a monetary recovery "as deemed appropriate" by the circuit court. This distinction is significant.

Arrowhead Lake's interpretation of the Declaration leads to an absurd result because it ignores the language granting the circuit court discretion to award attorney's fees and costs.⁶ As the prevailing party, the Declaration entitled Arrowhead Lake to receive an award of "attorney's fees and court costs as deemed appropriate by a court of competent jurisdiction." Section 18(d)(2) (emphasis added). Accordingly, Arrowhead Lake qualified for an award of attorney's fees and costs as an exception to the American Rule, but only in the amount "deemed appropriate" by the circuit court. The Declaration's language provided the circuit court the authority to award attorney's fees and costs to the prevailing party, but left to the circuit court the discretion to determine the amount of that award.⁷

Following the trial and the submission of post-trial briefs, the circuit court ruled in Arrowhead Lake's favor, ordered its preliminary injunction be made permanent, and each party to pay its own attorney's fees. Arrowhead Lake then submitted a "Motion for Amendment and Clarification of Judgment and Motion for...