Court Opinion

ID: 4695751
Source: CourtListenerOpinion
Date Created: 2021-06-15 18:07:33.339382+00
Date Added: 2024-06-11T08:05:37.053312
License: Public Domain

SUPREME COURT OF MISSOURI
                                         en banc
ARROWHEAD LAKE ESTATES                           )      Opinion issued June 15, 2021
HOMEOWNERS ASSOCIATION, INC.,                    )
                                                 )
                            Appellant,           )
                                                 )
v.                                               )      No. SC98772
                                                 )
AJAY AGGARWAL and MEGHA GARG,                    )
                                                 )
                            Respondents.         )

       APPEAL FROM THE CIRCUIT COURT OF BOONE COUNTY
                   The Honorable Kimberly Shaw, Judge

       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

1
  Based upon the operative language of the documents in this case, this Court will use the
term “attorney’s fees” for consistency, although the preference is “attorney fees.”
2
  This Court has jurisdiction pursuant to article V, section 10 of the Missouri Constitution
because it granted transfer after opinion by the court of appeals.
                             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

                                              2
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

3
  Homeowner also filed a notice of appeal, but the cross-appeal was abandoned.
4
  Arrowhead Lake also filed a motion for attorney’s fees on appeal, which was taken with
the case. The motion for attorney’s fees on appeal is overruled.
                                               3
“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.

5
 While Arrowhead Lake’s point on appeal claims it should have been awarded litigation
expenses, it never articulates a reason supporting this proposition.
                                               4
       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”);

                                              5
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

6
 The dissenting opinion is correct that this Court must determine the meaning of the
Declaration language rather than what it thinks may be most fair. Ironically, this is
exactly what the dissenting opinion has achieved by failing to consider the words as
actually written in the Declaration.
                                             6
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 Reconsideration” and a

proposed judgment. Homeowner responded to Arrowhead Lake’s motion and submitted

its own proposed judgment.

       The docket entry for June 19, 2019, states the circuit court clarified the judgment,

ruled in Arrowhead Lake’s favor and ordered Homeowner to pay Arrowhead Lake’s

attorney’s fees. On that same day, the circuit court entered another docket entry and its

written, final judgment. The docket entry notes the circuit court reviewed the post-

judgment motions submitted and the proposed judgments. The circuit court again

7
 While the Declaration’s language is clear, the dissenting opinion manufactures an
ambiguity to curtail the actual analysis of the contract language. However, because the
Declaration’s plain language qualifies a prevailing party to received attorney’s fees and
costs when the circuit court deems it appropriate, this Court “must enforce the provision
as written.” Davis v. Johnson Controls, Inc., 549 S.W.3d 32, 41 (Mo. App. E.D. 2018).
                                               7
determined each party should bear its own attorney’s fees. The circuit court entered its

final, signed judgment, modifying Arrowhead Lake’s proposed judgment.

       In its final judgment, the circuit court ordered Homeowner to remove the

unapproved structure, prohibited Homeowner from constructing any building or

improvement without prior approval, and taxed court costs to Homeowner. Notably, the

circuit court used a series of “x”s to strike out the paragraph regarding the amount of

attorney’s fees Homeowner would be required to pay Arrowhead Lake.

       The Declaration’s language required the circuit court to award attorney’s fees and

costs when it deemed that award would be appropriate. The record demonstrates the

circuit court was appraised of this issue. The record further reflects the circuit court

previously considered awarding attorney’s fees to Arrowhead Lake, but that after

submission of the post-trial motions and proposed judgments, the circuit court changed

its decision regarding attorney’s fees. The final judgment still taxed the court costs to

Homeowner. The circuit court’s decision-making process also is reflected by its physical

modification of the proposed judgment it adopted.

       Accordingly, the circuit court properly applied section 18(d)(2) by carefully

considering whether it was “deemed appropriate” to award Arrowhead Lake attorney’s

fees and costs. While Arrowhead Lake was not awarded attorney’s fees, Homeowner

was ordered to pay the court costs. The circuit court did not abuse its discretion in

applying section 18(d)(2) of the Declaration.

                                              8
Section 20’s Additional Provisions Pertaining to Enforcement of Declaration

       Arrowhead Lake asserts it also is entitled to receive attorney’s fees based upon

section 20 of the Declaration. Arrowhead Lake believes section 20’s “umbrella

language” grants it remedies for a “lot owner’s” breach of the Declaration. Alternatively,

Arrowhead Lake claims section 20(b) should apply to it because Arrowhead Lake is

technically a “lot owner.”

       Section 20 clearly allows Arrowhead Lake to enforce the Declaration’s terms in

state courts. Section 20 of the Declaration states:

       In addition to any rights and remedies provided under the Ordinances of
       Boone County, Missouri, or the laws of the state of Missouri, and subject to
       the requirements of [section]18 of this Declaration, the Developer, and/or
       the Association may enforce the rights and obligations and conditions of
       this Declaration against any Lot Owner through the courts of the state of
       Missouri ….

Section 20(b) provides:

       If any Lot Owner brings suit to enforce the terms of this Declaration against
       any other Lot Owner, then the prevailing party in such litigation shall be
       entitled to recover said prevailing party’s attorney’s fees, costs, litigation
       expenses, and other damages as to which said prevailing party is entitled, in
       addition to whatever equitable relief is available to said prevailing party.

       The “umbrella language” of section 20 granted Arrowhead Lake the authority to

pursue a remedy against Homeowner in court. Arrowhead Lake took advantage of this

provision to bring suit against Homeowner.

       However, the recovery of “attorney’s fees, costs, litigation expenses, and other

damages” as provided by section 20(b), is limited to a “lot owner.” The Declaration’s

                                             9
clear intent is to provide recovery to a prevailing “lot owner” who brings suit to enforce

the Declaration’s terms. Veal, 337 S.W.3d at 676.

       Arrowhead Lake is a homeowner’s association and represented itself as such

throughout the proceedings. Arrowhead Lake never argued it was asserting its rights

under the Declaration as a “lot owner.” Further, while referencing section 20 generally in

its trial and post-trial briefs in the circuit court, Arrowhead Lake never crafted any

argument claiming it was entitled to recovery of attorney’s fees based upon its belief it

was also a “lot owner.” The circuit court did not abuse its discretion by failing to craft an

augment sua sponte based upon facts that were not presented or argued. See Sanders v.

City of Columbia, 602 S.W.3d 288, 298 (Mo. App. W.D. 2020); Curry Inv. Co. v.

Santilli, 494 S.W.3d 18, 27 (Mo. App. W.D. 2016); Sweet v. Sweet, 154 S.W.3d 499, 507

(Mo. App. W.D. 2005).

                                        Conclusion

       The circuit court’s judgment is affirmed.

                                           _______________________________
                                           George W. Draper III, Chief Justice

Russell, Breckenridge and Fischer, JJ., concur;
Wilson, J., dissents in separate opinion filed;
Powell, J., concurs in opinion of Wilson, J.

                                             10
             SUPREME COURT OF MISSOURI
                                         en banc
ARROWHEAD LAKE ESTATES                            )
HOMEOWNERS ASSOCIATION, INC.,                     )
                                                  )
                            Appellant,            )
                                                  )
v.                                                )      No. SC98772
                                                  )
AJAY AGGARWAL and MEGHA GARG,                     )
                                                  )
                            Respondents.          )

                                DISSENTING OPINION

       The principal opinion holds that section 18(d)(2) gave the circuit court discretion

to decide whether or not to award attorney fees to Arrowhead Lake Estates Homeowners

Association, Inc. (“Arrowhead Lake”), i.e., the prevailing party in this litigation. I

respectfully dissent because the only reasonable construction of this provision is that it

requires an award of attorney fees to the prevailing party but gives the circuit court

discretion in determining the amount of such an award. Accordingly, I would remand for

the circuit to determine the amount of that award in this case.

       Section 18(d)(2) provides that, “if the Claim is litigated in whole or in part, the

prevailing party shall be entitled to receive an aware [sic] of attorney[] fees and court

costs as deemed appropriate by a court of competent jurisdiction.” [Emphasis added].
Plainly, the phrases “shall be entitled” and “as deemed appropriate” are in tension with

each other. The first phrase appears to give the prevailing party an absolute right to an

award of attorney fees and costs, but the latter phrase seems to bestow some discretion

upon the circuit court. This tension renders the contractual language contradictory and,

therefore, ambiguous. Cf. Ritchie v. Allied Property & Cas. Ins. Co., 307 S.W.3d 132,

140 (Mo. banc 2009) (“If a contract promises something at one point and takes it away at

another, there is an ambiguity.”) (quotation marks omitted).

       To resolve this ambiguity, this Court must give meaning to all of the language

used in section 18(d)(2) and yet resolve the apparent contradiction. The Court cannot

decide what it thinks the parties should have agreed upon or, worse, what arrangement

appears most fair in hindsight. Instead, the Court must determine as best it can what the

parties intended by the language they chose.

       Fortunately, there is an obvious solution, i.e., that the phrase “shall be entitled”

refers to an award of attorney fees and costs (as the provision expressly states) while the

phrase “as deemed appropriate” refers to the amount of such an award. This construction

gives meaning and effect to all of the language used by the parties, whereas the

construction imposed in the principal opinion simply reads the first phrase out of the

contract altogether.

       The homeowners argue that the circuit court should be affirmed because, even

assuming the construction posited in this dissent, the circuit court could have determined

that the “appropriate” amount of the award of attorney fees in this case was $0.00. This

argument is correct in theory, but wrong in practice (at least in this case). It is

                                               2
conceivable that, in a particular case, the circuit court could determine that the legal

services rendered by the prevailing party’s attorneys had no reasonable value and,

therefore, that an “appropriate” award of attorney fees would be $0.00. But that plainly

did not happen here. Instead, the circuit court in this case made it clear that it believed an

award of attorney fees was not fair in these particular circumstances because the case

presented a close call on several difficult issues. Nothing in the record suggests that the

circuit court believed Arrowhead Lake was entitled to its reasonable attorney fees but that

counsel was so deficient in performance that the only reasonable amount was $0.00.

Even if the circuit court had made such a finding, and it plainly did not, it would have

been clearly erroneous on this record and contrary to the overwhelming weight of the

evidence now appearing.

       Instead, it is clear the circuit court believed it had discretion on the question of

whether to award attorney fees and not merely on the question of how much that award

should be, and the principal opinion affirms that conclusion. Because Arrowhead Lake

was entitled to an award of reasonable attorney fees, and because I would remand for the

circuit court to determine in its discretion the amount of that award, I respectfully dissent.

                                                         _____________________________
                                                         Paul C. Wilson, Judge

                                               3