The Commonwealth Court of Pennsylvania ruled this month that a man from Pittsburgh is not entitled to recover attorneys’ fees and court costs from litigation he won against his homeowners association. Matthew Serota filed suit against the London-Towne Homeowners Association in 2015 after the association amended its Declaration of Covenants, Conditions and Restrictions (the “Declaration”) to allow only one vote per owner rather than one vote per home.
Serota owned 11 townhouses in the planned community, so he lost ten of his votes as a result of the change to the Declaration. Serota won his lawsuit and appeal by the association. Thereafter, Serota sought to have the association reimburse him approximately $48,000 in attorneys’ fees and court costs. The appeals court denied Serota’s initial request for attorneys’ fees but sent the case back to trial court who also denied Serota’s request for attorneys’ fees. Serota then appealed the trial court’s decision.
Serota argued that the association should pay his attorneys’ fees and costs according to the association’s bylaws and pursuant to sections of both Pennsylvania’s Uniform Planned Community Act (the “UPCA”) and the Nonprofit Corporation Law of 1988 (the “Nonprofit Law”). The Commonwealth Court sided with the trial court finding that none of Serota’s arguments circumvented the general rule in Pennsylvania that a party is responsible for their own legal costs unless otherwise provided by agreement, statute or recognized exception.
The appeals court rejected Serota’s argument that as the prevailing party in his underlying lawsuit he was entitled to attorney’s fees pursuant to association’s bylaws. The court found that although the bylaws authorize the payment of fees and costs to a prevailing party in a proceeding involving an alleged default by a unit owner, that Serota’s lawsuit against the association did not arise out of a default by a unit owner.
The appeals court also found that mandatory payment of his attorney’s fees was not included in the UPCA and associated Uniform Law Comment or the Nonprofit Law. Instead, the appeals court explained that the UPCA and Nonprofit Law do not specifically address attorney’s fees and that, “[w]hile the Uniform Law Comment does refer to attorneys’ fees, such reference is not binding on the court and, additionally, it considers the award of such fees to be within the discretion of the court.”[1]
The appeals court also rejected Serota’s argument that his legal costs represented actual damages that he could recover as a result of the association’s actions. According to the court, Serota’s attorneys’ fees are not a proven injury or loss resulting from the association’s amendment of the Declaration and as such, did not meet the definition of actual damages.
The Commonwealth Court’s opinion can be found at Serota v. London-Towne Homeowners Ass’n, No. 1451 C.D. 2017, filed Nov. 16, 2018).
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[1] The Pennsylvania General Assembly amended the language of the UPCA to provide that a prevailing party may be entitled to costs and reasonable attorney’s fees. The amended language was effective July 3, 2018, which was after this case was filed.
