Village Park Community Association v. Faitalia (In re Faitalia)

Case Type:
Consumer
Case Status:
Reversed
Citation:
HI-16-1170-JuTaKu (9th Circuit, Dec 06,2016) Published
Tag(s):
Ruling:

After Chapter 13 Debtors successfully stripped homeowner association lien for purposes of plan confirmation, bankruptcy court erred in awarding attorneys fees and costs to Chapter 13 Debtor as prevailing party.  Hawaii statute allows prevailing party award of fees and costs when incurred for: 1) collecting delinquent assessments; 2) foreclosure of an assessment lien; or 3) enforcing association governing documents.  The Hawaii statute does not support an award of attorneys fees and costs when the primary dispute is valuation of property or liens.

Procedural context:

Debtors prevailed on motion to strip homeowner association assessment lien for purposes of plan confirmation. Bankruptcy court awarded fees and costs to Debtors as prevailing party under Hawaii law.  Homeowner association appeals. BAP reversed bankruptcy court award of attorneys fees and costs.

Facts:

Debtors filed their Chapter 13 petition after their homeowners association sought to judicially foreclose on an association assessment lien. The Association filed a proof of claim evidencing a secured claim for $11,579.79.  The Association also objected to plan confirmation.  Debtors thereafter amended their Chapter 13 Plan and contemporaneously filed a motion to value their real property and to modify or strip off the Association's lien.  Debtors sought to demonstrate that the first priority mortgage was in excess of the value of the property and the Association contested the valuation.  The bankruptcy court found for Debtors on the valuation and lien stripping issues and, after confirming Debtors' Chapter 13 Plan, Debtors therafter sought an award of fees and costs as the prevailing party under Hawaii law.  The bankruptcy court awarded $27,397.89 in fees and costs against the Association.

Judge(s):
JURY, TAYLOR, and KURTZ, Bankruptcy Judges.

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