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What happened

Dominick Abatemarco bought condominium unit 226 at the Canterra at Squaw Peak complex, 1747 E. Northern Avenue in Phoenix, in about March 1998, lived there full time, and was current on his association dues. According to the court’s findings, many units and common areas in the complex had construction defects, including defective and dangerous balconies, and the Association had filed a construction-defect lawsuit against the builder that was expected to settle for less than the cost of the needed repairs. Abatemarco’s balcony was in need of substantial repair, as were the balconies of many other homeowners.

Abatemarco sued the Association in 2007 and applied for a preliminary injunction compelling the repairs. After a February 25, 2008 evidentiary hearing at which Abatemarco and the Association’s representative Eric Hayes testified, Judge Paul A. Katz issued an under-advisement ruling on April 9, 2008. The court found the balconies were limited common elements; that A.R.S. § 33-1255(C)(1) assigns their repair costs to the benefited units only “unless the declaration … provides otherwise”; and that this Declaration did provide otherwise — Section 4.2 makes maintenance, repair, and replacement of limited common elements the Association’s responsibility, and Section 6.7 requires the Association to assess all unit owners equally for the cost. The Association was therefore “clearly responsible” for repairing Abatemarco’s balcony, but the court initially denied the injunction, reasoning that he had an adequate remedy at law and that ordering his balcony repaired first would improperly give him priority over similarly situated owners.

On Abatemarco’s motion for reconsideration, the court reversed course in part. In a July 9, 2008 “Ruling and Preliminary Injunction,” Judge Katz found that Abatemarco did not have an adequate remedy at law and — because the court still could not prioritize one owner’s balcony without violating the CC&Rs — mandatorily enjoined the Association to promulgate and approve a remediation plan and funding mechanism to repair all balconies in the community pursuant to Sections 3.5 and 4.2 of the CC&Rs, with the plan due to the court by September 12, 2008 and all repairs completed by December 31, 2009. The Association’s motion for a stay pending appeal was denied on November 3, 2008.

The damages case narrowed sharply before trial. On February 5, 2009, Judge Brian R. Hauser — who had assumed the calendar in mid-2008 — denied Abatemarco’s motion for partial summary judgment on liability, finding fact questions about whether the Association timely performed its duties under the CC&Rs, but granted the Association summary judgment on all of Abatemarco’s non-contract claims as time-barred: no reasonable jury could find other than that his loss occurred on October 17, 2005, when the Association declared there would be no balcony repairs until its litigation with the developer concluded. On December 1, 2009, the court dismissed counts three through six, nine, and ten of the second amended complaint under the economic loss rule, since Abatemarco had full relief available on his contract theories and no separate personal injury or property damage, and it dismissed his punitive-damages claim as falling clearly below the required threshold of proof.

The surviving contract claims were tried to a jury before Judge Hauser over four days, March 1–4, 2010. On March 4, 2010 the jury returned verdicts for Abatemarco on his claim for breach of the implied duty of good faith and fair dealing ($50,000) and on his claim for breach of the CC&Rs ($40,000), and for the Association on his claim for breach of the statutory duty to repair. Jury fees of $615.60 were assessed against the Association.

The June 4, 2010 judgment resolved the dueling attorneys’-fee applications. Applying A.R.S. § 12-341.01(A) and the totality-of-the-litigation test, the court held Abatemarco was the successful party: he won $90,000 in contract damages, and his injunction had produced real-world results — “defendant has repaired the defective balconies as a result of plaintiff’s efforts, at least in large part.” The CC&Rs’ own fee provision for prevailing enforcement parties, made conclusive by the jury’s breach verdict, reinforced the award. But the court found the requested $591,475.50 in fees ($523,825.50 from Rose Law Group, P.C. and $67,650.00 from Snell & Wilmer, LLP) “patently unreasonable” in an over-litigated case, remarking that “[t]his case exemplifies the profligacy that results when one is spending someone else’s money,” and awarded $250,000 in fees plus $60,818.24 in costs in the formal judgment entered June 4, 2010. Collection followed: Abatemarco garnished the Association’s accounts, judgment was entered against garnishee Community Association Banc on September 28, 2010 after the parties reached an agreement, and the collected minute entries end in November 2010 with a further unopposed garnishee judgment request pending.

Procedural timeline

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