Arizona Court of Appeals Division Two holds that a fee award under § 12-341.01 is discretionary unless expressly provided for by the contract.

Homeowners purchased land in Tucson Estates subject to certain CC&Rs, including one governing the placement of a shed.  Homeowners attempted to obtain permission from the Owners Association (HOA) to install a new shed in a new location, but more than a year after Homeowners submitted the request, the HOA informed Homeowners that they violated the CC&Rs.  Homeowners moved the shed to the original location.  The HOA sought injunctive relief to require Homeowners to remove the shed, as well as liquidated damages and attorneys’ fees arising from the contract between Homeowners and the HOA.  The contract provides for an award of fees to the HOA if successful, but is silent if Homeowners are the prevailing party.  The trial court denied the HOA’s request for injunction, liquidated damages, and fees, and also denied Homeowners’ request for fees and costs. 

The Court of Appeals affirmed in part and reversed in part.  The Court affirmed denying Homeowners an attorneys’ fee award, explaining that an award under § 12-341.01 is discretionary, not mandatory, and a reasonable basis supports the trial court’s decision under the relevant § 12-341.01 factors.  Moreover, the contract only provides for mandatory fees if the HOA is successful, not Homeowners, and § 12-341.01 cannot contradict or modify the terms of the contract.  The Court reversed the denial of costs, explaining that an award of costs is mandatory to the successful party.  Because the HOA did not obtain any of the relief it sought, Homeowners were the successful party and were entitled to an award of costs.

Judge Miller authored the opinion; Presiding Judge Vásquez and Chief Judge Eckerstrom concurred.