Nottingdale Homeowners' Assn. v. Darby

In Nottingdale Homeowners' Assn. v. Darby (1987), 33 Ohio St.3d 32, 514 N.E.2d 702, the Court held that a provision in a declaration of condominium ownership or condominium by-laws requiring the payment of attorney fees incurred by a condominium owner's association in either a collection or foreclosure action for unpaid assessments is enforceable. Defendants-appellees, Keith and Ollie Darby (the Darbys), bought a Nottingdale Condominium. After several years of paying their monthly assessments, the Darbys intentionally stopped paying them. They contended that the plaintiff-appellant's, Nottingdale Homeowners Association, Inc., board of trustees was illegally elected by less than a quorum of unit owners as was required by the condominium by-laws, and, additionally, because they felt that the persons who assumed the trustees' responsibilities invalidly increased the monthly assessments above those amounts permitted by the condominium declaration. Since the Darbys failed to pay the assessments, the homeowners association filed a lien against the property and subsequently filed a foreclosure action. The homeowner's association sought approximately $ 2,500 in unpaid monthly assessments and attorney fees of over $ 12,000. The association sought attorney fees based upon certain provisions within the declaration of condominium ownership and condominium by-laws. The trial court found the lien to be valid and also awarded attorney fees. The appeals court overturned the award of attorney fees on the basis that attorney fees in Ohio are recoverable only where statutorily mandated or where the opponent acts in bad faith. The Ohio Supreme Court reversed the appellate court finding that, in this situation, attorney fees were recoverable. The Court reasoned: "By refusing to enforce the provision which would require appellees to pay appellant's reasonable attorney fees, this court would make it virtually impossible for condominium unit owners' associations to recoup unpaid assessments from recalcitrant unit owners. The expense of collection would render the effort useless. The result would be that a unit owner, who for any reason does not wish to pay his monthly service assessment, can enjoy the benefits of such services and refuse to pay for them, secure in the knowledge that collection by the association will be prohibitively expensive. Under such circumstances, what incentive would exist for the unscrupulous unit owner to pay his assessments? Obviously, very little. "As can be seen, the fee-shifting agreement in this case protects the fund of the unit owners' association from potential bankruptcy, and the conscientious contributors thereto from the burden of paying for the delinquency of others. Without such fee-shifting agreements, unit owners' associations may have to abandon claims against debtors, such as appellees, as too costly to pursue. With such agreements, the debtor will be encouraged to pay to avoid litigation, and if litigation becomes necessary, the association's resources will be protected if its suit proves meritorious. A more ideal arrangement can scarcely be imagined." Nottingdale, 33 Ohio St.3d at 36-37, 514 N.E.2d 702.