Court Determines Standard of Review for Denial of AALA Claim
In Mahoney v. Loma Alta Property Owners Assoc., No. 2080192 (Ala. Civ. App. March 27, 2009), the Court of Civil Appeals noted that although the Alabama Supreme Court has identified the standard of review for trial court awards of damages under the Alabama Litigation Accountability Act, the Court has not addressed the standard of review for appeals from orders denying a claim for ALAA damages. The Court concluded that the standard of review that applies to an appeal of an order awarding damages under the ALAA also applies to an appeal from a trial court order denying a claim for damages under the ALAA: “when the trial court denies an ALAA claim without stating its reasons, this court will reverse only when the record shows indisputably that the ‘action, claim, or defense’ is either ‘groundless in fact’ or ‘groundless in law.’” The court noted that an order denying a request for ALAA damages does not have to include findings of fact; an order granting a motion does.
“Section 12-19-272(a), Ala. Code 1975, provides that a trial court ‘shall award’ an attorney's fee against any party ‘who has brought a civil action, or asserted a claim therein, or interposed a defense, that a court determines to be without substantial justification, either in whole or part.’” Id. “’The clear terms of § 12-19-271(1) require that for an action, claim, or defense to be `without substantial justification' it must be either 'frivolous,' `groundless in fact,' `groundless in law,' `vexatious,' or `interposed for any improper purpose.' We conclude that the terms or phrases 'frivolous,' `groundless in fact,' `vexatious,' and 'interposed for any improper purpose' require factual determinations that will be entitled to deference on appeal. Thus, if a trial court determines that a party's action, claim, or defense is `without substantial justification,' based on the applicability of any one of these terms or phrases, that determination will not be disturbed on appeal 'unless it is clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence.' Cove Creek Development Corp. v. APAC-Alabama, Inc., 588 So. 2d 458, 461 (Ala. 1991).” Id. (citations omitted). The Court of Appeals reversed the trial court order denying the plaintiff’s ALAA claim and awarded her $500 in attorneys fees, based on her claim that the property owners’ association improperly asserted a claim against her for unpaid fees and late charges. The claim was baseless in fact because the plaintiff did not own the property.
