Washington HOA fee disputes can involve more than disagreements over monthly dues or special assessments. When a property manager imposes charges without proper authority, homeowners may have legal grounds to challenge those fees and recover money collected unlawfully.
In a published decision, Hillius v. 18 Paradise LLP, No. 87954-5-I, the Washington Court of Appeals, Division One, addressed a dispute involving unauthorized maintenance fee increases and a special assessment at a residential development in Lynden, Washington.
The court reached two different conclusions. It upheld dismissal of the homeowners’ claim under Washington’s Consumer Protection Act because they failed to establish the required public interest impact. But it reversed the trial court’s refusal to award monetary relief after the fees had already been declared invalid.
The decision demonstrates an important distinction: homeowners may be entitled to financial relief even when they cannot establish a Consumer Protection Act violation.
What Led to the Washington HOA Fee Dispute?
The lawsuit involved homeowners in the Homestead Planned Residential Development, a roughly 250-acre community containing residential properties, a golf course, and common open space.
The development was established in 1992. Its governing Master Declaration provided for monthly maintenance fees to support the management and upkeep of common open space.
The declaration also allowed annual maintenance fee increases of up to 5%.
In 2013, 18 Paradise LLP purchased the development. In 2017, it entered into a management agreement with MJ Management LLC, which operated the golf course, maintained common areas, and collected fees.
Unauthorized Special Assessment and Maintenance Fee Increase
In 2019, MJ Management attempted to amend the Master Declaration to impose two charges:
- A one-time special assessment of $83 per resident.
- An increase in monthly maintenance fees from $36 to $93.
MJ Management described the monthly increase as reflecting cumulative annual increases of 5% dating back to 1992.
However, the management agreement required MJ Management to obtain express permission from 18 Paradise before imposing the special assessment or increasing maintenance fees.
The trial court determined that MJ Management had not obtained that permission.
As a result, the court declared the amendments imposing the charges invalid.
Despite that ruling, the homeowners alleged that the improperly collected money had not been returned.
Washington HOA Fee Disputes and the Consumer Protection Act
The homeowners argued that the unauthorized charges violated Washington’s Consumer Protection Act, commonly called the CPA.
The CPA prohibits unfair methods of competition and unfair or deceptive acts or practices in trade or commerce.
The relevant statute is RCW 19.86.020.
However, proving that a charge was unauthorized is not necessarily enough to establish a private CPA claim.
Five Elements of a Washington Consumer Protection Act Claim
Under Hangman Ridge Training Stables, Inc. v. Safeco Title Insurance Co., 105 Wn.2d 778 (1986), a private plaintiff generally must prove:
- An unfair or deceptive act or practice.
- Conduct occurring in trade or commerce.
- An impact on the public interest.
- Injury to the plaintiff’s business or property.
- A causal connection between the challenged conduct and the injury.
The public interest requirement was decisive in Hillius.
The homeowners argued that collecting unauthorized fees satisfied the CPA. But the appellate court concluded that they had not established the required public interest impact.
The court noted that the challenged transactions involved a fixed group of property owners. The homeowners had not shown the necessary broader impact under the legal standards applied by the court.
Accordingly, the Court of Appeals affirmed dismissal of the CPA claim.
Does RCW 19.86.093 Replace the Hangman Ridge Test?
The homeowners also argued that the legislature’s 2009 enactment of RCW 19.86.093 replaced the public interest analysis established in Hangman Ridge.
The appellate court rejected that argument.
RCW 19.86.093 permits a claimant to establish public interest impact through specified statutory circumstances, including certain statutory violations or conduct that injured other persons or had or has the capacity to do so.
The court held that the statute provides an alternative method of proving public interest impact. It does not eliminate the earlier Hangman Ridge analysis.
The homeowners failed under both approaches.
The court found no sufficient showing that the challenged conduct affected persons outside the relevant homeowners or had the capacity to produce the broader injury required under the statute.
The ruling therefore confirms that a dispute involving unlawful assessments does not automatically satisfy every element of the CPA.
Homeowners Win the Right to a Money Judgment
Although the homeowners lost their CPA claim, they succeeded on another important issue.
The trial court had already determined that the special assessment and maintenance fee increases were invalid.
But the property owner and management company still retained funds collected under those amendments.
The homeowners repeatedly sought additional relief to recover the money.
The trial court denied their requests, reasoning that they had not originally pursued a monetary judgment at trial.
The Court of Appeals disagreed.
RCW 7.24.080 Allows Further Relief After a Declaratory Judgment
The governing statute was RCW 7.24.080, which allows further relief based on a declaratory judgment when necessary or proper.
A declaratory judgment determines the parties’ legal rights or obligations.
But a declaration alone may not provide an effective remedy when a party refuses to act consistently with those rights.
In Hillius, the trial court had already declared the fee amendments invalid. The homeowners nevertheless remained without repayment.
The appellate court concluded that a money judgment was necessary and proper to enforce the previously established rights.
Why the Court Rejected the Need for Another Lawsuit
The property owner and management company argued that the homeowners were effectively asserting new monetary claims.
They also suggested that additional factual determinations could be necessary.
The Court of Appeals rejected the argument that homeowners had to pursue a separate action merely to recover money collected under amendments already declared invalid.
The court explained that further monetary relief may be appropriate even though the original declaratory judgment proceeding was not framed as a damages lawsuit.
Requiring another proceeding would undermine the practical effect of the existing judgment.
The appellate court therefore reversed the denial of further relief and remanded the case for entry of a money judgment.
The opinion does not specify the final amount of that judgment. It should not be interpreted as establishing a particular refund amount for every homeowner.
What Does This Decision Mean for Washington Homeowners?
The decision offers several important lessons for people challenging assessments, maintenance charges, and other fees imposed under residential development documents.
Review the Governing Documents Carefully
A dispute may turn on the language of a declaration, management agreement, or other governing document.
In Hillius, the property manager’s authority was limited by a requirement to obtain express permission before imposing certain charges.
That contractual restriction was central to the finding that the amendments were invalid.
Homeowners questioning a charge should review the documents that establish who has authority to impose or increase fees.
An Unauthorized Fee Does Not Automatically Establish a CPA Violation
The Consumer Protection Act provides important remedies, but its requirements must be established separately.
The public interest element can be a significant obstacle in disputes involving a limited group of property owners.
Whether a particular dispute satisfies that requirement depends on the facts and applicable law.
A Declaratory Judgment Can Support Additional Monetary Relief
A successful declaration of rights may not end a dispute if the opposing party refuses to comply.
Under RCW 7.24.080, a court may grant additional relief to make a declaratory judgment effective.
That relief can include a money judgment when the legal and factual circumstances support it.
The Hillius ruling demonstrates how this provision can matter when a court has already determined that fees were improperly collected.
What Happened to the Homeowners’ Association Issues?
The case also involved disputes about the development’s homeowners’ association and ownership of common open space.
The Master Declaration contemplated an HOA, but the trial court found that no active association existed and that the declaration did not comply with the applicable former Lynden municipal ordinance.
The homeowners also challenged the private ownership of common open space.
However, the Court of Appeals did not order 18 Paradise to relinquish ownership.
The appellate court concluded that the homeowners had not adequately established their entitlement to that relief.
It also declined to determine precisely how the development should establish a compliant homeowners’ association.
This portion of the decision illustrates that proving a problem with governance documents does not necessarily establish entitlement to every requested remedy.
Did Either Side Recover Attorney Fees?
No.
The homeowners sought attorney fees under the Consumer Protection Act, but they did not prevail on that claim.
Both sides also requested attorney fees under a provision in the Master Declaration.
Because each side prevailed on different appellate issues, the Court of Appeals declined to award appellate attorney fees to either party.
This is another reminder that a favorable ruling on one issue does not automatically entitle a party to recover legal fees.
What Should Homeowners Do When Facing Disputed Assessments?
Homeowners concerned about unauthorized charges should consider preserving the documents and records that explain how the fees were imposed.
Relevant materials may include the declaration, amendments, management agreements, notices of assessments, payment histories, and communications with the property manager or association.
The applicable legal theory also matters.
A claim seeking to invalidate an unauthorized charge may involve different elements and remedies from a Consumer Protection Act claim.
And when a court has already declared a charge invalid, the availability of further relief may depend on the terms of that judgment and the requirements of RCW 7.24.080.
The appropriate approach depends on the particular development, governing documents, and procedural history.
Contact Blanford Law
Hillius v. 18 Paradise LLP illustrates how Washington courts distinguish between proving a statutory consumer protection claim and enforcing established rights through a money judgment.
Property owners and other parties involved in civil disputes should understand both the legal basis of their claims and the remedies potentially available.
Contact Blanford Law today at ken@blanfordlaw.com or 253-720-9304 for guidance on your legal matter.
Additional Resources
Related Blanford Law Articles
1. Allstate v. Batacan: Washington Insurance Coverage and Consumer Protection Act Claims
Explains an insurance coverage dispute involving allegations of bad faith and Consumer Protection Act violations, illustrating the importance of establishing each element of a claim.
URL: https://blanfordlaw.com/allstate-v-batacan-uim-dispute/
2. Johnson v. County of Kittitas: Washington Bail Law
Discusses a Washington declaratory judgment action involving the interpretation of statutory obligations and the role of appellate review.
URL: https://blanfordlaw.com/johnson-v-county-of-kittitas/
3. Washington ER 502: Attorney-Client Privilege and Work Product
Explains how Washington courts apply specific legal requirements to determine whether communications and materials receive legal protection.
URL: https://blanfordlaw.com/washington-er-502-attorney-client-privilege/
Two additional orphaned-content resources remain unselected pending confirmation that they are relevant, currently unused, and available in the tracking pool.
This article provides general information about Washington law and does not constitute legal advice. Individual cases depend on their facts, governing documents, and applicable law.