Reported / Citable
Background
When Robert Kurtz died intestate in 2020, he left behind a dilapidated house in Crescent City that had attracted squatters, drug activity, and roughly 14 tons of trash. The County of Del Norte stepped in, invoking California’s State Housing Law (Health & Safety Code § 17980.7(c)) to seek appointment of a receiver — a court-appointed manager — to rehabilitate and sell the property.
In its petition, the County named not only the “Estate of Robert D. Kurtz” but also Kurtz’s two sisters, Sheryl Allsop and Darla Britt, as defendants. The sisters had previously told the County they had no interest in the property and wanted nothing to do with it. They did not appear to oppose the receivership, which proceeded: the receiver spent about nine months rehabilitating the property, sold it, and used the proceeds to repay the secured lender and the County’s abatement costs.
Trouble arose when the receiver, unable to recover all of its own fees from the sale proceeds, sought a court order requiring the sisters to pay the shortfall — about $38,700 — as purported “successors in interest” to the property. The trial court refused, finding the County should never have sued the sisters in the first place. The sisters then moved for attorney fees as prevailing parties under § 17980.7(c)(11), which states the “prevailing party” in a receivership proceeding “shall be entitled to reasonable attorney’s fees and court costs.” The trial court denied that motion, citing an older statute, § 17984, which states that a municipality is “not liable for costs” in enforcement proceedings it brings under the State Housing Law.
The Court’s Holding
The First District Court of Appeal, Division Three reversed and held that the sisters are entitled to attorney fees. The opinion resolves a direct conflict between two statutory provisions using well-established rules of statutory construction.
The court held that § 17980.7(c)(11) — enacted in 1990 as part of the Legislature’s creation of the housing receivership remedy — is both more specific and more recently enacted than § 17984, which dates to 1961. When two conflicting statutes cannot be harmonized, the more specific and more recent statute controls. Because § 17980.7(c)(11) applies only to receivership proceedings under that specific section (while § 17984 applies broadly to all housing enforcement actions), it creates an exception to § 17984’s general cost-immunity for municipalities. Legislative history confirmed this reading: committee reports expressly told lawmakers that the new bilateral fees provision would apply to all categories of proceedings under § 17980.7, including ones only an enforcement agency can initiate — which necessarily implies fee awards against municipalities were intended.
The court also rejected the County’s argument that it was the sole “prevailing party” because it successfully obtained the receiver’s appointment. In a multi-party proceeding, more than one party can prevail. The County prevailed on abatement; the sisters prevailed entirely on the only claim ever asserted against them — that they should bear personal liability for the receivership costs. Because the sisters achieved a complete victory on that discrete claim, they are prevailing parties entitled to fees, regardless of the County’s success elsewhere in the litigation.
Key Takeaways
- When a county brings a housing receivership proceeding and names relatives or other third parties as defendants, those parties may recover attorney fees as prevailing parties under Health & Safety Code § 17980.7(c)(11) if they successfully defeat any claims against them — even if the county wins the receivership itself.
- The 1990-enacted § 17980.7(c)(11) overrides the older, more general § 17984 cost-immunity for municipalities in the receivership context. Ballard (2006), which suggested otherwise in dicta, is not controlling where a receivership proceeding is actually involved.
- In multi-party receivership actions, courts should assess “prevailing party” status separately as between each pairing of adverse parties, not just for the case as a whole.
- Receivers and enforcement agencies should be cautious about naming parties in receivership petitions who have disclaimed any ownership interest; if those parties successfully resist liability, the agency may owe them fees.
- Receivers who fail to secure their fees through super-priority liens before distributing sale proceeds do so at their own risk — pursuing third parties after the fact can generate fee liability for the petitioning agency.
Why It Matters
California counties routinely use housing receiverships to tackle blighted, dangerous properties — often when an owner has died without clear heirs or when an estate has never been probated. This decision imposes a significant accountability check: if a county casts too wide a net by naming relatives or other parties who have no real ownership stake, it risks owing those parties their attorney fees if they successfully defend. That financial exposure should encourage more careful lawyering before filing and more disciplined identification of who actually controls or benefits from a problem property.
For practitioners representing property owners, heirs, or other parties who find themselves unexpectedly named in a government-initiated receivership, this decision confirms a clear path to fee recovery. The opinion also clarifies an unresolved split in the courts about what “prevailing party” means in multi-party housing law litigation, giving attorneys a useful analog from the Civil Code § 1717 context to support fee motions where different parties prevailed on different issues.