Legal Question in Real Estate Law in California

It looks like there are two issues here. The first is whether costs and attorney fees are recoverable at all. The second is whether the fees are excessive and unreasonable and therefore not collectible, or not collectible in full.

As to the first issue, attorney fees are not collectible in contract cases unless the contract so provides. Most HOA-related contracts will, however, contain a clause saying that the prevailing party to an dispute can recover their attorney fees. Looks like you do not contest the $1,000 unpaid balance.

As to the second issue, courts are somewhat reluctant to award attorney fees that exceed the basic amount of the judgment, but often will. Small-claims case outcomes are unpredictible, but just as a guess I would say the HOA is more likely than not to get a judgment for $4,000+ if obliged to sue. I would therefore suggest trying to settle out of court.