(a) “Public swimming pool,” as used in this section, means any swimming pool operated for the use of the general public with or without charge, or for the use of the members and guests of a private club, including any swimming pool located on the grounds of a hotel, motel, inn, an apartment complex, or any residential setting other than a single-family home. For purposes of this section, public swimming pool shall not include a swimming pool located on the grounds of a private single-family home.
(b) The design and installation of all underwater lighting systems, operating at more than 15 volts, supplied from a branch circuit either directly or by way of a transformer, shall be installed in a public swimming pool, as defined in this section, so that there is no shock hazard with any likely combination of fault conditions during normal use, and shall comply with both of the following requirements:
(1) An approved ground-fault circuit interrupter shall be installed in the branch circuit that supplies all fixtures operating at more than 15 volts.
(2) Only approved underwater lighting fixtures shall be used and no lighting fixtures shall be installed for operations at more than 150 volts between conductors.
(c) Any public swimming pool that does not meet the requirements specified in subdivision (b), shall be retrofitted to comply with these requirements by May 1, 1999.
(d) The ground-fault circuit interrupter required pursuant to this section shall comply with standards acceptable to the authority having jurisdiction.
(e) The owner or operator of a public swimming pool shall, on or before May 1, 1999, comply with both of the following:
(1) Obtain an inspection of its public swimming pool by the local health officer or a qualified contractor as set forth in subdivision (f).
(2) Certify to the local health officer as set forth in Section 116053 that the public swimming pool facility is in compliance with this section.
(f) All electrical work required for compliance with this section shall be performed by a person licensed to perform electrical work within his or her general, specialty, or limited specialty contractor’s licensed scope of practice pursuant to Section 7059 of the Business and Professions Code.
(g) This section shall be known and may be cited as the Yasmin Paleso’o Memorial Swimming Pool Safety Law.
Related Links
Increased Maintenance Requirements for HOA Pools in California – Published on HOA Lawyer Blog (10/31/15)
22 CCR Section 65503. Public Swimming Pools; Definitions and Scope.
(a) The provisions of this Chapter shall apply to all public pools and public pool sites, including, but not limited to:
(1) Amusement park pools.
(2) Apartment house pools.
(3) Bed and breakfast inn pools.
(4) Campground pools.
(5) Club pools.
(6) Commercial pools.
(7) Condominium pools.
(8) Health or fitness club pools.
(9) Homeowner association pools.
(10) Hotel pools.
(11) Licensed day care facility pools.
(12) Medical facility pools.
(13) Mineral springs pools.
(14) Motel pools.
(15) Municipal pools.
(16) Public or private school pools.
(17) Recreational vehicle or mobile home park pools.
(18) Resort pools.
(19) Special purpose pools.
(20) Spray grounds.
(21) Swim school pools.
(22) Water park pools.
(23) Wave pools.
(b) Mineral springs pools that meet the fresh water flow exception standard in section 3123B.1, Title 24, California Code of Regulations (CCR), must comply with all the public pool standards in this chapter except for continuous public pool disinfection requirements in section 65529, if monthly bacteriological water-quality standards are met according to section 65531. Mineral springs pools that do not meet the fresh water flow exception standard in section 3123B.1, Title 24, CCR, shall comply with all public pool standards in this chapter and Title 24, CCR.
(c) The provisions of this Chapter shall apply to all ancillary facilities and equipment provided, operated, and maintained in connection with public pools, including, but not limited to:
(1) Dressing rooms.
(2) Drinking fountains.
(3) Fencing and enclosures.
(4) Locker rooms.
(5) Pool decks.
(6) Safety equipment.
(7) Shower rooms.
(8) Toilet facilities.
(9) Water treatment systems.
(d) A private pool is any constructed pool, permanent or portable, that is intended for use by occupants of not more than three residential units. Private pools are not public pools for the provisions of this chapter.
Note: Authority cited: Sections 116035, 116050, 131052 and 131200, Health and Safety Code. Reference: Sections 116025 and 116043, Health and Safety Code.
Current through 8/14/15 Register 2015, No. 33
Related Links
Increased Maintenance Requirements for HOA Pools in California – Published on HOA Lawyer Blog (10/31/15)
AB 786 (Levine). Common Interest Developments: Property Use & Maintenance.
Limits the exception extended to certain HOAs that use recycled water from being able to fine homeowners for reducing or eliminating the watering of vegetation or lawns during government-declared drought periods. HOAs would be permitted to fine homeowners for eliminating watering of lawns during droughts provided that the homeowner’s property subject to the fine has previously received, and continues to receive, recycled water for landscaping irrigation.
Current Status: Chaptered
FindHOALaw Quick Summary:
Existing law prohibits an association from imposing a fine or assessment against a homeowner for reducing or eliminating the watering of vegetation or lawns during government-declared drought periods. That prohibition does not extend to an association that “uses recycled water…for landscaping irrigation.” (Civ. Code § 4735(c).)
AB 786 (Levine) would amend Civil Code Section 4735 to authorize the fining of an owner if the owner’s property has received, and continues to receive, recycled water for landscaping irrigation. This bill would incorporate additional changes to Section 4735 proposed by AB 349 (Gonzalez) that would become operative if this bill and AB 349 are enacted and this bill is enacted last. This bill would declare that it is to take effect as an emergency statute.
*UPDATE: AB 786 was signed into law on October 13, 2015 and its changes to the law took immediate effect.
View more info on AB 786from the California Legislature's website
Related Links
Failure to Enforce
An association has the duty to enforce the restrictions set forth in its CC&Rs. When it fails to do so, “a homeowner can sue the association for damages and an injunction to compel the association to enforce the provisions of the [CC&Rs].” (Posey v. Leavitt (1991) 229 Cal.App.3d 1236, 1246.) However, an association’s enforcement duty does not necessarily require its board of directors to litigate every violation of the association’s governing documents; the board is granted some discretion in determining whether or not to litigate any particular violation. (See “Duty to Enforce.”)
Relinquishment of Enforcement Rights
If an association’s board fails or refuses to enforce the restrictions, the association may ultimately lose its right and ability to enforce the restrictions based upon the following:
- Statute of Limitations – The statute of limitations for a violation of a restriction is five (5) years from the time the association “discovered or, through the exercise of reasonable diligence, should have discovered the violation.” (Code. Civ. Pro § 336(b).) The term “restriction” in this respect does not mean only those restrictions which are recorded in the CC&Rs; it also includes unrecorded restrictions such as architectural standards. (Pacific Hills HOA v. Prun (2008) 81 Cal.App.4th 1557, 1563-1564.)
- Laches – Laches is an equitable defense that is used against persons who are unjustifiably slow to exercise a right or claim. The defense of laches could be used to defeat an association’s enforcement action if an association unreasonably delays in exercising its enforcement rights and that delay results in prejudice to the violating homeowner. (Pacific Hills, at 431.)
- Waiver – “The right to enforce a restrictive covenant may be deemed generally waived when there are ‘a sufficient number of waivers so that the purpose of the general plan is undermined,’ in other words, when ‘substantially all of the landowners have acquiesced in a violation so as to indicate an abandonment.’” (Alfaro v. Community Housing Improvement System & Planning Assn. (2009) 171 Cal.App.4th 1356, 1380.)
Posey v. Leavitt
[Restrictions; Duty to Enforce] A homeowner has the right to sue the HOA to compel the HOA to uphold its duty to enforce the restrictions.
Iwasaki, Thomas & Sheffield and Bruce T. McIntosh for Plaintiff and Appellant.
Honey Kessler Amado for Defendants and Respondents.
OPINION
HOLLENHORST, J.
Plaintiff Posey, owner of a condominium at Lake Arrowhead, filed this action against Mr. and Mrs. Leavitt, owners of another condominium in the same development. Mr. Posey contended that the Leavitts built a deck extension on the side of their condominium that encroached the common area and obstructed his view. Mr. Posey also sued his condominium association for breach of fiduciary duty.
Certain issues were presented to the jury on special interrogatories, and the trial court entered a judgment in favor of the Leavitts and against Mr. Posey. However, the jury awarded Mr. Posey $30,000 damages against the association.
ISSUES
Mr. Posey appeals, contending that the trial court failed to rule on certain equitable issues and misconceived its duty in ruling on the claims for injunctive relief. Specifically, he contends that the trial court erred in submitting all legal and equitable issues to the jury, in failing to consider that the jury’s decision was only advisory on the equitable issues, in failing to make its own factual determinations, and in failing to issue a statement of decision. Secondly, he argues that the stipulation of the parties that the deck encroached on the common area should have led to findings of trespass and nuisance as a matter of law. He also contends that the Leavitts cannot rely on the board’s ratification of its consent to the deck construction. Mr. Posey also raises issues concerning jury instructions.
THE COMPLAINT
In order to understand Mr. Posey’s contentions, we first review the allegations of the complaint and the manner in which they were presented to [1241] the jury. The first three causes of action are against the Leavitts for wilful trespass, negligent trespass, and nuisance. For relief, plaintiff seeks an order requiring removal of the deck extension and damages.
The fourth cause of action is against the homeowners association for breach of fiduciary duty and breach of the covenant of good faith and fair dealing. In that cause of action, Mr. Posey contended that the association breached its fiduciary duties by approving the deck extension, and in not requiring its removal. He sought damages against the association.
TRIAL COURT PROCEEDINGS
At the beginning of trial, the Leavitts made a motion for judgment on the pleadings and argued that the court should decide whether a nuisance existed before submitting the damages issues to the jury.[FN.1] They urged that there was no nuisance and no trespass. The trial court did not deny the motion at that time, but stated that it felt that the case presented issues that should go to the jury. Subsequently, the trial court denied the motion on grounds that the pleadings stated sufficient causes of action to proceed.
The Leavitts’ counsel also moved at the beginning of the trial to bifurcate the trial so that the issue of nuisance would be first heard by the court. Although the trial court stated that it agreed that it would decide the nuisance issue, it denied the motion.
In his brief, Mr. Posey states that, at the time jury instructions were discussed, the trial court decided that it would not make a preliminary decision on the trespass and nuisance issues, but would submit these issues to the jury. Unfortunately, the court’s reasoning is unknown because this discussion was not reported.
The jury was asked to make 15 special findings. These questions included whether the board of the association had consented and/or ratified the deck improvement, whether the defendants had relied on the statements made to them, and whether the association had violated its fiduciary duties. Mr. Posey specifically objects to the asking of three questions: (1) “8) Was the use of Mr. and Mrs. LEAVITTS [sic] deck extension an interference, substantial and unreasonable, such as would be offensive to a normal person?” (The jury found it was not by a vote of 10-2); (2) “13) Did defendants, DAVID & AILEEN LEAVITT intentionally and willfully trespass on the `Common [1242] Area’?” (The jury found they did not by a vote of 11 to 1); and (3) “14) Did defendants David & Aileen Leavitt negligently trespass on the `Common Area’?” (The jury found they did not by a vote of 9 to 3.) The jury answered these questions as shown and found for the Leavitts generally.
Following the jury’s decision, a hearing was held on December 8, 1987, ostensibly on an equitable indemnity cross-complaint between the Leavitts and the association. At that time, the trial court also ruled on Mr. Posey’s request for injunctive relief, even though his counsel was absent. The court said: “I am prepared to rule on that. And my ruling would be that there is no injunctive relief. Based upon the jury’s finding and the jury’s verdict, there is no justification for any injunctive relief being granted by this court and would deny the plaintiffs’ request in that regard.”
At a subsequent hearing, Mr. Posey’s counsel sought to reargue the request for injunctive relief. The court granted his request, saying “I have to tell you that I’m probably a little bit predisposed in this matter because I had [previously ruled on the matter] and I don’t feel that I was inclined to violate the — or set aside the jury’s verdict as far as their opinion in order to grant any injunctive relief, but I’m willing to listen to your argument.” Mr. Posey’s counsel then requested that “the court try to set aside what it’s previously done and consider the points and authorities I’ve cited. [¶] THE COURT: I intend to do that.” Mr. Posey’s counsel then argued that his understanding was that the court would decide the equitable issues and that the jury would decide the damage claims against the association. Mr. Posey’s counsel argued that it was error for the trial court to submit the equitable issues to the jury, but that “I think that the appropriate thing for the court to do at this time is to consider the evidence that was presented in its own mind and make its own independent determination on the equitable issues involved.” He also argued that the jury was mistaken in the law if it concluded that the Leavitts’ reliance on the association’s alleged consent eliminated the trespass. He urged the court to correct the jury’s alleged mistake of law.
The Leavitts’ counsel responded that the jury was correct if it found that the consent of the association eliminated the trespass.
After further arguments on the merits of the issue, and the cross-complaint for implied indemnity against the association, the trial court said: “It will be under submission. [¶] I would only comment that, if the court really had any equitable power it could use, the best thing it could do would be to put the clock back to the Spring of 1981 and let all these things transpire over again. [¶] If there ever was a classic case of a no-win situation, this is also it.”
[1243] The trial court then issued its ruling on January 21, 1988. Characterizing the motion as a motion for reconsideration of the December 8, 1987, ruling, it denied reconsideration [FN.2] Six days later, the Leavitts filed a request for a statement of decision. Twelve days later, Mr. Posey filed a similar request. (1) (See fn. 3.) The trial court denied the requests as being untimely.[FN.3] Accordingly, we have no record of the reasons for the trial court’s decision other than the comments quoted above.
DISCUSSION
Plaintiff was plainly seeking equitable relief against the Leavitts in the form of an injunction to remove the encroachment. (2) Injunction is a remedy for the torts of trespass and nuisance. (See, generally, Code Civ. Proc., §§ 525, 526, 731; Civ. Code, § 3501; 5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, §§ 604, 607, pp. 704, 706; 11 Witkin, Summary of Cal. Law (9th ed. 1990) Equity, §§ 82, 121, 126, pp. 760-761, 802-803, 807-808; 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, §§ 773-774, pp. 217-219.) The Leavitts defended on grounds that the consent of the association eliminated any trespass or nuisance.
(3) “Nuisance is distinguishable from trespass in that the mere intentional entry on land may violate the right of exclusive possession and create a right of action for trespass, while conduct or activity cannot amount to a nuisance unless it substantially interferes with the use and enjoyment of the land.” (11 Witkin, Summary of Cal. Law, supra, Equity, § 125, p. 806.) (4) An action to abate a nuisance is an action in equity. (Meek v. DeLatour (1905) 2 Cal. App. 261, 263 [83 P. 300],disapproved on other grounds in Robinson v. Puls (1946) 28 Cal.2d 664, 666 [171 P.2d 430].)
(5) An encroachment is usually both a trespass and a nuisance. (11 Witkin, Summary of Cal. Law, supra, Equity, § 126, pp. 807-808.) The parties here stipulated that an expert witness would testify that all of the areas outside the buildings themselves, including decks and stairs, encroached [1244] on the common area. The issue of encroachment was therefore removed from the case, and did not need to be decided by the court or jury.
(6) Since the action was an equitable action, there was no right to a jury trial on the consent defense.[FN.4] (Wolford v. Thomas (1987) 190 Cal. App.3d 347, 353-354 [235 Cal. Rptr. 422]; Bank of America v. Greenbach (1950) 98 Cal. App.2d 220, 230 [219 P.2d 814].) (7) “Where a jury trial is not a matter of right, but is nonetheless permitted, the verdict rendered is advisory only. The court may accept or reject it, and, irrespective of the verdict, must make findings to complete the record.” (Estate of Kreher (1951) 107 Cal. App.2d 831, 837 [238 P.2d 150]; Estate of Cazaurang (1946) 75 Cal. App.2d 217, 225 [170 P.2d 694].) If there is no right to a jury trial, a party must file a motion to have any issues tried to the jury, but the jury’s decision is advisory. (Cal. Rules of Court, rules 230, 231.) While our record is incomplete on this issue, it is clear that plaintiff properly pointed out to the trial court that any error in submitting issues to the jury would be cured if the trial court adopted the jury’s findings as its own. (Whiting v. Squeglia (1924) 70 Cal. App. 108, 114 [232 P. 986].) Nevertheless, the trial court did not do so.
Here, the jury decided that the Leavitts did not obtain the required written consent of the board of directors at a meeting on June 25, 1981, but that the board subsequently ratified the deck construction and the chairman of the board led the Leavitts to reasonably believe they had board approval. Somewhat inconsistently, the jury then found that a subsequent letter by a member of the board ratified the prior acts of the board and constituted “a confirmation of `written consent.'”
Assuming that the jury found that consent had been given, and the trial court agreed, the legal question becomes whether the board had the power to consent to a trespass on the common area by a homeowner. The resolution of this question turns on the reconciliation of two different doctrines.
(8a) Mr. Posey contends that, under principles of real estate law, as applied by the condominium documents here, he was a tenant in common [1245] of the common area with the other homeowners, and he therefore had the right to directly enforce the equitable servitudes binding the homeowners. They primarily rely on Civil Code sections 1351 and 1354. Civil Code section 1351, subdivision (f) defines a condominium to consist “of an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit….” Civil Code section 1354 states: “The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both.”[FN.5]
The Leavitts contend that, under real estate and corporate law principles, the homeowner’s association owned the common area, and that the board of directors therefore had the power to sell, transfer, or, in this case, authorize an encroachment into the common area. The Leavitts point out that the developers deeded the common area (lot 56) directly to the homeowners association, a nonprofit corporation. They argue that the homeowners association was therefore the owner of the common area and it could consent to the encroachment.
The articles of the association empower it to “sell, lease, transfer, dedicate for public use or otherwise dispose of real or personal property in connection with the affairs of the Association.” The Leavitts contend that the power to sell must include the lesser power to consent to an encroachment.
The bylaws of the association give the board of directors the power to “exercise for the Association all powers, duties and authority vested in or delegated to this Association and not reserved to the membership by other provisions of these By-Laws, the Articles of Incorporation, or the Declaration.”
(9) (See fn. 6.) The declaration also contemplates ownership of the common area by the association, with the owners having easements over the common area.[FN.6] It therefore provides: “Every Owner shall have a right and [1246] easement of enjoinment [sic, enjoyment] in and to the Common Area which will be appurtenant to and shall pass title to every Lot….”[FN.7] The declaration also provides that the percentage of ownership of the common area shall not be changed without the consent of all of the owners.
(8b) The parties here focused on a section of the declaration which states: “No Owner shall, without first obtaining written consent of the Board, make or permit to be made any structural alteration or structural improvement in or to his Lot or in or to any other part of the Project. No Owner shall take any action or permit any action to be taken that will impair the structural soundness or integrity or safety or [sic, of] any building or other structure in the Project or impair any easement or right or personal property which is a part of the Project, without the written consent of all Owners.” The Leavitts argued that, having obtained the written consent required by the first sentence, their project met the requirements of the declaration, even though it was not approved by the other homeowners.
We disagree for two reasons. Under the second sentence, an encroachment into the common area impairs the easements of the other owners over the common area, and thus requires the consent of all of the homeowners.[FN.8]
Secondly, although the Leavitts contended that board approval was sufficient because the board owns the common area, it is not necessary that the plaintiff own the property. All plaintiff needed to do was to show a possessory right superior to the right of the trespassers. (5 Witkin, Cal. Procedure, supra, Pleading, §§ 582, 586, pp. 48-49, 51-52.) Plaintiff clearly had such a right here.[FN.9]
(10a) Under well-accepted principles of condominium law, a homeowner can sue the association for damages and an injunction to compel the association to enforce the provisions of the declaration. (Cohen v. Kite Hill Community Assn. (1983) 142 Cal. App.3d 642 [191 Cal. Rptr. 209].) (8c) More importantly here, the homeowner can sue directly to enforce the declaration. “The typical declaration provides that the association or any owner has the right to enforce the declaration by any proceeding at law or in equity…. Ordinarily the declaration would be enforced by the association. However, in the event of that body’s failure or inability to act because of divergence of opinion among the members, any one of the unit/lot owners may take legal action to enforce the restrictions against what he considers to be a violation by one or more other unit/lot owners.” (Hanna, Cal. Condominium Handbook (2d ed. 1986) § 14.58, p. 430.)[FN.10]
(10b) “Any owner who believes that the association is not discharging its duty to enforce the restrictions has an individual cause of action against the association and the person who has violated the restrictions….” (7 Miller & Starr, Cal. Real Estate,supra, § 20:58, pp. 128-131; 4 Witkin, Summary of Cal. Law (9th ed. 1988) § 495, pp. 672-673.)
(8d) We therefore conclude that the trial court should have initially decided at least the trespass cause of action in favor of the plaintiff, and that, since the consent of the board of directors was insufficient authorization for the encroachment, the trial court should not have submitted any issues to the jury. The parties initially viewed the jury as the fact-finder on the damage claims against the association. If it had been limited to this role, the trial would have been substantially shortened and error avoided.
(11) Despite this conclusion, we do not find that Mr. Posey should automatically receive the injunction he seeks. As the Leavitts point out, theirs is a small encroachment and the governing principles were long ago summarized in Christensen v. Tucker (1952) 114 Cal. App.2d 554 [250 P.2d 660]: “It is our view that the better reasoned cases hold that in encroachment cases the trier of fact possesses some discretion in determining whether to grant or to deny the mandatory injunction. In exercising that discretion, and in weighing the relative hardships, the court should consider various factors. It starts with the premise that defendant is a wrongdoer, and that plaintiff’s property has been occupied. Thus, doubtful cases should be decided in favor of the plaintiff. In order to deny the injunction, certain factors must be present: 1. Defendant must be innocent — the encroachment must not be the result of defendant’s willful act, and perhaps not the result [1248] of defendant’s negligence. In this same connection the court should weigh plaintiff’s conduct to ascertain if he is in any way responsible for the situation. 2. If plaintiff will suffer irreparable injury by the encroachment, the injunction should be granted regardless of the injury to defendant, except, perhaps, where the rights of the public will be adversely affected. 3. The hardship to defendant by the granting of the injunction must be greatly disproportionate to the hardship caused plaintiff by the continuance of the encroachment and this fact must clearly appear in the evidence and must be proved by the defendant. But where these factors exist, the injunction should be denied, otherwise, the court would lend itself to what practically amounts to extortion.” (Id., at pp. 562-563; see, generally, 4 Witkin, Summary of Cal. Law, supra,Real Property, § 426, pp. 608-609; 11 Witkin, Summary of Cal. Law, supra, Equity, §§ 153-158, pp. 833-840): “Even the early California cases recognized the defense of balancing conveniences where the nuisance consisted of a slight encroachment of buildings on adjoining property.” (11 Witkin, supra, at p. 835.)
After citing this rule, defendants apply it to the facts of this case and conclude that the trial court properly denied injunctive relief. Thus, they contend that they acted in good faith and in reliance on the consent given them by the board of directors of the association.[FN.11] Secondly, they argue that Mr. Posey will not sustain any irreparable harm if the deck extension is not removed, particularly since he has no enforceable right to a view. Third, they contend that the hardship and cost to them from a removal of the deck extension outweighs the insignificant obstruction of Mr. Posey’s view if the deck extension remains.
The problem with defendants’ argument is that, while the trial court could have made these determinations in their favor, it did not.[FN.12] The trial court’s comments quoted above show that it did not decide the case under its equitable jurisdiction, did not independently evaluate the evidence, did not specifically adopt the jury’s findings, and did not weigh the relative hardships to decide whether to grant or deny the injunction. Even the cases defendants cite to support their position also support the proposition that [1249] the case will be reversed and remanded if the trial court has failed to weigh the relative hardships and make proper findings. (Brown Derby Hollywood Corp. v. Hatton, supra, 61 Cal.2d 855; D’Andrea v. Pringle (1966) 243 Cal. App.2d 689 [52 Cal. Rptr. 606]; Christensen v. Tucker, supra, 114 Cal. App.2d 554.)
(12) Anticipating this problem, defendants rest on the presumption in favor of the validity of a judgment and contend that a correct decision should be upheld even if it is based on the wrong reasons.[FN.13] They argue that the judgment is valid on its face, and, since there was no statement of decision, it will be presumed that the trial court found all facts necessary to support the judgment, citing In re Marriage of Ditto(1988) 206 Cal. App.3d 643 [253 Cal. Rptr. 770].
We reject this argument for two reasons. First, unlike Ditto, we have found that the trial court was properly asked for a statement of decision and failed to give it. Second, the judgment here contains the special findings of the jury quoted above, but no reasons for the denial of equitable relief. Because of the inconsistencies in the findings, we cannot presume that the judgment is regular. Since the trial court’s comments quoted above indicate that the trial court did not exercise its discretion, we cannot presume that it did.
Since the trial court failed to exercise its discretion in this regard, the case must be remanded to allow it to do so. However, for its guidance, we briefly discuss some of the other issues raised by the parties, and their effect on the trial court’s future deliberations. (See, generally, 5 Miller & Starr, Cal. Real Estate, supra, § 14:13, pp. 328-334.)
- Alleged Right to a View.
(13) In applying the Christensen test, the trial court will generally grant the injunction if it finds that the plaintiff will suffer irreparable injury from the encroachment. To decide whether the plaintiff here will suffer irreparable injury, the trial court must decide the threshold question of whether plaintiff had a right to his view.
Generally, there is no such right. Venuto v. Owens-Corning Fiberglas Corp. (1971) 22 Cal. App.3d 116 [99 Cal. Rptr. 350], states the general rule: “Although, in the light of the foregoing principles, it would appear that an interference with the view from land may amount to a nuisance, the courts have held that a building or structure cannot be complained of as a nuisance [1250] merely because it obstructs the view from neighboring property.” (Id., at pp. 126-127.) The jury was correctly, although unnecessarily, instructed here that, under California law, a landowner has no right to an unobstructed view over adjoining property. (See, also, Wolford v. Thomas, supra,190 Cal. App.3d 347; Pacifica Homeowners’ Assn. v. Wesley Palms Retirement Community (1986) 178 Cal. App.3d 1147, 1152 [224 Cal. Rptr. 380]; Katcher v.Home S. & L. Assn. (1966) 245 Cal. App.2d 425 [53 Cal. Rptr. 923].)
“As a general rule, a landowner has no natural right to air, light or an unobstructed view and the law is reluctant to imply such a right. [Citations.] Such a right may be created by private parties through the granting of an easement [citations] or through the adoption of conditions, covenants and restrictions … or by the Legislature [citations].” (Pacifica Homeowners’ Assn. v. Wesley Palms Retirement Community, supra, 178 Cal. App.3d 1147, 1152, italics added.)
The declaration here does not contain a specific provision giving homeowners a right to existing views. It is also true that, as defendants pointed out at oral argument, the courts are reluctant to imply such a right. Nevertheless, the practical effect of enforcing the provisions of the declaration would be to give protection to plaintiff’s existing view.
For example, plaintiff relied on general language in the declaration to support his contention that a right to a view could be found in the declaration. He pointed out that the declaration refers to an easement of “enjoinment,” which is presumably intended to be the right of quiet enjoyment stated in Civil Code section 1463. (See, generally, Petroleum Collections Inc. v. Swords (1975) 48 Cal. App.3d 841 [122 Cal. Rptr. 114].) Such a right is a running covenant, enforceable as an equitable servitude. (Civ. Code, § 1462; Cal. Condominium and Planned Development Practice (Cont.Ed.Bar 1984) §§ 1.9, pp. 15-16, 8.42-8.44, pp. 666-668.) The declaration also requires owners to adhere to the rules of the association. These rules require the common area to remain unobstructed, and the effect of strictly enforcing the right of quiet enjoyment or these rules would be to remove the alleged obstruction to plaintiff’s view.
On the other hand, as defendants point out, the declaration allows any owner to use the common area “in accordance with the purposes for which it is intended, so long as he does not hinder or encroach upon the lawful rights of the other Owners.” (Declaration, par. 6, pp. 7-8.) Defendants argue that, since a view is not generally a “lawful right,” plaintiff’s only right is the right to be free from an unreasonable interference with the use and enjoyment of his property. Although the jury found no such unreasonable [1251] interference here, the trial court could find that the encroachment itself was an unreasonable interference with the intended uses of the common area.
Accordingly, in determining whether plaintiff has suffered irreparable injury, the trial court should not consider deprivation of a view, per se, as an injury. It should, however, consider the total effect of the encroachment and specifically whether it constitutes an unreasonable interference with plaintiff’s rights under the declaration and rules. In interpreting the documents, the trial court should apply a rule of liberal interpretation to facilitate the operation of the development. (Civ. Code, § 1370; 7 Miller & Starr, Cal. Real Estate, supra, § 20:57, pp. 126-128.)
If the trial court finds that the defendants are innocent and that plaintiff will not suffer irreparable injury, the court should then proceed with evaluating the relative hardships under the third prong of the Christensen test. (Christensen v. Tucker, supra, 114 Cal. App.2d 554.) The considerations discussed in this section would also apply in balancing the relative hardships.
- Interference With Use.
(14) In considering irreparable injury and relative hardships, the trial court should not consider the Leavitts’ use of the deck extension.
Defendants contend that there is no nuisance because the jury found that the use of the deck extension by the Leavitts was not “an interference, substantial and unreasonable, such as would be offensive to a normal person.” Thus, they cite cases such as Venuto v. Owens-Corning Fiberglas Corp., supra, 22 Cal. App.3d 116, 126-127, which discuss the noninvasive activities that may constitute a nuisance. Venuto states: “Under the law of nuisances, where personal discomfort is the basis of the complaint the test of liability is the effect of the alleged interference on the comfort of normal persons of ordinary sensibilities in the community.” (Id., at p. 126.) However, these cases are not applicable here because this is not a case of noninvasive activities that constitute a nuisance. The encroachment is an obstruction to the free use of the common area, and is itself the nuisance. (Civ. Code, § 3479; 11 Witkin, Summary of Cal. law, supra, Equity, § 156, pp. 835-837.) The trial court therefore need not consider whether the Leavitts’ use of the deck extension interfered with the Mr. Posey’s use of his deck in applying the balancing test.
- Effect of Prior Award of Money Damages.
(15) The trial court can consider injunctive relief despite the fact that the jury awarded Mr. Posey money damages against the association.
[1252] Defendants contend that the trial court cannot award injunctive relief because Mr. Posey was awarded money damages against the association. They argue that the damages were for the diminishment in value of the Posey property, and that, having been awarded such damages, Mr. Posey cannot obtain injunctive relief.
We disagree. The cause of action against the association was for breach of fiduciary duty. (Cf. Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 513-514 [229 Cal. Rptr. 456, 723 P.2d 573, 59 A.L.R.4th 447].) Although Mr. Posey claimed a diminishment in value of approximately $50,000, it is not clear that damages were awarded for that diminishment. The jury may well have awarded the $30,000 to Mr. Posey, payable by the association, to compensate him for the costs of bringing an action that the association should have brought. Damages were the legal remedy for the breach of fiduciary duty, while injunctive relief was the equitable remedy sought for the trespass and nuisance. (Rest.2d, Torts, § 822, com. d.) Defendants’ argument also fails because Code of Civil Procedure section 731 allows a plaintiff to both enjoin or abate a nuisance and also recover damages. The trial court remains free, on remand, to issue the requested injunction, to award damages in lieu of an injunction, or to find for defendants.
DISPOSITION
The judgment is reversed and the case is remanded with instructions to the trial court to exercise its discretion to decide whether or not to issue an injunction by applying the tests stated in Christensen v. Tucker, supra, 114 Cal. App.2d 554. In making this determination, the trial court should consider whether or not the encroachment by the Leavitts was innocently made, whether Mr. Posey will suffer irreparable injury if the injunction is not issued, and the relative hardships to the parties caused by granting or denying the injunction. The trial court should also make and enter a statement of decision in accordance with Code of Civil Procedure section 632. Plaintiff is to recover costs on appeal.
Dabney, Acting P.J., and McKinster, J., concurred.
[FN. 1] The record is not complete because the trial briefs and written motions were not included in the record. The transcript indicates that the parties and the court generally accepted the principle that the trial court would decide the trespass and nuisance issues, and the jury would determine monetary damages.
[FN. 2] Defendants correctly note that plaintiff then filed an improper notice of appeal dated March 18, 1988, from the minute order instead of the judgment. Defendants properly moved to augment the record to include the judgment filed July 25, 1988, and suggest that we must treat the appeal as timely filed pursuant to California Rules of Court, rule 2(c). While such treatment is discretionary, not mandatory, we agree with defendants that we should consider the appeal on its merits. We note, however, that the perfection of the appeal, including obtaining the judgment and including it in the record on appeal, is properly the burden of the appellant, not the respondent.
[FN. 3] The trial court apparently counted the time from its earlier decision in December, despite its statement that it would set aside its previous decision and consider the matter over again. While there is some question as to the timeliness of the plaintiff’s request in February, the Leavitts’ request was clearly filed in time. The trial court therefore erred in denying the request for a statement of decision. (Code Civ. Proc., § 632.)
[FN. 4] The action could also be construed as an action for the recovery of real property, i.e., an ejectment action. If so, factual issues raised by the consent defense would be properly triable by the jury: “In actions for the recovery of … real … property, with or without damages, … an issue of fact must be tried by a jury, unless a jury trial is waived, or a reference is ordered, as provided in this Code. Where in these cases there are issues both of law and fact, the issue of law must be first disposed of.” (Code Civ. Proc., § 592.) In our view, the action was essentially a trespass action, and the third sentence of section 592 applies: “In other cases, issues of fact must be tried by the Court, subject to its power to order any such issue to be tried by a jury….” Since the action against the Leavitts was essentially equitable, the jury’s findings were only advisory.
[FN. 5] The declaration here was recorded in 1973. At that time, similar language was contained in former Civil Code section 1355. In 1985, the statutes were reorganized by the Davis-Stirling Common Interest Development Act (Stats. 1985, ch. 874) and the quoted language was adopted.
[FN. 6] It also inconsistently provides that “Each Owner shall own an undivided interest in the Common Area, including Limited Common Area. No such percentage shall be altered without the consent of all Owners….” Plaintiff, as a member of the association, either owned the common area as a tenant in common with the other homeowners or owned the easement interest discussed in the text. (Civ. Code, § 1351, subd. (l); former Civ. Code, § 1353, subd. (b).) Either interest is sufficient to support his trespass action. (See, generally, 7 Miller & Starr, Cal. Real Estate (2d ed. 1990) § 20:51, p. 117; 5 Miller & Starr, Cal. Real Estate, supra, § 14.10, pp. 323-325.)
[FN. 7] Interestingly enough, this section also provides that the easement is subject to the right of the association to convey the common area to a public agency but that such a conveyance requires a 2/3 vote of the owners. The declaration fails to mention the general right to transfer real property which is contained in the articles of incorporation, and which is unrestricted.
[FN. 8] The declaration also provides that “each Owner may use the Common Area, excepting Limited Common Area, in accordance with the purposes for which it is intended, so long as he does not hinder or encroach upon the lawful rights of the other Owners.” Obviously, as the parties agreed, there was an encroachment here.
[FN. 9] An analogous situation would be where a landlord consents to a third person’s activities on the property that interfere with a tenant’s interests. The tenant can still sue the third person for trespass on the tenant’s estate. (Brown Derby Hollywood Corp. v. Hatton (1964) 61 Cal.2d 855, 858; 5 Miller & Starr, Cal. Real Estate, supra, § 14.10, pp. 323-325.)
[FN. 10] The declaration here provides that: “Each Owner shall comply strictly with the provisions of this Declaration, and the Rules as the same may be lawfully amended from time to time, and with decisions adopted pursuant to said Declaration and Rules, and failure to comply shall be grounds for an action to recover reasonable sums due for damages or for injunctive relief, or both, maintainable by the Board or Manager in behalf of the Owners, or in a proper case, by an aggrieved Owner. …” (Italics added.)
[FN. 11] At oral argument, defendants also argued that there was a past practice of the board approving deck extensions, and that this history was relevant in interpreting the contract created by the recorded declaration. However, the defendants failed to point out that the declaration contains a waiver clause which essentially provides that the failure to insist on strict performance of a provision of the declaration is not a waiver of that provision. (Declaration, par. 15, pp. 18-19.)
[FN. 12] Defendants also rely on the familiar rule that the exercise of the trial court’s discretion will be reversed only upon a showing of abuse of discretion. Again, the problem for defendants is that the record does not show that the trial court did exercise its discretion or did adopt the findings of the jury as its own. (Cf. Lippold v. Hart (1969) 274 Cal. App.2d 24 [78 Cal. Rptr. 833].)
[FN. 13] The most recent case relied on by defendants, Novicke v. Vons Grocery Store (Cal. App.) has been ordered depublished by the Supreme Court.
Rancho Sante Fe Association v. Dolan-King
[Architectural Control; Architectural Standards] A HOA’s architectural standards could be used to define undefined architectural restrictions/terms contained in the CC&Rs.
Law Offices of Robert R. Massey and Robert R. Massey for Defendant and Appellant.
Musick, Peeler & Garrett, Michael J. Hickman; Lucas, Mullany, Boyer & Haverkamp and Richard L. Boyer for Plaintiff and Respondent.
OPINION
HUFFMAN, Acting P. J.-
Patricia Dolan-King, a homeowner in the residential community of Rancho Santa Fe, is the defendant and appellant in this action to enforce a protective covenant, brought by the Rancho Santa Fe Association (the Association). The Association obtained judgment in its favor for injunctive and declaratory relief and an award of attorney fees, based on Dolan-King’s construction of a fence around her property without the appropriate permits or compliance with other Association regulatory criteria for the definition of “major” or “minor” construction. Dolan-King appeals, contending that the trial court erred in directing a partial verdict on the validity of certain land use regulations enforced by the Association, and that the jury verdict resulting after the partial directed verdict is unsupported by the evidence or the law. She also contends that attorney fees should not have been awarded. (Civ. Code, § 1354, subd. (f).) fn. 1
Our examination of the record leads us to conclude that the trial court was correct in finding the challenged Rancho Santa Fe Regulatory Code provisions (the regulatory code) are valid, concerning the definition of the terms major and minor construction, and the subsequent jury verdict is supported by the evidence. We affirm the judgment and order of attorney fees to the Association as the prevailing party.
FACTUAL AND PROCEDURAL BACKGROUND
In 1996, Dolan-King purchased a home on an approximately three-acre lot in Rancho Santa Fe, located at 6840 El Camino Del Norte. Property development in Rancho Santa Fe is subject to the Rancho Santa Fe Protective[33]Covenant (Covenant), adopted and recorded in 1928 and amended at various times over the years. At the time she purchased her property, there was an original three-rail corral-type fence on it. Dolan-King originally proposed extensive remodeling plans (room addition structures) and a reconstructed fence composed of stucco columns joined by horizontal wood beams, and sought the appropriate permits from the Association. The Association reviewed those plans and denied permission to proceed with them. The story of that land use application and its processing by the Association is told in a published opinion, Dolan-King v. Rancho Santa Fe Assn.(2000) 81 Cal.App.4th 965 (referred to as our prior opinion or “Dolan-King I“).
In that prior action, Dolan-King had sought a judicial determination of the validity and enforceability of certain unrecorded guidelines, which provided the criteria and restrictions used by the art jury of the Association to reject her applications as to both the room additions and the proposed fence project. (Dolan-King I, supra,81 Cal.App.4th at p. 973.) Although Dolan-King had prevailed at trial, on appeal, the Association obtained reversal of that judgment. This court concluded that “the relevant provisions of the protective covenant are enforceable equitable servitudes, and, with regard to Dolan-King’s improvement applications, Dolan-King failed to meet her burden to show the Board’s decisions were unreasonable and arbitrary under the circumstances.” (Id. at p. 970.)
While that appeal was pending, Dolan-King caused to be constructed around the perimeter of her property a wrought iron fence approximately five feet in height and 800 feet long, with posts approximately every eight feet. She testified at trial that under her interpretation of paragraph 48 of the Covenant, she thought that this fence constituted minor construction, pursuant to the following Covenant definition: “The building of fences, walls, and similar structures, are divided into two classes: First, major construction; second, minor construction.The property owner may proceed with what he definitely thinks is a minor construction without submitting plansand specifications to the Art Jury as provided above, subject to the continuing jurisdiction of the Association through its Board of Directors to hear complaints against said minor construction . . . .” (Emphasis added.)
The Association, through its manager, sent her a letter June 3, 1999 informing her this fence was major construction under the regulatory code, section 31.0302, and that she should seek a permit or tear down the fence, or be subject to the imposition of a $500 lien for noncompliance with Covenant provisions and the revocation of her privileges to use Association facilities.
When she did not seek a permit or tear down the fence, the Association sent her a notice that a hearing would be held August 5, 1999 before the[34]Board regarding the revoking of her privileges to use Association facilities and the imposition of the $500 assessment. (The lien was released shortly before trial.) That hearing was held and those actions were taken by the Board. The minutes of the Board meetings state that the fence being discussed was not the one involved in the prior litigation, such that there was any approval of it pending that appeal.
The Association then brought this action for injunctive and declaratory relief to have Dolan-King seek the proper permits or remove the fence. Attorney fees were sought under section 1354. She responded with her cross-complaint for breach of contract, breach of fiduciary duty, slander of title, and related relief.
At trial call, various motions in limine were submitted and rulings made. As relevant here, the trial court refused Dolan-King’s offer of proof to provide traffic and safety evidence about the traffic in the area of her property as it pertains to fencing.
At the outset of trial, Dolan-King’s attorney agreed with the trial court that the validity of the regulatory code was subject to a ruling on its validity as a matter of law, based upon the governing documents of the Association. He argued that the Association had exceeded its powers by enacting the portions of the regulatory code dealing with major or minor construction, in contravention of paragraph 48 of the Covenant. Subsequently, the trial court rendered a statement of decision rejecting this argument and upholding the validity of the pertinent provisions of the regulatory code. This resulted in the entry of a partial directed verdict in favor of the Association. In its order, the court explained its reasoning as follows: Based on the relevant documentary evidence associated with this matter and the argument by the parties, the court found that the fence erected on the Dolan-King’s property was “major construction” as that term is used in the Covenant and the regulatory code. Specifically:
“Paragraph 48 of the Rancho Santa Fe Protective Covenant provides:
The building of fences, walls, and similar structures, are divided into two classes: First, major construction; second, minor construction. The property owner may proceed with what he definitely thinks is a minor construction without submitting plans and specifications to the Art Jury as provided above, subject to the continuing jurisdiction of the Association through its Board of Directors to hear complaints against said minor construction and to hear, try and determine the said complaints upon due notice to the defending property owner. Tennis courts and swimming pools are major construction.”
The order continued, “Section 31.0301 of the Rancho Santa Fe Regulatory Code provides: Fences and Walls. All fences and walls shall constitute ‘Major[35]Construction.'” (Although the court clearly intended to cite the fence and wall provisions, it erroneously cited to section 31.0301 in this respect; the actual language involved is not disputed and we may properly cite these provisions as shown in the record, section 31.0302.) The trial court then referred to section 31.0302.01 as specifying that “Wooden split-rail fences not exceeding 36″ in height, and consisting of two or fewer rails, and which observe all set-back requirements established for structures in the Protective Covenant, shall be considered minor construction.”
The trial court then concluded that pursuant to paragraph 48 of the Covenant and section 31.0302.01 of the regulatory code, “the only fence which constitutes ‘minor construction’ is a wood pasture rail fence with two rails, 36″ or less in height. Based on the Court’s review of the evidence and interpretation of Paragraph 48 of the Rancho Santa Fe Protective Covenant in conjunction with Sections 31.0302 and 31.0302.01 of the Rancho Santa Fe Regulatory Code, the subject fence constructed by defendant Patricia Dolan-King constituted ‘major construction.'”
The remaining issues of the complaint and cross-complaint, concerning compliance with the Covenant, were then submitted to the jury. It heard testimony and evidence about the Association’s procedures used to respond to the building of this wrought iron fence, and Dolan-King’s own testimony and expert testimony to support her belief that the fence constituted minor construction. Dolan-King also presented evidence that another landowner (Cloverlane Associates) had received a hearing in 2001 pursuant to paragraph 48 of the Covenant, when objections to a fence it built were raised. She argues that she had been subject to disparate treatment, because the Cloverlane fence issues had been dealt with more formally.
After deliberations, the jury returned a verdict in favor of the Association, finding it had not breached the Covenant provisions as alleged, and against Dolan-King on her cross-complaint. The special verdict provided that the cross-complaint was dismissed, and:
“2. The fence erected by defendant on or about Memorial Day 1999 (‘Subject Fence’) is ‘major construction’ within the meaning of that term in the Rancho Santa Fe Protective Covenant (‘Covenant’) and the Rancho Santa Fe Regulatory Code (‘Regulatory Code’).
“3. The Subject Fence could not be constructed consistent with the Covenant and the Regulatory Code without first obtaining a permit from the Rancho Santa Fe Association in accordance with the procedures set forth in the Covenant and the Regulatory Code.
“4. The Subject Fence was constructed without obtaining a permit from the Rancho Santa Fe Association.[36]
“5. The construction of the Subject Fence without a permit was a violation of the Covenant.
“6. The Subject Fence remains on the property of defendant Patricia Dolan-King as of the date of the jury verdict herein.
“7. In order to comply with the Covenant, defendant Patricia Dolan-King must remove the Subject Fence.”
At further proceedings, the Association submitted a proposed form of judgment in the alternative, that Dolan-King should seek the appropriate permits or remove the fence. She objected that an alternative form of judgment was inappropriate. The judgment signed by the trial court ordered that she was “permanently enjoined from maintaining the Subject Fence on the ‘Property’ . . . . To that end, defendant Patricia Dolan-King is enjoined and ordered to remove the Subject Fence from the Property within 30 days of the date of entry of this Judgment.”
In subsequent proceedings, the Association’s motion for attorney fees was granted in the amount of $318,293.50. The ruling stated that “the overall average hourly rate for the Association’s attorneys in the amount of $221 is reasonable in light of the nature of the litigation, the difficulty of the litigation, the skill required and employed by the Association’s attorneys, and the success of the Association in this litigation.” Also, an award of fees was included to reflect the amount of $12,007 for paralegal time, as necessary for the support of the Association’s attorneys.
Dolan-King appeals the judgment and order.
DISCUSSION
We first discuss the partial directed verdict which upheld the validity of the challenged regulatory code provisions, in light of the standards set out in prior litigation arising under this Covenant. (Pts. I & II, post.) We will then turn to Dolan-King’s arguments that the application of these regulations was unreasonable, as reflected in the jury verdict. We also evaluate the judgment in terms of the injunctive relief ordered and the attorney fees ordered. (Pt. III, post.)
I. APPLICABLE STANDARDS GLEANED FROM PRIOR LITIGATION
Much of the groundwork for this appeal has been laid by our prior opinion, Dolan-King I, which dealt with the validity of parallel provisions enacted by[37]the Association, the unrecorded guidelines followed by the Association’s art jury. Here, the issues concern the unrecorded regulatory code, but much of the same basic analysis is appropriate, as we next explain.
First, however, we must acknowledge the guidance provided by another prior opinion issued by this court, Ticor Title Insurance Co. v. Rancho Santa Fe Assn.(1986) 177 Cal.App.3d 726 (Ticor Title). This case established the principle that the Association’s power to “interpret” the Covenant does not grant its board any power to enact more stringent specific regulations than those expressly contained in the Covenant (e.g., setback regulations), unless appropriate amendment procedures have been followed as set forth in the Covenant: “The power to interpret, however, is not unlimited. The Board’s construction of its interpretation powers leads to an extraordinary and unjust result. Under this construction, the Board is unlimited in its power to interpret the Covenant as it sees fit even if, as in the instant case, it involves ignoring express language in the Covenant and denigrating the voting rights of the property owners. We do not believe the covenanting parties intended the Board to have such unfettered powers by the process of ‘interpretation.'” (Id. at pp. 733-734.)
Also in Ticor Title, supra, 177 Cal.App.3d 726, this court rejected the Association’s argument that because paragraph 14 granted authority to the Association to adopt regulations for the “general welfare,” a more extensive action, such as “a change or modification of existing provisions in the Covenant,” could be accomplished outside of the amendment provisions set forth in the Covenant, paragraph 165. In that case, the setback restriction was not one of the basic restrictions contained in the Covenant, and hence the amendment provisions of paragraph 165 applied. (In our case, a basic restriction found in paragraph 48 is involved, hence the amendment provisions of paragraph 164 would apply if an “amendment, change, modification or termination” of a restriction is to be accomplished, by a required two-thirds vote of property owners.) Dolan-King is claiming the limits outlined inTicor Titleon the Association’s power were exceeded when the Board adopted and enforced these portions of the regulatory code.
In order to examine this argument, we turn to the extensive guidance provided by the Supreme Court regarding the standards that apply in evaluating the validity of the challenged land use regulations, in this context of a governing land use covenant and subsequent, related regulations. In Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249, 264 (Lamden), the Supreme Court discussed its prior opinion, Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361 (Nahrstedt), which set forth the general rule, “When an association determines that a [38] unit owner has violated a use restriction, the association must do so in good faith, not in an arbitrary or capricious manner, and its enforcement procedures must be fair and applied uniformly.” (Id.at p. 383.) Restrictions found in a governing land use covenant “are evaluated for reasonableness in light of ‘the restriction’s effect on the project as a whole,’ not from the perspective of the individual homeowner. [Citations.] Accordingly, courts do not conduct a case-by-case analysis of the restrictions to determine the effect on an individual homeowner; we must consider the reasonableness of the restrictions by looking at the goals and concerns of the entire development.” (Dolan-King I, supra, 81 Cal.App.4th at p. 975.)
To expand upon the nature of the various rules that may be used to create use restrictions in such developments, the Supreme Court sought in Lamden, supra,to clarify the “distinction between originating CC&R’s and subsequently promulgated use restrictions. Specifically, we reasoned in Nahrstedt that giving deference to a development’s originating CC&R’s ‘protects the general expectations of condominium owners “that restrictions in place at the time they purchase their units will be enforceable.”‘ [Citations.] Thus, our conclusion that judicial review of a common interest development’s founding CC&R’s should proceed under a deferential standard was, as plaintiff points out, at least partly derived from our understanding . . . that the factors justifying such deference will not necessarily be present when a court considers subsequent, unrecorded community association board decisions.” (Lamden, supra, 21 Cal.4th at p. 264.)
Accordingly, in Dolan-King I, this court applied the rules developed in Nahrstedt, supra,8 Cal.4th 361 and Lamden, supra,21 Cal.4th 249, to such “subsequently promulgated use restrictions” that have not been recorded as running with the land. (Id.at p. 264.) In Dolan-King I, this court was concerned with the unrecorded guidelines followed by the Association’s art jury, as opposed to here, the issues concerning the unrecorded regulatory code. In either case, “such unrecorded restrictions are not accorded a presumption of reasonableness, but are viewed under a straight reasonableness test ‘so as to “somewhat fetter the discretion of the board of directors.”‘ [Citations.] We understand this distinction to primarily impact the respective burdens of proof at trial.” (Dolan-King I, supra, 81 Cal.App.4th at p. 977.) fn. 2[39]
Before we examine the decision of the trial court to uphold the validity of the subject regulatory code provisions dealing with major versus minor construction, as applied to fence work, it is useful to compare the nature of the guidelines analyzed in Dolan-King Ito the regulations at issue here. We noted previously that “[t]he Guidelines themselves do not purport to be strict restrictions on improvements or land use. They are intended to ‘disseminate[] the site and design standards which the community holds as necessary to preserve community character; articulate[] the policies and goals by which the Association judges and regulates land use; and give[] a clear indication of those site and design principles which increase the probability of the issuance of Association permits.'” (Dolan-King I, supra, 81 Cal.App.4th at p. 978.) Accordingly, even though the guidelines were not formalized as recorded equitable servitudes, we found there was “nothing inherently unreasonable about the Guidelines in and of themselves. They are the Association’s attempt to give property owners guidance, by way of detailed examples and explanation, on the criteria used by the Art Jury and Board in reviewing proposed improvements and exercising their broad discretion under the Covenant. The Board’s desire to give property owners more concrete examples of how the Art Jury is likely to exercise its broad discretion is entirely legitimate and fair, even though the Guidelines are not binding restrictions. That Dolan-King lacked notice of the Guidelines does not affect their reasonableness, but may influence our determination of whether the Board fairly and reasonably relied upon them to deny Dolan-King’s fence application . . . .” (Ibid.)
In this case, by comparison, section 31.03 of the regulatory code provides examples of various structures, improvements and grading that substantially affect community character and that therefore are deemed to constitute major construction. Section 31.0302 generally provides, “All fences and walls shall constitute “Major Construction.” However, section 31.0302.01 of the code specifically provides: “Exception: Split-Rail Fences. Wooden, unpainted split-rail fences not exceeding 36″ in height, and consisting of two or fewer rails shall be considered minor construction.” Another exception is provided for, i.e., garden walls that do not exceed 32 inches in height and that are composed of dry-laid materials, and which observe all set-back requirements established for structures in the protective Covenant, are considered to be minor construction. (§ 31.0302.02 of the regulatory code.)
For all practical purposes, the regulatory code is similar to the guidelines with respect to its unrecorded character, but its undisputed availability to interested Association homeowners for purposes of putting them on notice of the standards to be applied in evaluating development proposals. [1] The same straight reasonableness test should be applied to the code as to the guidelines, with attention to whether any basic restrictions of the Covenant are actually amended, changed, modified or terminated by the code, within the meaning of the amendment provisions of paragraph 164. The question[40]here is whether the code accomplishes such a substantive amendment, etc., of basic restrictions, as opposed to defining any terms left undefined by the Covenant, such as major and minor construction. (Para. 48.)
II. VALIDITY OF REGULATIONS: PARTIAL DIRECTED VERDICT
Following the above-described approach, we examine the trial court’s grant of the partial directed verdict upholding the subject regulatory code provisions to decide if the court correctly applied the “straight reasonableness test [designed] ‘to “somewhat fetter the discretion of the board of directors.”‘ [Citations.]” (Dolan-King I, supra, 81 Cal.App.4th at p. 977.) Where, as here, the decisive underlying facts (the nature of the fence and the actions taken by the Association), are undisputed, then the validity of the subject regulatory code provisions may be decided as a matter of law: “In such a case, in reviewing the propriety of the trial court’s decision, we are confronted with questions of law. [Citations.] Moreover, to the extent our review of the court’s declaratory judgment involves an interpretation of the Covenant’s provisions, that too is a question of law we address de novo.” (Dolan-King I, supra, 81 Cal.App.4th 965, 974.)
Dolan-King challenges the ruling in the Association’s favor chiefly by contending that the regulatory code effectively modifies, changes, or amends the controlling Covenant provision, paragraph 48, but without the necessary compliance with paragraph 164, to submit the matter to a vote of homeowners. She is arguing that the Covenant expressly protects a subjective right of the property owner to have a belief that a subject fence is minor construction, and to act accordingly by having it installed without the need for any permits or Association approval. (“The building of fences, walls, and similar structures, are divided into two classes: First, major construction; second, minor construction. The property owner may proceed with what he definitely thinks is a minor construction without submitting plans and specifications to the Art Jury as provided above, subject to the continuing jurisdiction of the Association through its Board of Directors to hear complaints against said minor construction . . . .” (Para. 48, emphasis added.)) Although paragraph 49 provides a procedure for the homeowner to submit plans to the art jury in case there is doubt about whether the contemplated work is a major or minor construction, she had no such doubt.
Further, Dolan-King argues that the powers of the Association and its board under the Covenant are primarily limited to promoting the general welfare of the community, and that this power should not allow aesthetic[41]considerations to override safety and traffic control considerations. (Para. 14.) She contends that the trial court erroneously read the Association’s articles of incorporation and bylaws, together with the Covenant language, as allowing the code to define these terms with such specificity, when paragraph 48 of the Covenant is more general in nature.
The Association is granted the power in its governing documents to adopt regulations. The articles of incorporation, article II, section 1, and the bylaws, article IV, section 6(e) allow regulations to be enacted as authorized by the Covenant and the articles of incorporation and bylaws. Paragraph 37 of the Covenant gives the Association regulatory power to carry out the provisions of the Covenant and governing documents. Paragraph 14 of the Covenant authorizes the Association to adopt rules and regulations promoting the health, safety and general welfare of the residents.
The fallacy of Dolan-King’s argument is that it focuses mainly upon her subjective beliefs as a homeowner, while failing to account for the well-accepted power of an association operating under the land use covenant to clarify and define its terms, so long as it is operating within the straight reasonableness standard. Both as to the governing Covenant and subsequently enacted restrictions, the inquiry should be whether their provisions are reasonable “in light of ‘the restriction’s effect on the project as a whole,’ not from the perspective of the individual homeowner. [Citations.] Accordingly, courts do not conduct a case-by-case analysis of the restrictions to determine the effect on an individual homeowner; we must consider the reasonableness of the restrictions by looking at the goals and concerns of the entire development.” (Dolan-King I, supra, 81 Cal.App.4th at p. 975.)
We disagree with Dolan-King that sections 31.03 et seq. effectively amend or modify paragraph 48 of the Covenant. Rather, these code sections operate to define the terms major and minor construction, with respect to fencing. They preserve the right of a homeowner to proceed with minor construction without seeking permits, while permissibly defining the parameters of what should reasonably be considered minor construction. The Covenant section is properly subject to objective clarification of its terms, which are not defined in that document. [2] It is not unreasonable for the Association to refer to the historical nature of low-lying split rail fences in the area as minor construction, thus preserving that category of the Covenant definition, while defining other types of fencing as major construction. So long as some fences may still constitute minor construction, the Covenant provision referring to minor construction has not been substantively modified or amended, changed, or terminated by this regulatory code. (Para. 164.)
Moreover, paragraph 48 itself reserves power to the Association, through its board of directors, “to hear complaints against said minor construction and[42]to hear, try and determine the said complaints upon due notice to the defending property owner,” even when the property owner proceeded with what he definitely thought was “minor construction,” without submitting plans and specifications. (Ibid.) This presupposes Association control to some extent over the definitions of those terms. Also, paragraph 49 provides a procedure for the homeowner to submit plans to the art jury in case there is doubt about whether the contemplated work is major or minor construction. [3] Based upon this reserved power in the Association to hear, try and determine complaints about any construction, it is not unreasonable for the Association and its board to enact regulations that seek to define such terms as minor construction in order to give notice to homeowners of readily discoverable, objective standards for interpretation of the Covenant. The trial court correctly granted the partial directed verdict on this basis.
Because Dolan-King is primarily relying upon her subjective understanding of what constitutes minor construction, the main thrust of her challenge to the regulatory code is found in the application of those provisions to her, in an allegedly unreasonable manner. We now turn to those arguments.
III. APPLICATION OF REGULATIONS AT TRIAL: JURY VERDICT
Dolan-King has two main challenges to the jury verdict in the Association’s favor that determined it had not breached the terms of the Covenant through its dealings with her fence construction. She first argues that even assuming the regulatory code is valid, as discussed above, the evidence nevertheless demonstrates that the Association did not follow its own procedures in dealing with her construction, and she was subject to disparate treatment in light of the more specifically referenced hearing that the Cloverlane Associates homeowners received, concerning paragraph 48. Thus, she claims the Association waived its right to enforce these regulations and they are unreasonable as applied to her.
Alternatively, she appears to be arguing that the trial court erroneously excluded her evidence about traffic and safety concerns surrounding her property, and that the judgment should be reversed because she was not allowed to fully present her case that this was minor construction. She mainly relies on case authority as follows: “‘A judgment may not be reversed on appeal, . . . unless “after an examination of the entire cause, including the evidence,” it appears the error caused a “miscarriage of justice.” [Citation.] . . . [W]here the error results in denial of a fair hearing, the error is reversible[43]per se. Denying a party the right to testify or to offer evidence is reversible per se. [Citations.]'” (Kelly v. New West Federal Savings (1996) 49 Cal.App.4th 659, 677.)
A. Reasonableness Of Procedures
[4] Because this issue was resolved upon disputed evidence, including challenges to the credibility of the Association witnesses, a substantial evidence standard of review should apply. (Toigo v. Town of Ross (1999) 70 Cal.App.4th 309, 317.) We accordingly disagree with appellant that this portion of the analysis must be conducted de novo, as pure documentary interpretation, in light of the parties’ submission to the jury of disputed facts. (See Davies Machinery Co. v. Pine Mountain Club Inc. (1974) 39 Cal.App.3d 18, 23.)
[5] In ruling for the Association, the trial court impliedly made findings that the letters that the Association sent to Dolan-King in June 1999 referred to the regulatory code and therefore gave her adequate notice that a hearing would be held regarding whether there was noncompliance with the Covenant building restrictions and related regulations, and whether her membership privileges should be suspended and a lien recorded against her property as a consequence. It was not disputed that the only basis that existed for considering the suspension of her membership privileges was the subject fence construction without appropriate permits.
Dolan-King argues that proper procedures were not followed, because the record does not contain any homeowner complaints against her, as contemplated by paragraph 48 of the Covenant, and that therefore the Association should not have proceeded to enforce the regulatory code. However, the trial court could reasonably conclude that the June 3, 1999 [6] Association manager’s letter referring to the code and notifying her of her noncompliance constituted a “complaint” within the Covenant definitions. [7] The trial court also determined that the notice given of the upcoming hearing was appropriate, even though the Association did not label the proposed hearing to be one held specifically under paragraph 48. Again, this was a reasonable interpretation of the documentary evidence. When Dolan-King was notified that a hearing would be held August 5, 1999 before the Board regarding the revoking of her privileges to use Association facilities and the imposition of a $500 lien assessment, she had already been placed on notice that the stated basis of that proposed action was noncompliance with the Covenant regarding the subject fence. Accordingly, the fact that the hearing was not labeled to be a proceeding under paragraph 48 was not dispositive. Dolan-King failed to make any convincing showing that the Association’s dealings with her in[44]1999 in that manner were measurably unfair when compared to the Association’s dealings in 2001 with another homeowner, Cloverlane, whose fence construction was opposed as not in compliance with Covenant standards, and where paragraph 48 was more expressly invoked.
The record also demonstrates that the subject fence was constructed while an appeal was pending from the earlier judgment arising from the original application for a fence permit and its denial, and that Dolan-King was knowledgeable about permit requirements for fences and had the advice of an attorney on the subject. She clearly understood the distinction between her original application to build the fence, and her claim that no application was necessary to build this fence. Accordingly, she has failed to show any impropriety in the notice and hearing given on the minor construction issue.
Dolan-King’s backup position is that under any definition, the fence she built should be considered minor construction, because it was installed in a few days, was of relatively low cost, and was of a type that was relatively easy to install and remove. However, she has not shown that these criteria necessarily led to an objective conclusion that this fence was minor construction. The trial court had in evidence photographs and measurements about the subject fence and the original fence it replaced, along with testimony presented by Dolan-King’s construction expert that some definitions were necessary as to major and minor construction, because those terms were not universally used one way or the other in the construction industry. It was not a foregone conclusion that only minor construction was involved here, when all the evidence was considered.
On the whole record, we cannot say that the trial court erred in deciding that the Association had not breached the Covenant through its utilization of the complaint and hearing procedure, nor had it waived its right to enforce these regulations. Dolan-King failed to show that she met any accepted standards about what was minor construction of a fence, such that any different result was required.
B. Fairness of Trial Proceedings
To evaluate the claims that the traffic and safety evidence was erroneously excluded, we refer to well-established authority that “an appellate court applies the abuse of discretion standard of review to any ruling by a trial [45] court on the admissibility of evidence. [Citations.] Speaking more particularly, it examines for abuse of discretion a decision on admissibility that turns on the relevance of the evidence in question. [Citations.] That is because it so examines the underlying determination as to relevance itself. [Citation.] Evidence is relevant if it has any tendency in reason to prove a disputed material fact. [Citation.]” (People v. Waidla (2000) 22 Cal.4th 690, 717.)
Dolan-King’s argument in this respect appears to be a claim that there should be a traffic and safety exception to the requirement that a permit be obtained for other than minor construction. She bases this argument upon public policy concerns, such as a right to privacy and to protect her home and family, and a theory that the burden of these regulations outweighs any benefit that is received from them.
While these arguments are appealing in the abstract, we cannot say that Dolan-King’s efforts to present this evidence had any support in the language of the Covenant, its subsequently enacted regulations, or the Association’s governing documents, in light of our conclusions above that the validity of the regulatory code could be addressed as a question of law, as agreed to in the trial proceedings. [8] There is no express traffic or safety exception to the permit requirement. The Covenant includes concerns about the general welfare of the homeowners in the area, and the Association is given regulatory powers to promote them. [9] Moreover, the same traffic concerns were addressed in the previous litigation that lead to the Dolan-King I opinion, and the trial court here was of the belief that to allow traffic evidence to be introduced would be to retry that previous case. Under all the circumstances, we can find no abuse of discretion in the in limine rulings that excluded traffic and safety evidence about this particular property.
Finally, although Dolan-King now argues there was no adequate showing of irreparable harm to the Association to support the issuance of injunctive relief, she cannot be heard to complain about the form of relief ordered. This is because she objected to an alternative form of judgment, which would have allowed her to apply for a permit for the fence, or tear it down. The fence had been in place approximately three years by the time of trial, and she had never sought a permit due to her argument that none was required for minor construction. [10] Once that issue was determined against her, and based upon her objection to allowing the permit procedure to be further pursued, any error in the issuance of the injunctive relief was either invited error or harmless. (7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 22, p. 558.)[46]
On the record before us, we cannot find Dolan-King showed that the Association’s procedures as applied to her were unreasonable, nor that the trial proceedings were unfair.
IV. ATTORNEY FEE AWARD
Dolan-King appeals the trial court’s order granting an award of attorney fees to the Association under section 1354, subdivision (f). The order authorized an award in the amount of $318,293.50, based on an overall average hourly rate for the Association’s attorneys in the amount of $221, and an award for paralegal time.
Although Dolan-King has provided a copy of the order, she has not provided the moving and opposing papers on the fees matter. The only argument made in the opening brief is that this large award will have a chilling effect on discouraging legitimate opposition to the Association’s business practices, which she labels as questionable. (Blue Lagoon Community Association v. Mitchell (1997) 55 Cal.App.4th 472, 476-478.)
The party seeking to challenge an order on appeal has the burden to provide an adequate record to assess error. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295-1296.) Where the party fails to furnish an adequate record of the challenged proceedings, his claim on appeal must be resolved against him. (Ibid.; also see Ketchum v. Moses(2001) 24 Cal.4th 1122, 1140-1141.)
[11] Ordinarily, an award of attorney fees under a statutory provision, such as section 1354, subdivision (f), is reviewed for abuse of discretion. The Association remains the prevailing party here. We have been presented with no support for Dolan-King’s claims of abuse of discretion with respect to the time expended, the hourly rate billed, or the nature of the costs assessed after the motion to tax was ruled upon. Accordingly, the proper course is to uphold the award. (Vo v. Las Virgenes Municipal Water District(2000) 79 Cal.App.4th 440, 447.) The respondent’s brief does not seek an award of attorney fees on appeal. The ordinary costs on appeal will be awarded to the Association, however.[47]
DISPOSITION
The judgment and order are affirmed. Costs on appeal to the Association.
Nares, J., and O’Rourke, J., concurred.
FN 1. All further statutory references are to the Civil Code unless noted.
FN 2. The Supreme Court has granted review in a case further examining the standards which govern the validity of a land use restriction in a common interest development, i.e., one that was adopted and recorded by an association after the purchase of the unit in the development. (Villa de Las Palmas Homeowners Association v. Terifaj, review granted Sept. 25, 2002, S109123.) That case is fully briefed but has not been set for oral argument. It is factually distinguishable because the challenged regulations in our case are unrecorded (the regulatory code).
Bear Creek Planning Committee v. Ferwerda
[Architectural Control; Architectural Standards] A HOA had the authority to adopt architectural standards beyond those set forth in the CC&Rs based upon empowering language in the CC&Rs governing the same.
Thomas & Associates and Michael W. Thomas for Appellant Robert Ferwerda.
Law Offices of Samuel G. Grader, Christian B. Green; Porter & Simon, James E. Simon; Lewis Brisbois Bisgaard & Smith, Jeffry A. Miller, Judith M. Tishkoff and Matthew B. Stucky for Respondent Bear Creek Planning Committee.
Porter Scott, Timothy M. Blaine and John F. Doyle for Respondents David Bordon, Richard E. Irving, Peter M. Turner, Irene Wertheim, Ronald Scoglio, Carole Lynn Keller and Bear Creek Valley Board.
Louis A. Basile for Respondents James Ware and Cindy Ware.
CERTIFIED FOR PARTIAL PUBLICATION[FN *]
OPINION
ROBIE, J.—
This appeal follows a trial by reference[FN. 1] of three consolidated cases. The trial court entered judgment against plaintiff Robert Ferwerda, who had been trying to build a home on his vacant lot. He had sued the Bear Creek Planning Committee (the committee) and the individuals who comprised the Bear Creek Valley Board (the board) who he contended inappropriately blocked construction on his lot. He had also sued his next-door neighbors, James and Cindy Ware (the Wares), contending they had violated the covenants, conditions, and restrictions (CC&R’s) in building and remodeling their house. Ferwerda appeals from a judgment entered in favor of the committee, the board, and the Wares, which included awards of attorney fees to the committee and the Wares. We affirm the judgment as to the committee and the Wares, except as it relates to the attorney fees. As to those orders, we reverse. Finally, as to the board, we dismiss as moot the appeal relating to it.
[1181] FACTUAL AND PROCEDURAL BACKGROUND
A. Introduction
Robert Ferwerda owns lot No. 134 in Alpine Meadows Estates subdivision unit No. 4 (subdivision No. 4). Since 2001, he has been trying to obtain approval to build a house on his lot. This litigation surrounds events related to securing that approval, interpretation of the CC&R’s and related restrictions on the lots in subdivision No. 4, and the resolution of the three cases consolidated in the trial court.
B. The CC&R’s, the Green Book, and the 2002 Architectural Review Manual
The CC&R’s that govern subdivision No. 4 were recorded in 1964 and establish “a general plan for the improvement and development” of the property. The guiding principle is “that it is to the best interest of the area that it be developed into an attractive ski area, alpine in character and appearance, with as little damage to the natural beauty of the land and trees as is possible.” To that end, the CC&R’s contain several restrictions on the subdivision. Among other things, owners are not permitted to cut down trees over five inches in diameter on their lots without approval from the committee. More generally, owners are required to receive approval from the committee before constructing or excavating on their lots. The owners’ plans and specifications and the committee’s approval must be “in accordance with the procedures and standards set forth in the Bear Creek Planning Committee Restrictions.” The “Bear Creek Planning Committee Restrictions” were incorporated into the CC&R’s as exhibit A in 1964.
The committee incorporated in 1978. The articles of incorporation describe the committee’s primary purpose as “promoting the social welfare of the community of Alpine Meadows, California and for the mutual benefit of all property owners in that community through supervision and enforcement of the [CC&R’s].” Among its powers and duties as articulated in its bylaws are “[t]o review and approve or disapprove plans and specifications for improvements in the Bear Creek Valley pursuant to the CC&R’s,” “conduct, manage and control the affairs of the corporation and to make such rules and regulations thereof as they may deem appropriate,” and “maintain, issue, and revise at its discretion” a procedures, regulations, and standards manual.
[1182] In 1990, the committee published the so-called green book that contains procedures, regulations, and standards. The “green book” notes the observance of objective criteria for plan approval and of subjective criteria guided by a proposed plan’s “harmony with the environment in which the structure is placed and harmony with its surroundings.” The restriction on tree removal is continued. It recommends use of fire-retardant composition shingles. Finally, it includes the following attorney fees provision: “In the event that it is necessary for the Committee to initiate litigation to enforce the provisions of these Provisions, Regulations, and Standards, then the Committee shall be entitled to recover its reasonable attorneys’ fees and costs.”
The green book was revised in 2002 and that revision became known as the 2002 architectural review manual. The manual states, among other things, “[t]he design of each structure must bear a harmonious relationship to the land and its neighbors” and live trees cannot be removed without board approval. Similar to the green book, it contains the following attorney fees provision: “In the event that it is necessary for the [committee] to enforce the provisions of the [2002 architectural review manual] by obtaining legal advice to clarify issues, initiate litigation, filing and/or preparing legal documents or filing and preparing a Cease and Desist Order, then [the committee] shall be entitled to recover its reasonable attorney fees and costs from the Performance Deposit or other means as may be deemed necessary. Legal expenses above the performance deposit may be recovered by fines assessed.”
C. Ferwerda’s Activities and Resulting Litigation[*]
DISCUSSION
I
The Committee Has the Power to Adopt Standards Beyond Those Set Forth in the CC&R’s
Section 6 of the CC&R’s states the committee may act on applications, “all in accordance with the procedures and standards set forth in the Bear Creek Planning Committee Restrictions, a copy of which is attached hereto as [1184] Exhibit A and by this reference is made a part hereof. Except as to set-backs (Paragraph 13 hereof),in the event of a conflict between the standards required by said Committee and those contained herein, the standards of said Committee shall govern.” (Italics added.)
The trial court found this italicized language “empowers the [committee] to adopt new conditions on an ongoing basis.” As we explain below on our de novo review (Ekstrom v. Marquesa at Monarch Beach Homeowners Assn. (2008) 168 Cal.App.4th 1111, 1121 [86 Cal.Rptr.3d 145]), the trial court was correct to the extent this language allows the committee to adopt new design standards related to the improvement or development of lots in subdivision No. 4.
(1) The interpretation of CC&R’s is governed by the rules for interpreting contracts. (Fourth La Costa Condominium Owners Assn. v. Seith (2008) 159 Cal.App.4th 563, 575 [71 Cal.Rptr.3d 299].) (2) It is a long-standing rule that “[a]ll parts of a [contract] must be applied so as to give effect and meaning to every part, if possible . . . .” (Burnett v. Piercy (1906) 149 Cal. 178, 189 [86 P. 603]; see Civ. Code, § 1641 [“[t]he whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other”].)
(3) The plain language of section 6 of the CC&R’s contemplates the committee may adopt standards beyond those contained in exhibit A as it existed when the CC&R’s were adopted. This is evidenced by the acknowledgment in section 6 that if there is a conflict between the standards set forth in that section and the “standards required by [the] [c]ommittee,” the standards of the committee govern. If the committee had no power to adopt standards beyond those in the CC&R’s, there would be no need for this language. We must read the CC&R’s as a whole and adopt the construction that gives effect to every part of the CC&R’s. (Ezer v. Fuchsloch (1979) 99 Cal.App.3d 849, 861 [160 Cal.Rptr. 486] [“[a] cardinal principle of document construction is that a document must be `construed as a whole’ so as `to give effect to every part thereof . . .'”].)
The question then becomes what is meant by “standards” as that term is used in the CC&R’s. That term is used in section 6 in reference to the “procedures and standards set forth in the Bear Creek Planning Committee Restrictions” that are attached to the CC&R’s. In those restrictions, there is a “standards” section. The first paragraph entitled, “GENERAL” explains in part that “[t]he design of each structure must bear a harmonious relationship to the land and its neighbors, in terms of lot coverage, mass and degree of individual expression.” The remaining 13 paragraphs (with the exception of the last one, which addresses variances) detail architectural design standards, [1184] i.e., standards for such things as floorspace, decks, roofs, exterior walls, windows, colors and finishes, and parking places. In the context of the CC&R’s, then, the term “standards” refers to architectural design standards.
Ferwerda offers no interpretation of this language in section 6 of the CC&R’s. Instead, he points to case law and testimony from the committee’s expert witness, which he claims negate our interpretation of the CC&R’s. Neither helps him.
The cases relied on by Ferwerda, Werner v. Graham (1919) 181 Cal. 174 [183 P. 945] and Riley v. Bear Creek Planning Committee (1976) 17 Cal.3d 500 [131 Cal.Rptr. 381, 551 P.2d 1213], are distinguishable.
In Werner, a developer subdivided a tract and recorded a map of the tract that “showed no building lines or anything else to indicate any purpose of restricting in any way . . . .” (Werner v. Graham, supra, 181 Cal. at p. 177.) He then sold the lots. (Id. at pp. 177-178.) The early deeds contained “restrictive provisions” that were “so uniform and consistent in character as to indicate unmistakably that [the developer] had in mind a general and common plan which he was following.” (Id. at p. 177.) The developer told the purchasers, “he was exacting the same restrictive provisions from all purchasers.” (Id. at pp. 178-179.) The developer later quitclaimed the property eventually purchased by the plaintiff, but the deed to this property contained no restrictions. (Id. at p. 179.) The court held restrictions placed in the earlier deeds to the other properties were not binding on the plaintiff. (Id. at pp. 184-186.)
In Riley, the developer sold a property via a deed that contained no restrictions. (Riley v. Bear Creek Planning Committee, supra, 17 Cal.3d at pp. 503-504.) Nine months later, the developer recorded a document purporting to impose uniform restrictions on a number of lots, including the one in dispute. (Id. at p. 504.) The court held these restrictions did not apply to the lot sold earlier. (Id. at pp. 506-507.)
Both of these cases are distinguishable because the CC&R’s here specifically acknowledge the possibility of a conflict between the standards set forth therein and the “standards required by [the] [c]ommittee” and assert that if such a conflict arises, the standards required by the committee govern. Ferwerda signed that he “read and approved” the CC&R’s.
The expert testimony to which Ferwerda points also does not help him. That testimony consisted of the opinion of the committee’s expert that section 6 does not expressly authorize the committee to create new or different standards than those attached in exhibit A (as other CC&R’s he had worked [1185] on did) but that by implication, the committee had such authority. This testimony undercuts Ferwerda’s position because it supports a reading of section 6 (if only by implication) that gives the committee such authority.
Based on the plain language of section 6 of the CC&R’s, we hold the committee had the power to adopt standards beyond those set forth in the CC&R’s, which are reflected in the green book and the 2002 architectural review manual.
II
The Trial Court Erred in Awarding Attorney Fees to the Committee and to the Wares
Ferwerda contends the court erred in requiring him to pay the committee’s and the Wares’ attorney fees. In his view, the green book and the 2002 architectural review manual cannot be the bases for authorizing the attorney fees because they are unrecorded and were enacted by an unelected committee without approval of the property owners.
The committee and the Wares take the position adopted by the trial court, i.e., the attorney fees were permissible because the green book and the 2002 architectural review manual provide for the recovery of attorney fees for prevailing parties such as themselves. And, in any event, Ferwerda asked for attorney fees if he prevailed and since he lost in the trial court, he was liable for the other side’s attorney fees.
(4) A prevailing party is entitled to attorney fees when authorized by statute or contract. (Code Civ. Proc., §§ 1032, 1033.5, subd. (a)(10).) Here, the CC&R’s contain no attorney fees provision. Rather, the green book and the 2002 architectural review manual provide for recovery of attorney fees by the committee. In reviewing these publications in part I of the Discussion, we explained that the CC&R’s give the committee power to adopt new design standards relating to the improvement or development of lots in subdivision No. 4. The question is whether that power allows the committee to adopt attorney fees provisions not contained in the CC&R’s.
The committee contends it had such broad power because the CC&R’s and its own bylaws give it the authority to “expand upon and describe the provisions of the CC&Rs” and “[s]o long as such rules and guidelines are reasonable and do not conflict with the CC&R’s, they will be held to be enforceable.” In support, they cite MaJor v. Miraverde Homeowners Assn. (1992) 7 Cal.App.4th 618 [9 Cal.Rptr.2d 237] and Rancho Santa Fe Assn. v. [1186] Dolan-King (2004) 115 Cal.App.4th 28 [8 Cal.Rptr.3d 614] (Rancho Santa Fe). Neither case helps the committee.
In MaJor, the court addressed whether the homeowners association was authorized to discriminate between resident members and nonresident members in the use and enjoyment of common areas. (MaJor v. Miraverde Homeowners Assn., supra, 7 Cal.App.4th at p. 625.) The CC&R’s granted every member a right and easement of enjoyment in and to the common areas within the property, subject only to the right of the association to establish uniform rules and regulations pertaining to a member’s use of the common areas and recreational facilities. (Ibid.) Nonresident members asserted the association acted without authority in restricting the use of common areas by nonresident members. (Ibid.) The court agreed, explaining as follows: “an association may not exceed the authority granted to it by the CC&R’s. Where the association exceeds its scope of authority, any rule or decision resulting from such an ultra vires act is invalid whether or not it is a `reasonable’ response to a particular circumstance. Where a circumstance arises which is not adequately covered by the CC&R’s, the remedy is to amend the CC&R’s. The courts have held homeowners are subject to any reasonable amendment of the CC&R’s properly adopted . . . .” (Id.at p. 628.)
In Rancho Santa Fe, the court addressed whether a homeowners association could apply a regulation adopted subsequent to the enactment of land use covenants that clarified the terms of one of those covenants permitting a homeowner to undertake “minor” (as opposed to “major”) construction without the art jury’s approval. (Rancho Santa Fe, supra, 115 Cal.App.4th at p. 40.) In holding the association could, the court explained the governing documents granted to the association power to adopt regulations and further explained an association operating under a land use covenant had the “well-accepted power” to clarify and define the covenant’s terms, so long as it did so reasonably. (Id. at p. 41.)
These cases do not support the authority of the committee to enact the attorney fees provisions here. In MaJor, the court limited the association’s authority to that granted to it in the CC&R’s. It is not enough, as the committee argues, that the attorney fees provisions are reasonable. MaJor rejected this argument, noting that if a circumstance arises that is not adequately covered by the CC&R’s, the remedy is to amend the CC&R’s, regardless of whether the association’s actions are reasonable. (MaJor v. Miraverde Homeowners Assn., supra, 7 Cal.App.4th at p. 628.) Here, the CC&R’s are silent on attorney fees. It is a situation, therefore, “not adequately covered by the CC&R’s,” requiring amendment of the CC&R’s to insert such a provision. (Ibid.) Similarly, in Rancho Santa Fe, the court’s holding that the regulation was enforceable turned on the fact the governing [1187] documents granted the association power to adopt regulations and the fact the at-issue regulation served only to reasonably clarify terms already in the land use covenant. (Rancho Santa Fe, supra, 115 Cal.App.4th at p. 41.) Here, the attorney fees provisions do not seek to clarify existing language in the CC&R’s. Rather, they are an attempt by the committee to insert a new provision that binds homeowners without their approval.
Undaunted, the committee continues to argue that the CC&R’s, the green book, and the 2002 architectural review manual “must be construed together as one contract, as the rules and standards in the Greenbook and [the 2002 architectural review manual] give effect to the CC&Rs.” In support, it cites Huntington Landmark Adult Community Assn. v. Ross (1989) 213 Cal.App.3d 1012 [261 Cal.Rptr. 875].) There, the defendants challenged an attorney fees award, contending there was no provision for attorney fees in the CC&R’s. (Id. at p. 1023.) The court held the defendants were “mistaken” because the supplemental declaration of easements, covenants, conditions and restrictions contained an attorney fees provision. (Ibid.) Huntington is unhelpful here. To the extent the green book and the 2002 architectural review manual deal with topics already covered by the CC&R’s and simply serve to reasonably clarify their meaning (see Rancho Santa Fe, supra, 115 Cal.App.4th at p. 41) or to the extent they adopt new or different standards (which as we have explained in pt. I of the Discussion the CC&R’s give the committee the power to do), those documents are a legitimate exercise of the committee’s power granted to it under the CC&R’s. They therefore bind the homeowners whether we view them as separate or supplemental to the CC&R’s. The same reasoning does not apply to the attorney fees provisions. Nothing in the CC&R’s gives the committee the power to insert into the green book and the 2002 architectural review manual an attorney fees provision that was never in the CC&R’s or contemplated therein. Huntington simply does not cover this situation.
We turn then to the other basis on which the committee and the Wares seek to uphold the attorney fees awards: Ferwerda asked for attorney fees if he prevailed and since he lost in the trial court, he was liable for the other side’s attorney fees. The problem with this argument is that it relies on an incomplete statement of the law.
(5) Pursuant to Civil Code section 1717, “a prevailing party is entitled to attorney fees only if it can prove it would have been liable for attorney fees had the opponent prevailed.” (M. Perez Co., Inc. v. Base Camp Condominiums Assn. No. One (2003) 111 Cal.App.4th 456, 467 [3 Cal.Rptr.3d 563].) In Perez, we disapproved dictum in our earlier opinion in International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175 [101 Cal.Rptr.2d 532], which said, “Where a party claims a contract allows fees and prevails, it gets [1188] fees. Where it claims a contract allows fees and loses, it must pay fees.” (International Billing Services, at p. 1190.) We explained in Perez: “The fallacy of the rule stated in International Billing Servicesis the assumption that if the party who claims that a contract allows fees prevails in the underlying litigation, it gets attorney fees. In truth, the party must still prove that the contract allows attorney fees. The mere allegation is not enough.” (Perez, at p. 468.) The same applies for a losing plaintiff. For a losing plaintiff to be required to pay attorney fees, the plaintiff’s “bare allegation that [h]e is entitled to receive attorney’s fees [is] not . . . sufficient”; he also had to have established the attorney fees clauses “actually entitled” him to recover fees. (Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295, 1307 [230 Cal.Rptr. 553].) Here, Ferwerda never so established, and as we have explained, he could not so establish because the attorney fees provisions in the green book and the 2002 architectural manual did not legitimately serve to add an attorney fees provision to the CC&R’s.[FN. 2] Therefore, the committee and the Wares could not claim the right to attorney fees simply because Ferwerda had asked for those fees in his complaint.[FN. 3]
(6) In sum, there was no basis, either contractual or statutory on which to award attorney fees to the committee or the Wares.[FN. 4] The fees awards must be reversed.
III-VI[FN *]
[1189] DISPOSITION
The orders for attorney fees are reversed. In all other respects, the judgment as to the committee and the Wares is affirmed. The appeal as to the board is dismissed. The board is entitled to its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).) Ferwerda, the committee, and the Wares shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)
The stay issued by this court on December 29, 2010, is vacated upon finality of this opinion.
Nicholson, Acting P. J., and Butz, J., concurred.
[*] Pursuant to California Rules of Court, rule 8.1110, this opinion is certified for publication with the exception of part C of the Factual and Procedural Background and parts III, IV, V, and VI of the Discussion.
[1] A trial by reference is a proceeding under Code of Civil Procedure section 638, subdivision (a), which provides that a referee may be appointed by agreement of the parties to “hear and determine any or all of the issues in an action or proceeding, whether of fact or of law, and to report a statement of decision.” That “statement of decision . . . is the equivalent of a statement of decision rendered by a superior court under Code of Civil Procedure section 632.” (Central Valley General Hospital v. Smith (2008) 162 Cal.App.4th 501, 513 [75 Cal.Rptr.3d 771].) As such, a referee’s statement of decision is subject to appellate review using the same rules that apply to a trial court’s statement of decision. (Ibid.) For simplicity, here we refer to the referee as the trial court.
[*] See footnote, ante, page 1178.
[2] Ferwerda also claimed attorney fees under the private attorney general fee statute (Code Civ. Proc., § 1021.5) in his first amended cross-complaint. The provisions of Civil Code section 1717 are distinct from and have no application to the private attorney general fee statute. Section 1717’s right to attorney fees is based on the notion of reciprocal contractual attorney fees.
[3] We note also the attorney fees provisions in the green book and the 2002 architectural review manual were unilateral, in favor of the committee. “Section 1717 of the Civil Code, however, which governs enforcement of contractual attorney fees provisions, provides that any contractual attorney fees provision must be applied mutually and equally to all parties to the contract, even if it is written otherwise.” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1106 [86 Cal.Rptr.2d 614, 979 P.2d 974].)
[4] The above analysis applies to the Wares’ claims of attorney fees as well. The Wares’ argument that they are entitled to attorney fees is based on the attorney fees provision in the green book, which they claim Ferwerda relied upon throughout the litigation here. Whether that is true is irrelevant. Because we hold the committee had no power to insert the attorney fee provision into the green book, the Wares cannot rely on that provision to claim they are entitled to attorney fees.
[*] See footnote, ante, page 1178.
Duffey v. Superior Court
[Declaration; Enforcement] HOAs may file declaratory relief actions for an authoritative interpretation of the governing documents; An owner need not be a defendant in any lawsuit brought by a HOA to discharge its own duty to enforce the CC&Rs simply because that owner complains about a neighbor’s proposed construction.
Darryl J. Paul for Petitioners.
No appearance for Respondent.
Durst & Landeros, Lee H. Durst and Jose G. Landeros for Real Parties in Interest.
OPINION
SILLS, P.J.
This case presents a different twist on a common situation in California. A property owner proposes to build an improvement which neighbors claim will obstruct their view and violate the “CC&Rs”[FN.1] to which the property is subject. If the homeowner association charged with enforcing the CC&Rs does not take action against the owner, the offended neighbors often take matters into their own hands and sue both the property owner and the homeowner association to prevent the improvement. (See e.g., Posey v. Leavitt (1991) 229 Cal. App.3d 1236 [280 Cal. Rptr. 568] [deck encroaching on common area]; Cohen v. Kite Hill Community Assn. (1983) 142 Cal. App.3d 642 [191 Cal. Rptr. 209] [fence obstructing adjoining landowner’s view]; Beehan v. Lido Isle Community Assn. (1977) 70 Cal. App.3d 858 [137 Cal. Rptr. 528][construction of house in arguable contravention of setback restrictions].)
In this case it is the homeowner association which has initiated the litigation, in particular, a request for declaratory relief concerning whether the CC&Rs prohibit a proposed improvement. The twist is that the homeowner association has named not only the property owner as a defendant, but the complaining neighbors as well.
The neighbors brought a motion for judgment on the pleadings to extricate themselves from the case. The trial court denied the motion and the neighbors have now petitioned this court for a peremptory writ of mandate commanding the trial court to grant the motion. We grant the petition.
I
As this matter comes to us by way of a thwarted motion for judgment on the pleadings, the following facts are taken from the first amended complaint of the plaintiff, the Coast Homeowners Association (the homeowner association), filed in January 1988: The Bertrams, Duffeys, and Mehrenses each own homes in San Clemente subject to certain CC&Rs. The Bertrams have [428] submitted a set of plans to the homeowner association for the construction of a patio cover. The homeowner association is organized as a corporation under the laws of California. The Duffeys and the Mehrenses are next-door neighbors of the Bertrams, and have objected[FN.2] to the proposed patio cover because it will block their ocean views. The Bertrams contend the CC&Rs do not prohibit the patio cover; the Duffeys and the Mehrenses contend they do. The homeowner association requests a judicial declaration whether the CC&Rs do, indeed, prohibit the proposed patio cover and whether it should deny or approve the Bertrams’ proposed construction.
In October 1991, the Duffeys and the Mehrenses brought a motion for judgment on the pleadings on the grounds there is no controversy between them and the homeowner association and no relief is being sought against them by the homeowner association. The Bertrams did not oppose the motion. The homeowner association did oppose it, contending, in essence, it was enough to allege that there is a controversy between the Bertrams on the one hand, and the Duffeys and the Mehrenses on the other, to establish a cause of action on the part of the homeowner association for declaratory relief.
The trial court denied the motion and the Duffeys and the Mehrenses filed this proceeding. We invited informal responses. The homeowner association makes two arguments. One, if the Duffeys and the Mehrenses had not voiced their objections to the Bertrams’ patio cover in writing, the homeowner association would not have had to file this lawsuit. Two, if the Duffeys and the Mehrenses were dismissed from the case before the resolution of the dispute over the CC&Rs, they could sue the homeowner association if they did not approve of the outcome; the Duffeys and the Mehrenses must be kept in this litigation to avoid subjecting it to a “no-win” situation.
II
(1) Before we address the homeowner association’s arguments, we note the obvious. The homeowner association seeks no relief against the Duffeys or the Mehrenses. This is the dispositive fact in the petition before us.
Courts analyze homeowner associations in different ways, depending on the function the association is fulfilling under the facts of each case. Courts have treated associations as landlords (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 499-501 [229 Cal. Rptr. 456, 723 P.2d 573, 59 [429] A.L.R.4th 447][association could be held liable for rape and robbery of individual owner who was not allowed to install additional lighting at time of crime wave]), minigovernments (Laguna Publishing Co. v. Golden Rain Foundation (1982) 131 Cal. App.3d 816, 844 [182 Cal. Rptr. 813] [gated community could not discriminate among give-away newspapers]; businesses (O’Connor v. Village Green Owners Assn. (1983) 33 Cal.3d 790, 796 [191 Cal. Rptr. 320, 662 P.2d 427] [condominium project with age restrictions in CC&Rs was “business” within meaning of Unruh Civil Rights Act]) and corporations (Beehan v. Lido Isle Community Assn., supra, 70 Cal. App.3d 858, 865-867 [board of directors’ good faith refusal to take action against construction of house in arguable contravention of setback restrictions was protected by corporate business judgment rule]).
The nature of the present case invokes the “corporate” function of the association. Of the four cases just cited, Beehan, which applied corporate law, is the one most similar to this, involving, as it did, a dispute between two neighbors over what sort of construction was allowable under recorded land use restrictions. Moreover, corporate principles also make the most sense in this case. The homeowner association is not acting as a business seeking a profit, a landlord exercising management over tangible property, or a minigovernment physically controlling access to its “citizen’s” property. The homeowner association here is incorporated, but is torn between competing factions as to what collective action to take. Corporate law provides a ready framework for this problem.
Under corporate principles, the homeowner association has no cause of action against the Duffeys and Mehrenses, as demonstrated in Weisman v. Odell (1970) 3 Cal. App.3d 494 [83 Cal. Rptr. 563]. In Weisman, minority shareholders sued a corporation and its majority shareholders seeking to dissolve the corporation because the majority shareholders had operated the entity for their own benefit at the expense of the minority. No direct relief or damages, however, were requested against the majority shareholders.
The majority shareholders successfully demurred to the complaint, and the decision was affirmed on appeal. The appellate court reasoned the majority shareholders could not be joined as defendants against their will because “[i]t is fundamental that a person should not be compelled to defend himself in a lawsuit when no relief is sought against him.” (3 Cal. App.3d at p. 498.) Because the “sole relief” was the dissolution of the corporation, the majority shareholders could “not be compelled to be parties defendant under the pleadings.” (3 Cal. App.3d at p. 499.)
Here, it is undisputed that no relief is sought against the Duffeys or the Mehrenses. While they, like the majority shareholders in Weisman, may be [430] affected by the trial court’s ultimate decision, nothing will happen to them directly as a result of that decision.
The case law on the subject of indispensable parties[FN.3] also supports our conclusion. In Lushing v. Riviera Estates Assn. (1961) 196 Cal. App.2d 687 [16 Cal. Rptr. 763], a property owner submitted plans to a homeowner association to build a second house on a particular lot. The association refused to pass on or consider the plans, contending that the lot in question was not a “building site” within the meaning of the declarations governing the property. The property owner sued the association and the trial court decided the issue in favor of the owner. The association appealed, contending, among other things, that the property owner should have joined the other lot owners as indispensable or conditionally necessary parties to the action. (196 Cal. App.2d at p. 690.) The appellate court rejected the contention, reasoning there was no need to join the other lot owners because they were not necessary to a “complete determination of the controversy.” (Ibid.)
The impact of land use litigation on the rights of neighbors was also touched on in Leonard Corp. v. City of San Diego (1962) 210 Cal. App.2d 547 [26 Cal. Rptr. 730]. In Leonard Corp., a developer sued a city for declaratory relief concerning the correct zoning for a particular tract of land. Adjacent landowners sought to intervene, claiming they purchased their own property in reliance on the developer’s statements that the tract in question would be restrictively zoned. They argued they were indispensable parties to the dispute. The trial court denied the request and the court of appeal affirmed the decision.
The Leonard Corp. court, in essence, reasoned that the adjacent landowners were not indispensable parties because there was no logical demarcation between them and any other person who might be somehow affected by the developer’s plans: “If interveners were indispensable parties, then it might well be said that every home owner on adjacent subdivisions in Point Loma was an indispensable party who might claim some injury or loss by reason of the zoning ordinance.” (210 Cal. App.2d at p. 550.) It was enough that the trial court could make a “complete determination” of the zoning controversy with just the parties already before it. (Ibid.)
Lushing and Leonard Corp. articulate principles applicable to the instant case. The only parties the trial court needs to make a “complete determination” about the applicability of the CC&Rs to the Bertrams’ proposed patio cover are the Bertrams and the homeowner association.
[431] Moreover, as in Leonard Corp., there is no principled demarcation to distinguish some of the Bertrams’ neighbors (the Duffeys and the Mehrenses) from others who have not been joined in the litigation. Not only will the Duffeys and the Mehrenses be affected by this litigation, but so will all owners subject to the disputed CC&Rs. Patios as yet unbuilt by owners in the tract now blissfully unaware of the Bertrams’ plans may be affected by the outcome of this case. But as the Leonard Corp. court perceived, it is unreasonable to join every nearby landowner who might conceivably be affected by the litigation. It is enough that the homeowner association, charged with the enforcement of the CC&Rs (see discussion below), and the arguably offending property owners, are in it.
III
A
We now turn to the homeowner association’s two arguments in favor of keeping the unwilling Duffeys and Mehrenses in the case. The first is that but for the Duffeys and the Mehrenses, the homeowner association would not have needed to file this action in the first place.
It does not follow, however, that the individual owner must be a defendant in any lawsuit brought by a homeowner association to discharge its own duty to enforce the CC&Rs simply because that owner complains about a neighbor’s proposed construction. Homeowner associations have the responsibility of enforcing a development’s declaration of restrictions. (Cohen v. Kite Hill Community Assn., supra, 142 Cal. App.3d 642 [association could be held liable for failing to enforce architectural standards in CC]; see also Sproul and Rosenberry, § 1.2, p. 5.) This duty exists independently of what any given group of owners, such as the complaining neighbors in this case, might think or assert. The Duffeys’ and the Mehrenses’ written objection to the Bertrams’ proposed construction is thus quite irrelevant to the question of what the association must do about that construction. If the Bertrams’ construction is, indeed, contrary to the CC&Rs, the association would still have the responsibility of trying to prevent it even if the Duffeys and the Mehrenses favored it.[FN.4]
[432] B
(2) The homeowner association also argues the Duffeys and the Mehrenses must remain in the case lest they sue the association if they are unhappy with the outcome. This argument is similarly unpersuasive.
If, after this litigation is over, the Duffeys and the Mehrenses are unhappy because the court has rejected their interpretation of the CC&Rs on the merits, they will have only themselves to blame. Civil Code section 1354 gives them the right to join the litigation to enforce the CC&Rs if they so desire.[FN.5] If they are at all concerned that the homeowner association will not vigorously press their interpretation of the CC&Rs to the trial court, now is the time for them to exercise their rights under Civil Code section 1354 and do so.
The association, for its part, need only make a good faith effort to obtain a judicial declaration on the merits of the dispute. Code of Civil Procedure section 374 gives an association standing to pursue “matters pertaining” to the “[e]nforcement of the governing documents” of a “common interest development.” Enforcement is impossible when governing documents are unclear as applied in a given context. Interpretation of governing documents is undoubtedly a “matter pertaining” to their enforcement. Accordingly, we conclude Code of Civil Procedure section 374 authorizes homeowner associations to file declaratory relief actions such as this one where there is a need for an authoritative interpretation of governing documents.
At the same time, however, Code of Civil Procedure section 374 specifically relieves homeowner associations from the need to join “the individual owners of the common interest development.”[FN.6] When read in conjunction with Civil Code section 1354, an important implication emerges from this aspect of the statute: if there is a good faith dispute concerning the interpretation [433] of the CC&Rs, a homeowner association need not vigorously advocate any particular interpretation — individual owners can do that if they want to under Civil Code section 1354. As long as the “matters” relate to the enforcement of the CC&Rs (which would entail joining the parties against whom they are to be enforced), the association has standing to litigate them without joining the neighboring owners with their various viewpoints. If those owners want to press their own interpretations, Civil Code section 1354 allows them to jump into the fray directly. Otherwise, they are free to stay on the sidelines.
This aspect of the statute makes sense in light of the conflicts to which homeowner associations are inevitably subject. The instant case is a good example. If the Bertrams are correct in their interpretation of the CC&Rs, then the association must allow the construction of the patio cover. The rights of not only the Bertrams are involved, but of every other homeowner who would like to exercise the right to construct a patio cover in the development. If the Duffeys and the Mehrenses are correct, then the association must seek to prevent the construction of the Bertrams’ patio cover to protect the rights of the Duffeys, the Mehrenses, and every other homeowner who does not want a neighbor’s patio cover to block their view. Given this “no-win” position, it is enough for the association to seek a determination of the controversy joining only the arguably offending property owners.
On the other hand, if the association, for some reason, lets the case go by default and be disposed of on some purely procedural basis, it will be as if the association had done nothing to enforce the CC&Rs. Worse, the Duffeys and the Mehrenses (or other neighbors of like mind) may have foregone their own rights to enforce the declarations under Civil Code section 1354 on the assumption that the association would obtain a judicial declaration on the issue, one way or the other. If the homeowner association did allow the case to go by default and for that reason alone the Bertrams were able to build their patio cover, then the Duffeys and the Mehrenses ought to be able to sue the association for failing to enforce the CC&Rs. (See Cohen v. Kite Hill Community Assn., supra, 142 Cal. App.3d 642 [duty of homeowner association to enforce architectural standards set forth in declarations].) Either way — whether there is a decision on the merits or not — there is no reason now to keep the Duffeys and the Mehrenses in this case involuntarily.
Even though the Duffeys and the Mehrenses need not be joined as parties, there is no question as to the binding effect of this litigation on them. The policy behind Code of Civil Procedure section 374 requires that declaratory [434] judgments brought in litigation authorized under the statute be res judicata, and binding on the individual owners, including all those who do not participate in the litigation. Unless an association’s litigation is binding, the benefits of section 374 will vanish. (See Comment, Homeowner Association Standing in California: A Proposal to Expand the Role of the Unit Owner (1986) 26 Santa Clara L.Rev. 619, 627.)
IV
Homeowner associations play an increasingly important role in the daily lives of Californians. It is common knowledge that much of the new housing developed in recent years — including single-family detached dwellings — is subject to CC&Rs enforceable by such associations. Some large homeowner associations have budgets which put them on a par with small cities and towns. In many areas of our state homeowner associations have practically become a “quasibranch” of municipal government. (Cf. Sproul and Rosenberry, supra, § 6.5, p. 252 [noting both associations and local governments can “be responsible for providing services such as road maintenance, street lighting, parks, recreation, and utilities”]; see also Cohenv. Kite Hill Community Assn., supra, 142 Cal. App.3d 642, 652 [“approval of a fence not in conformity with the Declaration is analogous to the administrative award of a zoning variance”].)
Given this role, it would be incongruous indeed if the expression of opinion to a homeowner association by one neighbor about another neighbor’s proposed construction were cause to name the objecting neighbor in a lawsuit. Merely standing up at a homeowners’ or board of directors’ meeting to argue that one’s neighbors’ plan to paint their garage door Day-Glo orange with magenta polka dots is prohibited by the CC&Rs should not land one in a lawsuit. Even a “small” lawsuit for declaratory relief can be expensive.
The tactic employed by this homeowner association of naming objecting neighbors in a declaratory relief lawsuit only sows the seeds of destruction of its own declarations. If every neighbor who demands enforcement of the CC&Rs winds ups in court, no one will demand enforcement, and landscape and construction standards will effectively cease to exist. It is difficult to imagine a denser pall cast over association governance than the prospect of being named in a lawsuit for simply insisting the association do its job.
In this case, for instance, the Duffeys and the Mehrenses have presumably had to incur legal expenses for more than four years, if only to “monitor” the case. Those expenses have functioned, in essence, as a penalty for their having objected to the Bertrams’ plans.
[435] Enough is enough. Having invited and received a response from the homeowner association, issuance of an alternative writ would not assist our resolution of this matter. Indeed, it would only increase the fees the petition seeks to alleviate,[FN.7] as well as cause unnecessary delay. A peremptory writ in the first instance is therefore appropriate. (See Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 178 [203 Cal. Rptr. 626, 681 P.2d 893].) Let a peremptory writ of mandate issue directing the trial court to vacate its denial of the motion for judgment on the pleadings brought by the Duffeys and the Mehrenses and enter a new judgment in their favor.
Wallin, J., and Sonenshone, J., concurred.
[FN. 1] “CC&Rs” stands for “covenants, conditions, and restrictions.” The term is technically inaccurate because declarations typically do not include conditions, which, if breached, would cause the property to revert to the developer. (Sproul & Rosenberry, Advising Cal. Condominium and Homeowners Associations (Cont.Ed.Bar 1991) § 7.1, pp. 300-301 [hereafter Sproul and Rosenberry].)
[FN. 2] In its response to the petition for writ of mandate, the homeowner association states that the Duffeys and the Mehrenses “voiced their objections in writing.” The complaint, however, makes no mention of written, as distinct from oral, objections.
[FN. 3] Under Code of Civil Procedure section 389, a person who claims an interest in the subject matter of an action and is so situated as to leave any party already in the case subject to substantial risk of inconsistent obligations “shall be joined” as a party to the action. As we are about to show, Code of Civil Procedure section 389 is not applicable here.
[FN. 4] To use a farfetched example, if the Bertrams sought to turn their backyard into a toxic waste dump, and their neighbors failed to oppose the idea, would this relieve the association from the obligation to enforce the CC&Rs, which, we presume, would forbid such a use? If not, as is obviously the case, then the fact of neighbor opposition is similarly independent of the association’s obligation.
[FN. 5] The text of Civil Code section 1354 is: “The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both. In any action to enforce the declaration, the prevailing party shall be awarded reasonable attorney’s fees and costs.”
[FN. 6] Code of Civil Procedure section 374 provides:
“An association established to manage a common interest development shall have standing to institute, defend, settle, or intervene in litigation, arbitration, mediation, or administrative proceedings in its own name as the real party in interest and without joining with it the individual owners of the common interest development, in matters pertaining to the following:
“(a) Enforcement of the governing documents.
“(b) Damage to the common areas.
“(c) Damage to the separate interests which the association is obligated to maintain or repair.
“(d) Damage to the separate interests which arises out of, or is integrally related to, damage to the common areas or separate interests that the association is obligated to maintain or repair.” (Italics added.)
[FN. 7] We express no opinion on what right, if any, the Duffeys and the Mehrenses may have to recoup their fees under Civil Code section 1354.
Seahaus La Jolla Owners Association v. Superior Court
[Attorney-client privilege; Homeowners] Attorney-client privilege applies to communication between association’s attorney and homeowners.
Epsten Grinnell & Howell, Anne L. Rauch; Rockwood & Noziska, Brant Noziska, Neal Rockwood; Law Offices of William A. Bramley and William A. Bramley for Petitioner.
Simpson Delmore & Greene, Paul J. Delmore, Elizabeth A. Donovan and Brook T. Barnes for Real Parties in Interest CLB Partners Ltd. and La Jolla View Ltd., LLC.
Gordon & Rees, Sandy M. Kaplan, R. Scott Sokol and Matthew G. Kleiner for Real Parties in Interest Webcor Development, Inc., Webcor Builders, Inc., and Webcor Construction, L.P.
Bryan Cave, Robert E. Boone III, Edward M. Rosenfeld, Tony Tootell and David Harford for Real Parties in Interest Bank of America Corporation, Bank of America, N.A., and Countrywide Home Loans, Inc.
OPINION
HUFFMAN, J. —
Petitioner Seahaus La Jolla Owners Association (Association) is the plaintiff in a construction defect action alleging water and other damage to the common areas of a common interest development. The Association sued the developers and builders of the complex, La Jolla View Ltd., LLC, and Webcor Construction L.P. (Defendants), who, among others, are the real parties in interest in this mandamus proceeding. The Association contends the trial court erred and abused its discretion in overruling the Association’s claim of attorney-client privilege in this discovery dispute over Defendants’ efforts to depose individual homeowners regarding disclosures made at informational meetings about the litigation.
The record shows that counsel for the Association’s board of directors (the Board) gave notice to the individual homeowners in June 2009 that the Board was pursuing mediation but was also contemplating filing construction defect [760] litigation. (Civ. Code, former § 1368.5, now § 6150.)[FN. 1] Such litigation was filed in July of 2009, and the Board and its counsel subsequently conducted meetings with many individual homeowners of the 140 units to apprise them of the status and goals of the litigation. Pursuant to the provisions of the governing documents, at one such litigation update meeting, the Board sought and obtained majority approval by the homeowners for pursuing the action. (Civ. Code, § 6150, subd. (b); Association’s Declaration of Covenants, Conditions and Restrictions (CCRs), § 4.4.11, “Members’ Approval of Certain Actions.”)
By the time of the later litigation update meetings, a subgroup of individual homeowners had filed its own companion action in which they seek damages for construction defects in their private individual units, and their action was coordinated for discovery purposes with the Association’s action. (Sarnecky v. La Jolla View Ltd., LLC (Super. Ct. San Diego County, No. 37-2010-00092634-CU-OR-CTL) (Sarnecky action).)[FN. 2]
Defendants’ contested discovery requests were made during depositions of many individual homeowners, and seek to inquire into the content and disclosures made at those informational litigation update meetings, which were conducted by the Association’s counsel. The Association objected, invoking the attorney-client privilege under Evidence Code[FN. 3] section 952 and the “common interest” doctrine. (See OXY Resources California LLC v. Superior Court (2004) 115 Cal.App.4th 874, 887-888 [9 Cal.Rptr.3d 621] (OXY Resources) [parties who possess common legal interests may share privileged information without losing the protection afforded by the privilege].) However, several rulings by the trial court have declined to allow such a privilege to be asserted by the Association, or have concluded any privilege was waived, regarding the communications received at the meetings by [761] individual homeowners who are not the actual clients of the Association’s retained counsel. This petition ensued.
“Confidential communications” between client and lawyer are defined in section 952 as meaning “information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.” (Italics & underscoring added.)
(1) We evaluate this discovery dispute in the context of the usual first principles, that parties may obtain discovery regarding any unprivileged matter that is relevant to the subject of the pending action or motions, but subject to the rule that “the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., § 2017.010, italics added.) Defendants’ claim to entitlement to information about the litigation update meetings is apparently based upon the claim of some of the individual plaintiffs to stigma damages for their units (apparently in the Sarnecky action). Defendants argue that in the Association’s common area action, they should be able to inquire into the beliefs of the individual homeowner plaintiffs about damages and the source of their beliefs (such as any perceptions gained from information given to them by the Association’s attorneys at the Board’s litigation update meetings).
To the extent this record reveals anything about the purpose of the requested discovery, it shows that counsel for Defendants is seeking to develop information about the litigation strategy of the Association’s counsel, including the legal opinions formed and the advice given by the lawyers in the course of that relationship, and such disclosures would not likely lead to the discovery of admissible evidence. (§ 952; Code Civ. Proc., § 2017.010; Mitchell v. Superior Court (1984) 37 Cal.3d 591, 609-610 [208 Cal.Rptr. 886, 691 P.2d 642] (Mitchell) [public policy concerns outlined against unwarranted invasions of privilege].)
(2) In the Act governing common interest developments, the Legislature placed certain obligations on homeowners association governing boards to communicate with individual owners about proposed construction defect litigation by the association regarding the common areas. (Civ. Code, § 6150, subd. (a).) The association may sue developers over common area defects and [762] also over alleged damage to the separate interests that the association must maintain or repair, or damage to the separate interests that is integrally related to damage to the common areas. (Ibid.; Civ. Code, § 5980.) By the same token, individual owners have economic interests in the value of not only their own individual units, but also in the state of the development as a whole. (Ostayan v. Nordhoff Townhomes Homeowners Assn., Inc. (2003) 110 Cal.App.4th 120, 126-127 [1 Cal.Rptr.3d 528] (Ostayan).)
As we will show, the challenged orders in the Association’s action represent an overly technical definition of the attorney-client privilege, and do not account for the protection of client confidentiality as it operates through the common interest doctrine, in this factual and legal context surrounding common interest developments. We grant relief on the petition to allow the attorney-client privilege to be asserted under these circumstances.
FACTUAL AND PROCEDURAL SUMMARY
A. Nature of Meetings Held by Board for Individual Homeowners; Legal Representation
The Board hired the Epsten Grinnell & Howell law firm to represent it in pursuing mediation with the developer and general contractor of the development. On June 23, 2009, the Association’s counsel sent a letter to all homeowners notifying them that mediation was pending, no lawsuit had been filed, and a preliminary list of defects was enclosed, reflecting that the Association was currently investigating the nature, extent and severity of the defects at the site. The letter stated that if an owner was selling or refinancing a unit, “you may be required to provide this document to escrow, buyer, or a lending institution.”
The next letter from the Association’s attorneys was dated August 17, 2009, and provided homeowners with an update regarding the status of the construction defect claims involving the common areas of the development. This letter notified homeowners that (1) the Association had just filed its lawsuit on July 31, 2009, due to limitations concerns and bankruptcy of one defendant, and (2) the homeowners might be required to disclose that filing in connection with any pending sale or refinance of a unit. Mediation was continuing, but the legal action filing had been deemed to be essential to preserve the claims. Counsel stated that members of the firm would be present at the Association’s annual meeting on September 16, 2009, to answer questions and discuss the Association’s legal options and the status of the investigation and mediation efforts.
On January 13, 2010, the Board and its mediation and litigation committee sent out a notice of an informational meeting to all homeowners, at which [763] counsel for the Association would be present to provide owners with information about the status of the claims against the developers and builders of the complex. The meeting was scheduled for January 26, 2010, for presentations by the attorneys and some of the consultants retained to assist in connection with pursuing the claims.
Next, counsel for the Association sent all homeowners another status update on the claims against the developers and builders dated March 1, 2010. This letter referenced the homeowner meeting held January 26, 2010, and stated that additional defects had been identified and were being investigated. The homeowners were told that additional meetings would be scheduled when the results of the current investigation were obtained.
On March 20, 2012, counsel for the Association notified the individual homeowners that an upcoming open forum meeting was scheduled for March 24, 2012, to answer individual homeowners’ questions regarding the litigation, particularly its relationship to the separate Sarnecky individual homeowners’ action. Only some of the individual homeowners were parties to the separate action, and they were represented by their own attorneys (the Aguirre firm). The letter also stated that the Association’s structural engineer would be attending the meeting to answer questions.
B. Discovery Dispute; Referee
Defendants pursued discovery in the Association’s action, requesting that several individual homeowners be produced for deposition and questioned about the litigation meetings’ content, and any basis they might have learned there about any stigma damages being claimed for their units. Defendants argued that the meetings were not held in a confidential context and any applicable privileges had been waived.
The Association objected to the questions and asserted that the information was protected from disclosure by the attorney-client privilege. The Association did not claim that the individual homeowners were also clients of its counsel, but rather that they were “third persons … to whom disclosure is reasonably necessary for the … accomplishment of the purpose for which the lawyer is consulted.” (§ 952.) Thus, it claimed the individual homeowners were present to further the interests of the Association, as client, in the consultation.
When Defendants continued to seek information about the content of the meetings, the Association brought the issue before the appointed discovery referee, James A. Roberts. After a tentative ruling and hearing, the referee issued a report and recommendations for a protective order to be issued by [764] the court. The referee concluded that the information requested about the content of the meetings was not subject to discovery because it was neither directly relevant to the action nor reasonably likely to lead to relevant evidence. In his June 4, 2012 letter decision, he stated his opinion that the Association had the better argument as to why such communications should be determined to be privileged. In his formal recommendation dated July 13, 2012, issued after a request for reconsideration, the referee stated that even though some of the letters from the Association’s counsel to the homeowners, about the status of the litigation and the claims being made, were stated on their face not to be confidential and thus could be shown to lenders or prospective purchasers, the public content of those letters was different from the content of the confidential information being discussed at the homeowner litigation meetings.
C. Court Proceedings on Referee’s Recommendation
Defendants brought their objections to the referee’s recommendations to the trial court (Judge Vargas), who held several hearings. In a series of proposed orders and rulings, Judge Vargas stated he “sustains defendant’s objection” to the recommendation, but also stated “[t]he court overrules all other objections.” Although the order granted the protective order proposed by the referee, it was stamped “granted with modifications” (which were unclear), and the same order was stamped as “Rejected — Defective (Courtesy Copy Not Received by Court).” Meanwhile, some of the individual homeowners’ depositions were proceeding, out of over 30 that were set.
At the end of 2012, Judge Vargas retired and the case was reassigned to Judge Meyer. In July 2013, Defendants moved to compel further answers, claiming that the information sought about the meetings at the individual homeowners’ depositions was not protected by the attorney-client privilege, since there were no attorney-client relationships between the Association’s counsel and the individual homeowners.
The Association responded that there was not any attorney-client relationship between its own counsel and the individual homeowners, but that nevertheless, its counsel’s disclosures to those homeowners were privileged under section 952, as reasonably necessary for “the accomplishment of the purpose” for which the Association’s lawyer was consulted.
At the hearing on the motion to compel, Judge Meyer stated that he could not understand Judge Vargas’s orders, which were ambiguous and contradictory. The matter was taken under submission and the motion to compel granted on September 4, 2013: “This court cannot change Judge Vargas’s order [765] reversing the Discovery Referee’s determination regarding an attorney-client relationship between the Association’s counsel and individual homeowners.”
This petition followed, asserting that the court erred in granting the motion to compel solely on the ground that it had to follow Judge Vargas’s earlier order, which was ambiguous. Petitioner seeks orders compelling the trial court to vacate its orders allowing the requested discovery, and asks that we direct the trial court to order adoption of the referee’s report. The Association contends this privilege question is one of first impression that should be considered by this court before the Association or witnesses are required to disclose information it claims is privileged.[FN. 4]
We issued a stay, received additional briefing, and issued an order to show cause. Oral argument was held and the matter submitted.
DISCUSSION
In this context of Association litigation seeking recovery for construction defects in the common areas, we are asked to decide whether attorney-client privileges extend to communications, for which confidentiality was intended or preserved, between the Association’s counsel and third party nonclients (individual homeowners), at Association update meetings about the common area litigation, which were held for the individual homeowners. Although there may be some differences between the procedural posture of some of these third party nonclients (i.e., only some of the individual homeowners have filed the separate Sarnecky action seeking damages to their private units), we will treat the Association and its litigation counsel’s communications to individual homeowners at the meetings as raising the same legal issue. Were such communications sufficiently confidential, and “reasonably necessary for the accomplishment of the purpose for which the [Association’s] lawyer is consulted,” based on common interests in the subject matter of the Association’s litigation updates? (See §§ 912, 952.)
[766]I
APPLICABLE STANDARDS
A. Review of Privilege Rulings
“Extraordinary review of a discovery order will be granted when a ruling threatens immediate harm, such as loss of a privilege against disclosure, for which there is no other adequate remedy. [Citation.] `”We review discovery orders under the abuse of discretion standard, and where the petitioner seeks relief from a discovery order that may undermine a privilege, we review the trial court’s order by way of extraordinary writ. [Citation.]”‘” (Zurich American Ins. Co. v. Superior Court (2007) 155 Cal.App.4th 1485, 1493 [66 Cal.Rptr.3d 833] (Zurich).) Each challenged discovery ruling concerning the recognition of a privilege is considered on a “`case-by-case'” basis, and we decide only the issues before us. (Upjohn Co. v. United States (1981) 449 U.S. 383, 396-397 [66 L.Ed.2d 584, 101 S.Ct. 677].)
In this context, “`[t]he trial court’s determination will be set aside only when it has been demonstrated that there was “no legal justification” for the order granting or denying the discovery in question.'” (OXY Resources, supra, 115 Cal.App.4th 874, 887.) A trial court has abused its discretion in determining the applicability of a privilege when it utilizes the wrong legal standards to resolve the particular issue presented. (Zurich, supra, 155 Cal.App.4th 1485, 1493-1494.)
(3) The party claiming privilege has the burden of establishing the preliminary fact that the communications were made during the course of an attorney-client relationship. (D. I. Chadbourne, Inc. v. Superior Court (1964) 60 Cal.2d 723, 729 [36 Cal.Rptr. 468, 388 P.2d 700]; Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 740 [101 Cal.Rptr.3d 758, 219 P.3d 736].)
(4) The overarching standards for the scope and applicability of a privilege are statutory in nature. (§ 911.) “The privileges set out in the Evidence Code are legislative creations; the courts of this state have no power to expand them or to recognize implied exceptions.” (Wells Fargo Bank v. Superior Court (2000) 22 Cal.4th 201, 206 [91 Cal.Rptr.2d 716, 990 P.2d 591] (Wells Fargo); see Roberts v. City of Palmdale (1993) 5 Cal.4th 363, 373 [20 Cal.Rptr.2d 330, 853 P.2d 496];Zurich, supra, 155 Cal.App.4th 1485, 1494.) Public policy supports the proper scope of application of attorney-client privileges, to ensure “`the right of every person to freely and fully confer and confide in one having knowledge of the law, and skilled in [767] its practice, in order that the former may have adequate advice and a proper defense.'” (Mitchell, supra, 37 Cal.3d 591, 599.)
(5) The proper purposes of discovery are to obtain information on unprivileged matters that are relevant to the subject of the pending action, “if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., § 2017.010.) “For discovery purposes, information is relevant if it `might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement.’ [Citation.] Admissibility is not the test and information, unless privileged, is discoverable if it might reasonably lead to admissible evidence. [Citation.] … [T]he scope of discovery extends to any information that reasonably might lead to other evidence that would be admissible at trial. `Thus, the scope of permissible discovery is one of reason, logic and common sense.'” (Lipton v. Superior Court (1996) 48 Cal.App.4th 1599, 1611-1612 [56 Cal.Rptr.2d 341] (Lipton); italics omitted.)
B. Procedural Status: No Reliance on Laches
Before analyzing the record in light of the above legal principles, we acknowledge that the sequence of discovery referee recommendations and two sets of superior court rulings have created some confusion on the basis for the rulings and the exact issues to be resolved. Defendants complain that the Association could have sought mandamus relief earlier, but did not do so until well into the discovery and litigation process, and thus, the petition arguably should be barred by laches. (See, e.g.,Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 68 [99 Cal.Rptr.2d 316, 5 P.3d 874]; Planned Parenthood Golden Gate v. Superior Court (2000) 83 Cal.App.4th 347, 356 [99 Cal.Rptr.2d 627].)
Writ review on the merits is appropriate to evaluate the rulings granting the motion to compel brought by Defendants, since they effectively disallowed the claims of attorney-client privilege raised by the Association with respect to the proposed questioning of individual homeowners. It is not necessary to enter into the debate about what Judge Vargas meant in the rulings he made before he retired in 2012, or about Judge Meyer’s subsequent interpretation of what Judge Vargas must have meant, when Judge Meyer found it determinative that there was no attorney-client relationship between the Association’s counsel and individual homeowners. In light of the novel and important issues raised by the petition on the interpretation of section 952, we decline to take the route of relying on principles of laches to resolve this matter. (See Lipton, supra, 48 Cal.App.4th 1599, 1612.)
Moreover, the Association has requested in its petition that this court direct the trial court to order adoption of the referee’s report. Such an intermediate [768] step is not necessary, and instead we exercise our discretion to reach the merits of the privilege questions presented.
II
ELIGIBILITY FOR PRIVILEGE COVERAGE
A. Basic Statutory Criteria: Evidence Code
(6) Two basic situations arise under section 952 for determining whether a “confidential communication” between a client and lawyer will retain its privileged character. Most importantly to the case before us, section 952 provides that confidentiality is retained if such an attorney-client communication is transmitted in confidence “to no third persons other than those who are present to further the interest of the client in the consultation ….” (§ 952, italics added.) Together, sections 912 and 952 will “permit sharing of privileged information when it furthers the attorney-client relationship; not simply when two or more parties might have overlapping interests.” (McKesson HBOC, Inc. v. Superior Court (2004) 115 Cal.App.4th 1229, 1237 [9 Cal.Rptr.3d 812], italics added, citing Raytheon Co. v. Superior Court (1989) 208 Cal.App.3d 683 [256 Cal.Rptr. 425].)
In general, section 912, subdivision (a) provides guidance for when disclosures operate to waive a privilege. One of its exceptions, section 912, subdivision (d) expressly clarifies it is not a waiver of privilege under the following circumstances: “`A disclosure in confidence of a communication that is protected by a privilege provided by [attorney-client privilege, section 954], when disclosure is reasonably necessary for the accomplishment of the purpose for which the lawyer … was consulted, is not a waiver of the privilege.'” (OXY Resources, supra, 115 Cal.App.4th at p. 890, italics added; see First Pacific Networks, Inc. v. Atlantic Mutual Ins. Co.(N.D.Cal. 1995) 163 F.R.D. 574, 581 [both §§ 912 and 952 contain the same concept, i.e., whether there is a reasonable necessity for disclosure to a third party, in order to accomplish the purpose of consulting the lawyer].)
(7) Accordingly, section 952 allows privileges to be preserved when a family member, business associate or joint client (and/or the attorney for same) meets with the client and attorney who claim privilege, in regard to a matter of joint concern, “`when disclosure of the communication is reasonably necessary to further the interest of the [claimant/litigant].'” (Insurance Co. of North America v. Superior Court(1980) 108 Cal.App.3d 758, 767 [166 [769] Cal.Rptr. 880], italics added; see 2 Witkin, Cal. Evidence (5th ed. 2012) Witnesses, § 124, pp. 423-424.)[FN. 5]
In a related situation, public policy considerations were enunciated to assist in defining the proper scope of statutory protections of attorney-client confidential communications. The Supreme Court in Mitchell, supra, 37 Cal.3d 591, 611, was confronted with a defendant’s discovery requests that were nominally intended to produce evidence relating to a plaintiff’s claimed damages, in the form of questioning of the plaintiff about the nature and content of any warnings or information she had received from her attorney about the potential damages she was asserting. (Id. at p. 597.) In that case, the plaintiff was claiming injury from the defendants’ wrongful environmental contamination, including her emotional distress stemming from fears of future physical harm that might be caused from the contamination. (Id. at p. 595.)
In the requested discovery in Mitchell, defense counsel arguably was seeking to inquire into whether the plaintiff and her counsel had discussed any potential physical harm to her from the contamination, “and if so, whether that discussion had contributed to plaintiff’s distress.” (Mitchell, supra, 37 Cal.3d 591, 610.) In considering privilege, the Supreme Court balanced the respective interests and concluded that such questioning went too far, because it “might very well reveal much of plaintiff’s investigative efforts and trial strategy.” (Ibid.) The plaintiff’s attorney-client privilege should protect against any such investigation by opposing counsel into confidential client communications about injury and damages. (Id. at pp. 610-611.)
Moreover, allowing such proposed discovery into attorney-client discussions would “potentially uphold a harassment tactic whereby defendants … are able to shift the focus of the case from damages caused by [their actions] to damages caused by allegedly inflammatory or false information provided by self-serving attorneys…. [T]his technique not only obfuscates many of the substantive issues in a case but also frequently places the wrong `defendant’ on trial.” (Mitchell, supra, 37 Cal.3d 591, 610-611.) Permitting such discovery would constitute “an unwarranted abrogation of the attorney-client privilege,” that would unjustifiably undermine the proper functioning of the judicial system. (Id. at p. 611.)
[770] Having set forth these basic principles and policy limitations regarding the protected scope of the attorney-client privilege, we turn to the more specific questions presented about the application of the common interest doctrine in this situation.
B. Common Interest Doctrine Definition
(8) “Although the protection of the attorney-client privilege is absolute, the protection afforded by the common interest doctrine is qualified, because it depends on the content of the communication…. [T]here is `no absolute brightline [sic] test which distinguishes between the parties [sic] “adversarial” interests and their “common” interests.'” (OXY Resources, supra, 115 Cal.App.4th 874, 896.)
Not only the content of the communication must be considered, but also the circumstances of the communication. “Applying these waiver principles in the context of communications among parties with common interests, it is essential that participants in an exchange have a reasonable expectation that information disclosed will remain confidential. If a disclosing party does not have a reasonable expectation that a third party will preserve the confidentiality of the information, then any applicable privileges are waived. An expectation of confidentiality, however, is not enough to avoid waiver. In addition, disclosure of the information must be reasonably necessary for the accomplishment of the purpose for which the lawyer was consulted. (Evid. Code, § 912, subd. (d).) Thus, `[f]or the common interest doctrine to attach, most courts seem to insist that the two parties have in common an interest in securing legal advice related to the same matter — and that the communications be made to advance their shared interest in securing legal advice on that common matter.’ [Citations.]” (OXY Resources, supra, 115 Cal.App.4th at p. 891, italics added.)
(9) In Citizens for Ceres v. Superior Court (2013) 217 Cal.App.4th 889, 915 [159 Cal.Rptr.3d 789], the court expounded on the rules regarding the nonwaiver principles of sections 912 and 952. A communication to a lawyer, even when made in the presence of another person (e.g., a business associate or joint client, who is present to further the interest of the client in the consultation), and on a matter of joint concern, may retain a privileged character, within the existing scope of the privilege statutes. “Evidence Code sections 912 and 952, however, make no reference to common interests or joint concerns; they refer instead to a reasonable necessity of disclosure. Those two sections give rise to the common-interest doctrine…. [T]he alignment of the parties’ common interests may mean disclosures between [771] them are reasonably necessary to accomplish the purposes for which they are consulting counsel.” (Citizens for Ceres, supra, at p. 916.)[FN. 6]
(10) In Smith v. Laguna Sur Villas Community Assn. (2000) 79 Cal.App.4th 639, 642 [94 Cal.Rptr.2d 321] (Smith), the court analyzed discovery demands for attorney-client privileged information that were made by appellants as condominium owners and members of their Association, regarding litigation materials created by the Association. Those owners were not individually named as plaintiffs in the Association’s construction defect litigation against the developers, so that the owners were not equivalent to the Association client that had retained the attorney to bring the lawsuit, and thus the owners could not be allowed to access the privileged information. The court explained, “Like closely held corporations and private trusts, the client [(association)] is the entity that retained the attorney to act on its behalf.” (Ibid.; see id. at p. 643 [§ 951 defines “`client'” as the “`person'” who “`directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer ….'”].) Thus, “[w]here the association sues in its own name without joining with it the individual unit owners, the association, not the unit owners, holds the attorney-client privilege.” (9 Miller & Starr, Cal. Real Estate (3d ed. 2011) § 25B:110, p. 25B-233 (rel. 10/2007).)
In reaching its conclusions, the court in Smith, supra, 79 Cal.App.4th 639, relied on Wells Fargo, supra, 22 Cal.4th 201, 209, in which no “fiduciary” exception to the attorney-client privilege was allowed on behalf of beneficiaries of a trust, who had sought to discover confidential communications between their trustee and the outside trust counsel hired by the trustee. It was immaterial that the trust had paid the attorney; such payments “do not suffice to create an attorney-client relationship.” (Smith, supra, at p. 645.) Courts “do not enjoy the freedom to restrict California’s statutory attorney-client privilege based on notions of policy or ad hoc justification.” (Wells Fargo, supra, at p. 209.)
[772] In Smith, supra, 79 Cal.App.4th 639, the court colorfully addressed concerns about group client confidentiality and potentially conflicting loyalties of association counsel, by stating: “It is no secret that crowds cannot keep them. Unlike directors, the residents owed no fiduciary duties to one another and may have been willing to waive or breach the attorney-client privilege for reasons unrelated to the best interests of the association. Some residents may have had no defects in their units or may have had familial, personal or professional relationships with the defendants. Indeed, it is likely that the developer in the underlying litigation itself may have owned one or more unsold units within the complex. As [association] points out, `[o]ne can only imagine the sleepless nights an attorney and the Board of Directors may incur if privileged information is placed in the hands of hundreds of homeowners who may not all have the same goals in mind.’ With the privilege restricted to an association’s board of directors, this is one worry, at least, that their lawyers can put to rest.” (Id. at p. 645.)
C. Homeowners Associations’ Obligations: Civil Code Criteria
(11) For purposes of evaluating the proper scope of the attorney-client privilege, we turn to the statutes governing the Association’s obligations to its members. In Civil Code former section 1368.3 (now Civ. Code, § 5980), an association that was established to manage a common interest development is granted standing to sue in its own name on matters concerning damage to the common area, or damage to separate interests that are affected by damage to the common areas, etc. (Civ. Code, § 5980; former § 1368.3, repealed by Stats. 2012, ch. 180, § 1, operative Jan. 1, 2014.)[FN. 7] As previously explained, after the Association filed its construction defect action in 2009 alleging damage to the common areas, individual homeowners hired their own attorneys to file a separate but coordinated action for damage to individual units (the Samecky action). However, the Association can seek redress for damage to separate interests that are affected by damage to the common areas, etc. (Civ. Code, § 5980.)
[773] (12) “The duties and powers of a homeowners association are controlled both by statute and by the association’s governing documents.” (Ostayan, supra, 110 Cal.App.4th 120, 126-127.) In that case, the appellate court observed that the “complex” relationship between the individual owners and the managing association of a common interest development may “`”depend[] on the function the association is fulfilling under the facts of each case.”‘” (Id. at p. 126.) Although the individual owner “`has an economic interest in the proper business management of the development as a whole for the sake of maximizing the value of his or her investment,'” in other ways, “`each individual owner, at least while residing in the development, has a personal, not strictly economic, interest in the appropriate management of the development….'” (Id. at pp. 126-127, quoting Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249, 266-267 [87 Cal.Rptr.2d 237, 980 P.2d 940].)
(13) As explained already, the Act places certain obligations on an association to communicate with individual owners about any proposed construction defect litigation. Civil Code section 6150, subdivision (a), part of the Act, requires the board of an association to provide a written notice to each current member of the association, 30 days prior to the filing of any civil action by the association against the developer, “for alleged damage to the common areas, alleged damage to the separate interests that the association is obligated to maintain or repair, or alleged damage to the separate interests that arises out of, or is integrally related to, damage to the common areas or separate interests that the association is obligated to maintain or repair.” Such a notice shall specify (1) a meeting will take place to discuss problems that may lead to the filing of a civil action; (2) what are the options available to address the problems; and (3) the time and place of the meeting. (Ibid.) (If there are potential statute of limitations problems imminent, the association may give such notice within 30 days after the filing of the action (Civ. Code, § 6150, subd. (b)); this method was evidently used here.)
In the CCRs applicable to this property, the Association is required not only to give such written notice of intended litigation to Association members, but also to obtain a vote of approval by more than 50 percent of the members, before filing the action. (CCRs, § 4.4.11.) This provision implements the protections of the individual homeowners’ economic interests in the value of not only their own individual units, but also the development as a whole. (Ostayan, supra, 110 Cal.App.4th 120, 126-127.) It anticipates that investigation of common area defects could require individual homeowners to permit access and testing that affect their units.
[774] III
ANALYSIS; NO WAIVER FOUND
In light of the above principles of law, we turn to the record and request for relief in this case.
A. Was Confidentiality of Communications Maintained at Meetings?
(14) The common interest doctrine is properly characterized under California law “as a nonwaiver doctrine, analyzed under standard waiver principles applicable to the attorney-client privilege and the work product doctrine.” (OXY Resources, supra, 115 Cal.App.4th at p. 889, fn. omitted.) “`[F]or the common interest doctrine to attach, most courts seem to insist that the two parties have in common an interest in securing legal advice related to the same matter — and that the communications be made to advance their shared interest in securing legal advice on that common matter.’ [Citations.]” (Id. at p. 891.)
Defendants argue that any confidentiality of communications at the meetings was initially waived through several different sets of circumstances. First, persons employed by or affiliated with Defendants, and who were also individual homeowners, were allowed to attend, and expert consultants attended and spoke at the meetings. (But see fn. 5, ante.) Second, a few homeowners later discussed issues raised at the meetings with their relatives and friends. Third, the letters announcing the meetings stated that the letters could be shared with potential buyers or lenders. Also, the Association had not kept confidential, but had made available to others, the numerous e-mails its counsel had received from individual homeowners about the defects they were experiencing in their units.
In response, the Association provided the declaration of its managing agent, Nina McCarthy, stating that the Association and its counsel gave instructions that attendance at the litigation meetings was to be restricted to Seahaus owners only, not tenants, prospective buyers, real estate agents or other such third parties.
The concerns expressed in Smith, supra, 79 Cal.App.4th 639, about the difficulty of preserving confidentiality when a large crowd of homeowners is involved were outlined by the court in that case, in response to the individual homeowners’ efforts to access privileged material created by the association’s lawyers. Such access was not necessarily intended to further the purpose of the association’s lawyers’ job, but was adverse to it. (Id. at p. 645.) Our [775] situation is the converse, in which the Association and its Board and lawyers perceive that the Board has a duty to keep all the individual homeowners informed about common area litigation that might affect the value of the individual units.
Likewise, in Wells Fargo, supra, 22 Cal.4th 201, the individual beneficiaries were seeking to force disclosure of the trustee’s privileged information, for their own dissident reasons. Again, our situation is the converse, in which the corporate entity is attempting to offer confidential legal information to other interested persons about matters in which the entity (the Association) and its members (individual homeowners) have some common interests, and which the attorneys for the Association are attempting to protect. Concededly, the interests of the Association and the individuals will not always be aligned, and it can be difficult to draw a line between their allied interests and their adverse interests. (See OXY Resources, supra, 115 Cal.App.4th at p. 896.) However, the Association was seeking to share its privileged information with homeowners, to the extent that it believes that they “`all have the same goals in mind.'” (Smith, supra, 79 Cal.App.4th at p. 645.)
(15) To determine the scope of the privilege, we look to the content of the subject communications, as well as the circumstances, for indications on whether the meetings will advance the common interests in the representation by counsel. (OXY Resources, supra, 115 Cal.App.4th at p. 891.) In considering the Civil Code sections listed above about the initiation of construction defect litigation, together with the Association’s governing documents, we conclude that the Association’s duties and powers include communicating with those parties who have closely aligned common interests, and the individual homeowners at the development have such common interests in this particular context. On balance, these circumstances show that the Association and its counsel, and the individual homeowners who participated in the litigation meetings, maintained a reasonable expectation that information to be disclosed about the status of the litigation was confidential in nature. “Clearly, the fundamental purpose behind the privilege is to safeguard the confidential relationship between clients and their attorneys so as to promote full and open discussion of the facts and tactics surrounding individual legal matters.” (Mitchell, supra, 37 Cal.3d 591, 599.) In the role of client, the Association could properly take into account not only its own goals of protecting the common areas, but also the interests of its individual member homeowners in their units, as related to the common areas that the Association was seeking to repair. The relationship of the two construction defect actions was close enough so that the individual homeowners had common interests in the legal status of the Association’s action. (See Civ. Code, § 6150, subd. (a).) Moreover, the presence of some homeowners who may have had conflicting loyalties (homeowners who were affiliated with Defendants) did not destroy all other common interests.
[776] We conclude that the subject litigation meetings were held to accomplish the purpose for which the Association’s lawyers were consulted. (§ 912, subd. (d); OXY Resources, supra, 115 Cal.App.4th at p. 891.) The common interest doctrine and its protection of confidentiality of these communications apply as a matter of law to these circumstances.
B. Was “Reasonable Necessity” Shown for Disclosures at Meetings?
We turn to the related question of whether the record supports the conclusion that it was “reasonably” necessary to the purpose of the Association’s attorney retention for such disclosures to be made at the subject meetings, to the individual homeowners. (§§ 952, 912, subd. (d).) Defendants appear to argue that even if the original meeting, seeking individual voter approval of the Board’s decision to pursue the litigation, was required by the CCRs and therefore was reasonably necessary, any subsequent meetings lost that protected status. We disagree. Both the content and the circumstances of each set of communications made about the Association’s legal strategy or advice support conclusions that each stage of these disclosures was intended to carry out the purpose of pursuing the Association’s lawsuit (to recover for asserted damage to the common areas) in such a way that would be consistent with and not interfere with the rights of the individual homeowners.
Although the two sets of plaintiffs involved here have some common interests in obtaining legal advice about their respective and distinct property rights, those rights will ultimately differ and are being resolved in separate lawsuits. Nevertheless, the Association’s attorney was attempting to communicate in the subject meetings with other stakeholders, the individual homeowners, in a manner that would advance their shared interests in securing advice on similar legal and factual issues. (OXY Resources, supra, 115 Cal.App.4th at pp. 887-888.) These circumstances were enough to connect the disclosure of the litigation update information with the statutorily required “reasonably necessary” steps toward accomplishing the purpose for which the lawyers were consulted. (§ 912, subd. (d).)
If we agree with the position taken by Defendants, which is that the Association’s attorneys’ communications to individual homeowners were not confidential and merely served to create inflated expectations of individualized stigma damages, we run the risk of offending the public policy considerations set out in Mitchell, supra, 37 Cal.3d at pages 609 through 610. Even if discovery into privileged discussions between attorneys and clients would nominally be intended to produce some evidence relating to the issues about damages, “it might very well reveal much of plaintiff’s investigative efforts and trial strategy.” (Id. at p. 610.) Such discovery about attorney-client [777] communications regarding potential damage evaluations or items “would potentially uphold a harassment tactic whereby defendants … are able to shift the focus of the case from damages caused by [their actions] to damages caused by allegedly inflammatory or false information provided by self-serving attorneys…. [T]his technique not only obfuscates many of the substantive issues in a case but also frequently places the wrong `defendant’ on trial.” (Id. at pp. 610-611.)
(16) In reaching this conclusion and granting the petition, we do not expand the scope of statutory privileges, but instead apply recognized rules to an unusual set of facts. (Wells Fargo, supra, 22 Cal.4th 201, 206.) The trial court erred in granting Defendants’ motion to compel deposition answers from individual homeowners about the content and strategies disclosed to them by the Association or its counsel at the litigation update meetings, and the trial court must deny the motion and issue a protective order concerning the attorney-client privilege in light of the common interest doctrine.
DISPOSITION
Let a peremptory writ of mandate issue directing the superior court to vacate its September 4, 2013 order denying assertion of the attorney-client privilege and compelling discovery, and enter a new order issuing a protective order and denying the motion to compel. The stay issued on September 17, 2013 is vacated. Petitioner is entitled to costs in the writ proceeding.
McConnell, P. J., and Irion, J., concurred.
[FN. 1] Both Civil Code former section 1368.5 and current Civil Code section 6150 are provisions contained in the Davis-Stirling Common Interest Development Act (the Act), which was recently repealed, reenacted and renumbered by Statutes 2012, chapter 180, section 1, operative January 1, 2014; see Civil Code section 4000 et seq. on residential properties, and Civil Code section 6500 et seq. for commercial and industrial properties. We utilize the current Civil Code section designations. The Association is a nonprofit mutual benefit corporation managing the common interest development.
[FN. 2] The Sarnecky action was brought by a group of approximately 30 unit homeowners against not only the developers and builders, but also the lenders and escrow holders. One real party in interest here, defendant Bank of America, was never sued in this Association action, but only in the individual homeowners’ coordinated action. Bank of America recently obtained summary judgment in theSarnecky action and has notified this court that it is no longer a real party in interest and will not be filing a return. However, its previous filings were properly before this court, and have been relied on by the other real parties in interest, and may be considered here.
[FN. 3] All further statutory references are to the Evidence Code unless noted.
[FN. 4] We assume that only those individual homeowners who are litigants in the Sarnecky action could be seeking stigma damages, and that the Association is not doing so regarding the common areas. In any case, the parties each assume that the same privilege questions apply to the Association and each individual homeowner deponent.
[FN. 5] Parenthetically, we need not discuss at length the other statutory concept in section 952, that privileges remain when confidences are disclosed to persons “to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted.” (§ 952, italics added; see 2 Witkin, Cal. Evidence, supra, Witnesses, § 125, pp. 424-425 [rule covers various kinds of agents and intermediaries, e.g., secretary, accountant, other expert, etc.].) The expert consultants who attended the litigation update meetings would fall into this category.
[FN. 6] In Citizens for Ceres v. Superior Court, supra, 217 Cal.App.4th 889, the appellate court was addressing an arcane question under the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.), about whether a developer and a municipality have any “common interest” in the creation of a legally defensible environmental impact report about the developer’s application. The appellate court was analyzing whether those two entities had waived the attorney-client and other privileges, with respect to the communications they disclosed to each other before the project was approved. This required interpretation of the terms of Public Resources Code section 21167.6, subdivision (e) (governing the preparation of the administrative record). The court held that the administrative record statute does not impliedly abrogate the lead agency’s attorney-client privilege, but any privilege is nevertheless waived as to any documents shared with the developer’s counsel before the project is approved. (See 9 Miller & Starr, Cal. Real Estate (2013-2014 supp.) § 25A:6, pp. 100-101.) That case is factually distinguishable. Its general statement of the common interest doctrine is useful, although the court’s application of it has been criticized by commentators. (Ibid.)
[FN. 7] Cf. Wardleigh v. Second Judicial Dist. Court In & For County of Washoe (1995) 111 Nev. 345 [891 P.2d 1180, 1185], applying Nevada law that a homeowners association lacks standing to file an action, but when it “acts as an agent or facilitator for homeowners who have retained counsel, Association officials so acting on behalf of the Association would be drawn into the privilege enjoyed by the homeowner clients,” despite a lack of a direct attorney-client relationship with the homeowners in litigation sponsored by the association. Further, “such representation by the Association will be privileged only to the extent that the Association acts on behalf of the homeowner clients in a setting where it is clear that the communications with the homeowners’ counsel were intended to be privileged and confidential.” (Ibid.) We need not rely on out-of-state law, as California law is sufficient.
Talega Maintenance Corporation v. Standard Pacific Corporation
[Board meetings; Protected Speech & Anti-SLAPP] Statements made at HOA Board meetings are not matters of “public interest” nor “official proceedings” that are entitled to constitutional protection under anti-SLAPP statutes.
Newmeyer & Dillion, James S. Hultz and Uliana A. Kozeychuk for Defendants and Appellants.
The Law Offices of Jeri E. Tabback and Jeri E. Tabback for Plaintiff and Respondent.
OPINION
IKOLA, J. —
Plaintiff Talega Maintenance Corporation (HOA), a homeowners association, sued two developers for construction defects. The developers, who developed the residential community itself, also developed certain trails adjacent to the housing community. The trails were badly damaged during rains and flooding in 2005 and again in 2010, allegedly as a result of construction defects.
The HOA also sued three former employees of the developers. The employees were appointed by the developers to be members of the HOA’s board of directors at various times since 2003.[FN. 1]
The HOA alleges the employee defendants committed fraud, negligence, and breached fiduciary duties in performing their duties as board members. In particular, the HOA contends it is not financially responsible for repairing the trails; the developers are. Yet the developer board members, who comprised a majority of the board, represented that the HOA was responsible and expended HOA funds to investigate and repair the trails.
[726] Defendants filed an anti-SLAPP motion [FN. 2] pursuant to Code of Civil Procedure section 425.16 [FN. 3] to strike the fraud, negligence, and fiduciary duty claims, contending they arise from protected statements made at the HOA board meetings. The trial court denied the motion and defendants appeal from that denial. We affirm.
FACTS
The following facts are taken from the complaint and the declarations filed in connection with the anti-SLAPP motion.
Defendant Talega Associates, LLC, purchased land for what became a 3,900-acre master planned community in San Clemente known as the “Talega Project.” Ultimately, more than 3,500 homes housing more than 9,000 residents were built. Plaintiff is the homeowners association for the Talega Project. Defendant Standard Pacific Corporation (collectively with Talega Associates referred to as Developers) was a “Guest Builder” that purchased unimproved lots and built separate communities within the Talega Project. The complaint alleges the Developers planned and constructed the Prima Deshecha and Cristianitos regional riding and hiking trails (the Trails), which are the trails at issue here. Defendants Patrick Hayes, Jerome Miyahara, and James B. Yates (collectively, Developer Board Members) were employees of Talega Associates who were appointed to represent Talega Associates on the HOA’s board of directors. At all relevant times, the Developer Board Members comprised a majority of the HOA’s board of directors.
In approximately 2005, the Trails suffered a partial slope failure as a result of severe rains. By that time, title to a portion of the damaged property had already transferred to the HOA. The Developer Board Members represented that the HOA was responsible to pay for repairs to the property it owned — the allegedly fraudulent statement — and to that end expended over $500,000 of HOA funds. According to the complaint, however, the Developer Board Members knew, but failed to disclose, that under the relevant controlling documents, the Developers were responsible for the cost of repairs. Further, the Developer Board Members knew, but failed to disclose, that the damages were the result of the Developers’ improper construction of the Trails, as explicitly pointed out to them by agents of Orange County.
In 2010 rains again damaged the Trails. This time, however, the independent board members had formed an executive committee — with no Developer [727] Board Members — that hired its own consultants to investigate the cause of the damages. From the consultants, the independent board members learned for the first time that the Developers were bound forever to provide repairs to the Trails, that the Trails were not actually completed, and that the Trails’ failures were likely the result of construction defects.
The HOA filed suit in September of 2012, alleging causes of action for breach of fiduciary duty, fraud, constructive fraud, construction defect, negligence, and declaratory relief. Each of the defendants filed anti-SLAPP motions targeting the causes of action for breach of fiduciary duty, fraud, constructive fraud, and negligence. At the hearing on the motions the court recognized it was a close call, stating, “I don’t think it’s a slam dunk. It could go either way. And I just want to give it some more thought as to the extent to which it might operate to strike some but not all of the allegations; or whether it is an all or a nothing.” Ultimately, the court denied the motions in their entirety, stating, “[Defendants] failed to establish that any statements were an exercise of free speech. Additionally, [defendants] failed to establish that statements at issue were made before, or in connection with, an official proceeding authorized by law. Moreover, even if the statements were made in a public forum via a [homeowners association] open board meeting, [defendants] have not demonstrated that they involved a matter of sufficient public interest or an exercise of a free speech right.” Defendants timely appealed.
DISCUSSION
I. Legal Principles
Section 425.16, subdivision (b)(1), the anti-SLAPP statute, states, “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”
(1) The anti-SLAPP statute “requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity…. [Citation.] If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 [124 Cal.Rptr.2d 507, 52 P.3d 685].)
“The sole inquiry under the first prong of the anti-SLAPP statute is whether the plaintiff’s claims arise from protected speech or petitioning [728] activity. [Citation.] Our focus is on the principal thrust or gravamen of the causes of action, i.e., the allegedly wrongful and injury-producing conduct that provides the foundation for the claims. [Citations.] We review the parties’ pleadings, declarations, and other supporting documents at this stage of the analysis only `to determine what conduct is actually being challenged, not to determine whether the conduct is actionable.'” (Castleman v. Sagaser (2013) 216 Cal.App.4th 481, 490-491 [156 Cal.Rptr.3d 492] (Castleman).)
As used in the anti-SLAPP statute, “`act in furtherance of a person’s right of petition or free speech … in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or on an issue of public interest.” (§ 425.16, subd. (e).)
(2) “An order denying a special motion to strike under section 425.16 is immediately appealable. [Citations.] Our review is de novo; we engage in the same two-step process as the trial court to determine if the parties have satisfied their respective burdens. [Citations.] If the defendant fails to show that the lawsuit arises from protected activity, we affirm the trial court’s ruling and need not address the merits of the case under the second prong of the statute.” (Castleman, supra, 216 Cal.App.4th at p. 490.)
II. The Constructive Fraud, Breach of Fiduciary Duty, and Negligence Causes of Action Are Not Subject to the Anti-SLAPP Statute
(3) Of the four causes of action subject to the anti-SLAPP motions, we can immediately rule out all but the fraud cause of action. Section 425.16, subdivision (e)(1), (2) and (3) apply to “any written or oral statement.” [FN. 4] The breach of fiduciary duty, constructive fraud, and negligence claims are principally based on the Developer Board Members withholding information and improperly directing the expenditure of funds. These are not “written or oral statements.” Accordingly, those subdivisions do not apply.
The only possible application would be subdivision (e)(4), which pertains to “any other conduct in furtherance of the exercise of the constitutional right [729] of petition or the constitutional right of free speech….” (See, e.g., Lieberman v. KCOP Television, Inc. (2003) 110 Cal.App.4th 156 [1 Cal.Rptr.3d 536] [television station’s gathering of information to be used in broadcast was protected conduct]; No Doubt v. Activision Publishing, Inc. (2011) 192 Cal.App.4th 1018 [122 Cal.Rptr.3d 397][creation of a video game featuring the likeness of members of a famous rock band was expressive work constituting protected conduct].) Although defendants have paid lip service to the application of subdivision (e)(4), they make no effort to explain how withholding information they had a fiduciary duty to divulge, or expending funds to investigate and repair the Trails, is constitutionally protected conduct.
(4) Instead, defendants insist that these causes of action are in fact based on express statements made at board meetings, and thus should be treated the same as the fraud cause of action. Defendants recount that plaintiff’s attorney admitted at oral argument in the trial court that “[t]he fraud allegation is based on a statement that was made at a board meeting.” They then leap to the following conclusion: “In fact, allof the causes of action are based upon the allegation that the Defendants controlled, directed, and/or voted for certain actions taken by the HOA in connection with the Regional Trails. [Citation.] Therefore, the HOA’s admission … extends to all of the subject causes of action.” But that is a non sequitur. Controlling, directing, and voting for certain actions are not statements.
We recognize, nonetheless, that voting can constitute protected activity. (See Schroeder v. Irvine City Council (2002) 97 Cal.App.4th 174, 183, fn. 3 [118 Cal.Rptr.2d 330] [stating in dicta, with respect to city council member votes, “voting is conduct qualifying for the protections afforded by the First Amendment”].) Nonetheless, voting is not per se protected activity. (See Donovan v. Dan Murphy Foundation (2012) 204 Cal.App.4th 1500, 1506 [140 Cal.Rptr.3d 71] (Donovan)[stating, with respect to the vote of a nonprofit organization board member, “The mere act of voting, however, is insufficient to demonstrate that conduct challenged in a cause of action arose from protected activity.”].) Here, the HOA’s claim arises from the act of spending money in violation of the Developer Board Members’ fiduciary duties. The allegations in the complaint concerning the breach of fiduciary duty cause of action, for example, include no mention of voting. While the expenditure of money may have been precipitated by a vote, “the fact that protected activity may have triggered a cause of action does not necessarily mean the cause of action arose from the protected activity.” (Id. at p. 1507; see Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207, 1218 [104 Cal.Rptr.3d 692][conduct challenged in action alleging city failed to comply with competitive bidding requirement was not officials’ communications or deliberations, but their failure to obey state and local laws].) The vote [730] was merely incidental. Thus the anti-SLAPP statute does not apply to the HOA’s causes of action for breach of fiduciary duty, constructive fraud, and negligence.
III. The Fraud Cause of Action Is Not Subject to the Anti-SLAPP Statute
The fraud cause of action presents a closer question. The HOA alleges the Developer Board Members fraudulently misrepresented that the HOA was financially liable for repairing the Trails. The HOA’s counsel conceded this representation was made at a HOA board meeting. Defendants contend subdivisions (e)(1), (2) and (3) apply.
A. Homeowners Association Board Meetings Are Not Official Proceedings
Subdivision (e)(1) applies to statements “made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law.” (Italics added.) Defendants contend homeowners association meetings are official proceedings authorized by law. In support of their contention they note that courts have described a homeowners association as a “quasi-governmental entity” (Silk v. Feldman (2012) 208 Cal.App.4th 547, 553 [145 Cal.Rptr.3d 484] (Silk)), and that the meetings and activities of homeowners associations are heavily regulated under the Davis-Stirling Common Interest Development Act (Civ. Code, § 4000 et seq.). Neither party cited, nor have we found, any case directly addressing the issue of whether a homeowners association meetings is an “official proceeding” for purposes of subdivision (e)(1).
We begin our analysis with two cases that found the proceeding before it was an official proceeding authorized by law. The first is the seminal case analyzing “official proceeding,” Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192 [46 Cal.Rptr.3d 41, 138 P.3d 193] (Kibler). The issue in Kibler was whether a hospital’s peer review disciplinary proceedings were “`official proceeding[s]'” for purposes of the anti-SLAPP statute. (Kibler, at p. 197.) The plaintiff was a doctor who had been disciplined. He sued the hospital based on statements made during the proceedings and the hospital brought an anti-SLAPP motion. (Id. at pp. 196-197.) In concluding the hospital peer review proceedings are official proceedings, the court relied on three considerations. First, peer review proceedings are required of hospitals and heavily regulated. (Id. at pp. 199-200.) Second, because hospitals are required to report the results of peer review proceedings to the Medical Board of California, peer review proceedings play a “significant role” in “`aid[ing] the appropriate state licensing boards in their responsibility to regulate and discipline errant [731] healing arts practitioners.'” (Id. at p. 200.) Third, “[a] hospital’s decisions resulting from peer review proceedings are subject to judicial review by administrative mandate. [Citation.] Thus, the Legislature has accorded a hospital’s peer review decisions a status comparable to that of quasi-judicial public agencies whose decisions likewise are reviewable by administrative mandate.” (Ibid.)
The second case reaching a similar result is Fontani v. Wells Fargo Investments, LLC (2005) 129 Cal.App.4th 719 [28 Cal.Rptr.3d 833], disapproved on other grounds in Kibler, supra, 39 Cal.4th at page 203, footnote 5. In Fontani a former securities broker-dealer sued his former employer based on statements the latter made to the National Association of Securities Dealers (NASD) concerning the reasons for the plaintiff’s termination. (Fontani, at p. 725.) The issue was whether the proceeding before the NASD was an “official proceeding” for purposes of subdivision (e)(1). (Fontani, at p. 728.) In answering in the affirmative, the court relied on the following observations: “In its capacity here, the NASD exercises governmental power because `it is the primary regulatory body for the broker-dealer industry’ and thus performs uniquely regulatory functions typically performed by a governmental regulatory agency. [Citations.] More specifically, while the NASD may perform some private functions, … it stands as a regulatory surrogate for the [Securities and Exchange Commission]. The federal securities laws `”delegate[] government power” to [self-regulatory organizations] such as the New York Stock Exchange … and the NASD “to enforce … compliance by members of the industry with both the legal requirements laid down in the Exchange Act and ethical standards going beyond those requirements.”‘” (Id. at p. 729; see Vergos v. McNeal (2007) 146 Cal.App.4th 1387, 1396 [53 Cal.Rptr.3d 647] [administrative grievance procedure set up by Regents of the University of California, “a constitutional entity having quasi-judicial powers,” deemed official proceeding].)
Next we turn to two cases holding the proceeding at issue was not an official proceeding.
In Garretson v. Post (2007) 156 Cal.App.4th 1508 [68 Cal.Rptr.3d 230], “[t]he key issue” was “whether defendant’s act of noticing a nonjudicial foreclosure sale of plaintiff’s property constitutes protected activity under the anti-SLAPP statute.” (Id. at p. 1515.) The court noted that nonjudicial foreclosure sales are governed by a comprehensive statutory framework and that the end result is a “final adjudication of the rights of the borrower and lender.” (Id. at p. 1516.) The court also noted that nonjudicial foreclosure activity is protected by the litigation privilege. (Id. at p. 1518.) Nonetheless, the court concluded a nonjudicial foreclosure is fundamentally a “`private, contractual proceeding, rather than an official, governmental proceeding or [732] action.'” (Id. at p. 1520.) The court distinguished Kibler on the basis that nonjudicial foreclosures “are not closely linked to any governmental, administrative, or judicial proceedings or regulation, such as the state licensing and regulation of physicians in Kibler.” (Garretson, at p. 1521.)
In Donovan, supra, 204 Cal.App.4th 1500, the plaintiff was a former member of the board of directors of a nonprofit charitable organization who sued the organization and current board members for wrongful removal. (Id. at pp. 1502-1503.) The defendants contended the board meeting at which the plaintiff was removed was an official proceeding because “board of directors meetings and majority voting are authorized under the Corporations Code, and the issue whether to retain [the plaintiff] was an issue of consideration before the [board of directors].” (Id. at p. 1508.) The court rejected that contention and distinguished Kibler on the basis that board decisions are not subject to review by administrative mandate and because, though meetings of the board of directors were authorized by statute, “the actual procedures are left to the private organizations.” (Donovan, at p. 1508; see Olaes v. Nationwide Mutual Ins. Co. (2006) 135 Cal.App.4th 1501, 1508 [38 Cal.Rptr.3d 467] [private company’s sexual harassment grievance protocol not an official proceeding].)
(5) In this spectrum of cases, homeowners association meetings fall outside the scope of official proceedings. Although the word “official” in subdivision (e)(1) is not coextensive with “governmental” (Kibler, supra, 39 Cal.4th at p. 203), the case law demonstrates that nongovernmental proceedings must have a strong connection to governmental proceedings to qualify as “official.” Thus, although courts have recognized the similarities between a homeowners association and a local government, even going so far as to describe a homeowners association as a “quasi-governmental entity, paralleling the powers and duties of a municipal government” (Silk, supra, 208 Cal.App.4th at p. 553), a homeowners association is not performing or assisting in the performance of the actual government’s duties, as was the case in Kibler and Fontani. Further, unlike the hospital peer review board decision in Kibler, decisions by the board of a homeowners association are not reviewable by administrative mandate. Thus they have not been delegated government functions to the same extent. Finally we note that although no case has directly addressed this issue, multiple cases have addressed anti-SLAPP motions arising from statements at homeowners association board meetings, and all such cases have analyzed the case under the rubric of subdivision (e)(3) or (4). (See, e.g., Silk, at p. 553; Cabrera v. Alam (2011) 197 Cal.App.4th 1077, 1086-1087 [129 Cal.Rptr.3d 74]; Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, 474 [102 Cal.Rptr.2d 205] (Damon).) Our holding is consistent with the approach taken in those cases.
[733] B. Whether the HOA or the Developers Were Liable to Pay for Repairs to the Trails Was Not an Issue Under Consideration by a Governmental Body
Subdivision (e)(2) applies to statements “made in connection with an issue under consideration or review by a legislative, executive, or judicial body.” Citing allegations in the complaint that the Developers worked closely with the County of Orange and City of San Clemente in the construction of the Trails, defendants contend “there can be no dispute that the construction and condition of the trails were issues under consideration and review by governmental agencies, and alleged statements regarding these issues were protected speech.”
The problem is, the relevant issue is not the general construction and condition of the Trails. Rather, the allegedly fraudulent statement concerns who has to pay for repairing the Trails. There is nothing in the record suggesting the County of Orange or City of San Clemente was considering that issue.
(6) Courts have generally rejected attempts to abstractly generalize an issue in order to bring it within the scope of the anti-SLAPP statute. For example, in the context of subdivision (e)(3), where the statement must concern an issue of public interest, the court in World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1570 [92 Cal.Rptr.3d 227], stated, “While employee mobility and competition are undoubtedly issues of public interest when considered in the abstract, one could arguably identify a strong public interest in the vindication of any right for which there is a legal remedy. `The fact that “a broad and amorphous public interest” can be connected to a specific dispute is not sufficient to meet the statutory requirements’ of the anti-SLAPP statute. [Citation.] By focusing on society’s general interest in the subject matter of the dispute instead of the specific speech or conduct upon which the complaint is based, defendants resort to the oft-rejected, so-called `synecdoche theory of public issue in the anti-SLAPP statute,’ where `[t]he part [is considered] synonymous with the greater whole.’ [Citation.] In evaluating the first prong of the anti-SLAPP statute, we must focus on `the specific nature of the speechrather than the generalities that might be abstracted from it.'” (Italics added.) Similarly, here, our focus is not on some general abstraction that may be of concern to a governmental body, but instead on the specific issue implicated by the challenged statement and whether a governmental entity is reviewing that particular issue. On the record before us, this requirement is not satisfied.
[734] C. Who Was to Pay For Repairing the Trail Was Not an Issue of Public Interest
Subdivision (e)(3) applies to statements “made in a place open to the public or a public forum in connection with an issue of public interest….” Plaintiff concedes homeowners association meetings constitute a public forum, and thus the issue boils down to whether the alleged fraudulent statements were in connection with an issue of public interest.
(7) “The definition of `public interest’ within the meaning of the anti-SLAPP statute has been broadly construed to include not only governmental matters, but also private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity.” (Damon, supra, 85 Cal.App.4th at p. 479.) “Although matters of public interest include legislative and governmental activities, they may also include activities that involve private persons and entities, especially when a large, powerful organization may impact the lives of many individuals.” (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 650 [49 Cal.Rptr.2d 620], disapproved on other grounds in Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 68, fn. 5.) However, “in cases where the issue is not of interest to the public at large, but rather to a limited, but definable portion of the public (a private group, organization, or community), the constitutionally protected activity must, at a minimum, occur in the context of an ongoing controversy, dispute or discussion, such that it warrants protection by a statute that embodies the public policy of encouraging participation in matters of public significance.” (Du Charme v. International Brotherhood of Electrical Workers (2003) 110 Cal.App.4th 107, 119 [1 Cal.Rptr.3d 501].)
It is the latter requirement that is absent with respect to the fraud cause of action here. There is no indication in the record that there was any controversy, dispute, or discussion surrounding the Developer Board Members’ representation that the HOA was liable to pay the repair costs. To the contrary, a declaration submitted by an independent board member states, “I believed [the Developer Board Members’] representations, as I had no reason to believe at the time that they were not telling me the truth or acting in the best interest of the Association.” This suggests there was no controversy about the issue, and nothing in the record contradicts that inference. The Developer Board Members made their statements and others believed them without dispute. Given the absence of any controversy, dispute, or discussion, the issue of who was to pay for the repairs, which was of interest to only a narrow sliver of society, was not a public issue.
By contrast, in cases involving statements made at public homeowners association forums where the court found there was a public issue, the [735] requirement of an ongoing controversy was satisfied. In Damon, for example, “each of the alleged defamatory statements concerned (1) the decision whether to continue to be self-governed or to switch to a professional management company; and/or (2) [the general manager’s] competency to manage the Association.” (Damon, supra, 85 Cal.App.4th at p. 479.) “Moreover, the statements were made in connection with the Board elections and recall campaigns.” (Ibid.) Indeed, “[b]y the end of 1997, the senior citizen residents of Ocean Hills were largely split into two camps: those who favored [the general manager’s] continued service and those who wanted [him] terminated as general manager.” (Id. at p. 472.) In Cabrera v. Alam, supra, 197 Cal.App.4th at page 1082, the statement at issue was an accusation in the midst of an election campaign that a past president had stolen money from and defrauded the homeowners association. In Silk, supra, 208 Cal.App.4th at page 551, the challenged statement was again in the context of a board election and implied an incumbent board member had engaged in selfdealing. In contrast to these cases, the total absence of controversy in the present case is plain. Accordingly, the allegedly fraudulent statement here did not concern a public issue.
(8) Because defendants failed to meet their burden to show the challenged causes of action arose from protected activity, “we affirm the trial court’s ruling and need not address the merits of the case under the second prong of the statute.” (Castleman, supra, 216 Cal.App.4th at p. 490.)
DISPOSITION
The order is affirmed. Plaintiff shall recover its costs incurred on appeal.
Moore, Acting P. J., and Thompson, J., concurred.
[FN. 1] The complaint also listed the County of Orange as a defendant solely because it has an easement on the trails at issue and is a party to one of the agreements subject to the declaratory relief action. Any reference to “defendants” in this opinion excludes the County of Orange.
[FN. 2] SLAPP is an acronym for “`strategic lawsuit against public participation.'” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 815, fn. 1 [124 Cal.Rptr.3d 256, 250 P.3d 1115].)
[FN. 3] All statutory references are to the Code of Civil Procedure unless otherwise stated.
[FN. 4] “References to “subdivisions (e)(1),” “subdivision (e)(2),” “subdivision (e)(3),” and “subdivision (e)(4)” are to section 425.16.
Related Links
“Requesting HOA Enforcement Held to be Constitutionally Protected Activity” – Published on HOA Lawyer Blog (January 2018)