[Encroachments; Trespass; Adverse Possession] A homeowner may not establish an adverse possession claim over HOA common area without showing that the homeowner paid all property taxes for the disputed area; Equitable easements may not be granted to an encroaching homeowner whose trespass was willful or negligent.
Everett L. Skillman for Defendants, Cross-complainants and Appellants.
Neuland, Whitney & Michael, Frederick T. Whitney and Jane A. Gaba for Plaintiff, Cross-defendant and Respondent.
OPINION
[988] ARONSON, J.—
Plaintiff, cross-defendant, and respondent Nellie Gail Ranch Owners Association (Nellie Gail) sued defendants, cross-complainants, and appellants Donald G. McMullin and Cynthia Jensen-McMullin (collectively, McMullins)1 to quiet title and compel the McMullins to remove a retaining wall and other improvements they built without Nellie Gail’s approval on more than 6,000 square feet of common area Nellie Gail owned adjacent to the McMullins’ property. Following a bench trial, the trial court entered judgment for Nellie Gail and awarded Nellie Gail its attorney fees. The McMullins appeal, claiming the trial court should have quieted title in them or at least granted them an equitable easement over the disputed property. We disagree and affirm the trial court’s judgment.
First, the McMullins contend Nellie Gail was equitably estopped to bring this quiet title action because it told the McMullins it would not pursue construction of the wall as a violation of the governing declaration of covenants, conditions, and restrictions (CC&R’s) and instructed the McMullins to work with Nellie Gail’s architect to develop a landscaping, irrigation, and drainage plan to screen the wall from view. The McMullins, however, forfeited this claim by failing to assert it at trial. Moreover, equitable estoppel requires the party asserting it to be ignorant of the true facts and to justifiably rely on the conduct or statements of another who has knowledge of those facts. The evidence supports the conclusion Nellie Gail did not know all of the facts and it made its statements after the McMullins knowingly constructed the retaining wall and other improvements on Nellie Gail’s property without obtaining the required written approvals from Nellie Gail. The McMullins therefore could not justifiably rely on Nellie Gail’s statements even if they did not forfeit the claim.
Second, the McMullins contend the trial court erred when it rejected their adverse possession claim because the McMullins failed to pay property taxes on the disputed property. The McMullins contend the disputed property had no value, and therefore they were excused from establishing that essential element. The McMullins were excused from paying property taxes only if they established no property taxes were levied or assessed on the disputed property during the relevant five-year period. Substantial evidence, however, supports the conclusion the disputed property had a value and property taxes were levied against it, but were assessed to the individual property owners in the community consistent with the law concerning property taxes on common areas owned by homeowners associations.
[989]
Next, the McMullins contend the trial court erred in granting Nellie Gail a mandatory injunction authorizing it to remove the retaining wall and other improvements at the McMullins’ expense, rather than requiring Nellie Gail to accept monetary damages as compensation for an equitable easement that would allow the McMullins to maintain the wall and improvements. A property owner generally is entitled to a mandatory injunction requiring an adjacent owner to remove an encroachment, but a trial court has discretion to deny an injunction and grant an equitable easement if the encroacher acted innocently and the balancing of the hardships greatly favors the encroacher. Substantial evidence supports the trial court’s conclusion the McMullins were not innocent encroachers and therefore the court properly granted Nellie Gail an injunction.
Finally, the McMullins challenge the trial court’s award of attorney fees to Nellie Gail, but we lack jurisdiction to review that award because the court made it after entry of judgment and the McMullins neither identified the award in their notice of appeal nor filed a separate notice of appeal. We therefore dismiss that portion of the appeal challenging the fees award.
I. Facts and Procedural History
Nellie Gail Ranch is a 1,407-unit residential planned development on approximately 1,350 acres in Laguna Hills, California. Nellie Gail is the homeowners association the developer formed to own the common areas and administer the community’s CC&R’s. The community has horse trails, an equestrian center, parks, tennis courts, and other common areas Nellie Gail manages.
In December 2000, the McMullins purchased a home in Nellie Gail Ranch located at the end of a cul-de-sac on a hilltop with canyon views. The back of their property slopes down towards and abuts lot 274, which is an approximately 15-acre canyon lot owned by Nellie Gail and dedicated as open space. One of the community’s horse trails runs across lot 274 directly behind the McMullins’ property. The back left corner of the McMullins’ property also touches lot 273, which is an approximately 5-acre lot owned by Nellie Gail that is home to the community’s largest park.
The McMullins’ backyard has three retaining walls used to provide level, useable space because of their property’s sloping nature. There is a short three-foot retaining wall that separates their house and patio from their grass area. A second, nearly six-foot retaining wall separates their house, patio and grass area from a lower area where they have a swimming pool and deck. [990] The third retaining wall is a six-foot wall that separates all of these areas from the slope that leads to lots 273 and 274. Beyond this final retaining wall is a wrought iron fence that encircles the entire back portion of the McMullins’ property. The area between the final retaining wall and the wrought iron fence has a considerable slope.
Nellie Gail’s CC&R’s and its architectural review committee guidelines required homeowners to obtain written approval from the architectural review committee (Review Committee) before constructing or making significant alterations to any improvements on their property. In January 2008, the McMullins applied to the Review Committee to replaster their swimming pool, redo the pool deck, construct a bar area near the pool, install a solar heater for the pool, replace the wrought iron fence with an eight-foot retaining wall, backfill behind that new wall, install a large patio slab or sports court and garden in the flat area created, and build a staircase from the pool area down to the flat area behind the new retaining wall. The application included a site plan Donald prepared showing the location of the proposed improvements, and depicting the new retaining wall would be constructed in the same location as the existing wrought iron fence. The plan identified the property lines between the McMullins’ property and their neighbors on either side, but did not identify the rear property line between the McMullins’ property and lot 274. The plan included two dashed lines that extended from the existing six-foot retaining wall that surrounded the backyard to the side property lines, but did not explain what those lines represented. Nellie Gail later discovered these unlabeled, dashed lines showed the rear property line’s location.
In February 2008, the Review Committee sent the McMullins a letter denying their application and explaining how it failed to comply with the CC&R’s and the committee’s guidelines. The letter also informed the McMullins that “a fully dimensioned site plan showing property lines, easement areas, setbacks and fully defined landscaping and drainage will be needed [for any future applications].”
Two weeks later, Donald prepared and submitted a new application with a revised, more detailed site plan. That plan again represented the new retaining wall would be constructed in the same location as the existing wrought iron fence, and also identified the property lines between the McMullins’ property and their neighbors, but not the property line between the McMullins’ property and Nellie Gail’s lot 274. The plan also included the same dashed lines extending from the end of the existing, six-foot retaining wall without explaining what those lines represented. In March 2008, the Review Committee sent the McMullins a letter denying the revised application and explaining the reasons for the denial. This letter again notified the McMullins that any [991] future application must be accompanied by “a fully dimensioned site plan showing property lines” and other necessary information “from a licensed Civil Engineer.” The committee’s letter also suggested the McMullins submit a new application limited to just the pool-related improvements if they wanted to get started on their project.
The McMullins followed the Review Committee’s suggestion and submitted a new application limited to the pool-related improvements only, which included a staircase from the pool area down to the slope behind the existing six-foot retaining wall. In April 2008, the Review Committee sent the McMullins a letter approving this application subject to a few conditions, including one that prohibited the McMullins from modifying the grade on the slope behind their existing retaining wall.
Almost a year later, Cynthia went to the Review Committee’s office to submit a new application and plans for the retaining wall and sports court. She spoke with Sandi Erickson, the Review Committee’s community relations person. Cynthia testified Erickson said the plans were not necessary because the McMullins’ application already was approved. Cynthia asked Erickson to double-check her information, and after looking on Nellie Gail’s computer system, Erickson again told Cynthia she did not need to submit the plans because they had [**666] been approved. Erickson stopped working for Nellie Gail a few weeks after this conversation, and she did not testify at trial. Cynthia did not obtain written confirmation of this conversation or the Review Committee’s alleged approval for the retaining wall.
In May 2009, the McMullins obtained a building permit for the retaining wall from the City of Laguna Hills and began construction. None of the parties could explain how the McMullins obtained this permit when they did not have Nellie Gail’s written approval for construction of the wall. The appellate record only includes a copy of the permit; it does not include the application the McMullins submitted to the city.
Jeff Hinkle began working as Nellie Gail’s facilities and compliance manager in June 2009. That same month, he received a phone call from a resident informing him construction trucks were on the horse trail near the McMullins’ property. Hinkle spotted a cement truck and a pickup truck on the trail directly behind the McMullins’ property. After speaking with Nellie Gail’s general manager and reviewing its computer files to confirm the McMullins had obtained an approval to perform work on their property, Hinkle returned to the horse trail to speak with the McMullins’ contractor and Cynthia. In confirming the McMullins had an approval, Hinkle did not look at the plans or determine the type of work the McMullins were authorized to perform; he simply confirmed they had obtained an approval for some work. [992] Hinkle informed the contractor and Cynthia they needed a trail permit to have vehicles or equipment on the horse trail, and the contractor returned to Nellie Gail’s office with Hinkle to obtain the permit. During these visits to the trail near the McMullins’ property, Hinkle did not observe any construction work in progress. The wall had not been constructed, and he did not see [***11] any excavations for the wall footings.
In August 2009, Hinkle was in the park near the McMullins’ property and noticed they were building a wall at the back of the property. He returned to Nellie Gail’s office to check on the nature of the improvements the McMullins were authorized to construct. He discovered the McMullins’ approvals authorized work on their pool, the installation of solar panels on the slope behind the existing retaining wall, and a staircase from the pool down to the slope. He noticed one of the conditions for the approval prohibited the McMullins from modifying the slope and the approval did not authorize a new retaining wall. Hinkle then wrote the McMullins a letter directing them to immediately stop all work and to contact Nellie Gail to discuss their project.
At this point, the wall and related improvements essentially were completed and the McMullins were waiting for the city to sign off on the project. The work that remained was backfilling against the wall on the side facing lot 274, some minor finish grading, and completing the irrigation, drainage, and landscaping. Creation of the flat surface behind the wall and the sports court were complete, and a wrought iron fence had been installed on top of the new retaining wall.
After receiving the cease and desist letter, the McMullins stopped work and began discussions with Nellie Gail about what was necessary to complete the project. Nellie Gail informed the McMullins its architect would inspect the wall and the McMullins should submit an application and detailed plans to the Review Committee for possible approval. The McMullins submitted the application and plans to the Review Committee on September 30, 2009. As with all previous applications, Donald prepared the site plan and failed to identify the location of the rear property line between the McMullins’ property and Nellie Gail’s lot 274. The site plan again included the unlabeled, dashed lines that extended from the original six-foot retaining wall that Nellie Gail later learned was the rear property line.
On October 15, 2009, the Review Committee sent the McMullins a letter denying their application for the retaining wall as constructed. The letter explained why the application was denied and what additional information the committee needed from the McMullins before it would approve the wall, including a dimensioned site plan by a licensed surveyor that depicted the [993] easement for the trail and the wall. The McMullins therefore hired a surveyor to conduct a survey and prepare a plan showing the relationship between the horse trail and the retaining wall. Donald told the surveyor not to include the rear property line on this plan. The McMullins submitted this plan to Nellie Gail before the end of October.
On November 10, 2009, Hinkle sent the McMullins an e-mail explaining that many of the problems concerning the wall could have been avoided if the McMullins’ plans had identified their rear property line. The e-mail also stated, “In any case, the wall was built and is on [Nellie Gail’s] property. Let’s move forward on how we can make this an amicable and reasonable resolution.” A week later, Nellie Gail’s board of directors considered in closed session how to address the issues surrounding the McMullins’ wall. The board voted and “agree[d] not to pursue the installation of the McMullin[s’] wall as a violation, and [to] direct the [Review Committee] to decide on appropriate screening options.” On December 9, 2009, Nellie Gail sent the McMullins a letter informing them of the board’s vote and instructing them to meet with Nellie Gail’s architect to finalize a landscaping, irrigation, and drainage plan to screen the wall.
After receiving this letter, the McMullins met with Nellie Gail’s architect and developed a landscaping, irrigation, and drainage plan for the areas on both sides of the wall. In January 2010, the Review Committee approved this plan and the McMullins implemented it at a cost of approximately $20,000. This expenditure was in addition to the approximately $150,000 they already spent to construct the retaining wall, sports court, and other improvements. Neither Nellie Gail nor the Review Committee, however, ever approved any of these improvements other than the landscaping, irrigation, and drainage relating to the screening for the wall.
In July 2010, the city sent a letter to both the McMullins and Nellie Gail explaining the wall was constructed entirely on Nellie Gail’s property and did not fully comply with the city’s requirements regarding the wall’s height and the slope adjacent to the wall. The city further informed the parties the wall could not remain in its current condition—either Nellie Gail must grant its approval for the wall and the wall must be brought into compliance with the city’s requirements, or the wall must be removed.
Based on the city’s letter, Nellie Gail wrote the McMullins in November 2010 to inform them the wall could not remain in its current, unapproved condition and the two sides should try to resolve the situation. Nellie Gail’s letter explained the McMullins never provided any plans that showed the location of the property line between the McMullins’ property and Nellie Gail’s lot 274 despite the Review Committee’s repeated requests. Nellie Gail [994] therefore requested that the McMullins obtain a professional survey showing all of the McMullins’ improvements in relation to the property line between the two properties, and that the parties engage in alternative dispute resolution after the survey.
When the McMullins did not immediately respond, Nellie Gail hired its own surveyor to locate the property line. Nellie Gail’s surveyor completed his investigation in March 2011, and determined the original six-foot retaining wall was constructed on the property line and the new retaining wall and improvements were built almost entirely on Nellie Gail’s property. The area between the property line and the new retaining wall totaled more than 6,100 square feet of lot 274 (hereinafter, Disputed Property) and increased the total size of the McMullins’ lot from approximately 16,400 square feet to more than 22,500 square feet. Contrary to the McMullins’ repeated representations in their applications, Nellie Gail’s surveyor determined the retaining wall was built well outside the location of the previous wrought iron fence and enclosed more than 2,000 square feet of lot 274 that were not enclosed by the previous fence. In January 2012, the McMullins hired a surveyor to determine the relationship between the property line and the retaining wall. Their surveyor confirmed the retaining wall enclosed more than 6,100 square feet of Nellie Gail’s lot 274, and the parties stipulated at trial there was no significant difference between these two surveys.2
After receiving these surveys, the parties continued to explore possible resolutions for the problem. In July 2012, Nellie Gail conducted a vote of its members on whether to sell the Disputed Property to the McMullins based on an appraisal they obtained. The members overwhelmingly voted not to sell the Disputed Property to the McMullins. Of the 572 members who voted, only 142 voted in favor of the sale.
In June 2013, Nellie Gail sued the McMullins to quiet title to the Disputed Property in its name, to ask for an injunction requiring the McMullins to remove the retaining wall and all other improvements from the Disputed Property, and to request a declaratory judgment declaring the parties’ rights and duties under the CC&R’s. The McMullins answered and filed a cross-complaint against Nellie Gail seeking to quiet title to the Disputed Property in their name and a declaratory judgment regarding their rights and duties concerning the Disputed Property. They alleged they either acquired title to the Disputed Property through adverse possession or a prescriptive, implied, or equitable easement over the Disputed Property.
[995]
Following a six-day bench trial, the trial court entered judgment for Nellie Gail on all claims. The judgment declared the McMullins breached the CC&R’s by failing to accurately depict their property lines on the plans they submitted to the Review Committee, constructing the retaining wall and other improvements without the Review Committee’s approval or the city’s permission, and constructing the retaining wall and improvements on Nellie Gail’s property. The judgment further declared the McMullins did not acquire title to the Disputed Property by adverse possession because they failed to establish the essential elements of their claim, and the McMullins likewise did not acquire a prescriptive or equitable easement because they failed to establish the requisite elements. The court therefore quieted title to lot 274 and lot 273 in Nellie Gail and issued a mandatory injunction authorizing Nellie Gail to do the following at the McMullins’ expense: (1) remove the sports court; (2) cut down and remove the retaining wall to the existing grade in a manner that meets the city’s approval; and (3) “address the grade of the ground on the entirety of Lot 274 and Lot 273 in order to restore the area to a gradual open space slope and to restore the plantings on said Lot 274 and Lot 273 to native California vegetation.” Neither side requested a statement of decision.
Shortly after the trial court entered judgment, Nellie Gail filed a motion for attorney fees and costs. The court granted that motion, awarding approximately $187,000 in attorney fees and $10,000 in costs. Following the trial court’s ruling granting the fee motion, the McMullins filed their notice of appeal from the trial court’s judgment. The trial court later entered an amended judgment adding the attorney fees and costs to the judgment.
II. Discussion
A. We Infer the Trial Court Made All Necessary Findings Supported by Substantial Evidence Because the Parties Failed to Request a Statement of Decision
(1) “Upon a party’s timely and proper request, [Code of Civil Procedure] section 632 requires a trial court to issue a statement of decision following ‘the trial of a question of fact by the court.’ The statement must explain ‘the factual and legal basis for [the court’s] decision as to each of the principal controverted issues at trial . …’” (Acquired II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 970 [153 Cal.Rptr.3d 135] (Acquired II); [996] see Code Civ. Proc., § 632.)3 If the parties fail to request a statement of decision, the trial court is not required to provide one. (Acquired II, at p. 970.)
(2) “A party’s failure to request a statement of decision when one is available has two consequences. First, the party waives any objection to the trial court’s failure to make all findings necessary to support its decision. Second, the appellate court applies the doctrine of implied findings and presumes the trial court made all necessary findings supported by substantial evidence. [Citations.] This doctrine ‘is a natural and logical corollary to three fundamental principles of appellate review: (1) a judgment is presumed correct; (2) all intendments and presumptions are indulged in favor of correctness; and (3) the appellant bears the burden of providing an adequate record affirmatively proving error.’” (Acquired II, supra, 213 Cal.App.4th at p. 970.)
Here, it is undisputed the trial court conducted a six-day bench trial to determine the parties’ rights, duties, and interests in the Disputed Property. Similarly, no one disputes the parties did not request, and the court did not prepare, a statement of decision explaining the factual and legal basis for the court’s decision. We therefore infer the court made factual findings favorable to Nellie Gail on all issues necessary to support the judgment, and we review those findings under the substantial evidence standard. (Acquired II, supra, 213 Cal.App.4th at p. 970; Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 59–60 [58 Cal. Rptr. 3d 225].) We more fully address the specific standard of review applicable to each of the McMullins’ challenges in our discussion below.
The McMullins contend the doctrine of implied findings does not apply because all relevant facts were undisputed, and therefore the trial court did not resolve any factual issues in reaching its decision. Thus, the McMullins conclude they have raised only legal issues subject to de novo review. We disagree. There are many disputed factual issues underlying the court’s judgment. For example, the trial court had to determine the extent of the parties’ knowledge about the location of the McMullins’ rear property line, whether the McMullins deliberately failed to identify their rear property line on their submissions to Nellie Gail, and numerous other issues. Moreover, we do not independently review factual issues unless the facts are undisputed and no conflicting inferences can be drawn from the facts. (Montague v. AMN Healthcare, Inc. (2014) 223 Cal.App.4th 1515, 1521 [168 Cal. Rptr. 3d 123]; DiQuisto v. County of Santa Clara (2010) 181 Cal.App.4th 236, 270 [104 Cal. Rptr. 3d 93].) The McMullins failed to establish no conflicting inferences could be drawn from the evidence presented at trial.
[997]
B. The McMullins Forfeited Their Equitable Estoppel and Statute of LimitationsDefenses by Failing to Assert Them at Trial
The McMullins contend the trial court erred in quieting title to the Disputed Property in Nellie Gail because two of their defenses defeated Nellie Gail’s quiet title claim as a matter of law. First, the McMullins contend equitable estoppel barred Nellie Gail’s claim. Second, they contend section 318’s five-year limitations period bars Nellie Gail’s claim. The McMullins forfeited these defenses by failing to assert them at trial.
(3) “As a general rule, theories not raised in the trial court cannot be asserted for the first time on appeal; appealing parties must adhere to the theory (or theories) on which their cases were tried. This rule is based on fairness—it would be unfair, both to the trial court and the opposing litigants, to permit a change of theory on appeal … .” (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2015) ¶ 8:229, p. 8-167.) “New theories of defense, just like new theories of liability, may not be asserted for the first time on appeal.” (Bardis v. Oates (2004) 119 Cal.App.4th 1, 13–14, fn. 6 [14 Cal. Rptr. 3d 89].) “‘Appellate courts are loath to reverse a judgment on grounds that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider. … Bait and switch on appeal not only subjects the parties to avoidable expense, but also wreaks havoc on a judicial system too burdened to retry cases on theories that could have been raised earlier.’” (Brandwein v. Butler (2013) 218 Cal.App.4th 1485, 1519 [161 Cal. Rptr. 3d 728].)
In their answer, the McMullins alleged boilerplate defenses based on equitable estoppel and the statute of limitations. Similarly, in the joint list of controverted issues the parties filed on the eve of trial, the McMullins identified these defenses as two of their 19 controverted issues for trial. The McMullins, however, thereafter abandoned those defenses by failing to raise either of them at trial.
The trial brief the McMullins filed neither argued these defenses nor identified them as issues for the trial court to decide. In his opening statement, the McMullins’ trial counsel stated he would present evidence to show the McMullins were entitled to maintain the retaining wall and other improvements on the Disputed Property based on three theories—adverse possession, prescriptive easement, and equitable easement. Counsel failed to mention equitable estoppel or the statute of limitations as a basis for the court to deny Nellie Gail’s quiet title claim. Similarly, in his closing argument, counsel argued the court should quiet title in the McMullins or grant them an exclusive easement over the Disputed Property based on adverse possession, prescriptive easement, or equitable easement. At no time during trial did the [998] McMullins assert that Nellie Gail was equitably estopped to bring a quiet title claim or that the statute of limitations barred Nellie Gail’s claim.
The McMullins fail to cite anywhere in the trial record where they mentioned the statute of limitations, and they cite just one page of the reporter’s transcript where their counsel uttered the words “equitable estoppel” during closing argument. This isolated utterance, however, is not sufficient to preserve the issue for appeal because the McMullins’ counsel did not utter those words while arguing Nellie Gail was equitably estopped to assert a quiet title claim. Indeed, it appears the McMullins’ counsel may have misspoke by mentioning equitable estoppel because he uttered that phrase when urging the trial court to grant an equitable easement, which, as explained below, is a separate doctrine that allows a landowner who constructed an improvement on an adjacent owner’s property to defeat that owner’s injunction request based on a balancing of the hardships or conveniences. (See, e.g., Tashakori v. Lakis (2011) 196 Cal.App.4th 1003, 1008–1009 [126 Cal. Rptr. 3d 838] (Tashakori).)
(4) Nonetheless, assuming the McMullins’ trial counsel meant to argue equitable estoppel, substantial evidence supports the implied finding the McMullins failed to establish the essential elements necessary for equitable estoppel. “‘“A valid claim of equitable estoppel consists of the following elements: (a) a representation or concealment of material facts (b) made with knowledge, actual or virtual, of the facts (c) to a party ignorant, actually and permissibly, of the truth (d) with the intention, actual or virtual, that the ignorant party act on it, and (e) that party was induced to act on it.”’ [Citation.] … Other, more general formulations have been proposed [citation], but all formulations require that the conduct of the party to be estopped induced action on the part of the complaining party. ‘Such causation is essential to estoppel . …’” (Stephens & Stephens XII, LLC v. Fireman’s Fund Ins. Co. (2014) 231 Cal.App.4th 1131, 1149 [180 Cal. Rptr. 3d 683].) “‘“‘[T]he existence of an estoppel is generally a question of fact for the trier of fact, and ordinarily the [fact-finder’s] determination is binding on appeal unless the contrary conclusion is the only one to be reasonably drawn from the facts.’”’” (J.P. v. Carlsbad Unified School Dist. (2014) 232 Cal.App.4th 323, 333 [181 Cal. Rptr. 3d 286].)
As the basis for their equitable estoppel claim, the McMullins cite Nellie Gail’s December 2009 letter and January 2010 e-mail, which informed the McMullins the board of directors decided not to pursue the unauthorized construction of the retaining wall and related improvements as a violation of the CC&R’s, and instructed the McMullins to work with Nellie Gail’s architect to develop a landscaping plan to screen the wall from view. In reliance on these letters, the McMullins assert they spent $20,000 to develop [999] and implement a landscaping plan for the area surrounding the retaining wall. That evidence is insufficient to equitably estop Nellie Gail from bringing a quiet title claim as a matter of law.
The McMullins ignore that these communications and their reliance on them occurred well after the retaining wall was constructed, and therefore they could not justifiably have relied on them in spending approximately $150,000 to construct the wall and related improvements that did not include the landscape screening, irrigation, and drainage around the wall. Moreover, the evidence supports the implied finding Nellie Gail did not know all of the essential facts because it was unaware of the extent of the McMullins’ encroachment onto its property when it voted not to pursue the wall as a CC&R’s violation and approved the plans to screen the wall. The evidence also supports the implied finding the McMullins were not ignorant of the facts because they concealed their rear property line’s location from Nellie Gail and knowingly started construction without Nellie Gail’s written approval.
Specifically, the record includes testimony from a member of Nellie Gail’s board of directors who participated in the vote not to pursue the retaining wall as a CC&R’s violation. That board member testified the board simply was looking for an amicable resolution to the situation, but did not know where the McMullins’ rear property line was or the extent of the encroachment when it voted. The record also reveals the trial court found the McMullins were not “innocent” in their construction of the wall because (1) they intentionally failed to identify their rear property line in each of the many plans they submitted despite Nellie Gail’s repeated request for them to identify property lines; (2) they knew where the property line was located because all of their plans included a dashed, unlabeled line that approximated the rear property line’s location; and (3) they started construction based on an ambiguous oral statement from a Nellie Gail employee about the approval of their plans when they knew written approval from the Review Committee was required before construction could begin. Moreover, the city later informed both parties the wall was on Nellie Gail’s property and it could not remain there without Nellie Gail’s express approval. This evidence supports the implied finding the trial court rejected the McMullins’ equitable estoppel defense to the extent they did not forfeit it.4
[1000]
C. The McMullins Failed to Establish They Acquired Any Interest in the Disputed Property by Adverse Possession
The McMullins contend the trial court erred by failing to sustain their quiet title claim to the Disputed Property because they presented evidence sufficient to establish a claim to title by adverse possession. We disagree.5
(5) To establish they acquired title by adverse possession the McMullins must show (1) they possessed the Disputed Property under a claim of right or title; (2) they actually, openly, and notoriously occupied the Disputed Property in a manner that gave reasonable notice to Nellie Gail; (3) their possession and occupancy was adverse and hostile to Nellie Gail; (4) they continually possessed and occupied the Disputed Property for five years; and (5) they paid all property taxes levied and assessed on the Disputed Property during that five-year period. (Main Street Plaza v. Cartwright & Main, LLC (2011) 194 Cal.App.4th 1044, 1054 [124 Cal. Rptr. 3d 170].)
(6) The trial court found the McMullins’ adverse possession claim failed because they did not pay any property taxes on the Disputed Property.6 (See Mesnick v. Caton (1986) 183 Cal.App.3d 1248, 1260 [228 Cal. Rptr. 779] [“The adverse claimant’s failure to pay taxes on the land he claims is fatal to his claim”].) The payment of property taxes is a statutory requirement for adverse possession. (§ 325, subd. (b).) For section 325 purposes, a tax is levied when the county board of supervisors fixes the tax rate and orders payment of the taxes. A tax is assessed when the county assessor prepares the annual roll listing properties subject to taxation and their assessed value. (Hagman v. Meher Mount Corp. (2013) 215 Cal.App.4th 82, 90 [155 Cal. Rptr. 3d 192] (Hagman); see Allen v. McKay & Co. (1898) 120 Cal. 332, 334 [52 P. 828].)
The party claiming an interest based on adverse possession bears the burden to show either that “no taxes were assessed against the land or that if [1001] assessed he paid them.” (Gilardi v. Hallam (1981) 30 Cal.3d 317, 326 [178 Cal. Rptr. 624, 636 P.2d 588]; see Glatts v. Henson (1948) 31 Cal.2d 368, 372 [188 P.2d 745].) Section 325 requires that payment of the property taxes must be “established by certified records of the county tax collector.” (§ 325, subd. (b).) “Ordinarily, when adjoining lots are assessed by lot number, the claimant to the disputed portion cannot establish adverse possession because he cannot establish [he paid taxes on the portion of the adjoining property he occupied and possessed].” (Gilardi, at p. 326.)
The McMullins do not dispute they paid no property taxes on the Disputed Property. Instead, citing Hagman, they contend they were not required to pay taxes to establish their claim because the larger parcel that included the Disputed Property—lot 274—had no value, and therefore no taxes were levied and assessed against it. To show the Disputed Property had no value, the McMullins point to the recorded quitclaim deed transferring lot 274 to Nellie Gail in 1984 and recent property tax statements.
According to the McMullins, the recorded quitclaim deed showed lot 274 had no value because the deed states no documentary transfer tax was required for the transfer because the consideration was less than $100. The McMullins contend the tax statements show lot 274 had no value because the statements did not show the county levied and assessed any specific property taxes against lot 274 and did not identify a specific value for the parcel. This evidence, however, fails to meet the McMullins’ burden to show no taxes were levied and assessed.
In Hagman, the adverse possession claimant presented evidence showing the holder of legal title applied for and obtained a property tax exemption for the property at issue during the entire period of adverse possession because the titleholder was a religious organization that used the property for educational purposes. (Hagman, supra, 215 Cal.App.4th at p. 86.) That exemption precluded the county from levying or assessing any property taxes against the property. The Court of Appeal therefore concluded the claimant was not required to pay property taxes to establish adverse possession because no property taxes were assessed or levied on the property during the period of adverse possession. (Id. at pp. 90–91.)
Here, the McMullins rely on evidence that fails to show lot 274 was exempt from property taxes, lot 274 had no value, or no property taxes were levied and assessed on lot 274. The quitclaim deed transferred lot 274 from Nellie Gail’s original developer to Nellie Gail and dedicated the parcel as open space. Nowhere does the deed state lot 274 has no value and the McMullins do not cite any authority to support their assumption that the absence of any documentary transfer tax on this type of transfer establishes [1002] the property has no value. Moreover, at trial, the parties agreed lot 274 and the Disputed Property had value, but merely disagreed on what that value was. Similarly, although the property tax statements showed Nellie Gail was not billed for any property taxes on lot 274, and did not identify a specific value for that parcel, the tax statements stated, “common area values separately assessed.” (Capitalization omitted.)
(7) That statement is consistent with Revenue and Taxation Code section 2188.5’s assessment of property taxes for common areas owned by homeowners associations like Nellie Gail. That section provides that all parcels owned by individual homeowners that make up the association are assessed property taxes based not only on the value of their separate lots, but also on the value of their proportionate, undivided share of all common areas owned by their homeowners association. (Rev. & Tax. Code, § 2188.5, subd. (a)(1).)7 Common areas like lot 274 therefore have value and property taxes are levied against them; those taxes are billed to and paid by the individual homeowners. (Lake Forest Community Assn. v. County of Orange (1978) 86 Cal.App.3d 394, 397 [150 Cal. Rptr. 286] [“pursuant to Revenue and Taxation Code section 2188.5, the real property taxes levied against the clubhouse and the parcel of land on which it is located are assessed to the separately owned residential properties owned by [the] Association’s members”].)
(8) The McMullins argue these authorities do not apply to lot 274 because there is no evidence to show the developer or Nellie Gail properly annexed lot 274 to make it part of the common areas governed by Nellie Gail under the CC&R’s. At trial, however, the McMullins stipulated that lot 274 is “‘Common Area’” as defined in Nellie Gail’s CC&R’s. Having tried the case based on that stipulation, the McMullins may not seek to repudiate it on appeal. (See People v. Pijal (1973) 33 Cal.App.3d 682, 697 [109 Cal. Rptr. 230] [“It is, of course, well established that the defendant is bound by the stipulation or open admission of his counsel and cannot mislead the court and jury by seeming to take a position on issues and then disputing or repudiating the same on appeal”].)
The McMullins therefore failed to meet their burden to show they were not required to pay any property taxes on the Disputed Property, and the trial court properly found their adverse possession claim failed as a result.
[1003]
D. The Trial Court Did Not Abuse Its Discretion in Granting Nellie Gail an Injunction Against the McMullins’ Encroachment
The McMullins contend the trial court erred in granting Nellie Gail a mandatory injunction that requires them to pay for removing the visible portions of the retaining wall and restoring the surrounding area to its natural condition. According to the McMullins, the trial court could not grant the equitable remedy of an injunction without first finding Nellie Gail had no adequate remedy at law, and the record lacks substantial evidence to support the finding monetary damages was an inadequate legal remedy. The McMullins misconstrue the governing legal standards, and we conclude substantial evidence supports the trial court’s decision.
(9) In an action between adjoining landowners based on the defendant constructing an improvement on the plaintiff’s property, the plaintiff generally is entitled to a mandatory injunction requiring the defendant to remove the encroachment. (Brown Derby Hollywood Corp. v. Hatton (1964) 61 Cal.2d 855, 858 [40 Cal. Rptr. 848, 395 P.2d 896] (Brown Derby); Salazar v. Matejcek (2016) 245 Cal.App.4th 634, 649 [199 Cal. Rptr. 3d 705] (Salazar).) Under the doctrine of “‘balancing of conveniences’” or “‘relative hardships,’” a trial court has discretion to deny an injunction and instead compel the plaintiff to accept damages as compensation for a judicially created easement that allows the defendant to maintain the encroaching improvement. (Shoen v. Zacarias (2015) 237 Cal.App.4th 16, 19–20 [187 Cal. Rptr. 3d 560] (Shoen); see Tashakori, supra, 196 Cal.App.4th at pp. 1008–1009; Linthicum v. Butterfield (2009) 175 Cal.App.4th 259, 265 [95 Cal. Rptr. 3d 538] (Linthicum).)
“When a trial court refuses to enjoin encroachments which trespass on another’s land, ‘the net effect is a judicially created easement by a sort of non-statutory eminent domain.’ [Citations.] However, the courts are not limited to judicial passivity as in merely refusing to enjoin an encroachment. Instead, in a proper case, the courts may exercise their equity powers to affirmatively fashion an interest in the owner’s land which will protect the encroacher’s use.” (Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 764–765 [110 Cal. Rptr. 2d 861] (Hirshfield).) That interest commonly is referred to as an equitable easement. (Shoen, supra, 237 Cal.App.4th at pp. 19–20; Tashakori, supra, 196 Cal.App.4th at pp. 1008–1009.)
(10) For a trial court to exercise its discretion to deny an injunction and grant an equitable easement, “three factors must be present. First, the defendant must be innocent. That is, his or her encroachment must not be willful or negligent. The court should consider the parties’ conduct to determine who is responsible for the dispute. Second, unless the rights of the public would be harmed, the court should grant the injunction if the plaintiff [1004] ‘will suffer irreparable injury … regardless of the injury to defendant.’ Third, the hardship to the defendant from granting 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. …’” (Hirshfield, supra, 91 Cal.App.4th at p. 759, italics omitted.) “Unless all three prerequisites are established, a court lacks the discretion to grant an equitable easement.” (Shoen, supra, 237 Cal.App.4th at p. 19.)
“Overarching the analysis is the principle that since the defendant is the trespasser, he or she is the wrongdoer; therefore, ‘doubtful cases should be decided in favor of the plaintiff.’” (Hirshfield, supra, 91 Cal.App.4th at p. 759; see Linthicum, supra, 175 Cal.App.4th at p. 265.) Moreover, “courts approach the issuance of equitable easements with ‘[a]n abundance of caution.’” (Shoen, supra, 237 Cal.App.4th at p. 21.) When courts compare the hardships or conveniences, the scales “begin tipped in favor of the property owner due to the owner’s substantial interest in exclusive use of her property arising solely from her ownership of her land.” (Shoen, supra, 237 Cal.App.4th at p. 20.)
(11) “‘When the court finds … that the defendant was not innocent, it should grant an injunction [because an essential element for denying an injunction and establishing an equitable easement is missing].” (Salazar, supra, 245 Cal.App.4th at p. 649, italics omitted, quoting Brown Derby, supra, 61 Cal.2d at p. 858.) “The defendant is not innocent if he wilfully encroaches on the plaintiff’s land. [Citations.] To be wilful the defendant must not only know that he is building on the plaintiff’s land, but act without a good faith belief that he has a right to do so.” (Brown Derby, supra, 61 Cal.2d at p. 859.) “Where the conduct is willful, it may be presumed that a defendant acted with full knowledge of the plaintiff’s rights ‘“‘and with an understanding of the consequences which might ensue . …’”’” (Salazar, supra, 245 Cal.App.4th at p. 649.) “The question whether the defendant’s conduct is so egregious as to be willful or whether the quantum of the defendant’s negligence is so great as to justify an injunction is a matter best left to the sound discretion of the trial court.” (Linthicum, supra, 175 Cal.App.4th at p. 267.) “We review the trial court’s application of this doctrine for an abuse of discretion.” (Shoen, supra, 237 Cal.App.4th at p. 20.)
(12) Here, the trial court refused to grant the McMullins an equitable easement, and instead issued an injunction for the removal of the retaining wall and restoration of the surrounding area. The court found the McMullins were not innocent in constructing the wall on Nellie Gail’s property, and therefore did not satisfy the first of the three requirements described above. The record supports the court’s ruling because substantial evidence supports [1005] the implied findings the McMullins knew where their rear property line was located, they intentionally did not identify it, and they began constructing the wall knowing they did not have the necessary approvals from Nellie Gail.
For example, the evidence showed Nellie Gail denied several applications by the McMullins seeking approval for the retaining wall and related improvements. Each time, Nellie Gail told the McMullins in writing that any future application must include “a fully dimensioned site plan showing property lines,” but the McMullins repeatedly submitted applications that failed to identify the rear property line. Indeed, the McMullins never submitted a plan identifying the location of their rear property line. The evidence also showed Donald prepared all of the plans the McMullins submitted to Nellie Gail, and each time he drew in a dashed, unlabeled line that Nellie Gail later discovered was the rear property line and showed the retaining wall and other improvements were on Nellie Gail’s property. Moreover, the applications repeatedly represented the retaining wall would be constructed in the same location as the original wrought iron fence, but the McMullins constructed the new retaining wall in a location that enclosed 2,000 square feet more than the original wrought iron fence. Finally, the trial court could rely on evidence that showed the McMullins constructed the retaining wall based on Erickson’s oral and ambiguous statement that she thought the McMullins’ plans had been approved, but the McMullins knew all of their previous plans for the retaining wall had been rejected in writing, they had not submitted [***41] any new plans since the last rejection, and a written approval from the Review Committee was required before construction could commence.
The McMullins point to the Review Committee’s approval of the landscape screening for the retaining wall as a basis for the trial court to grant an equitable easement and deny injunctive relief. As explained above, however, that approval occurred after the McMullins knowingly constructed the wall on Nellie Gail’s property without the Review Committee’s approval. Moreover, the $20,000 cost for the screening portion of the project amounts to less than 12 percent of the total cost for the project. On these facts, we cannot say the trial court abused its discretion in concluding the McMullins were not innocent, and therefore were not entitled to an equitable easement.
The McMullins also argue Nellie Gail should have known the location of the property line between the two properties, and Nellie Gail acquiesced in the McMullins’ construction of the retaining wall by failing to tell them to stop construction until the wall essentially was complete. These arguments, however, ignore the governing standard of review and improperly seek to reargue the evidence on appeal. As explained above, we review the trial court’s decision to grant an injunction and deny an equitable easement under [1006] the abuse of discretion standard. (Shoen, supra, 237 Cal.App.4th at pp. 19–20; Linthicum, supra, 175 Cal.App.4th at p. 267.) The abuse of discretion standard includes a substantial evidence component: “We defer to the trial court’s factual findings so long as they are supported by substantial evidence, and determine whether, under those facts, the court abused its discretion. If there is no evidence to support the court’s findings, then an abuse of discretion has occurred.” (Tire Distributors, Inc. v. Cobrae (2005) 132 Cal.App.4th 538, 544 [33 Cal. Rptr. 3d 761].)
When we review the record for substantial evidence, we do not determine whether substantial evidence supports the factual conclusions advanced by the McMullins. Rather, we review the entire record solely to determine whether substantial evidence supports the trial court’s expressed and implied factual findings. If there is, our analysis ends; we may not substitute our deductions for those of the trial court. (Rupf v. Yan (2000) 85 Cal.App.4th 411, 429–430, fn. 5 [102 Cal. Rptr. 2d 157].) As explained above, we conclude substantial evidence supports the trial court’s finding the McMullins were not innocent, and therefore were not entitled to an equitable easement.
(13) In arguing monetary damages provided an adequate legal remedy that required the trial court to deny injunctive relief, the McMullins fail to recognize the foregoing authorities governed the court’s decision whether to grant an injunction or require Nellie Gail to accept monetary damages instead. The McMullins rely on cases that discuss injunctive relief generally and involve different factual contexts. Reliance on these authorities is unavailing here because they do not address awarding injunctive relief when an adjoining property owner constructs an improvement that encroaches on his or her neighbor’s property.8 Under the foregoing authorities, whether Nellie Gail suffered irreparable injury or monetary damages provided an adequate legal remedy is addressed by the second element of the governing standard, [1007] but the court need not decide that issue where, as here, the court determines the defendant was not innocent and therefore was ineligible for an equitable easement. (See Brown Derby, supra, 61 Cal.2d at p. 858 [“The rationale behind the rule is … to prevent a wrongdoer from gaining control of land merely by paying a penalty of damages”].)
Finally, the McMullins challenge the terms and scope of the trial court’s injunction. First, they contend the injunction requires the city to issue permits for and approve the retaining wall’s demolition, but there is no guarantee the city will approve the demolition or issue any permits. Second, the McMullins contend the injunction is overbroad because it authorizes Nellie Gail to address the grade and ground cover on the entirety of lot 274 and lot 273 at the McMullins’ expense, but those lots total more than 20 acres and the McMullins’ construction disturbed much less than one acre. Neither of these arguments invalidates the injunction or requires our intervention at this time.
We will not speculate on the city’s position concerning the retaining wall’s demolition. The trial court has the authority to modify the injunction if necessary to comply with the city’s building code or other requirements. Moreover, the injunction essentially requires the wall to be removed in whatever manner the city requires. As for the McMullins’ concern Nellie Gail will attempt to regrade and replant the entire 20 acres at the McMullins’ expense, that too is based on nothing more than speculation. The trial court’s judgment includes a procedure for the McMullins to challenge the reasonableness of the expenses Nellie Gail seeks to impose on them and they may seek to modify the injunction if necessary.
E. This Court Lacks Jurisdiction to Review the Trial Court’s Attorney Fees Award
The McMullins contend the trial court erred in awarding Nellie Gail attorney fees under Civil Code section 5975, subdivision (c), because this lawsuit is not an action to enforce Nellie Gail’s governing documents, but an action to enforce the quitclaim deed transferring lot 274 to Nellie Gail. We lack jurisdiction to review the attorney fees award because the McMullins failed to timely appeal the award. We therefore dismiss that portion of their appeal.
(14) “‘An appellate court has no jurisdiction to review an award of attorney fees made after entry of the judgment, unless the order is separately appealed.’ [Citation.] ‘“[W]here several judgments and/or orders occurring close in time are separately appealable (e.g., judgment and order awarding attorney fees), each appealable judgment and order must be expressly specified—in either a single notice of appeal or multiple notices of appeal—in [1008] order to be reviewable on appeal.”’” (Colony Hill v. Ghamaty (2006) 143 Cal.App.4th 1156, 1171 [50 Cal. Rptr. 3d 247] (Colony Hill); see Allen v. Smith (2002) 94 Cal.App.4th 1270, 1284 [114 Cal. Rptr. 2d 898]; DeZerega v. Meggs (2000) 83 Cal.App.4th 28, 43 [99 Cal. Rptr. 2d 366] (DeZerega).) Indeed, “‘[w]hen a party wishes to challenge both a final judgment and a postjudgment costs/attorney fee order, the normal procedure is to file two separate appeals: one from the final judgment, and a second from the postjudgment order.’” (Torres v. City of San Diego (2007) 154 Cal.App.4th 214, 222 [64 Cal. Rptr. 3d 495].) “‘“[I]f a judgment or order is appealable, an aggrieved party must file a timely appeal or forever lose the opportunity to obtain appellate review.”’” (Silver v. Pacific American Fish Co., Inc. (2010) 190 Cal.App.4th 688, 693 [118 Cal. Rptr. 3d 581] (Silver).)
Here, the trial court entered judgment in Nellie Gail’s favor in early November 2014. In mid-December, the court granted Nellie Gail’s attorney fees motion and awarded Nellie Gail $187,000 in attorney fees and $10,000 in costs. The McMullins filed their notice of appeal on December 30, 2014, stating they appealed from “the judgment executed and filed on November 6, 2014.” Their notice of appeal did not identify the trial court’s ruling on Nellie Gail’s attorney fees motion or otherwise suggest the McMullins were appealing the attorney fees award. On January 21, 2015, the trial court entered an “Amended Judgment,” granting Nellie Gail’s attorney fees motion and amending the original judgment to include the attorney fees and costs award. The amended judgment stated the judgment “shall remain in all other respects as originally entered, and as modified to date, and shall retain its original entry date of November 6, 2014.” The McMullins did not file a separate notice of appeal to challenge either the trial court’s ruling on the attorney fees motion or the amended judgment, and therefore we lack jurisdiction to review the attorney fees award.
Citing Grant v. List & Lathrop (1992) 2 Cal.App.4th 993 [3 Cal.Rptr.2d 654] (Grant), the McMullins contend their notice of appeal necessarily encompassed the trial court’s attorney fees award because the original judgment awarded Nellie Gail attorney fees and left a blank space for the amount to be inserted later, and the amended judgment expressly amended the original judgment nunc pro tunc to include the amount of fees. The McMullins misconstrue Grant and the court’s judgment and amended judgment.
(15) In Grant, the Court of Appeal determined it had jurisdiction to decide an appeal challenging a postjudgment award of attorney fees where the judgment identified in the notice of appeal expressly awarded attorney fees to the prevailing party and merely left the determination of the amount for postjudgment proceedings. (Grant, supra, 2 Cal.App.4th at pp. 996–997.) [1009] The foregoing authorities emphasize Grant established a narrow exception to the rule requiring a separate notice of appeal for a postjudgment attorney fees award, and that exception applies solely when “the entitlement to fees [is] adjudicated by the original judgment, leaving only the issue of amount for further adjudication.” (DeZerega, supra, 83 Cal.App.4th at p. 44; see Silver, supra, 190 Cal.App.4th at p. 692; Colony Hill, supra, 143 Cal.App.4th at p. 1172.)
In Silver, for example, the appellant sought to challenge a postjudgment attorney fees award on his appeal from the underlying judgment that stated attorney fees were awarded to the respondent and left a blank space for the amount of fees to be inserted later. (Silver, supra, 190 Cal.App.4th at pp. 690–691.) The Court of Appeal concluded it lacked jurisdiction to review the attorney fees award because the trial court made the award after entry of judgment and the appellant did not file a separate notice of appeal challenging the award. Although the judgment stated fees were awarded and left a blank space for the amount, the Silver court concluded Grant did not apply because the record showed the trial court determined both entitlement to and the amount of fees in postjudgment proceedings. (Silver, at pp. 691–692.)
Here, the original judgment similarly stated Nellie Gail shall recover its attorney fees and left a blank space for the amount to be inserted later, but the record shows the trial court made no determination regarding attorney fees before entering judgment, and determined both Nellie Gail’s entitlement to and the amount of fees after entry of judgment. Grant therefore does not apply.
Contrary to the McMullins’ contention, the trial court’s amended judgment did not amend the original judgment nunc pro tunc and thereby bring the attorney fees award within the scope of their notice of appeal. Although Nellie Gail’s attorney fees motion requested that the trial court amend the original judgment nunc pro tunc to include the fees award, neither the trial court’s ruling nor the amended judgment stated the original judgment was amended nunc pro tunc. Rather, the amended judgment simply stated the original judgment was amended to include the attorney fees and costs award and the original judgment shall retain its original entry date.
(16) More importantly, a trial court’s authority to amend its judgment nunc pro tunc is limited to correcting clerical errors in the judgment. (APRI Ins. Co. v. Superior Court (1999) 76 Cal.App.4th 176, 185–186 [90 Cal. Rptr. 2d 171]; Lang v. Superior Court (1961) 198 Cal.App.2d 16, 17–18 [18 Cal. Rptr. 67].) Amending a judgment to include an award of attorney fees and costs when the court determined both the entitlement to and amount of fees after entry of judgment is not an amendment to correct a clerical error. [1010] Indeed, the Rule of Court addressing postjudgment awards of costs, including attorney fees, directs the court clerk to enter the award on the judgment. It does not authorize the court or clerk to amend the judgment nunc pro tunc. (Cal. Rules of Court, rule 3.1700(b)(4).) If a judgment could be amended nunc pro tunc to include a postjudgment attorney fees award, an appellant would never have to file a separate appeal from a postjudgment order granting attorney fees, but that is contrary to the foregoing authorities. (Cf. Colony Hill, supra, 143 Cal.App.4th at p. 1172.)
(17) Finally, the McMullins contend we must liberally construe their notice of appeal to encompass the trial court’s postjudgment attorney fees award. Not so. The Colony Hill court rejected this same argument: “‘The rule favoring appealability in cases of ambiguity cannot apply where there is a clear intention to appeal from only part of the judgment or one of two separate appealable judgments or orders. [Citation.] “Despite the rule favoring liberal interpretation of notices of appeal, a notice of appeal will not be considered adequate if it completely omits any reference to the judgment [or order] being appealed.”’” (Colony Hill, supra, 143 Cal.App.4th at p. 1172; see Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35, 47 [269 Cal. Rptr. 228].) The McMullins’ notice of appeal unmistakably stated they appealed from the trial court’s November 6, 2014 judgment, and nothing else.
III. Disposition
The judgment is affirmed. The purported appeal from the trial court’s order awarding attorney fees and costs is dismissed for lack of jurisdiction. Nellie Gail shall recover its costs on appeal.
Bedsworth, Acting P. J., and Thompson, J., concurred.
1 We also refer to the McMullins individually by their first names to avoid confusion. No disrespect is intended.
2 The only area of disagreement was whether the Disputed Property included a few square feet of lot 273. Nellie Gail’s surveyor concluded it did not, but the McMullins’ surveyor concluded it did. Whether the Disputed Property included a portion of lot 273 is not significant to our analysis and the trial court nonetheless quieted title to both lots in Nellie Gail’s name. We therefore refer only to lot 274 for ease of reference.
3 All statutory references are to the Code of Civil Procedure unless otherwise stated.
4 We also note the McMullins asserted a quiet title claim in their cross-complaint that would support the trial court’s judgment quieting title to the Disputed Property in Nellie Gail. The McMullins contend Nellie Gail was equitably estopped to bring its quiet title action, but did not assert Nellie Gail was equitably estopped from defending the McMullins’ quiet title claim or that the trial court could not quiet title in Nellie Gail based on the McMullins’ claim.
5 The McMullins do not separately argue they were entitled to an interest in the Disputed Property by adverse possession. Rather, they raise their adverse possession argument as the basis for their contention Nellie Gail’s quiet title action was time-barred. We nonetheless consider the argument on its merits because the governing five-year limitation period on a property owner’s quiet title action against an adverse possessor is triggered when an adverse possessor begins to use and occupy the property to acquire title. An adverse possessor who claims the legal owner’s quiet title action is time-barred therefore bears the burden to establish all elements of an adverse possession claim to show the quiet title claim is time-barred. (Harrison v. Welch (2004) 116 Cal.App.4th 1084, 1095–1096 [11 Cal. Rptr. 3d 92].)
6 The trial court also found the McMullins failed to establish their possession and occupation of the Disputed Property was “open, notorious, and hostile,” but we need not address this finding because substantial evidence supports the court’s finding the McMullins failed to pay property taxes.
7 In pertinent part, Revenue and Taxation Code section 2188.5, subdivision (a)(1), provides as follows: “[W]henever real property has been divided into planned developments as defined in Section 11003 of the Business and Professions Code, the interests therein shall be presumed to be the value of each separately owned lot, parcel, or area, and the assessment shall reflect this value, which includes all of the following: [¶] (A) The assessment attributable to the value of the separately owned lot, parcel, or area and the improvements thereon. [¶] (B) The assessment attributable to the share in the common area reserved as an appurtenance of the separately owned lot, parcel, or area.”
8 The McMullins in their rehearing petition fault us for not discussing the following statement from Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342 [1 Cal.Rptr.3d 32, 71 P.3d 296] (Intel Corp.): “Even in an action for trespass to real property, in which damage to the property is not an element of the cause of action, ‘the extraordinary remedy of injunction’ cannot be invoked without showing the likelihood of irreparable harm.” (Id. at p. 1352.)
Intel Corp. addressed whether a claim for trespass to chattels could be based on an employee’s unauthorized use of a company’s e-mail system. (Intel Corp., supra, 30 Cal.4th at pp. 1346–1348.) It did not address an adjoining landowner’s encroachment on his or her neighbor’s property by constructing an improvement. The quote on which the McMullins rely is merely dictum from the court’s response to an argument that actual injury was not an element of a claim for trespass to chattels when the only remedy sought is injunctive relief. (Id. at pp. 1351–1352.) Moreover, the McMullins fail to recognize the quote on which they rely addresses a trespass in general, which may include simple entry onto another’s land, but the cases discussed above address the more specific situation of a landowner encroaching on his or her neighbor’s property by constructing an improvement, not merely entering upon the property.
Related Links
“Encroaching on HOA Common Area Could Cost You” – Published on HOA Lawyer Blog (January, 2017)
Grossman v. Park Fort Washington Association
[Attorney’s Fees; ADR; Pre-Litigation] Pre-litigation attorney’s fees that are incurred in alternative dispute resolution (ADR) are recoverable by the prevailing party in subsequent ligation.
Notice: CERTIFIED FOR PARTIAL PUBLICATION *
Robert J. Rosati for Defendant and Appellant.
Michael A. Milnes for Plaintiffs and Respondents.
OPINION
FRANSON, J.—
INTRODUCTION
This appeal involves a dispute between a homeowners association and property owners who built a cabana and fireplace in their backyard without obtaining prior approval from the homeowners association. The homeowners association contends the applicable governing documents prohibited the cabana and fireplace. Thus, the homeowners association concludes it properly denied the owners’ request for a variance and properly imposed a fine of $10 per day until the cabana and fireplace were removed.
The trial court interpreted the governing documents as allowing the cabana and requiring the fireplace to be 10 feet from the property line. Applying this interpretation, the court required the fireplace to be modified, concluded a variance was not needed for the cabana, and vacated the continuing fine. The trial court also awarded statutory attorney fees to the property owners after deducting 10 hours for the unsuccessful claims. The fee award included attorney time spent on prelitigation mediation.
[1131]
(1) In the unpublished portion of this opinion, we conclude that the trial court properly interpreted the governing documents of the homeowners association and, when awarding attorney fees, did not abuse its discretion by deducting only 10 hours of attorney time for the unsuccessful claims. In the published portion of this opinion, we address a novel issue of statutory construction concerning the scope of the attorney fees provision in the Davis-Stirling Common Interest Development Act (the Davis-Stirling Act) (Civ. Code, § 1350 et seq.). We interpret Civil Code section 1354, subdivision (c) to allow a prevailing party to recover attorney fees and costs incurred in prelitigation mediation.
We therefore affirm the judgment and the order granting the motion for attorney fees.
FACTS*
PROCEEDINGS*
DISCUSSION
I.–V.*
VI. Attorney Fees for Prelitigation ADR
After Neil and Doredda Grossman (the Grossmans) obtained a judgment in their favor against defendant Park Fort Washington Association (the Association), they filed a motion requesting attorney fees for 331.9 hours that their attorney worked on their behalf. The attorney time included 38.1 hours incurred between July 12, 2007, and November 26, 2008, in connection with a mediation of the parties’ dispute. The mediation occurred before the lawsuit was filed in June 2009. The Grossmans’ motion also requested costs, including $875 paid as one-half of the fee charged by the retired justice who conducted the mediation.
[1132]
The Association’s opposition to the motion for attorney fees included the argument that the recovery for time spent on prelitigation mediation was not authorized by the attorney fees provision contained in Civil Code section 1354, subdivision (c).
Ultimately, the trial court granted the motion for attorney fees and awarded the Grossmans $112,665 in attorney fees. This award included compensation for the 38.1 hours incurred in the prelitigation mediation.
A. Statutory Provisions
The Davis-Stirling Act includes provisions addressing alternative dispute resolution (ADR), including the initiation of such nonjudicial procedures, the timeline for completing ADR, and the relationship between ADR and any subsequent litigation. (See Civ. Code, §§ 1369.510–1369.590.) Among other things, the legislation provides that an “association or an owner or a member of a common interest development may not file an enforcement action in the superior court unless the parties have endeavored to submit their dispute to alternative dispute resolution pursuant to this article.” (Civ. Code, § 1369.520, subd. (a).)
The Davis-Stirling Act also includes the following mandatory attorney fees provision: “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” (Civ. Code, § 1354, subd. (c).)
One way this attorney fee provision and the ADR requirements interact is addressed in Civil Code section 1369.580: “In an enforcement action in which fees and costs may be awarded pursuant to subdivision (c) of Section 1354, the court, in determining the amount of the award, may consider whether a party’s refusal to participate in alternative dispute resolution before commencement of the action was reasonable.”
B. The Association’s Contentions
The Association reads the statutory language in subdivision (c) of Civil Code section 1354 as authorizing only the recovery of fees and costs incurred in the action to enforce the governing documents. Based on this interpretation, the Association argues that the Grossmans are not entitled to recover fees and costs incurred in prelitigation ADR and the trial court erred, as a matter of law, in awarding such fees and costs.7
[1133]
The Association’s argument is purely textual. (See Scalia & Garner, Reading Law: The Interpretation of Legal Texts (2012) p. 16 [“exclusive reliance on text when interpreting [a statute] is known as textualism”].) It has not presented any legislative history that demonstrates, either directly or by implication, the Legislature intended to have attorney fees and costs incurred in ADR excluded from the award. Also, the Association has indentified no public policy that would be promoted by its interpretation of the statute.
C. Interpretation of Attorney Fees Statute
(2) Civil Code section 1354, subdivision (c) reads: “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” This text does not explicitly limit the recovery of attorney fees and costs to those items incurred in the lawsuit itself. Instead, it specifies two conditions that must exist before the award of reasonable attorney fees and costs is mandatory. The first statutory condition is the existence of an “action to enforce the governing documents … .” (Civ. Code, § 1354, subd. (c); see Salawy v. Ocean Towers Housing Corp. (2004) 121 Cal.App.4th 664, 670 [17 Cal. Rptr. 3d 427] [attorney fees provision expressly limits award to actions to enforce governing documents].) The second condition is the existence of a prevailing party. (Chapala Management Corp. v. Stanton (2010) 186 Cal.App.4th 1532, 1546 [113 Cal. Rptr. 3d 617] [attorney fees are awarded as a matter of right to the prevailing party].)
Here, the Grossmans satisfied both conditions. The lawsuit was an action to enforce terms in the master declaration of covenants, conditions, and restrictions easements recorded in September 1984 (CC&R’s)—particularly section 7.14 of the CC&R’s. It is undisputed that the CC&R’s are “governing documents” for purposes of the attorney fees provision in the Davis-Stirling Act. (See Civ. Code, § 1351, subd. (j) [“ ‘[g]overning documents’ ” defined].) In addition, the trial court determined the Grossmans were the prevailing party, a determination not challenged on appeal.
Thus, if the analysis is limited to the actual language in subdivision (c) of Civil Code section 1354, the critical word to deciding whether attorney fees and costs expended in ADR are recoverable is whether those fees and costs were “reasonable.”
(3) Our analysis of what is reasonable is affected by other provisions in the statutory scheme created by the Davis-Stirling Act. (See State Farm Mutual Automobile Ins. Co. v. Garamendi (2004) 32 Cal.4th 1029, 1043 [12 [1134] Cal. Rptr. 3d 343, 88 P.3d 71] [courts construe the words of a statute in context and with reference to the entire scheme of law of which they are a part].)
First, Civil Code section 1369.520, subdivision (a) requires a prospective plaintiff to endeavor to submit the dispute to ADR before filing a lawsuit to enforce the governing documents. This provision effectively makes ADR mandatory and, therefore, precludes a determination that the time and effort spent pursuing ADR was unreasonable per se.
Second, Civil Code section 1369.580 provides that a party’s refusal to participate in ADR before the start of the action could affect the amount of the attorney fees awarded. This provision strongly implies that the attorney fees a prevailing party spent trying to convince a recalcitrant party to submit the dispute to ADR could be recovered, if otherwise reasonable.
Lastly, we have not found, and the Association has not identified, any policy reasons for excluding attorney fees and costs incurred in ADR from the award given to a party that has pursued ADR and subsequently prevailed in a lawsuit involving the same dispute.
(4) Based on the foregoing, we conclude that a party does not act unreasonably when it spends money on attorney fees and costs during prelitigation ADR. The alternate view—that such expenditures are categorically unreasonable—is contrary to the strong public policy of promoting the resolution of disputes through mediation and arbitration. (E.g., Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 235, fn. 4 [145 Cal. Rptr. 3d 514, 282 P.3d 1217] [public policy favors arbitration as a means of dispute resolution].) Thus, when attorney fees and costs expended in prelitigation ADR satisfy the other criteria of reasonableness, those fees and costs may be recovered in an action to enforce the governing documents of a common interest development. (Civ. Code, § 1354, subd. (c).)
Thus, the trial court did not err in awarding those fees and costs.
VII. Apportionment of Attorney Fees* [1135]
DISPOSITION
The judgment and the order granting the motion for attorney fees are affirmed. The Grossmans shall recover their costs on appeal.
Levy, Acting P. J., and Gomes, J., concurred.
On January 15, 2013, the opinion was modified to read as printed above.
* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of the Facts, Proceedings, and parts I.–V. and VII. of the Discussion.
* See footnote, ante, page 1128.
* See footnote, ante, page 1128.
* See footnote, ante, page 1128.
7 The attorney fees relate to 38.1 hours incurred between July 12, 2007, and November 26, 2008. The costs include $875 paid as one-half of the fee charged by a retired justice to conduct the ADR proceeding.
* See footnote, ante, page 1128.
Related Links
Recovering Pre-Litigation Attorney’s Fees in HOA Disputes – Published on HOA Lawyer Blog (March, 2013)
Rancho Mirage Country Club Homeowners Association v. Hazelbaker
[Attorney’s Fees; ADR; Settlement Agreement] An action to enforce a settlement agreement reached between a HOA and an owner through Alternative Dispute Resolution (ADR) was held to be an action to enforce the governing documents entitling the prevailing party to an award of attorney’s fees and costs pursuant to Civ. Code § 5975.
OPINION
HOLLENHORST, J.
Defendants and appellants Thomas B. Hazelbaker and Lynn G. Hazelbaker own, through their family trust, a condominium in the Rancho Mirage Country Club development. Defendants made improvements to an exterior patio, which plaintiff and respondent Rancho Mirage Country Club Homeowners Association (Association) contended were in violation of the applicable covenants, conditions and restrictions (CC&Rs). The parties mediated the dispute pursuant to the Davis-Stirling Common Interest Development Act (Davis-Stirling Act or the Act), codified at sections 4000-6150 of the Civil Code[1] (formerly sections 1350-1376). The mediation resulted in a written agreement. Subsequently, the Association filed the present lawsuit, alleging that defendants had failed to comply with their obligations under the mediation agreement to modify the property in certain ways.
While the lawsuit was pending, defendants made modifications to the patio to the satisfaction of the Association. Nevertheless, the parties could not [256] reach agreement regarding attorney fees, which the Association asserted it was entitled to receive as the prevailing party.
The Association filed a motion for attorney fees and costs, seeking an award of $31,970 in attorney fees and $572 in costs. The trial court granted the motion in part, awarding the Association $18,991 in attorney fees and $572 in costs. Defendants argue on appeal that the trial court’s award, as well as its subsequent denial of a motion to reconsider the issue, are erroneous in various respects.[2]
For the reasons discussed below, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
In November 2011, defendants applied for and received approval from the Association’s architectural committee to make certain improvements to the patio area of their property. Subsequently, however, the Association contended that defendants had made changes that exceeded the scope of the approval, and which would not have been approved had they been included in defendants’ November 2011 application.
On June 19, 2012, the Association sent defendants a request for alternative dispute resolution pursuant to former section 1369.510 et seq., identifying the disputed improvements and proposing that the parties mediate the issue. Defendants accepted the proposal, and a mediation was held on April 8, 2013. A “Memorandum of Agreement in Mediation” dated April 9, 2013, was reached, signed by two representatives of the Association, its counsel, and Thomas Hazelbaker (but not Lynn Hazelbaker). The agreement called for defendants to make certain modifications to the patio, in accordance with a plan newly approved by the Association; specifically, to install three openings, each 36 inches wide and 18 inches high, in a side wall of the patio referred to as a “television partition” in the agreement, and to use a specific color and fabric for the exterior side of drapery. The agreement provided for the modifications to be completed within 60 days from the date of the agreement. It also provided for a special assessment on defendants’ property to pay a portion of the Association’s attorney fees incurred to that point, and included a prevailing party attorney fees clause with respect to any subsequent legal action “pertaining to the enforcement of or arising out of” the agreement.
The modifications described in the mediation agreement were not completed within 60 days. The parties each blame the other for that circumstance.
[257]
On September 4, 2013, the Association filed the present lawsuit, asserting two causes of action: (1) for specific performance of the mediation agreement, and (2) for declaratory relief. Subsequently, the parties reached agreement regarding modifications to the property, slightly different from those agreed to in mediation; instead of three 36-inch-wide openings, two openings of 21 inches, separated by a third opening 52 inches wide, were installed in the wall, and a different fabric than the one specified in the mediation agreement was used for the drapery. The modifications were completed by defendants in September 2014. The parties could not reach a complete settlement, however, because they continued to disagree about who should bear the costs of the litigation.
On October 15, 2014, the Association filed a motion seeking attorney fees and costs pursuant to section 5975, subdivision (c). The motion sought $31,970 in attorney fees, plus $572 in costs. On October 30, 2014, the hearing of the matter, initially set for November 10, 2014, was continued to November 25, 2014, on the court’s own motion. Defendants filed their opposition to the motion on November 14, 2014.
At the November 25, 2014 hearing on the motion, the trial court noted that defendants’ “paperwork was not timely and the Court did not consider it.”[3] The court further observed that the bills submitted by the Association in support of its motion were heavily redacted, sometimes to the point where it could not “tell what’s going on.” The court declined to review unredacted bills in camera, and further remarked that “if I can’t tell what’s going on, I’m not awarding those fees.” At the conclusion of the hearing, the court took the matter under submission.
On December 2, 2014, the trial court issued a minute order granting the Association’s motion, but awarding less than the requested amount; $18,991 in attorney fees, plus $572 in costs. The trial court denied the Association’s motion with respect to fees incurred prior to the mediation, awarding $3,888.50 in “[p]ost mediation fees” incurred by one law firm on behalf of the Association “starting 60 days post mediation,” and $15,102.50 in “litigation fees” incurred by another law firm. With respect to the “[p]ost mediation fees,” the court commented as follows: “The court had great difficulty determining the nature of the billings because so much information was redacted from the billings. All doubts were resolved in favor of the homeowner.”
Judgment was entered in favor of the Association on December 17, 2014, and on January 14, 2015, a notice of entry of judgment was filed. On January [258] 21, 2015, defendants filed a motion for reconsideration of the trial court’s order regarding fees and costs. On February 27, 2015, after a hearing, the trial court denied the motion as untimely, further noting that the motion “did not set forth any new facts, law, or a chance in circumstances.”
II. DISCUSSION
A. The Association’s Lawsuit Is an “Action to Enforce the Governing Documents” Under the Davis-Stirling Act.
This case presents the question of whether the Davis-Stirling Act, and particularly the fee-shifting provision of section 5975, subdivision (c), applies to an action to enforce a settlement agreement arising out of a mediation conducted pursuant to the mandatory alternative dispute resolution requirements of the Act. We conclude that it does apply in at least some circumstances, and more specifically that it applies on the facts of this case.
“The Davis-Stirling Act, enacted in 1985 [citation], consolidated the statutory law governing condominiums and other common interest developments.” (Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 81 (Villa De Las Palmas).) “The Davis-Stirling Act includes provisions addressing alternative dispute resolution (ADR), including the initiation of such nonjudicial procedures, the timeline for completing ADR, and the relationship between ADR and any subsequent litigation.” (Grossman v. Park Fort Washington Assn. (2012) 212 Cal.App.4th 1128, 1132 (Grossman).) Among other things, the legislation provides that “[a]n association or a member may not file an enforcement action in the superior court unless the parties have endeavored to submit their dispute to alternative dispute resolution pursuant to this article.” (§ 5930, subd. (a).)
The Act also includes the following mandatory attorney fees provision: “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” (§ 5975, subd. (c).) This language has been interpreted to allow recovery of not only litigation costs, but also reasonable attorney fees and costs expended in pre-litigation ADR pursuant to the Davis-Stirling Act. (Grossman, supra, 212 Cal.App.4th at p. 1134 [interpreting former section 1354, later renumbered as § 5975 without substantive change].)
In Grossman, although the parties participated in a mediation prior to the litigation, there is no indication that the mediation produced any sort of agreement, and the complaint was explicitly framed as an action to enforce a specific provision of the CC&Rs at issue. (Grossman, supra, 212 Cal.App.4th [259] at pp. 1131, 1133.) In contrast, the mediation between the parties in this case did produce an agreement, and the complaint was framed as an action to enforce that agreement. Grossman therefore does not directly address whether the Association’s claim for attorney fees and costs is properly treated as falling within the scope of the Davis-Stirling Act. Grossman in essence interprets the term “action” in section 5975 to encompass both the mandatory pre-litigation ADR efforts and any subsequent litigation “to enforce the governing documents.” (Grossman, supra, at p. 1134; § 5975.) But is a lawsuit to enforce an agreement that was reached during mediation (or another form of ADR) an action “to enforce the governing documents,” in the meaning of section 5975, where the mediation was initiated pursuant to the Davis-Stirling Act? In our view, that question must be answered in the affirmative, at least in circumstances similar to those of this case, for the reasons discussed below.
We must construe the words of a statute in context and with reference to the entire scheme of law of which they are a part. (State Farm Mutual Automobile Ins. Co. v. Garamendi (2004) 32 Cal.4th 1029, 1043.) The Davis-Stirling Act is intended, among other things, to encourage parties to resolve their disputes without resort to litigation, by effectively mandating pre-litigation ADR. (See § 5930, subd. (a) [enforcement action in civil court may not be filed until parties have “endeavored to submit their dispute” to ADR; § 5960 [in determining amount of fee and cost award, court “may consider whether a party’s refusal to participate in [ADR] before commencement of the action was reasonable”].) Narrowly construing the phrase “action to enforce the governing documents” to exclude actions to enforce agreements arising out of that mandatory ADR process would discourage such resolutions, and encourage gamesmanship. For example, a party might agree to a settlement in mediation without any intention of fulfilling its settlement obligations, but simply to escape the cost-shifting provisions of the Davis-Stirling Act.[4] It is unlikely, therefore, that a narrow construction is preferable.
Moreover, the gravamen of the Association’s complaint is that defendants have not taken certain steps to bring their property into compliance with the applicable CC&Rs. The relief sought by the complaint is an order requiring defendants to take those steps, and a declaration of the parties’ respective rights and responsibilities. The circumstance that the steps to bring the property into compliance with CC&Rs were specified a mediation agreement does not change the underlying nature of the dispute between the parties, or the nature of the relief sought by the Association. Indeed, the parties’ agreement was the product of a mediation conducted [260] explicitly pursuant to the ADR requirements of the Davis-Stirling Act. We see nothing in the Davis-Stirling Act that suggests we should give more weight to the form of a complaint—its framing as an action to enforce a mediation agreement—than to the substance of the claims asserted and relief sought, in determining whether an action is one “to enforce the governing documents” in the meaning of section 5975.
We hold, therefore, that the present case is an “action to enforce the governing documents,” in the meaning of section 5975.[5] As such, the trial court properly considered the Davis-Stirling Act as the basis for any recovery, as the Association requested in its motion for attorney fees and costs. (Parrott v. Mooring Townhomes Assn., Inc. (2003) 112 Cal.App.4th 873, 879-880 [because party sought recovery pursuant to fee-shifting statute, standards for contractual fee-shifting clauses inapplicable].)
B. The Trial Court Did Not Abuse Its Discretion by Determining the Association to Be the Prevailing Party.
Defendants contend the trial court erred by determining the Association to be the prevailing party. We find no abuse of discretion.
The analysis of who is a prevailing party under the fee-shifting provisions of the Act focuses on who prevailed “on a practical level” by achieving its main litigation objectives; the limitations applicable to contractual fee-shifting clauses, codified at section 1717, do not apply.[6] (Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1574.) We review the trial court’s determination for abuse of discretion. (Villa De Las Palmas, supra, 33 Cal.4th at p. 94.) “`”The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced [261] from the facts, the reviewing court has no authority to substitute its decision for that of the trial court.”‘” (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1339 (Goodman).)
The trial court’s determination that the Association prevailed on a practical level is not beyond the bounds of reason. The Association wanted defendants to make alterations to their property to bring it in compliance with the applicable CC&Rs, specifically, by installing openings in the side wall of the patio, and altering the drapery on the patio. The Association achieved that goal, with defendants completing the modifications to the patio in September 2014.
Defendants focus on the circumstance that the modifications that were ultimately made to the property differed in some details from those contemplated by the mediation agreement. This argument, however, frames the issue improperly. The “action” at issue in the section 5975 analysis includes not only the litigation in the trial court, but also the pre-litigation ADR process. (Grossman, supra, 212 Cal.App.4th at p. 1134.) The objective of the Association’s enforcement action, including the pre-litigation ADR process, is reasonably characterized broadly, as seeking to force defendants to bring their property into compliance with the CC&Rs. It was successful in achieving that goal.
Moreover, the differences between the terms of the mediation agreement and the actual modifications that defendants made, and which the Association accepted, are reasonably viewed as de minimis. The openings installed in the patio wall were of different dimensions than were contemplated in the mediation agreement, but nevertheless openings were installed, to the satisfaction of the Association; different fabric was used, but nevertheless the exterior color of the drapery was brought into conformity with the rest of the development. And defendants concede (indeed, insist) that the changes between the terms of the mediation agreement and the final modifications to the property were motivated by physical necessity—the dimensions of the existing wall and its supporting beams, the unavailability of the specified fabric for drapery. Defendants cannot point to any success in any aspect of the litigation itself; prior to the motion for attorney fees at issue, the only significant events in the litigation were the filing of the complaint and the answer. The trial court therefore did not exceed the bounds of reason in determining the Association achieved its main litigation objectives as a practical matter.
Defendants argue that the trial court abused its discretion by refusing to consider their late-filed opposition papers and supporting evidence, and that consideration of that evidence “undoubtedly would have mitigated in [262] favor of [defendants] and necessarily a different ruling as to the prevailing party determination.” This argument fails in several respects. First, a trial court has broad discretion to accept or reject late-filed papers. (Cal. Rules of Court, rule 3.1300(d).) Defendants made no attempt to seek leave to file their opposition late, and made no attempt to demonstrate good cause for having failed to adhere to the applicable deadline. The circumstance that they were, at the time, appearing in propria persona, does not establish good cause. (See Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 638-639 [“When a litigant is appearing in propria persona, he is entitled to the same, but no greater, consideration than other litigants and attorneys [citations]. Further, the in propria persona litigant is held to the same restrictive rules of procedure as an attorney [citation].” (Fn. omitted.).) The trial court acted well within its discretion when it declined to consider defendants’ opposition papers.[7]
Second, defendants are incorrect that consideration of their opposition would likely have made any difference in the trial court’s determination of the prevailing party. Defendants sought to introduce evidence that the terms of the mediation agreement could not be precisely implemented, and evidence of the Association’s “delay and unwillingness to address ambiguities in the agreement.” Even accepting these points as true, however (and they are disputed at least in part by the Association), they would not likely have altered the trial court’s analysis of which party prevailed in the action. The fact remains, as discussed above, the Association contended defendants had altered their property in a manner that was inconsistent with the applicable CC&Rs, and sought successfully to force defendants to make modifications to bring the property into compliance. Because the Association achieved that main litigation objective, it was properly considered to have prevailed in the action as a practical matter, even though the only judgment resulting from the case related to the award of fees and costs, not the merits of the complaint.[8]
In short, the trial court reasonably found the Association to be a prevailing party, for purposes of making an award of attorney fees and costs under the Davis-Stirling Act.
[263]
C. The Trial Court Did Not Abuse Its Discretion in Determining the Amount of Fees and Costs to Award.
Defendants argue that the trial court abused its discretion in determining its award of fees and costs in several different respects. We find no abuse of discretion.
Once the trial court determined the Association to be the prevailing party in the action, it had no discretion to deny attorney fees. (§ 5975; Salehi v. Surfside III Condominium Owners Assn. (2011) 200 Cal.App.4th 1146, 1152 [language of § 5975 reflects legislative intent to award attorney fees as a matter of right when statutory criteria are satisfied].) The magnitude of what constitutes a reasonable award of attorney fees is, however, a matter committed to the discretion of the trial court. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095-1096.) As noted above, in reviewing for abuse of discretion, we examine whether the trial court exceeded the bounds of reason. (Goodman, supra, 47 Cal.4th at p. 1339.) In so doing, we presume the “trial court impliedly found `every fact necessary to support its order.'” (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115-1116, fn. 6, citing Murray v. Superior Court (1955) 44 Cal.2d 611, 619.)
Here, the trial court explicitly took into account the circumstance that the Association had already recovered a portion of its attorney fees pursuant to the agreement of the parties, and awarded fees only for fees incurred starting 60 days after the mediation, when the agreed upon modifications should have been completed. The court also excluded any award with respect to billings that did not provide sufficient “information” for it to “tell what’s going on.” The amount actually awarded was substantially less than the total amount requested, and defendants have not pointed to anything suggesting the amount is unreasonable on its face, given the circumstances of the case. We therefore find no manifest abuse of discretion in the court’s award.
Defendants argue that the trial court did not have enough information to support its findings, pointing to the trial court’s comments about heavy redaction of the billing records. The trial court specified, however, that it awarded no fees with respect to billing items it considered to be excessively redacted, and that it resolved any doubts about the appropriateness of billing entries in favor of defendants. Moreover, unlike some other jurisdictions, California law does not require detailed billing records to support a fee award; “[a]n attorney’s testimony as to the number of hours worked is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records.” (Steiny & Co. v. California Electric Supply Co. [264] (2000) 79 Cal.App.4th 285, 293.) Furthermore, “[a]n award for attorney fees may be made in some instances solely on the basis of the experience and knowledge of the trial judge without the need to consider any evidence. (Fed-Mart Corp. v. Pell Enterprises, Inc. (1980) 111 Cal.App.3d 215, 227.) Defendants’ arguments about the sufficiency of the documentation submitted by the Association in support of its request for attorney fees are without merit.[9]
Defendants also suggest that the trial court erred by not articulating in more detail its findings with respect to how it arrived at the number that it did for an award of attorney fees and costs. It is well settled, however, that the trial court was not required to issue any explanation of its decision with regard to the fee award. (Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 101 (Gorman)[“We adhere to our earlier conclusion that there is no general rule requiring trial courts to explain their decisions on motions seeking attorney fees.”].) To be sure, appellate review may well be “hindered” by the lack of any such explanation. (Martino v. Denevi (1986) 182 Cal.App.3d 553, 560.) Without explanation, an award may appear arbitrary, requiring remand if the appellate court is unable to discern from the record any reasonable basis for the trial court’s decision. (E.g. Gorman, supra, at p. 101 [“It is not the absence of an explanation by the trial court that calls the award in this case into question, but its inability to be explained by anyone, either the parties or this appellate court.”) Here, the trial court’s reasoning is not so inscrutable, as discussed above.
D. Judgment Was Properly Entered Against Both Defendants.
Defendants argue that judgment was not properly entered against Lynn Hazelbaker, because she was not a signatory to the mediation agreement. This argument was not raised in the trial court, however, and “[a]s a general rule, `issues not raised in the trial court cannot be raised for the first time on appeal.'” (Sea & Sage Audubon Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417.) Moreover, the argument [265] is without merit. It depends on the characterization of the action as no more than an action on a contract, rather than an action to enforce the CC&Rs, which we rejected above. Moreover, Lynn Hazelbaker was jointly represented by the same attorneys as Thomas Hazelbaker during the periods of the case when they have been represented by counsel, and joined with him in every filing, both in the trial court and in this court.[10] An award of attorney fees to the Association against both Thomas and Lynn Hazelbaker is appropriate.
E. The Trial Court Did Not Err By Denying Defendants’ Motion for Reconsideration.
Defendants argue that the trial court erred by denying their motion for reconsideration as untimely. They are incorrect. Judgment was entered on December 17, 2014, while defendants’ motion was filed on January 21, 2015. “A trial court may not rule on a motion for reconsideration after entry of judgment.” (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 187, 192.)
Defendants further contend that the trial court should have treated their untimely motion for reconsideration as a timely motion for new trial, and granted it. However, defendants’ asserted bases for demanding a “new trial”—really, a new hearing on the issue of attorney fees, since no trial, or any other disposition on the merits of the complaint, ever occurred—are all contentions we have discussed above, and rejected. Defendants’ January 21, 2015 motion was properly denied on the merits, even if it could be construed as timely filed.
F. The Association Is Entitled to Appellate Attorney Fees.
The Association correctly asserts that if it prevails in this appeal it is entitled to recover its appellate attorney fees. “A statute authorizing an attorney fee award at the trial court level includes appellate attorney fees unless the statute specifically provides otherwise.” (Evans v. Unkow (1995) 38 Cal.App.4th 1490, 1499.) Neither section 5975, nor any other provision of the Davis-Stirling Act, precludes recovery of appellate attorney fees by a prevailing party; hence they are recoverable.
[266]
III. DISPOSITION
The judgment is affirmed. The Association is awarded its costs and attorney fees on appeal, the amount of which shall be determined by the trial court.
RAMIREZ, P. J. and MILLER, J., concurs.
[1] Further undesignated statutory references are to the Civil Code.
[2] The Association did not file a cross appeal challenging the trial court’s award of less than the full amount requested.
[3] Defendants concede that their opposition to the motion for attorney fees was filed late, only seven court days before the hearing. (See Code Civ. Proc., § 1005, subd. (b) [opposition papers due nine court days before hearing].)
[4] We here speak in hypotheticals; we do not suggest a finding that defendants have engaged in such gamesmanship.
[5] It bears mention that our conclusion here may not apply to every action to enforce a settlement agreement arising out of ADR conducted pursuant to the Davis-Stirling Act. Consider the situation of a dispute arising regarding the application of CC&Rs, resolved at mediation by an agreement for one party to buy the other party’s property, with payments to be made on a specified schedule. Suppose the payments are not made on time, and a lawsuit to enforce the settlement is brought. It would be difficult to characterize such an action as one to “enforce the governing documents,” at least in the same sense as the action at issue in this appeal. But we may leave for another day the question of whether a dispute like our hypothetical would nevertheless fall within the scope of section 5975.
[6] Section 1717 provides that when an action on a contract “has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party” for the purpose of an award of attorney fees pursuant to a contractual prevailing party clause. (§ 1717, subd. (b)(2).) Because section 1717 is inapplicable to this case, we need not and do not discuss in detail defendants’ arguments that rest on application of that section.
[7] Defendants’ arguments to the contrary rely heavily on case law from the summary judgment context. This reliance is out of place. Even if a motion for attorney fees is the last issue remaining in a case, it is not, as defendants put it, a “case dispositive motion” in the same sense that a motion for summary judgment is.
[8] Like the trial court, we need not address the Association’s contention that defendants not only filed their opposition late, but also never properly served the documents and supporting evidence on the Association.
[9] Moreover, defendants never objected to the adequacy of the documentation submitted by the Association in support of its motion for attorney fees, either at the hearing on the motion, or in their late-filed opposition papers. The court raised the issue of excessive redactions on its own motion, not at the prompting of defendants. As such, even if defendants’ challenge to the adequacy of the evidentiary basis for the trial court’s award of fees had merit, it would have been forfeited. (See Robinson v. Grossman (1997) 57 Cal.App.4th 634, 648 [party that failed to object to the trial court that the opposing party’s attorney fees were not sufficiently documented waived the right to object on appeal to the amount of the fee award].)
[10] For example, defendants’ opposition to the Association’s motion for attorney fees and costs is entitled “Declaration of Thomas B. Hazelbaker in Opposition to Plaintiff[‘]s Motion for Attorneys’ Fees and Costs,” but the heading indicates the document was filed on behalf of both Thomas B. Hazelbaker and Lynn G. Hazelbaker, as “Defendants, In Pro Per,” and Lynn Hazelbaker filed no separate opposition to the motion.
Related Links
Attorney’s Fees are Recoverable to Enforce Settlement Agreement Reached in ADR – Published on HOA Lawyer Blog (November, 2016)
Woodridge Escondido Property Owners Association v. Nielson
[Architectural Control] A HOA’s architectural committee does not have the authority to approve an improvement which is in violation of the CC&Rs.
Joseph J. Rego for Defendant and Appellant.
Feist, Vetter, Knauf and Loy, Alan H. Burson and Lisa Frazee Morgosh for Plaintiff and Respondent. [561]
OPINION
NARES, ACTING P. J.-
This case involves a dispute between a homeowners association and a homeowner regarding the construction of a wooden deck over an easement. Plaintiff Woodridge Escondido Property Owners Association (association) managed a planned residential development known as Woodridge in Escondido. Defendant Paul Nielsen owned a home in Woodridge and had a side yard easement over the adjoining property of his [562] neighbor, Virginia Kendall. The declaration of covenants, conditions and restrictions (CC&R’s) expressly prohibited the installation of “any permanent fn. 1 Nielsen refused the offer. The association brought this action for injunctive and declaratory relief against him, seeking an order requiring him to remove the encroaching portion of the deck. The association also recorded a notice of pendency of action (lis pendens). fn. 2 structure other than irrigation systems” on the easement. (Italics added.) After he received permission from Woodridge’s architectural committee, Nielsen constructed a wooden deck that encroached upon the easement. The association’s board of directors later found that the architectural committee had erroneously approved the construction of the deck, ordered Nielsen to remove the portion of the deck that encroached upon the easement, and offered to pay for the removal cost.
The court granted the association’s motion for summary judgment and its motion for attorney fees. After the court issued an order granting Nielsen’s motion to expunge the lis pendens, the association petitioned for writ relief (Woodridge Escondido Property Owners Assn. v. Superior Court/Nielsen (Apr. 26, 2004, D043860) [nonpub. opn.]). This court granted the petition and issued a peremptory writ directing the court to vacate that order and enter an order denying Nielsen’s motion.
Nielsen appeals the summary judgment and the order granting the association’s motion for attorney fees. Nielsen also purports to appeal from the order granting his motion to expunge the lis pendens, and he requests “review” of this court’s writ decision. For reasons we shall explain, we affirm the summary judgment and award of attorney fees in favor of the association and conclude that we have no authority to either reach the merits of Nielsen’s purported appeal of the expungement order or review this court’s final writ decision.
FACTUAL AND PROCEDURAL BACKGROUND fn. 3
The homes in the Woodridge Escondido development (development) are a type known as “zero lot line.” One exterior side wall of each home is built on one of the side yard property lines of the lot on which the home is located [563] (the lot on which the home is located is sometimes referred to as the dominant tenement). Each lot has a five-foot easement over the side yard of the adjacent lot that belongs in fee to the owner of that neighboring lot (which is sometimes referred to as the servient tenement).
A. CC&R’s
Article IV (Architectural Control) of the subject CC&R’s requires written approval of all “structure[s] or improvement[s]” to be built or installed on any lot in the development, and provides:
“No building, fence, wall, patio, patio cover or other structure or improvement . . . shall be commenced, erected, placed, installed or altered upon any Lot until the location and the complete plans and specifications . . . have been submitted to and approved in writing as to . . . location to surrounding structures . . . by the Board, or by the architectural committee composed of at least three . . . and not more than [five] representatives from the membership of the Association appointed by and serving at the pleasure of the Board. All or any number of the members of the architectural committee may be members of the Board. In the event no architectural committee is named, the Board shall serve as the architectural committee. . . .” (Italics added.)
Article X, section 1, which pertains to the enforcement of the CC&R’s, declares that a violation of the CC&R’s is a nuisance for which the association and “any owner” may seek a remedy:
“The Association and any owner shall have the right to enforce, by any proceedings at law or in equity, all restrictions, conditions, covenants and reservations now or hereafter imposed by the provisions of [these CC&R’s]. . . . The result of every act or omission whereby any covenant contained in [these CC&R’s] is violated in whole or in part is hereby declared to be a nuisance, and every remedy against nuisance, either public or private, shall be applicable against every such act or omission. . . .” (Italics added.)
Article X, section 8(c), which is of central importance in this appeal, limits use of side yard easements in the development and prohibits the owners of dominant tenements from installing “any permanent structure other than irrigation systems” on appurtenant side yard easements.
Article X, section 9 (Litigation) of the CC&R’s contains an attorney fees provision that authorizes the prevailing party in litigation commenced by the association or any homeowner to recover costs of suit and reasonable attorney fees. [564]
B. Nielsen’s Lot and Deed Restrictions
Nielsen owns lot 64 in the development. Lot 64 is subject to the CC&R’s and is located at 2234 Hilton Head Glen in the City of Escondido. The deed transferring title of the property to Nielsen (deed) described the “easement appurtenant to lot 64 on, over and across that portion of” the neighboring lot (lot 63) and, like article X, section 8(c) of the CC&R’s, prohibited Nielsen from using the easement for the installation of “any permanent structure other than irrigation systems”:
“The owner of Lot 64 may use the easement granted herein for access, recreation and landscaping (including irrigation systems) purposes only and shall not use the easement in violation of any law or for the installation or maintenance of any permanent structure, other than irrigation systems. . . .” (Italics added.)
C. Nielsen’s Deck and Hot Tub fn. 4
Nielsen built a 17- by 21-foot deck with a full-size hot tub that extended into the five-feet-wide side yard easement over the adjacent side yard of the neighboring lot (lot 63) owned by Virginia Kendall. fn. 5 Two members of the architectural committee had approved Nielsen’s architectural approval request form pertaining to the deck.
The association’s board of directors later found that the architectural committee had erroneously approved the construction of the deck, decided that the deck should be removed, and offered to pay Nielsen for the removal cost. fn. 6
D. Association’s Complaint and Lis Pendens
In April 2003 the association filed a complaint for injunctive and declaratory relief against Nielsen to enforce the CC&R’s and the provisions of the [565] deed pertaining to the easement. In the prayer of the complaint, the association sought a declaration of the parties’ rights and obligations under the CC&R’s, and an order requiring Nielsen to remove the portion of the deck that was encroaching on the subject easement. The association also recorded and served on Nielsen a notice of pendency of action (lis pendens).
E. Association’s Motion for Summary Judgment and Nielsen’s Motion To Expunge Lis Pendens
The association filed a motion for summary judgment. Nielsen filed a motion to expunge the lis pendens. After hearing argument, the court issued an order granting summary judgment for the association. The court found “no triable issue as to whether [Nielsen] violated the CC&Rs by constructing a permanent structure on the easement.” (Italics added.) The court also found as a matter of law that “the deck constitute[d] a permanent structure within the meaning of the CC&Rs.” (Italics added.) Furthermore, the court found that to the extent Nielsen raised the relative hardship doctrine in opposing summary judgment, “no evidence has been submitted in support of the application of this doctrine.”
The court also issued an order granting Nielsen’s motion to expunge the lis pendens. In expunging the lis pendens, the court confirmed its earlier tentative ruling that provided in part:
“The court finds that the [association’s] complaint failed to state a real property claim as defined in [Code of Civil Procedure fn. 7 ] section 405.4.[ fn. 8 ] Although the complaint alleges that [Nielsen’s] deck encroaches upon an easement, the court finds that the complaint does not affect possession of real property since a judgment in favor of [the association] will merely require removal of personal property, to wit, the deck.” (Italics added.)
F. This Court’s Writ Directing the Court To Vacate Its Order Expunging the Lis Penden (D043860), and the Supreme Court’s Rejection of Nielsen’s Petition for Review
The association filed a writ petition in this court (case No. D043860) challenging the expungement of the lis pendens on the grounds that the definition of “real property claim” in section 405.4 (see fn. 8, ante) included [566] “the use of an easement identified in the pleading” and that in the summary judgment proceeding the association had established the probable validity of its claim against Nielsen.
In an unpublished opinion filed in April 2004 (Woodridge Escondido Property Owners Assn. v. Nielsen, supra, D043860), this court concluded that the association was entitled to writ relief because it had asserted a “real property claim” against Nielsen within the meaning of section 405.4 by filing a complaint for declaratory and injunctive relief alleging that Nielsen violated the CC&R’s by constructing a deck in the restricted area of the side yard easement. This court reasoned that “[w]hether or not the deck [was] labeled personal property, a fixture or anything else, the association’s claim against Nielsen [was] for his use (misuse) of the side yard easement.” This court ordered the issuance of a writ directing the court to vacate its order granting the expungement, enter a new order denying Nielsen’s motion to expunge the lis pendens, and entertain any motion for reasonable attorney fees and costs the association might bring pursuant to section 405.38. In July 2004, the superior court issued an order vacating the order granting Nielsen motion to expunge the lis pendens and entered a new order denying that motion.
G. Attorney Fees Award, Judgment, and Appeal
As the prevailing party on its action to enforce the CC&R’s, the association brought a motion for attorney fees, which Nielsen opposed. The court issued an order (the attorney fees order) granting the motion and awarding reasonable attorney fees to the association in the amount of $9,672.35. The award did not include attorney fees incurred by the association in the writ petition proceeding in this court (case No. D043860, discussed, ante).
On March 25, 2004, the court entered judgment in favor of the association. Nielsen’s timely appeal from the judgment and attorney fees order followed.
DISCUSSION
A. Summary Judgment
We first address Nielsen’s appeal of the summary judgment entered in favor of the association.
- Background and Nielsen’s contentions
In granting summary judgment in favor of the association, the court found no triable issue of material fact as to whether Nielsen violated the CC&R’s by constructing a permanent structure on the side yard easement on Kendall’s [567] property. The court also found that the deck was a permanent structure within the meaning of the CC&R’s as a matter of law and that, to the extent Nielsen raised the relative hardship doctrine (discussed, post) in opposing summary judgment, he had submitted no evidence in support of the application of that doctrine.
Nielsen does not dispute that his deck extended over the side yard easement on Kendall’s property. He contends the summary judgment should be reversed because (1) there is no evidence to show the deck was a permanent structure within the meaning of the CC&R’s; (2) there are triable issues of material fact whether the deck was a permanent structure in violation of article X, section 8(c) of the CC&R’s, and whether the hot tub motor caused any vibration in Kendall’s house; (3) there are also triable issues of material fact as to whether he was required to seek approval by a three-member panel of the architectural committee, whether “the Board [sic][ fn. 9 ] erroneously approved [his] request [to build the deck],” whether his architectural approval request form was erroneously approved by the architectural committee, and whether that form was incomplete; (4) the association “act[ed] in an arbitrary manner by directing [him] to remove the deck extending over the easement, soon after his application was approved”; (5) the association’s claim that Nielsen’s hot tub caused a nuisance on Kendall’s property is based on insufficient evidence; (6) the relative hardship doctrine should be applied because there is nothing to show that the association, in bringing this action for injunctive and declaratory relief “based on a breach of the CC&Rs and the deck and hot tub causing a nuisance to [Kendall’s] residence,” has been irreparably damaged; and (7) the association denied Nielsen’s right to a hearing before the board of directors approved a motion requesting him to remove the portion of the deck that extended over the easement.
- Standard of review
[1] On an appeal from a grant of summary judgment, we independently examine the record to determine whether triable issues of material fact exist. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767 (Saelzler).) “In performing our de novo review, we must [568] view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [his] evidentiary submission while strictly scrutinizing [the prevailing party’s] own showing, and resolving any evidentiary doubts or ambiguities in [favor of the losing party].” (Id. at p. 768.)
[2] “[T]he party moving for summary judgment [(here the association)] bears the burden of persuasion that there is no triable issue of material fact and that [it] is entitled to judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar), fn. omitted.) “[A] plaintiff bears the burden of persuasion that ‘each element of’ the ’cause of action’ in question has been ‘proved,’ and hence that ‘there is no defense’ thereto. ([] § 437c, subd. (o)(1).)” (Aguilar, supra, 25 Cal.4th at p. 850.)
If the moving plaintiff meets its initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, the burden shifts to the defendant (here Nielsen) “to make a prima facie showing of the existence of a triable issue of material fact.” (Aguilar, supra, 25 Cal.4th at p. 850.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Ibid., fn. omitted.)
- Analysis
[3] The key factual issue in this case is whether Nielsen’s deck, which encroached upon the side yard easement on Kendall’s property, violated the provisions of article X, section 8(c) of the CC&R’s because it was a permanent structure prohibited by those provisions. For reasons we now discuss, we conclude the association met its initial burden of production to demonstrate that the deck was a permanent structure, and thus met its burden to make a prima facie showing of the nonexistence of any triable issue of material fact.
In support of its summary judgment motion, the association presented to the court a copy of the CC&R’s. The plain language of article X, section 8(c) of the CC&R’s limits use of the side yard easements in the development, including Nielsen’s easement on Kendall’s property over which he built his deck, and it prohibits the owners of dominant tenements (including Nielsen) from installing “any permanent structure other than irrigation systems” on the appurtenant side yard easements. That section provides:
“Each side yard easement may be used by the Owner(s) of the Dominant Tenement to which [569] it is appurtenant for access, landscaping (including irrigation systems) and recreational purposes only. The Owner(s) of the Dominant Tenement shall not use the appurtenant side yard easement in violation of any law or for the installation or maintenance of any permanent structure other than irrigation systems. . . .” (Italics added.)
The association also submitted authenticated photocopies of color photographs showing the location and construction details of the deck that abutted the house of Nielsen’s neighbor, Kendall (the owner of the servient tenement), as well as a declaration by Kendall, who described the deck as “a wooden deck structure [constructed] over the easement on my property which abuts my house and completely covers the drainage culvert established by the builder.” Kendall also stated in her declaration that “the legs of the deck are buried into the ground and it is attached to his house.”
[4] Nielsen challenges Kendall’s declaration, claiming that it “is nothing more than hearsay because she was not a party to the action against [him].” This claim is unavailing. Section 437c, subdivision (b)(5) provides that evidentiary objections not made at the hearing on a summary judgment motion “shall be deemed waived.” Here, Nielsen asserted his hearsay objection to Kendall’s declaration in his written response to the association’s separate statement of undisputed material facts. However, a mere objection is insufficient. To preserve an evidentiary objection for appellate review, the objecting party must also obtain a ruling on the objection from the trial court. (Sharon P. v. Arman, Ltd. (1999) 21 Cal.4th 1181, 1186, fn. 1 [evidentiary objections deemed waived because “the record contain[ed] no rulings on those objections”], disapproved on another point in Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 853, fn. 19.) Here, Nielsen has failed to show that the court ruled on his hearsay objection to Kendall’s declaration, and our review of the record discloses no such ruling. Accordingly, we deem Nielsen’s evidentiary objection waived and view Kendall’s declaration as having been admitted in evidence as part of the record for purposes of this appeal. (Sharon P. v. Arman, Ltd., supra, at p. 1186, fn.1.)
We reject Nielsen’s contention that there is “no evidence to demonstrate the deck [was] a permanent fixture.” Neither the CC&R’s nor Nielsen’s grant deed fn. 10 define the term “permanent fixture.” The Oxford English Dictionary [570] Online (OED Online), however, defines “permanent” as “[c]ontinuing or designed to continue indefinitely without change; abiding, lasting, enduring; persistent.” fn. 11
Here, the association’s photographic evidence and Kendall’s declaration establish that because Nielsen’s deck was attached to his house and its supporting legs or posts were buried in the ground, it was “designed to continue indefinitely without change” and was constructed to last or endure. Nielsen’s contention that the deck was not permanent because it could be (and has been) removed, is unavailing. As already noted, article X, section 8(c) of the CC&R’s prohibits the owner of a dominant tenement (in this case, Nielsen) from constructing any permanent structure “other than irrigation systems” over an appurtenant side yard easement. The plain language of that section shows that for purposes of enforcing the CC&R’s, “permanent” and “removable” are not mutually exclusive terms. Although irrigation pipes and fixtures, like a deck, can be removed from an easement, they (like a deck) are designed to continue indefinitely without change, and thus are no less “permanent” than a deck. Article X, section 8(c) of the CC&R’s, however, like Nielsen’s grant deed, provides an exception permitting the construction of such permanent irrigation systems on appurtenant side yard easements.
We thus conclude that the association met its burden of producing evidence showing that the deck was permanent within the meaning of article X, section 8(c) of the CC&R’s. Accordingly, we also conclude that the association met its burden of showing that Nielsen’s deck was a prohibited permanent structure that encroached upon the appurtenant side yard easement on Kendall’s property in violation of that section of the CC&R’s.
Because the association met its burden of producing evidence showing that Nielsen’s construction of the deck on the easement on Kendall’s property was a violation of the CC&R’s, we further conclude it also met its burden of producing evidence showing that the encroaching portion of the deck was a nuisance within the meaning of article X, section 1 of the CC&R’s, which provides in part that “[t]he result of every act or omission whereby any covenant contained in [these CC&R’s] is violated in whole or in part is hereby declared to be a nuisance” (italics added), and “every remedy against nuisance, either public or private, shall be applicable against every such act or omission. . . .” (Italics added.) That section also expressly authorizes the [571] association to enforce the CC&R’s “by any proceedings at law or in equity.” In sum, the association met its initial burden of producing evidence showing prima facie entitlement to the injunctive and declaratory relief for which it prayed in its complaint against Nielsen. fn. 12
Because the association met its initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, the burden shifted to Nielsen to make a prima facie showing of the existence of such an issue. (Aguilar, supra, 25 Cal.4th at p. 850.) In support of his written opposition to the summary judgment motion, Nielsen submitted his own declaration, which he cited several times in his written response to the association’s separate statement of undisputed material facts. In its order granting the summary judgment motion, however, the court found that Nielsen’s declaration failed to comply with section 2015.5, fn. 13 and ruled that it was inadmissible. fn. 14 On appeal, Nielsen does not contend the court erred in excluding his declaration.
Because Nielsen’s excluded declaration was the purported evidence that he offered to show the existence of a triable issue of material fact, we conclude [572] that he failed to meet his burden “to make a prima facie showing of the existence of a triable issue of material fact.” (Aguilar, supra, 25 Cal.4th at p. 850.)
Nielsen’s contention that the association acted in an arbitrary manner by directing him to remove the encroaching portion of the deck soon after its construction was approved is unavailing because it is not supported by evidence, and because the undisputed facts show that the association, its board of directors, and its architectural committee had no authority to approve the construction of any permanent structure other than an irrigation system on the subject easement in violation of the express prohibitory provisions of article X, section 8(c) of the CC&R’s (discussed, ante).
Nielsen’s reliance on Deane Gardenhome Assn. v. Denktas (1993) 13 Cal.App.4th 1394 (Denktas) is misplaced. There, a homeowners association brought an action for injunctive relief and damages against two homeowners, alleging they had painted their house in violation of the association’s CC&R’s, which required the homeowners to obtain approval of the association’s architectural review committee before painting the exterior of the house and restricted the color choices to those the association approved. (Id. at pp. 1395-1396.) The homeowners hired a painter to paint their house green and pink, and the painter took paint samples to the association’s president to obtain his approval. The president approved the green paint color, but told the painter to “tone down” the pink color. (Id. at p. 1396.) When the painter returned with a different shade of pink, the president approved that color. (Ibid.) The trial court entered judgment in favor of the homeowner defendants, but denied their request for attorney fees. (Ibid.) The Court of Appeal reversed the order denying the homeowners’ request for attorney fees, reasoning that they were entitled to an award of reasonable attorney fees under the fees provision of the CC&R’s because they had successfully defended the suit that the homeowners association had brought against them, and thus they were the prevailing parties. (Id. at pp. 1398, 1399.)
Denktas is factually distinguishable in that the restrictive covenants in that case did not prohibit that which the president of the homeowners’ association approved: the [573] color of the paint that the homeowner defendants had used to paint the exterior of their house. (See Denktas, supra, 13 Cal.App.4th at p. 1396.) The restrictive covenants required the homeowners to obtain approval of the color they chose, and they obtained that approval. (Ibid.) Here, in contrast, the CC&R’s expressly prohibited that which the board of directors found the architectural committee had erroneously approved: the construction of a “permanent structure other than irrigation systems” (Nielsen’s deck) over the appurtenant side yard easement on Kendall’s property.
We reject Nielsen’s contention that the relative hardship doctrine (see Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 754 (Hirshfield)) fn. 15 it has suffered an irreparable injury. Nielsen cites Field-Escandon v. DeMann (1988) 204 Cal.App.3d 228, 238, which held that a trial court has discretion to deny a mandatory injunction to remove an encroachment, and in exercising that discretion the court should balance or weigh the relative hardships. Nielsen also relies on Christensen, supra, 114 Cal.App.2d 554, and Hirshfield, supra, 91 Cal.App.4th 749, which he asserts are on point. should be applied because (he asserts) there is nothing to show that the association, in bringing this action for injunctive and declaratory relief “based on a breach of the CC&Rs and the deck and hot tub causing a nuisance to [Kendall’s] residence,” has been irreparably damaged. Nielsen is claiming that the association is not entitled to summary judgment because proof of irreparable injury is an element of a claim for injunctive relief and here the association is only suing on behalf of Nielsen’s neighbor, Kendall, and thus cannot show that
Nielsen, however, incongruously maintains that because he has removed the encroaching portion of the deck, “[t]he allegation regarding the removal of a portion of the deck that encroaches over the easement is no longer an issue.” Nielsen thus appears to concede that application of the relative hardship doctrine is a moot issue because the association’s claim for a mandatory injunction is now moot.
Assuming that the issue of the applicability of the relative hardship doctrine is not moot with respect to the association’s remaining claim for declaratory relief, Nielsen has presented no evidence with respect to the relative hardships that he claims should be balanced in this matter. As already discussed, Nielsen’s evidence primarily consisted of his own declaration (see fn. 14, ante), which the court, in a ruling Nielsen does not challenge, found [574] inadmissible. Even if Nielsen’s brief declaration were admissible, it contains no evidence regarding the relative hardships that he claims should be weighed.
The Christensen and Hirshfield cases, upon which Nielsen relies, are distinguishable in that neither case involved an action by a homeowners association authorized to remove an easement encroachment that violated the express provisions of applicable restrictive covenants. In Christensen, which involved a dispute between owners of adjoining parcels of real property in Santa Cruz, the plaintiff sought a mandatory injunction to compel removal of a cement abutment that the defendants had mistakenly constructed on the plaintiff’s land. (Christensen, supra, “114 Cal.App.2d at p. 555.) In Hirshfield, which involved a dispute between owners of adjoining parcels of real property in Bel-Air, the defendants’ cement block wall encroached upon the plaintiffs’ land. (Hirshfield, supra, “114 Cal.App.2d at p. 756.) As already noted, none of the plaintiffs in those cases was a homeowners association charged with the responsibility of enforcing valid restrictive covenants, and in neither case did the encroachment constitute a violation of such covenants.
[5] Also unavailing is Nielsen’s contention that the summary judgment should be reversed because the association denied him a hearing before the board of directors approved a motion requesting him to remove the portion of the deck that extended over the easement. Ordinarily, issues not raised in the trial court proceedings are waived. (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2004) ¶ 1:44, p. 1-9 (rev. #1, 2002).) Here, a review of both Nielsen’s written opposition to the summary judgment motion and the reporter’s transcript of the oral argument on that motion shows that Nielsen did not raise this contention in the trial court, and thus he has waived this point. Were it necessary to reach the merits of this contention, we would conclude the record shows that Nielsen was present at the board of directors meeting at which the board approved the motion to direct him to remove the encroaching portion of his deck and that he participated in the proceedings and had an opportunity to be heard. Specifically, the board of directors’ October 15, 2002 minutes indicate that Nielsen was the president of the association at the time of the meeting, and the minutes referred to item No. 2230-34 HH on the agenda as “Problem re deck at 2234 abutting home at 2230, Nielsen and Kendall.” Those minutes also state:
“Paul [Nielsen] shared items in a title report which he felt were apropos. Mrs. Kendall stated her case, including not having access to the side of her home, noise from spa heater and what she called ‘illegality’ of a [575] permanent structure in the area she owned (servient tenement). She stated if she decided to sell, the buyer would not be able to get clear title. She also pointed out she was not advised of project in advance and had no opportunity to state her objections on the [architectural approval request form]. At this point Paul excused himself so that the Board could vote.” fn. 16
In sum, the record shows that Nielsen failed to meet his burden of presenting evidence establishing the existence of a triable issue of material fact, and the association met its burden of persuasion that there is no triable issue of material fact and that it is entitled to judgment as a matter of law. Accordingly, we affirm the summary judgment.
B. Attorney Fees Order
Nielsen also appeals the attorney fees order that awarded reasonable attorney fees in the amount of $9,672.35 to the association as the prevailing party in this matter. The record shows that the award was based on article X, section 9, of the CC&R’s, which provides in part that “[i]n the event the Association . . . shall commence litigation to enforce any of the Covenants, Conditions or Restrictions contained in [the CC&R’s], the prevailing party in such litigation shall be entitled to costs of suit and such sum for attorney’s fees as the Court may deem reasonable.” (Italics added.)
[6] “The most fundamental rule of appellate review is that an appealed judgment or order is presumed to be correct.” (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs, supra, ¶ 8:15, pp. 8-4 to 8-5 (rev. #1, 2004), italics omitted.) [7] As the appellant, Nielsen has the burden of presenting “argument and legal authority on each point raised on appeal.” (Id., ¶ 8:17.1, p. 8-5 (rev. #1, 2004).)
Although his appellant’s opening brief raises the issue of whether the association was entitled to an award of attorney fees in this matter, Nielsen fails to present any argument or legal authority regarding this issue in either that brief or his appellant’s reply brief. Accordingly, we presume the award of attorney fees was proper. As the prevailing party in the summary judgment proceeding, the association is entitled to recover reasonable attorney fees it has incurred both in the trial court proceedings and on appeal. [576]
C. Expungement Order and This Court’s Writ Decision
Last, Nielsen’s appellant’s opening brief states that he is also appealing from the court’s order granting his motion to expunge the lis pendens recorded by the association, and that he is requesting review of this court’s April 2004 decision in the writ petition proceeding (D043860) to issue a peremptory writ directing the court to vacate its expungement order and enter a new order denying Nielsen’s motion to expunge. fn. 17 Nielsen claims that the trial court properly expunged the lis pendens because the association failed to state a “real property claim” within the meaning of section 405.4 (the provisions of which are set forth in fn. 8, ante).
- Background
In granting Nielsen’s motion to expunge the lis pendens, the court found that although the association’s complaint alleged that Nielsen’s deck encroached upon an easement, the complaint failed to state a “real property claim” as defined in section 405.4 because it “[did] not affect possession of real property since a judgment in favor of [the association] will merely require removal of personal property, to wit, the deck.” (2AA 210, 320)! The association challenged the expungement by filing in this court a writ petition (case No. D043860), arguing that the definition of “real property claim” in section 405.4 included “the use of an easement identified in the pleading.”
In Woodridge Escondido Property Owners Assn. v. Superior Court/Nielsen, supra, D043860, this court concluded that the association was entitled to writ relief because it had asserted a real property claim against Nielsen within the meaning of section 405.4 by filing a complaint for declaratory and injunctive relief alleging that Nielsen violated the CC&R’s by constructing a deck in the restricted area of the side yard easement. This court explained that “[w]hether or not the deck [was] labeled personal property, a fixture or anything else, the association’s claim against Nielsen [was] for his use (misuse) of the side yard [577] easement.” Noting that Nielsen still had time to appeal the summary judgment, we also stated that “a lis pendens may remain on record while the appeal is pending. [Citation.]” Citing California Rules of Court, fn. 18 rule 24(b)(3), fn. 19 the opinion also stated that “the opinion is made final immediately as to this court.”
Nielsen sought to challenge this court’s writ decision by filing a petition for review with the California Supreme Court. In June 2004 the high court sent a letter to Nielsen’s counsel stating that it had considered Nielsen’s petition for review, but “ha[d] directed that the petition for review be returned unfiled.” We issued the remittitur on June 28, 2004.
- Analysis
[8] Under section 405.39, fn. 20 an order granting or denying a motion to expunge a lis pendens is not an appealable order. (See also Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs, supra, ¶ 2:259.2, p. 2-111 (rev. #1, 2001).) Thus, this court has no authority to review on appeal either the court’s initial order granting Nielsen’s motion to expunge the lis pendens (an order in Nielsen’s favor) or its subsequent order denying that motion following this court’s issuance of the peremptory writ and the remittitur.
This court also has no authority to review our writ decision in case No. D043860. As already noted, the opinion stated that it was “final immediately as to this court.” Nielsen challenged the decision by attempting to file a petition for review with the Supreme Court, which considered it and then returned it to him unfiled. Because the writ decision is final as to this court, we have no power to review it. (See also rule 24(b)(1) [“[e]xcept as otherwise provided in this rule, a Court of Appeal decision . . . is final in that court 30 days after filing”].) In sum, we affirm the summary judgment and award of attorney fees in favor of the association and conclude that we have no authority to either reach the merits of Nielsen’s purported appeal of an expungement order, or review this court’s final writ decision. [578]
DISPOSITION
We affirm the judgment and the attorney fees order. The association shall recover its costs and attorney fees on appeal. The cause is remanded to the trial court for a determination of the amount of reasonable attorney fees and costs on appeal the association shall recover from Nielsen under the provisions of article X, section 9, of the CC&R’s.
Haller, J., and O’Rourke, J., concurred.
FN 1. According to the parties on appeal, the portion of the deck that encroached upon the easement has been removed.
FN 2. “‘A lis pendens is a recorded document giving constructive notice that an action has been filed affecting title to or right to possession of the real property described in the notice.’ [Citation.]” (Kirkeby v. Superior Court 33 Cal.4th 642, 647.) (2004)
FN 3. The following background is based primarily on the facts that the parties acknowledge are undisputed, and this court’s prior opinion in this matter (Woodridge Escondido Property Owners Assn. v. Nielsen, supra,post. D043860), discussed,
FN 4. Nielsen asserts on appeal that he “recently removed the portion of the deck that extend[ed] over the [five-foot] easement,” and thus “[t]he allegation regarding the removal of a portion of the deck that encroach[ed] over the easement is no longer an issue.”
FN 5. Kendall, who is not a party to this appeal, states in her declaration supporting the association’s summary judgment motion that Nielsen’s deck was built “over the easement on [her] property,” and it “abut[ted] [her] house.” In his written opposition to that motion, Nielsen did not dispute that he constructed the deck over the side yard easement on Kendall’s property, but he disputed that the deck was a “permanent structure” and that it abutted Kendall’s house.
FN 6. As shown by its October 15, 2002 minutes, the board made the following determination: “That [homeowner] Nielsen remove the 5[-foot] encroachment on property owned by Kendall at 2230 [Hilton Head Glen], with Association to pay for the cost of removal, due to fact the Architectural Committee erred in giving approval. Work to be completed in 60 days. Board felt allowing encroachment would set a very harmful precedent.”
FN 7. All further statutory references are to the Code of Civil Procedure unless otherwise specified.
FN 8. Section 405.4 defines the term “real property claim” as “the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement identified in the pleading, other than an easement obtained pursuant to statute by any regulated public utility.” (Italics added.)
FN 9. The record shows that the architectural committee, not the board of directors, approved Nielsen’s request to build the deck, and the board of directors later overruled that approval and directed Nielsen to remove the encroaching portion of the deck. In support of his contention that the board of directors approved the deck, Nielsen relies on article IV of the CC&R’s, which provides in part that “[i]n the event no architectural committee is named, the Board shall serve as the architectural committee.” (Italics added.) Nielsen fails to cite any evidence in the record showing that no architectural committee was named in this matter.
FN 10. The grant deed, like article X, section 8(c) of the CC&R’s, prohibited Nielsen from using the appurtenant side yard easement on Kendall’s property for the installation of “any permanent structure, other than irrigation systems.”
FN 11. OED Online (2d. ed. 1989) < (as of Apr. 2005).
FN 12. Noting that he recently removed the portion of the deck that encroached upon the easement on Kendall’s property, Nielsen asserts that “[t]he [association’s] allegation regarding the removal of a portion of the deck that encroache[d] over the easement is no longer an issue.” The association agrees, and states that “[i]t is apparently the issue of declaratory relief concerning the rights and duties of the parties [that Nielsen] is now appealing.”
FN 13. Section 2015.5 provides: “Whenever, under any law of this state or under any rule, regulation, order or requirement made pursuant to the law of this state, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn statement, declaration, verification, certificate, oath, or affidavit, in writing of the person making the same (other than a deposition, or an oath of office, or an oath required to be taken before a specified official other than a notary public), such matter may with like force and effect be supported, evidenced, established or proved by the unsworn statement, declaration, verification, or certificate, in writing of such person which recites that it is certified or declared by him or her to be true under penalty of perjury, is subscribed by him or her, and (1), if executed within this state, states the date and place of execution, or (2), if executed at any place, within or without this state, states the date of execution and that it is so certified or declared under the laws of the State of California. . . .”
FN 14. Nielsen’s brief declaration stated: “I [NIELSEN] AM THE DEFENDANT IN THE ABOVE REFERENCED MATTER, AND DECLARE UNDER PENALTY OF PERJURY AS FOLLOWS: [¶] 1. I first became aware of the Lis Pendens on my property about two weeks ago when I attempted to secure a refinance through ‘World Savings.’ I wanted to place my financial affairs in order, especially since I am still recouping from the loss of my wife in April 2003. [¶] 2. As far as the deck is concerned this is not a permanent structure, and completely detachable. [¶] 3. I obtained approval of the Architectural Committee of the Association before the deck was built. [¶] 4. The deck does not interfere with my neighbor’s use, and in fact improved the value of our property as there was nothing but rock and dirt in the area the deck occupies. [¶] 5. My neighbor was aware at all times that I wanted to build this deck, and never once complained to me until this suit was filed about eight months ago. [¶] 6. The City of Escondido inspected the deck and stated no permit was required for the deck.” (Italics added.) Nielsen and his counsel signed and dated the declaration.
FN 15. The Hirshfield court explained that “[t]he doctrine we refer to as ‘relative hardship’ is the equitable balancing required by Christensen [v. Tucker (1952) 114 Cal.App.2d 554 (Christensen)] and related decisions. The case law and commentaries use various other labels, such as ‘”balancing of equities”‘ [citation], ‘balancing conveniences’ [citation], and ‘comparative injury’ [citation]. For consistency, we will call it the ‘relative hardship doctrine.'” (Hirshfield, supra, 91 Cal.App.4th at p. 754, fn. 1.)
FN 16. In light of the foregoing, we need not address Nielsen’s remaining contentions.
FN 17. In his appellant’s opening brief, Nielsen states: “There are three (3) specific trial court rulings [Nielsen] is seeking review on appeal. Because the court of appeal reversed a trial court ruling to expunge lis pendens on April 26, 2004, [Nielsen] is requesting the court review that decision and ask[s] the court to take judicial notice of [case No. D043860]. . . . The first order was entered on January 8, 2004, regarding [Nielsen’s] motion to expunge. . . .” (Italics added.) Nielsen also asserts that our “decision to reverse the trial court’s ruling . . . in Case No. D043860 . . . should also be reviewed.”
The record shows that the “first order” to which Nielsen refers is the superior court’s January 8, 2004 order granting his motion to expunge the lis pendens. The record also shows that on July 15, 2004, after we issued the remittitur in case No. D043860 on June 28 of that year, the trial court complied with the writ by entering an order that vacated its order granting Nielsen’s motion to expunge the lis pendens, and denied that motion. We thus presume that Nielsen is purporting to challenge the trial court’s post-remittitur order denying his motion to expunge, rather than the vacated order granting that motion.
FN 18. All further rule references are to the California Rules of Court.
FN 19. Rule 24(b)(3) provides in part: “If necessary to . . . promote the interests of justice, a Court of Appeal may order early finality in that the court of a decision granting a petition for a writ within its original jurisdiction . . . . The decision may provide for finality in that court on filing or within a stated period of less than 30 days.” (Italics added.)
FN 20. Section 405.39 provides: “No order or other action of the court under this chapter shall be appealable. Any party aggrieved by an order made on a motion under this chapter may petition the proper reviewing court to review the order by writ of mandate. The petition for writ of mandate shall be filed and served within 20 days of service of written notice of the order by the court or any party. The court which issued the order may, within the initial 20-day period, extend the initial 20-day period for one additional period not to exceed 10 days. A copy of the petition for writ of mandate shall be delivered to the clerk of the court which issued the order with a request that it be placed in the court file.” (Italics added.)
Cobb v. Ironwood Country Club
[ADR; Bylaws Amendment] An amendment to the Bylaws by the HOA incorporating an arbitration provision does not bind ongoing disputes and accrued claims.
Green, Bryant & French, Matthew T. Poelstra; Boudreau Williams and Jon R. Williams for Defendant and Appellant.
Robert L. Bouchier for California State Club Association as Amicus Curiae on behalf of Defendant and Appellant.
Slovak Baron Empey Murphy & Pinkney, Thomas S. Slovak and mCharles L. Gallagher for Plaintiffs and Respondents.
Arbogast and Bowen and David M. Arbogast for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiffs and Respondents.
OPINION
RYLAARSDAM, J.
—Ironwood Country Club (Ironwood or the Club) appeals from an order denying its motion to compel arbitration of the declaratory relief action brought by plaintiffs William S. Cobb, Jr., and Elizabeth Richards, who are former members of Ironwood, and Patrick J. Keeley and Helen Riedstra, who are current members. The motion to compel was based on an arbitration provision Ironwood incorporated into its bylawsfour months after plaintiffs’ complaint was filed. Ironwood argues (1) that its new arbitration provision was fully applicable to this previously filed lawsuit because the lawsuit concerned a dispute which was “ongoing” between the parties, and (2) that its right to amend its bylaws meant that any such amendment would be binding on both current and former members.
The trial court disagreed, reasoning that Ironwood’s subsequent amendment of its bylaws was insufficient to demonstrate that any of these plaintiffs agreed to arbitratethis dispute, and that if Ironwood’s basic premise were [963] accepted, it would render the agreement illusory. We agree with both conclusions and affirm the order.
When one party to a contract retains the unilateral right to amend the agreement governing the parties’ relationship, its exercise of that right is constrained by the covenant of good faith and fair dealing which precludes amendments that operate retroactively to impair accrued rights. Plaintiffs certainly did not agree to any such illegal impairment in this case.
And Ironwood’s basic premise, which is that each member’s agreement to the bylaw provision allowing for future amendments to its bylaws means those members are automatically bound by whatever amendments the Club makes in accordance with that provision—even after the members have resigned their membership—would doom the agreement as illusory if it were correct. Fortunately, it is not.
FACTS
Plaintiffs’ complaint, filed in August 2012, alleges that two of the plaintiffs are current members of Ironwood, and two are former members. In 1999, the Club entered into an agreement with each of its 588 members, whereby each member loaned the club $25,500 to fund the Club’s purchase of additional land. The members were given the option of paying the funds in a lump sum or by making payments over a period of 20 years into a “Land Purchase Account.” In connection with the loans, the Club represented that if any member sold his or her membership before the loan was repaid, the Club would be “absolutely obligated to pay the Selling Member the entire amount then standing in the Member’s Land Purchase Account.” Moreover, any new member would be required to pay, in addition to the regular initiation fee, an amount equal to the hypothetical balance in a Land Purchase Account, as well as the “remaining unamortized portion of the Land Purchase Assessment.” (Italics omitted.)
In reliance on the Club’s representations, the members voted to approve the land purchase and enter into the loan agreements. Three of the plaintiffs paid the lump sum, and one plaintiff elected to make monthly payments into a Land Purchase Account. The Club consistently reported these payments in financial disclosures as a liability owed to each member, payable upon “sale of a member’s certificate” to a new member. (Italics omitted.) In April 2012, Ironwood represented that it had repaid the $25,500 land purchase assessment to 10 resigned members whose memberships were subsequently purchased by new members, since 2003.
However, plaintiffs alleged that despite the Club’s initial description of how the funds would be generated to reimburse resigning members, it [964] “inexplicably failed” to require new members to pay the equivalent of the land purchase assessment when they joined.
More significantly, in January 2012, Ironwood announced that “[a]fter substantial due diligence, [it had] concluded that the practice of repaying the Land Assessment to forfeiting members . . . must cease effective immediately.” (Italics omitted.) Thereafter, Ironwood made various conflicting and confusing statements and unilaterally imposed new rules to justify writing off its previously acknowledged liability to the members.
Based on those described facts, plaintiffs alleged that an actual controversy has arisen between themselves and Ironwood, with respect to the Club’s obligation to repay the land purchase assessment to each plaintiff.
When plaintiffs filed their complaint, Ironwood’s bylaws contained no arbitration provision. However, four months later, in December 2012, the Club’s board of directors notified the membership that it was contemplating amendments to the bylaws, including the adoption of a bylaw mandating arbitration of “any claim, grievance, demand, cause of action, or dispute of any kind whatsoever . . . of or by a Member past or present . . . arising out of, in connection with, or in relation to Club Membership, Club property, Club financial obligations of whatever nature, Club equipment, and/or Club and/or Member’s activity, and involving the Club and/or the Club’s officers, directors or agents.” When it did not receive a sufficient number of objections from members in response to these proposed amendments, Ironwood’s board adopted the arbitration provision into its bylaws effective December 28, 2012.
In January 2013, Ironwood filed a motion to compel plaintiffs to arbitrate their claim against it, based on Ironwood’s “recent bylaw amendment.” The Club asserted, without analysis, that because plaintiffs each agreed to abide by its bylaws when they became members, including a provision which allowed those bylaws to be amended, they were automatically deemed to have “accepted and agreed to” the arbitration amendment subsequently adopted. Plaintiffs opposed the motion, arguing (1) Ironwood’s amendment of its bylaws did not comply with either legal requirements for corporate voting or the bylaw’s own requirements, (2) Ironwood’s amendment of its bylaws did not establish their agreement to arbitrate this dispute, (3) the provision was unconscionable, and (4) Ironwood had waived any right to arbitrate by using the court process to litigate plaintiff’s claim.
The trial court denied the motion to compel arbitration, concluding that Ironwood’s motion represented an improper effort to apply its new arbitration bylaw retroactively to a pending case. The court reasoned that Ironwood’s subsequent amendment of its bylaws did not reflect any agreement by these [965] plaintiffs to arbitrate this already pending dispute. And because arbitration is a matter of agreement, no party can be compelled to a dispute he has not agreed to submit. The court also pointed out that “[t]aken to its logical extreme, [Ironwood’s] argument would allow for an ever shifting playing field. Indeed, [Ironwood] could arguably amend and require arbitration years into a lawsuit, or amend to make conduct that was wrongful when an action was filed allowable.”
DISCUSSION
On appeal, Ironwood makes three points. Its primary contention is that by accepting membership in the Club, plaintiffs agreed to be bound by its bylaws—including the provision for future amendments—and thus they “[n]ecessarily [a]greed” to its subsequent bylaw amendment requiring arbitration of disputes. Ironwood also disputes the idea that its application of the arbitration provision to this dispute qualifies as “retroactive,” because in Ironwood’s view, the dispute is “ongoing.” And third, it claims the trial court’s ruling contravenes the public policy which requires that any doubt as to whether an arbitration agreement governs a particular dispute must be resolved in favor of ordering arbitration. None of these points has merit.
1. Ironwood’s Power to Amend
Ironwood asserts that its bylaws constitute a contract between the Club and each of its members. (See King v. Larsen Realty, Inc. (1981) 121 Cal.App.3d 349, 357 [175 Cal.Rptr. 226].) We agree. However, the Club further contends that because the bylaws include a provision allowing it to amend them, the members—even formermembers—are deemed to have agreed to whatever amendments are made in accordance with that provision. We cannot agree with that further contention.
(1) Indeed, the contract Ironwood describes would qualify as illusory, and be unenforceable. “[W]hen a party to a contract retains the unfettered right to terminate or modify the agreement, the contract is deemed to be illusory.” (Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 15 [96 Cal.Rptr.2d 179, 999 P.2d 71].) On the other hand, while “an unqualified right to modify or terminate the contract is not enforceable[,] the fact that one party reserves the implied power to terminate or modify a unilateral contract is not fatal to its enforcement, if the exercise of the power is subject to limitations, such as fairness and reasonable notice.” (Id. at p. 16.)
And under California law, one very significant restriction on what might otherwise be a party’s unfettered power to amend or terminate the agreement governing the parties’ relationship is the implied covenant of good faith and [966] fair dealing. (Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 885 [123 Cal.Rptr.3d 736].) The covenant operates “`as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.'” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031-1032 [14 Cal.Rptr.2d 335].) “The covenant of good faith finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith.” (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 372 [6 Cal.Rptr.2d 467, 826 P.2d 710].)
(2) With respect to arbitration provisions specifically, this court has already held that the implied covenant of good faith and fair dealing prohibits a party from “mak[ing] unilateral changes to an arbitration agreement that apply retroactively to `accrued or known’ claims because doing so would unreasonably interfere with the [opposing party’s] expectations regarding how the agreement applied to those claims.” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 61 [159 Cal.Rptr.3d 444].) In reaching this conclusion, we join other courts. (See Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1474 [162 Cal.Rptr.3d 545] [“The implied covenant also prevents an employer from modifying an arbitration agreement once a claim has accrued or become known to it.”]; Peleg v. Neiman Marcus Group, Inc. (2012) 204 Cal.App.4th 1425, 1465 [140 Cal.Rptr.3d 38] [“A unilateral modification provision that is silent as to whether contract changes apply to claims, accrued or known, is impliedly restricted by the covenant so that changes do not apply to such claims.”].)
(3) Thus, to the extent Ironwood intended to enact an arbitration bylaw that would govern this dispute—a dispute which had not only accrued, but was already being litigated in court by the time the arbitration bylaw became effective—it violated the covenant of good faith and fair dealing implied into the bylaws, and thus exceeded the proper scope of its amendment power. Consequently, there is no basis to infer that plaintiffs agreed in advance to be bound by such an attempt.
2. Retroactivity
Even if it were otherwise theoretically proper for a party to unilaterally impose an arbitration provision that applied to claims which had already accrued, there is an additional problem with Ironwood’s claim that its bylaw amendment reflected an agreement to arbitrate this dispute: i.e., there is nothing in the language of either the bylaws generally, or this specific [967] amendment, that states it is intended to have such a retroactive effect. (Cf. Peleg v. Neiman Marcus Group, Inc., supra, 204 Cal.App.4th at pp. 1432-1433 [in which the disputed provision actually stated it would apply to all unfiled claims, even those that had already accrued].)
The Club addresses this additional problem by denying that application of this arbitration provision to the instant case would qualify as retroactive. In the Club’s view, because plaintiffs have alleged their claim for declaratory relief reflects an “ongoing” dispute concerning the parties’ rights, duties and obligations under the loan agreements, it is distinguishable from the type of dispute that is “based upon some incident which occurred at some finite period of time in the past.” This distinction is specious.
All pending lawsuits—even those which are based on a specific past incident—reflect ongoing disputes. That is the very nature of a lawsuit. Until a lawsuit is resolved by settlement or judgment, or becomes moot, it necessarily reflects an ongoing dispute. Application of the arbitration bylaw to this case would qualify as retroactive because it would affect plaintiffs’ already accrued legal claims, as well as their already accrued rights to seek redress for those claims in court. (See Buttram v. Owens-Corning Fiberglas Corp. (1997) 16 Cal.4th 520, 528-529 [66 Cal.Rptr.2d 438, 941 P.2d 71] [proposition applies retroactively if it affects causes of action that accrued prior to its effective date].)
The Club also points out that even if this court were to construe this declaratory relief action as what it chooses to call a “pre-agreement dispute,” “the law does not otherwise forbid the arbitration of such a dispute.” We might agree with that point, as far as it goes, but the problem for Ironwood is that it doesn’t go very far. Coon v. Nicola (1993) 17 Cal.App.4th 1225 [21 Cal.Rptr.2d 846] (Coon), the case the Club relies on, provides no support for retroactive application of an arbitration provision in the context of this case.
In Coon, the plaintiff was treated by the defendant physician for injuries suffered in a mining accident. Several days later, the plaintiff visited the doctor in his office and signed an arbitration agreement. The agreement provided for arbitration of all claims arising out of “prospective care,” but also included an optional provision governing “`[r]etroactive [e]ffect.'” (Coon, supra, 17 Cal.App.4th at p. 1230.) That provision stated: “`If patient intends this agreement to cover services rendered before the date it is signed (for example, emergency treatment) patient should initial below: Effective as of date of first medical services.'” (Ibid.) The Coon court noted “[i]t is not disputed that respondent signed the agreement and separately initialed the clause expressly agreeing to arbitrate disputes stemming from the care appellant rendered prior to the office visit.” (Ibid., italics added.)
[968] Thus, Coon provides no authority for enforcing a unilaterally imposed retroactive arbitration agreement on a party who has not expressly consented to that retroactive application—which is what Ironwood is attempting to do here. Consequently, it offers no support for Ironwood’s position. Moreover, in the course of rejecting plaintiff’s contention that the retroactive agreement would be unenforceable even though he had expressly agreed to it, the Coon court makes a point that affirmatively harms Ironwood’s effort to enforce its new bylaw here: The court states that “[m]ost significantly, the present case does not limit appellant’s liability in any way but merely provides for a different forum in which to settle disputes.” (Coon, supra, 17 Cal.App.4th at p. 1237, italics added.) On this point as well, the Coon case is distinguishable from ours. The bylaw at issue before us, which Ironwood is attempting to apply retroactively, also purports to limit Ironwood’s liability, in that it additionally mandates a “waive[r of] all claims, rights and demands for punitive and consequential damages.” Coon provides no support for retroactive application of such a provision.
3. Public Policy
(4) Ironwood also relies on the strong public policy favoring arbitration provisions as the basis for asserting that any “`[d]oubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration.'” (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189 [33 Cal.Rptr.2d 188].) However, that presumption is of no assistance to Ironwood here, because it is also true that “[a]rbitration is consensual in nature” (County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 244 [54 Cal.Rptr.2d 628]) and “`[t]he right to arbitration depends on a contract'” between the parties (id. at p. 245). Thus, “`the policy favoring arbitration cannot displace the necessity for a voluntary agreement to arbitrate.'” (Victoria v. Superior Court (1985) 40 Cal.3d 734, 739 [222 Cal.Rptr. 1, 710 P.2d 833].)
And as we have already pointed out, Ironwood’s unilateral amendment of its bylaws, to add an arbitration requirement that purports to retroactively compel plaintiffs to arbitrate a dispute which is already pending in court, does not create a legally enforceable agreement to arbitrate that dispute. Stated simply, this case does not present any “doubt” as to whether Ironwood’s new arbitration bylaw might apply to this case.
Finally, we note that Ironwood’s fervent commitment to the arbitration of any claims its members might choose to file against it, stands in marked contrast to its apparent unwillingness to commit its own claims to the same system. The arbitration bylaw the Club seeks to enforce here applies only to “any claim, grievance, demand, [etc.,] of or by a Member past or present, [969] [etc.]” (Italics added.) These disputes brought by members are to be arbitrated before a “mutually agreed to retired Superior Court Judge.” By its terms, then, the provision does not extend to any claims brought by the Club itself. And if that omission were not clear enough, the bylaw goes on to specify that “[t]his arbitration provision shall not apply to any dispute arising out of the Club’s decision to impose any disciplinary action upon Members as set forth in these Bylaws.” And while the bylaw also provides for arbitration of “claims by the Club against a Member for the payment of dues, assessments, fees and/or use charges,”those arbitrations are required “to be administered by a judicial arbitration company or service in Riverside County that is selected by the Club.”
(5) Such a one-sided provision, especially when coupled with the purported waiver of any award of “punitive or consequential damages,” could be deemed unconscionable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 118 [99 Cal.Rptr.2d 745, 6 P.3d 669] [“the doctrine of unconscionability limits the extent to which a stronger party may, through a contract of adhesion, impose the arbitration forum on the weaker party without accepting that forum for itself”].)
DISPOSITION
The order is affirmed. Respondents’ request for judicial notice of documents which were lodged, but not filed, in the trial court is denied. Respondents are to recover their costs on appeal.
O’Leary, P. J., and Bedsworth, J., concurred.
Appellant’s petition for review by the Supreme Court was denied April 15, 2015, S224954.
Ward v. Superior Court
[Enforcement; Recorded Notice of Noncompliance] An association is not legally authorized to record a notice of noncompliance in response to a member’s violation of the CC&Rs.
Ronald M. Katzman for Petitioners. No appearance for Respondent. Wolf, Rifkin & Shapiro and Andrew S. Gelb for Real Party in Interest.
OPINION
ZEBROWSKI, J.
This case concerns whether a homeowners association may record, in a county’s land title records, a document asserting that a homeowner is in violation of the association’s covenants, conditions and restrictions (hereafter CC&R’s). We conclude that there is no authority for recordation of such a document, and that the document recorded in this case should have been expunged.
I. The Facts
Petitioners own a house in the Beverlywood area of Los Angeles. The property is subject to a declaration of restrictions which was recorded in 1940 and which affects 1,324 homes. These restrictions were updated in 1994 by the recordation of an amended and restated declaration of CC&R’s. The CC&R’s are administered by the Beverlywood Homes Association (hereafter BHA). For purposes of this petition, it is assumed that petitioners are bound by these CC&R’s. [FN. 1]
The CC&R’s provide for “Architectural and Design Control” by BHA. These controls require approval of construction or alterations by BHA. The [63] CC&R’s indirectly provide that BHA may record a notice of noncompliance by providing that property improvements will eventually be deemed in compliance “unless actual notice executed by the Association of such … noncompliance shall appear of record in the office of the County Recorder of Los Angeles County ….” Petitioners obtained approval from BHA for a remodeling project on their property. The project approval included approval for the painting of the new construction in “blue/blue-grey tones.” The evidence is in conflict, however, as to whether the shades later applied precisely matched the colors approved.
Either when painting was underway or shortly after it was completed in June 1995, petitioners received a letter from the BHA president complaining about the “atrocious bright-blue color” being applied, which the president found “hideous” and “offensive.” [FN. 2] The letter contended that “as to the color, you never obtained approval of this color and, as such, you have now violated the CC&Rs.” The letter purported to levy a fine of $50 and advised that the fine would be rescinded only if petitioners painted their property in a “color consistent with that in the surrounding neighborhood.” The letter continued that if petitioners did not comply, not only would additional fines accrue, but in addition “a notice of non-compliance will be filed against the property. A notice of non-compliance is notice to the world that there is a violation of CC&Rs. Such notice simply has the effect of preventing a sale, transfer or mortgage of the affected property.” The letter from the BHA president concluded “[l]et me assure you, I have received numerous phone calls from your neighbors, as well as those passing by your house while walking their dog or children. Because I live on the street behind you, most of the people in our local neighborhood know where I live and, unfortunately, also know my phone number.”
Petitioners refused to repaint their house in accordance with the demands of BHA. Several months later, in October 1995, while trying to refinance, petitioners learned from their title insurance company that BHA had unilaterally and without further notice recorded a “Notice of Non-Compliance with Declaration of Restrictions (Non-Conforming Improvement)” (hereafter the notice of noncompliance) against their property. As a consequence, the pending refinance could not close. Petitioners attempted to negotiate a release of the notice of noncompliance, but BHA refused to release the notice until petitioners repainted their home. Petitioners would not agree to repaint. In order to complete the refinance with the notice of noncompliance still of record, petitioners had to post a cash bond of $10,000 in favor of their title insurer. [64]
Negotiations apparently continued without progress until BHA filed suit in March 1996. BHA sought abatement of the offending color as a nuisance, punitive damages, attorney fees and costs. Petitioners moved for expungement of the notice of noncompliance. The motion was denied. This petition for writ of mandate followed.
II. The Statutory Law
A. There is no specific authorization for recordation of a notice of noncompliance.
Miller and Starr contains a nonexclusive list of 99 types of instruments that may be recorded. The recordation of most of these instruments is specifically authorized by statute. (3 Miller & Starr, Cal. Real Estate (2d ed. 1989) Recording and Priorities, §§ 8:4-8:5, pp. 275-292.) A notice of noncompliance with CC&R’s is not on the list, nor has any other specific authorization been cited. If a notice of noncompliance is recordable, recordation must be authorized by inclusion within a generic category of recordable documents.
B. BHA relies on generic authority that does not authorize recordation of a notice of noncompliance.
[1] BHA relies on the generic authorization for recordation of documents contained in Government Code section 27280, subdivision (a), which provides that “[a]ny instrument or judgment affecting the title to or possession of real property may be recorded ….” The notice of noncompliance in this case was not a “judgment,” hence if recordable, it must be recordable as an “instrument.”
The term “instrument” as used in Government Code section 27280 is defined in Government Code section 27279, subdivision (a), as “a written paper signed by a person or persons transferring the title to, or giving a lien on real property, or giving a right to a debt or duty.” Three categories are thus presented. A recordable “instrument” is one which either a) transfers title, b) “gives” a lien, or c) “gives” a right or duty.
Clearly the notice of noncompliance has no effect on the state of the title. Title remains vested in petitioners as before, possibly subject to typical deeds of trust or similar financing liens, etc. The first category of the “instrument” definition does not apply.
Nor does the notice of noncompliance “give,” or create, a lien on real property. While it does cloud the title by giving public notice of a claim and [65] creating uncertainty about the ability of BHA to force an eventual repainting of the house, the notice of noncompliance does not create a “lien.” Nor has BHA argued that its notice of noncompliance creates a “lien.” Hence the second category of the “instrument” definition does not apply.
BHA relies on the third category of the “instrument” definition. BHA argues that the notice of noncompliance is a recordable instrument “because it is in writing and gives ‘a right to a debt or duty’ in that it provides petitioners and any successors notice of their duty to bring their property into compliance.” Clearly there is a major difference between providing notice of a duty, and “giving” or creating that duty. To the extent that BHA has the “right” to dictate the color of a wall or garage door, that “right” was given to BHA by the CC&R’s. If the right exists, it exists whether or not a notice of noncompliance is recorded to give public notice of BHA’s claim. In this case, for example, BHA filed suit to enforce this claimed right, something BHA could have done without recording a notice of noncompliance. Thus BHA’s notice of noncompliance does not come within the third category of the “instrument” definition.
Even assuming that the notice of noncompliance were an “instrument” as defined by Government Code section 27279, it would be recordable only if-pursuant to Government Code section 27280-it affected “title to” or “possession of” the real property. As discussed above, the notice of noncompliance does not affect title to the property. Nor does it affect possession. Petitioners retain possession as well as title. Legally speaking, petitioners can freely transfer title and possession. The constraints petitioners are experiencing on transfer of title and possession are practical ones, not legal limitations. For example, property subject to a lis pendens remains freely transferable as a legal matter. (See, e.g., Stagen v. Stewart-West Coast Title Co. (1983) 149 Cal.App.3d 114, 122 [196 Cal.Rptr. 732].) The notice of noncompliance involved here has no legal effect on title or possession, or on transfers of title or possession. Instead, the notice simply creates uncertainty about whether BHA will be able to force petitioners (or their successors) to repaint their home. It is because few purchasers or lenders would likely be willing to assume this risk that transfer or encumbrance of the property might be impeded.
No authority for recordation of the notice of noncompliance has been cited except for the statutes discussed above. Since the cited statutes do not authorize the recording and no other statutory authority can be found, it must be concluded that there is no statutory authorization for recording such a document. [66]
C. The notice of noncompliance is not recordable in the absence of statutory authority.
[2] The system for public recording of land title records was established by statute. (See Gov. Code, § 27201 et seq.) The proper operation of that system is hence one of legislative intent.
A county recorder is obligated to accept for recordation only those documents which are “authorized or required by law to be recorded.” (Gov. Code, § 27201.) There is no authority for the proposition that a county recorder either must or may record documents which are not “authorized or required by law to be recorded,” i.e., there is no authority for the proposition that the recorder must or may accept unauthorized documents for recordation. Nor is there any authority for the proposition that parties may by private contract create a right to record, for their own private purposes, documents which are not “authorized or required by law to be recorded.”
In order to rule in favor of BHA that BHA’s notice of noncompliance is a recordable document, we would have to accept the proposition that any type of document is recordable unless recordation of that type of document is specifically prohibited. If that were the legislative intent, it is expectable that there would then be code sections prohibiting the recordation of specific types of documents.[FN. 3] However, BHA has cited no such code sections. Moreover, if it were the Legislature’s intent, in enacting the land title recording system, that any type of document could be recorded in that system, there would be no need for the Legislature to identify specific types of documents that are recordable. (Cf. 3 Miller & Starr, Cal. Real Estate, supra, Recording and Priorities, §§ 8:4-8:5, pp. 275-292 [listing specific types of recordable documents].) Yet the Legislature has taken great effort to identify various types of recordable documents. When the Legislature does specify a recordable type of document, the Legislature generally also specifies the standards according to which the propriety of such a recordation would be judged, and has often provided specific procedures governing disputes over propriety of a recording. (See, e.g., Code Civ. Proc., § 405 et seq.; Civ. Code, § 3109 et seq.) Thus there is no principled basis on which we can accept the proposition that the Legislature intended all documents of every kind to be recordable unless specifically prohibited. We therefore [67] conclude that BHA’s notice of noncompliance was not a recordable document.[FN. 4]
D. The notice of noncompliance should have been expunged.
[3] Petitioners’ motion to expunge the notice of noncompliance was brought pursuant to Civil Code section 3412, which provides that a written instrument may be adjudged void or voidable if it may cause serious injury if left outstanding. Here the notice of noncompliance was not a legally recordable document. The undisputed evidence demonstrated that the improper recordation of this document had created a cloud on title, preventing refinancing of petitioners’ property until they posted a $10,000 bond. The bond remains outstanding. We consider this a sufficiently serious injury to require expungement of the improperly recorded notice.[FN. 5]
III. Disposition
Accordingly, the superior court is directed to set aside its order denying petitioners’ motion to expunge the notice of noncompliance and to issue a [68] new and different order granting the motion. The temporary stay is vacated. Real party to pay the costs of this petition.
Boren, P. J., and Nott, J., concurred.
The petition of real party in interest for review by the Supreme Court was denied August 20, 1997. Mosk, J., and Kennard, J., were of the opinion that the petition should be granted.
FN 1. The issue here is not whether CC&R’s can be enforced. It is whether a notice of violation of CC&R’s is a type of document which can be recorded in the public land title records. We therefore need not consider the effect or application of Civil Code section 1354 (CC&R’s enforceable as equitable servitudes) or the case of Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361 [33 Cal.Rptr.2d 63, 878 P.2d 1275] (equitable servitudes to be enforced unless in violation of public policy). Rather than whether CC&R’s can be enforced, the question is whether compliance with CC&R’s can be coerced by recording a notice of noncompliance without statutory authority.
FN 2. Shade of color is not the issue here. The issue is the recordability of the notice of noncompliance.
FN 3. For example, Code of Civil Procedure section 405.36 prohibits the re-recording of a lis pendens after the lis pendens has once been expunged, unless leave of court is first obtained. This code section is only necessary because another section specifically authorizes the recording of a lis pendens in the first instance. (Code Civ. Proc., § 405.20.)
FN 4. The argument has been suggested that homeowners associations such as BHA need the ability to record notices of noncompliance in order to effectively enforce CC&R’s. We need not debate the issue here, for that is a matter for legislative attention. The Legislature can consider whether recording should be allowed, and what type of procedures for review of recordings should be provided. Recordation could be authorized with a ready made system for due process review, for example, by simply amending the definition of “real property claim” in Code of Civil Procedure section 405.4 (the lis pendens law) to include a claim of violation of CC&R’s. However, only the Legislature can make such public policy decisions.
FN 5. Attached to BHA’s complaint against petitioners was a copy of the CC&R’s. Article 3 of those CC&R’s deals with “Common Area,” and references a “Schedule B” on which parcels of land “owned by the Association for the benefit of the Members” were supposed to be listed. However, no Schedule B was attached to the copy of the CC&R’s appended to the complaint. It is therefore unclear whether BHA is, or is not, a common interest development subject to the regulation of the Real Estate Commissioner set forth in title 10, California Code of Regulations, section 2792.26. A homeowners association subject to this regulation “cannot be empowered to cause a[n] … abridgment of an owner’s right to the full use and enjoyment of his individually-owned subdivision interest on account of the failure by the owner to comply with provisions of the governing instruments … except by judgment of a court or a decision arising out of an arbitration ….” Placing a cloud on title with the specific intent of preventing transfer or refinancing can reasonably be construed as an “abridgment of an owner’s right to the full use and enjoyment of his individually-owned subdivision interest.” It thus appears that, to the extent BHA may be subject to this regulation because of status as a common interest development, it may be prohibited from recording notices such as the one involved in this case. To the extent the regulation is not applicable because BHA may not be a common interest development, the decision we make here is consistent with the approach taken by the Real Estate Commissioner.
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.
Beacon Residential Community Association v. Skidmore
[Construction Defect; Architect Liability] An architect who functions as the principal architect on a residential construction project owes a duty of care to future homeowners.
COUNSEL
Law Offices of Ann Rankin, Ann Rankin, Terry L. Wilkens; Katzoff & Riggs, Kenneth S. Katzoff, Robert R. Riggs, Sung E. Shim and Stephen G. Preonas for Plaintiff and Appellant; Berding & Weil and Matt J. Malone for Consumer Attorneys of California and Executive Council of Homeowners as Amici Curiae on behalf of Plaintiff and Appellant; Horvitz & Levy, Peder K. Batalden and Peter Abrahams for Defendants and Respondents Skidmore, Owings & Merrill LLP and HKS, Inc; Robles, Castles & Meredith and Richard C. Young for Defendant and Respondent Skidmore, Owings & Merrill LLP; Schwartz & Janzen, Noel E. Macaulay and Steven H. Schwartz for Defendant and Respondent HKS, Inc; Fred J. Hiestand for the Civil Justice Association of California as Amicus Curiae on behalf of Defendants and Respondents; Shannon B. Jones Law Group, Kathleen F. Carpenter, Jessica M. Takano and Amy R. Gowan for California Building Industry Association as Amicus Curiae on behalf of Defendants and Respondents; Collins Collins Muir + Stewart, David E. Barker and Melinda W. Ebelhar for The American Institute of Architects California Council and The American Institute of Architects as Amici Curiae on behalf of Defendants and Respondents.
[571] OPINION
LIU, J. —
A homeowners association on behalf of its members sued a condominium developer and various other parties over construction design defects that allegedly make the homes unsafe and uninhabitable for significant portions of the year. Two defendants were architectural firms, which allegedly designed the homes in a negligent manner but did not make the final decisions regarding how the homes would be built. Applying our decision in Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370 [11 Cal.Rptr.2d 51, 834 P.2d 745] (Bily) and relying on Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co., Inc. (2004) 125 Cal.App.4th 152 [22 Cal.Rptr.3d 660] (Weseloh), the trial court sustained a demurrer in favor of defendant architectural firms, reasoning that an architect who makes recommendations but not final decisions on construction owes no duty of care to future homeowners with whom it has no contractual relationship. The Court of Appeal reversed, concluding that an architect owes a duty of care to homeowners in these circumstances, both under the common law and under the Right to Repair Act (Civ. Code, § 895 et seq.).
Building on substantial case law and the common law principles on which it is based, we hold that an architect owes a duty of care to future homeowners in the design of a residential building where, as here, the architect is a principal architect on the project — that is, the architect, in providing professional design services, is not subordinate to other design professionals. The duty of care extends to such architects even when they do not actually build the project or exercise ultimate control over construction. Accordingly, we affirm the judgment of the Court of Appeal.
I.
In considering whether a demurrer should have been sustained, “we accept as true the well-pleaded facts in the operative complaint….” (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1189, fn. 1 [151 Cal.Rptr.3d 827, 292 P.3d 871].) The facts alleged in plaintiffs’ third amended complaint (the complaint) are as follows.
Skidmore, Owings & Merrill LLP (SOM) and HKS, Inc. (individually and doing business as HKS Architects, Inc.; hereafter HKS), are design professionals. SOM and HKS (collectively defendants) provided architectural and engineering services for The Beacon residential condominiums, a collection of 595 condominium units and associated common areas located in San Francisco (the Project). Although the units were initially rented out for two years after construction, defendants provided their services knowing that the finished construction would be sold as condominiums. A condominium [572] association was formed, and the condominium’s conditions, covenants, and restrictions were recorded, before construction commenced.
The homeowners association, plaintiff Beacon Residential CommunityAssociation (Association), sued several parties involved in the construction of those condominiums, including several business entities designated as the original owners and developers of the condominium, as well as SOM and HKS, with whom the owners and developers contracted for architectural services. SOM and HKS were the only architects on the Project. Plaintiff alleged that negligent architectural design work performed by defendants resulted in several defects, including extensive water infiltration, inadequate fire separations, structural cracks, and other safety hazards. One of the principal defects is “solar heat gain,” which made the condominium units uninhabitable and unsafe during certain periods due to high temperatures. Plaintiff alleged that the solar heat gain is due to defendants’ approval, contrary to state and local building codes, of less expensive, substandard windows and a building design that lacked adequate ventilation. Defendants are named in the first cause of action (“Civil Code Title 7 — Violation of Statutory Building Standards for Original Construction”), the second cause of action (“Negligence Per Se in Violation of Statute”), and the fifth cause of action (“Negligence of Design Professionals and Contractors”).
According to the complaint, defendants “provided architectural and engineering services” for the Project that “included, but were not limited to, architecture, landscape architecture, civil engineering, mechanical engineering, structural engineering, soils engineering and electrical engineering, as well as construction administration and construction contract management.” Defendants were paid more than $5 million for their work on the Project. In addition to “providing original design services at the outset”, of the Project, defendants played an active role throughout the construction process, coordinating efforts of the design and construction teams, conducting weekly site visits and inspections, recommending design revisions as needed, and monitoring compliance with design plans.
Defendants demurred, contending they owed no duty of care to the Association or its members under the facts alleged. The trial court agreed: “The allegations do not show that either of the architects went beyond the typical role of an architect, which is to make recommendations to the owner. Even if the architect initiated the substitutions, changes, and other elements of design that Plaintiff alleges to be the cause of serious defects, so long as the final decision rested with the owner, there is no duty owed by the architect to the future condominium owners, in the Court’s view. The owner made the final decision according to the third amended complaint.” The trial court granted plaintiff leave to amend the complaint to allege that defendants [573] “actually dictated and controlled the decision to eliminate [ventilation] ducts, acting in a manner that was contrary to the directions of the owner, or that ignored the owner’s directions,” but plaintiff declined.
The Court of Appeal reversed. It applied the factors set forth by this court in Biakanja v. Irving (1958) 49 Cal.2d 647, 650 [320 P.2d 16] (Biakanja) for determining whether a party owes a duty of care to a third party and concluded that the defendants owed a duty of care to the Association in this case. The court distinguished Weseloh, supra, 125 Cal.App.4th 152, a case that found no duty of care owed by a design engineer to a commercial property owner, on the grounds that Weseloh was decided on summary judgment rather than demurrer and that Weseloh had expressly limited its holding to its facts. The Court of Appeal further concluded that Bily, supra, 3 Cal.4th 370, did not support defendants’ position. Finally, the court concluded that the Right to Repair Act expressed a legislative intent to impose on design professionals a duty of care to future homeowners. (See Civ. Code, § 895 et seq.)
We granted review.
II.
(1) “Actionable negligence involves a legal duty to use due care, a breach of such legal duty, and the breach as the proximate or legal cause of the resulting injury.” (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 594 [83 Cal.Rptr. 418, 463 P.2d 770].) This case is concerned solely with the first element of negligence, the duty of care. Whether a duty of care exists “in a particular case is a question of law to be resolved by the court. [Citation.] [¶] A judicial conclusion that a duty is present or absent is merely `”a shorthand statement … rather than an aid to analysis …. `[D]uty,’ is not sacrosanct in itself, but only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.”‘ [Citation.] `Courts, however, have invoked the concept of duty to limit generally “the otherwise potentially infinite liability which would follow from every negligent act….”‘” (Bily, supra, 3 Cal.4th at p. 397.)
Here we consider whether design professionals owe a duty of care to a homeowners association and its members in the absence of privity. Although the issue presented in this case has not been decided by this court, we do not write on a blank slate. As explained below, courts have found in a variety of circumstances that builders, contractors, and architects owe a duty of care to third parties.
[574] A.
(2) Although liability for the supply of goods and services historically required privity of contract between the supplier and the injured party, the significance of privity has been greatly eroded over the past century. As we noted more than 50 years ago, “[l]iability has been imposed, in the absence of privity, upon suppliers of goods and services which, if negligently made or rendered, are `reasonably certain to place life and limb in peril.’ [Citations.] There is also authority for the imposition of liability where there is no privity and where the only foreseeable risk is of damage to tangible property. [Citations.]” (Biakanja, supra, 49 Cal.2d at p. 649.) In Biakanja, we held that a notary public who negligently drafted a will was liable to the intended beneficiary of the will. (Id. at pp. 650-651.) We explained that “[t]he determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, and the policy of preventing future harm.” (Id. at p. 650.)
The declining significance of privity has found its way into construction law. We described the evolution in Aas v. Superior Court (2000) 24 Cal.4th 627 [101 Cal.Rptr.2d 718, 12 P.3d 1125] (Aas): “Formerly, after a builder had completed a structure and the purchaser had accepted it, the builder was not liable to a third party for damages suffered because of the work’s condition, even though the builder was negligent. (E.g., Fanjoy v. Seales (1865) 29 Cal. 243, 249-250; see also Hale v. Depaoli [(1948)] 33 Cal.2d 228, 230 [201 P.2d 1] [reviewing the former law].) The purchaser, of course, had remedies against the builder in contract and warranty. But injured third parties had no clear remedy until we, following the trend that began with MacPherson v. Buick Motor Co. (1916) 217 N.Y 382 [111 N.E. 1050], qualified the general rule exonerating manufacturers from third party claims with an exception applicable whenever `”the nature of a [manufactured] thing is such that it is reasonably certain to place life and limb in peril when negligently made….”‘ (Kalash v. Los Angeles Ladder Co. (1934) 1 Cal.2d 229, 231-232 [34 P.2d 481], quoting MacPherson v. Buick Motor Co., supra, 111 N.E. 1050, 1053.) Having already held that the manufacturers of defective ladders [citation], elevators [citation], and tires [citation] could be liable to persons not in contractual privity with them yet foreseeably injured by their products, we easily applied the same rule to someone responsible for part of a house, i.e., a defective railing (Hale v. Depaoli, at pp. 230-232).
[575] “We first recognized a remedy in the law of negligence for construction defects causing property damage, as opposed to personal injury, in Stewart v. Cox [(1961)] 55 Cal.2d 857 [13 Cal.Rptr. 521, 362 P.2d 345]. There, we upheld a homeowner’s judgment against a subcontractor who had negligently applied concrete to the inside of a swimming pool, thereby causing the release of water that damaged the pool, lot and house. In our opinion we noted, and seemingly were influenced by, the `”decisions … plac[ing] building contractors on the same footing as sellers of goods, and … [holding] them to the general standard of reasonable care for the protection of anyone who may foreseeably be endangered by the negligence, even after acceptance of the work.”‘ (Id. at p. 862, quoting Prosser, Torts (2d ed. 1955) pp. 517-519.)” (Aas, supra, 24 Cal.4th at p. 637.)
The court in Stewart applied the Biakanja factors to determine the scope of the duty of care: “Here it was obvious that the pool for which Cox provided the gunite work was intended for the plaintiffs and that property damage to them — and possibly to some of their neighbors — was foreseeable in the event the work was so negligently done as to permit water to escape. It is clear that the transaction between [the pool subcontractor] and Cox was intended to specially affect plaintiffs. There is no doubt that plaintiffs suffered serious damage, and the court found, supported by ample evidence, that the injury was caused by Cox’s negligence. Under all the circumstances Cox should not be exempted from liability if negligence on his part was the proximate cause of the damage to plaintiffs.” (Stewart v. Cox, supra, 55 Cal.2d at p. 863 (Stewart).)
Soon after, in Sabella v. Wisler (1963) 59 Cal.2d 21 [27 Cal.Rptr. 689, 377 P.2d 889], we held that a contractor was liable to a homeowner, although the homeowner’s identity was unknown at the time of construction. The contractor had built a house on inadequately compacted soil, causing major subsidence and property damage. Applying the Biakanja factors, we said that although “it appears that… this house was not constructed with the intention of ownership passing to these particular plaintiffs, the Sabellas are members of the class of prospective home buyers for which Wisler admittedly built the dwelling. Thus as a matter of legal effect the home may be considered to have been intended for the plaintiffs, and Wisler owed them a duty of care in construction. (See Prosser, Torts (2d ed. 1955) § 36, pp. 166-168.) It is apparent that harm was foreseeable to prospective owners when the home was constructed upon the inadequately compacted earth in the lot, and it is undisputed that the Sabellas’ home was seriously damaged. Also, there was found to be a close connection between the negligent elements of workmanship for which defendant contractor must be held responsible … and the injury suffered.” (Sabella, at p. 28.)
[576] Courts have applied these third party liability principles to architects. In Montijo v. Swift (1963) 219 Cal.App.2d 351 [33 Cal.Rptr. 133], the plaintiff sued an architect after falling and injuring herself on a stairway at a bus depot that she alleged had been negligently designed with an inadequate handrail. Relying in part on Stewart, supra, 55 Cal.2d 857, and Hale v. Depaoli, supra, 33 Cal.3d 228, the court said: “Under the existing status of the law, an architect who plans and supervises construction work, as an independent contractor, is under a duty to exercise ordinary care in the course thereof for the protection of any person who foreseeably and with reasonable certainty may be injured by his failure to do so, even though such injury may occur after his work has been accepted by the person engaging his services.” (Montijo, at p. 353.) Similarly, in Mallow v. Tucker, Sadler & Bennett, Architects etc., Inc. (1966) 245 Cal.App.2d 700 [54 Cal.Rptr. 174], the court upheld an architect’s liability to a construction worker where the architect’s plans negligently failed to indicate the location of underground high-voltage transmission lines, resulting in the worker’s electrocution. (Id. at pp. 702-703.)
Architect liability to third parties has not been confined to personal injury; it also extends to property damage. The Court of Appeal in Cooper v. Jevne (1976) 56 Cal.App.3d 860 [128 Cal.Rptr. 724], perhaps the case most similar to the one before us, recognized such liability to condominium purchasers where an architectural firm “prepared and furnished to the builder-seller … architectural drawings and plans and specifications for the construction and other improvements within the … project and acted as supervising architects in the construction of the buildings within the project.” (Id. at p. 867.) Applying the Biakanja factors, Cooper held on demurrer that “the architects’ duty of reasonable care in the performance of their professional services is logically owed to those who purchased the allegedly defectively designed and built condominiums…. The architects must have known that the condominiums they designed and whose construction they supervised were built by [the builder-seller] for sale to the public and that purchasers of these condominiums would be the ones who would suffer economically, if not bodily, from any negligence by the architects in the performance of their professional services.” (Id. at p. 869.)
Similarly, in Huang v. Garner (1984) 157 Cal.App.3d 404 [203 Cal.Rptr. 800], the Court of Appeal overturned a nonsuit in an action by a property owner against a building designer and civil engineer for defective design, including insufficient fire retardation walls, that violated building code standards. (Id. at pp. 411-415.) The court took as a given that design professionals could be held liable to third parties for defective designs causing property damage and economic loss; the only issue was whether negligence had to be proven by expert testimony or could be established by showing departure from then Uniform Building Code requirements as negligence per se. (Huang [577] at pp. 411-414.) In Huber, Hunt & Nichols, Inc. v. Moore (1977) 67 Cal.App.3d 278 [136 Cal.Rptr. 603], the court said it is “now well settled that … the architect may be sued for negligence in the preparations of plans and specifications either by his client or by third persons….” (Id. at p. 299.)
B.
(3) The Association argues that the general principle that an architect may be sued in negligence by a future homeowner absent privity is also recognized by statute. The Right to Repair Act establishes a set of building standards for new residential construction and provides that builders and other entities “shall … be liable for” violation of those standards “[i]n any action seeking recovery of damages arising out of” such construction. (Civ. Code, § 896; see id., § 936; all undesignated subsequent statutory references are to this code.) Section 896 states that the deficiencies for which builders and other entities are liable include “the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction” of a dwelling unit. The Association points to section 936, which provides in part: “Each and every provision of the other chapters of this title apply to general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract. In addition to the affirmative defenses set forth in Section 945.5, a general contractor, subcontractor, material supplier, design professional, individual product manufacturer, or other entity may also offer common law and contractual defenses as applicable to any claimed violation of a standard.” (Italics added.) Section 937 makes clear that the term “design professionals” includes “architects and architectural firms.”
The Court of Appeal, relying on legislative history, concluded that the Right to Repair Act is “dispositive of the scope of duty” owed by defendants to the homeowners in this case. Defendants make several arguments against this position. First, they observe that whereas the act applies to “new residential units,” the residential units in the Project were initially rented as apartments. Second, defendants contend that even if the Right to Repair Act applies to this case, it does not support imposing a duty of care toward the Association’s members greater than the duty imposed at common law. Highlighting the portion of section 936 that preserves “common law … defenses,” defendants argue that under common law principles of duty articulated by this court, a design professional owes no duty of care to homeowners in the circumstances of this case. Defendants further rely on the established principle that “`”[a] statute will be construed in light of common [578] law decisions, unless its language `”clearly and unequivocally discloses an intention to depart from, alter, or abrogate the common-law rule concerning a particular subject matter….”‘”‘” (California Assn. of Health Facilities v. Department of Health Services (1997) 16 Cal.4th 284, 297 [65 Cal.Rptr.2d 872, 940 P.2d 323].) According to defendants, the Legislature’s limited purpose in enacting the Right to Repair Act in 2002 was to abrogate the “economic loss rule” affirmed in Aas, supra, 24 Cal.4th 627, 636 (see Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1202 [86 Cal.Rptr.3d 196] (Greystone)), not to otherwise create new tort duties.
We need not decide whether the Right to Repair Act is itself dispositive of the issue before us. Assuming defendants are correct that the existence of a common law duty of care is required to maintain a negligence action under the statute, such a duty exists under the facts alleged here. This conclusion follows from an application ofBiakanja and Bily, as we now explain.
III.
As noted, Biakanja set forth a list of factors that inform whether a duty of care exists between a plaintiff and a defendant in the absence of privity: “the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, and the policy of preventing future harm.” (Biakanja, supra,49 Cal.2d at p. 650.) Although the application of these factors necessarily depends on the circumstances of each case, it is possible to derive general rules that govern common scenarios. An example is our decision in Bily limiting the duty of care owed by auditing firms to nonclient third parties. We begin here with a review of Bily, whose reasoning provides a useful point of comparison. We then discuss the key considerations that counsel in favor of recognizing a duty of care that design professionals owe to future homeowners in circumstances like those alleged in plaintiff’s complaint.
A.
Bily involved a suit brought by investors in a computer company against the accounting firm that the company had hired to conduct an audit and issue audit reports and financial statements. The plaintiffs claimed that the accounting firm, Arthur Young & Company, had committed negligence in conducting the audit and reporting a $69,000 operating profit rather than the company’s actual loss of more than $3 million. The computer company eventually filed for bankruptcy, and its investors lost money. They sued, claiming injury from reliance on Arthur Young’s allegedly negligent audit. (Bily, supra, 3 Cal.4th at pp. 377-379.)
[579] We held that an auditor generally owes no duty of care to its client’s investors. (Bily, supra, 3 Cal.4th at p. 407.) In so holding, we recognized the important “`”public watchdog” function'” of auditors (id. at p. 383) but sought to set a reasonable limit on their potential liability for professional negligence given the vast range of foreseeable third party users of audit reports. “Viewing the problem … in light of the [Biakanja] factors,” the court in Bily focused on “three central concerns.” (Id. at p. 398.)
First, “[g]iven the secondary `watchdog’ role of the auditor, the complexity of the professional opinions rendered in audit reports, and the difficult and potentially tenuous causal relationships between audit reports and economic losses from investment and credit decisions, the auditor exposed to negligence claims from all foreseeable third parties faces potential liability far out of proportion to its fault….” (Bily, supra, 3 Cal.4th at p. 398.) In elaborating on this concern, the court observed that “audits are performed in a client-controlled environment.” (Id. at p. 399.) The client “necessarily furnishes the information base for the audit,” “has interests in the audit that may not be consonant with those of the public,” and “predominates in the dissemination of the audit report.” (Id. at pp. 399-400.) “Thus, regardless of the efforts of the auditor, the client retains effective primary control of the financial reporting process.” (Id. at p. 400.)
In addition, the court noted a mismatch between the auditor’s “secondary” role in the financial reporting process and the “primary” role attributed to the auditor as the cause of economic loss in a negligence suit by a third party. (Bily, supra, 3 Cal.4th at p. 400.) Because “the auditor may never have been aware of the existence, let alone the nature or scope, of the third party transaction that resulted in the claim” (ibid.), and because “the ultimate decision to lend or invest is often based on numerous business factors that have little to do with the audit report,” the auditor’s conduct lacks a sufficiently “`close connection'” to the loss of loaned or invested funds to justify recognition of a duty of care to third parties (id. at p. 401). In this context, “the spectre of multibillion-dollar professional liability … is distinctly out of proportion to: (1) the fault of the auditor …; and (2) the connection between the auditor’s conduct and the third party’s injury….” (Bily, at p. 402.)
Second, Bily emphasized that unlike ordinary consumers in product liability cases, “the generally more sophisticated class of plaintiffs in auditor liability cases (e.g., business lenders and investors) permits the effective use of contract rather than tort liability to control and adjust the relevant risks through `private ordering’….” (Bily, supra, 3 Cal.4th at p. 398.) “For example, a third party might expend its own resources to verify the client’s financial statements or selected portions of them that were particularly [580] material to its transaction with the client. Or it might commission its own audit or investigation, thus establishing privity between itself and an auditor or investigator to whom it could look for protection. In addition, it might bargain with the client for special security or improved terms in a credit or investment transaction. Finally, the third party could … insist[] that an audit be conducted on its behalf or establish[] direct communications with the auditor with respect to its transaction with the client.” (Id. at p. 403.) “As a matter of economic and social policy, third parties should be encouraged to rely on their own prudence, diligence, and contracting power, as well as other informational tools. This kind of self-reliance promotes sound investment and credit practices and discourages the careless use of monetary resources. If, instead, third parties are simply permitted to recover from the auditor for mistakes in the client’s financial statements, the auditor becomes, in effect, an insurer of not only the financial statements, but of bad loans and investments in general.” (Ibid.)
Third, Bily expressed skepticism that exposing auditors to third party negligence suits would improve the quality of the audits. (Bily, supra, 3 Cal.4th at pp. 404-405.) “In view of the inherent dependence of the auditor on the client and the labor-intensive nature of auditing, we doubt whether audits can be done in ways that would yield significantly greater accuracy without disadvantages. [Citation.] Auditors may rationally respond to increased liability by simply reducing audit services in fledgling industries where the business failure rate is high, reasoning that they will inevitably be singled out and sued when their client goes into bankruptcy regardless of the care or detail of their audits.” (Id. at p. 404.)
Notably, Bily did not categorically hold that auditors never owe a duty of care to third parties. Instead, Bily limited the duty to a “narrow class of persons who, although not clients, may reasonably come to receive and rely on an audit report and whose existence constitutes a risk of audit reporting that may fairly be imposed on the auditor. Such persons are specifically intended beneficiaries of the audit report who are known to the auditor and for whose benefit it renders the audit report.” (Bily, supra, 3 Cal.4th at pp. 406-407.) In situations where an auditor “clearly intended to undertake the responsibility of influencing particular business transactions involving third persons” with “sufficiently specific economic parameters to permit the [auditor] to assess the risk of moving forward,” liability for negligent misrepresentation may extend to persons “to whom or for whom the misrepresentations were made” so long as those persons have actually and justifiably relied on the auditor’s report. (Id. at pp. 408-409.)
[581] B.
(4) In many ways, the circumstances of the present case stand in contrast to the concerns in Bily that counseled against general recognition of an auditor’s duty of care to third parties. Here we focus on three considerations that drive the analysis and distinguish this case from Bily: (1) the closeness of the connection between defendants’ conduct and plaintiff’s injury; (2) the limited and wholly evident class of persons and transactions that defendants’ conduct was intended to affect; and (3) the absence of private ordering options that would more efficiently protect homeowners from design defects and their resulting harms. We then summarize this analysis in terms of the Biakanja factors, and we distinguish Weseloh, supra, 125 Cal.App.4th 152, the principal case on which defendants rely. As explained below, we hold that an architect owes a duty of care to future homeowners where the architect is a principal architect on the project — that is, the architect, in providing professional design services, is not subordinate to any other design professional — even if the architect does not actually build the project or exercise ultimate control over construction decisions.
1.
First, unlike the secondary role played by the auditor in the financial reporting process, defendants’ primary role in the design of the Project bears a “`close connection'” to the injury alleged by plaintiff. (Bily, supra, 3 Cal.4th at p. 401.) According to the complaint, defendants were the only architects on the Project. In that capacity, defendants “reviewed and approved the course of action where the specifications for the exterior windows … were changed to a design that inadequately prevented heat gain, which causes a seriously defective and nonfunctional condition that is also unhealthy.” Defendants also “recommended that the number of Z ducts [(ventilation ducts)] be reduced by a significant quantity, which is a major factor in the nonfunctional, unhealthy condition [of] the interior of the units.” The complaint alleges that these professional judgments were negligent and rendered the residential units unsafe and uninhabitable during certain periods of the year. Compared to “the connection between the auditor’s conduct and the third party’s injury (which will often be attenuated by unrelated business factors that underlie investment and credit decisions)” (Bily, at p. 402), the connection between defendants’ unique role as the design professionals on the Project and plaintiff’s damages resulting from negligent design is far more direct and immediate.
The trial court assigned dispositive significance to the fact that defendants did not go “beyond the typical role of an architect, which is to make recommendations to the owner,” and that “the final decision rested with the [582] owner….” Similarly, defendants contend that “they had no role in the actual construction. Instead, the developer, contractors, and subcontractors retained primary control over the construction process, as well as final say on how the plans were implemented.”
However, even if an architect does not actually build the project or make final decisions on construction, a property owner typically employs an architect in order to rely on the architect’s specialized training, technical expertise, and professional judgment. The Business and Professions Code defines “[t]he practice of architecture” as “offering or performing, or being in responsible control of, professional services which require the skills of an architect in the planning of sites, and the design, in whole or in part, of buildings, or groups of buildings and structures.” (Bus. & Prof. Code, § 5500.1, subd. (a); see id., § 5500.1, subd. (b) [providing a nonexhaustive list of “[a]rchitects’ professional services”].) The profession is licensed and regulated by the California Architects Board (id., §§ 5510, 5510.1, 5510.15, 5526), and the unlicensed or unauthorized practice of architecture is punishable as a misdemeanor (id., §§ 5536, 5536.1). In order to practice architecture, an applicant must pass two specialized exams, must demonstrate eight years of training and educational experience in architectural work, and must complete an internship program. (Id., §§ 5550, 5551, 5552, subd. (a); Cal. Code Regs., tit. 16, §§ 116-117.)
In this case, defendants were the principal architects on the Project. Among all the entities involved in the Project, defendants uniquely possessed architectural expertise. There is no suggestion that the owner or anyone else had special competence or exercised professional judgment on architectural issues such as adequate ventilation or code-compliant windows. Just as a lawyer cannot escape negligence liability to clearly intended third party beneficiaries on the ground that the client has the ultimate authority to follow or reject the lawyer’s advice (see, e.g.,Heyer v. Flaig (1969) 70 Cal.2d 223, 226 [74 Cal.Rptr. 225, 449 P.2d 161]; Lucas v. Hamm (1961) 56 Cal.2d 583, 588 [15 Cal.Rptr. 821, 364 P.2d 685]), so too an architect cannot escape such liability on the ground that the client makes the final decisions. An architect providing professional design services to a developer does not operate in a “client-controlled environment” comparable to the relationship between an auditor and its client. (Bily, supra, 3 Cal.4th at p. 399.) Whereas an auditor’s “client, of course, has interests in the audit that may not be consonant with those of the public” (ibid.), it would be patently inconsistent with public policy to hold that an architect’s failure to exercise due care in designing a building can be justified by client interests at odds with the interest of prospective homeowners in safety and habitability.
Were there any doubt as to defendants’ principal role in the design of the Project, it is dispelled by additional facts alleged here. According to the [583] complaint, defendants not only provided design services at the outset of the Project but also brought their expertise to bear on the implementation of their plans and specifications by doing weekly inspections at the construction site, monitoring contractor compliance with design plans, altering design requirements as issues arose, and advising the owner of any nonconforming work that should be rejected — all for a fee of more than $5 million. In other words, defendants applied their specialized skill and professional judgment throughout the construction process to ensure that it would proceed according to approved designs. The work defendants performed does not resemble “a broadly phrased professional opinion based on a necessarily confined examination” of client-provided information (Bily, supra, 3 Cal.4th at p. 403), nor did defendants act merely as “suppliers of information and evaluations for the use and benefit of others” (id. at p. 410). Instead, defendants played a lead role not only in designing the Project but also in implementing the Project design.
Nor do we find persuasive defendants’ claim that the connection between their conduct and plaintiff’s injury is “attenuated because … when the developer sold the units two years after construction, it was aware of, and concealed, the alleged defects.” This specific allegation, if true, may inform whether defendants’ conduct was the proximate cause of plaintiff’s injury. (See, e.g., Gonzalez v. Derrington(1961) 56 Cal.2d 130, 134 [14 Cal.Rptr. 1, 363 P.2d 1] [“independent, intervening cause” may preclude finding of proximate cause]; 6 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 1214, pp. 590-591.) It also may give rise to a claim of equitable indemnity by defendants against the developer. (See Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1197-1198 [246 Cal.Rptr. 629, 753 P.2d 585];Greystone, supra, 168 Cal.App.4th at p. 1208.) There is no reason to think in this case or in general that the developer and other major players have “left the scene” via bankruptcy, as is often the case with auditor liability suits. (Bily, supra, 3 Cal.4th at p. 400.) But because the developer’s alleged misdeeds are themselves derivative of defendants’ allegedly negligent conduct, they do not diminish the closeness of the connection between defendants’ conduct and plaintiff’s injury for purposes of determining the existence of a duty of care.
2.
Second, recognizing that an architect who is a principal provider of professional design services on a residential building project owes a duty of care to future homeowners does not raise the prospect of “`liability in an indeterminate amount for an indeterminate time to an indeterminate class.'” (Bily, supra, 3 Cal.4th at p. 385,quoting Ultramares Corp. v. Touche (N.Y. 1931) 255 N.Y. 170 [174 N.E. 441, 444].) As the complaint here alleges, defendants engaged in work on the Project with the knowledge that the [584] finished construction would be sold as condominiums and used as residences. There was no uncertainty, as there was in Bily, as to “the existence, let alone the nature or scope, of the third party transaction that resulted in the claim.” (Bily, supra, 3 Cal.4th at p. 400.) Defendants’ work on the Project “was intended to affect the plaintiff,” and “the `end and aim’ of the transaction was to provide” safe and habitable residences for future homeowners, a specific, foreseeable, and well-defined class. (Biakanja, supra, 49 Cal.2d at p. 650.) There is no “spectre of vast numbers of suits and limitless financial exposure” in this case. (Bily, at p. 400.) Instead, defendants “clearly intended to undertake the responsibility of influencing particular business transactions [(i.e., condominium purchases)] involving third persons [(i.e., prospective homeowners)]” (id. at p. 408) and could therefore “ascertain the potential scope of its liability and make rational decisions regarding the undertaking” (id. at p. 409). Further, as noted, defendants can limit their liability in proportion to fault through an action for equitable indemnification.
Defendants point to a provision in the contract with the developer that expressly disclaims the existence of any “third-party beneficiary of the obligations contained in the Agreement.” But we have never held that third party beneficiary status is a prerequisite to alleging negligence. In Bily, we noted only that third party beneficiaries “may under appropriate circumstances possess the rights of parties to the contract” (Bily, supra, 3 Cal.4th at p. 406, fn. 16), not that the lack of such status precludes liability in tort. If anything, the contract provision on which defendants rely “only serves to emphasize the fact that [defendants] were more than well aware that future homeowners would necessarily be affected by the work that they performed,” as the Court of Appeal observed.
3.
Third, the prospect of private ordering as an alternative to negligence liability is far less compelling here than in Bily. Whereas “[i]nvestors, creditors, and others who read and rely on audit reports and financial statements are not the equivalent of ordinary consumers” because “they often possess considerable sophistication in analyzing financial information and are aware from training and experience of the limits of an audit report `product,'” the average home buyer is more akin to “the `presumptively powerless consumer’ in product liability cases.” (Bily, supra, 3 Cal.4th at p. 403.) The typical home buyer “`clearly relies on the skill of the developer and on its implied representation that the house will be erected in reasonably workmanlike manner and will be reasonably fit for habitation. He has no architect or other professional adviser of his own, he has no real competency to inspect on his own, his actual examination is, in the nature of things, largely superficial, and his opportunity for obtaining meaningful protective changes [585] in the conveyancing documents prepared by the builder vendor is negligible.'” (Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224, 228 [74 Cal.Rptr. 749] (Kriegler).) As Chief Justice Traynor said for the court in Connor v. Great Western Sav. & Loan Assn. (1968) 69 Cal.2d 850 [73 Cal.Rptr. 369, 447 P.2d 609], “the usual buyer of a home is ill-equipped with experience or financial means to discern … structural defects. [Citation.] Moreover a home is not only a major investment for the usual buyer but also the only shelter he has. Hence it becomes doubly important to protect him against structural defects that could prove beyond his capacity to remedy.” (Id. at p. 867.)
Defendants contend that plaintiff has options for redress within the bounds of privity: Plaintiff may seek an assignment of the developer’s rights against defendants, or plaintiff may pursue its design defect claims against the developer, and the developer may in turn seek redress from defendants. But it is questionable whether this more attenuated form of liability will consistently provide adequate redress. More importantly, the chief interest of prospective homeowners is to avoid purchasing a defective home, not only to have adequate redress after the fact. The long-established common law rule holding architects as independent professionals directly accountable to third party homeowners is most likely to vindicate that interest.
Moreover, as we recognized in Bily, the sophisticated consumer of audit reports “might expend its own resources to verify the client’s financial statements or selected portions of them that were particularly material to its transaction with the client. Or it might commission its own audit or investigation, thus establishing privity between itself and an auditor or investigator to whom it could look for protection.” (Bily, supra,3 Cal.4th at p. 403.) But it is unrealistic to expect home buyers to take comparable measures. A liability rule that places the onus on home buyers to employ their own architects to fully investigate the structure and design of each home they might be interested in purchasing does not seem more efficient than a rule that makes the architects who designed the homes directly responsible to home buyers for exercising due care in the first place. This seems especially true in “today’s society” given the “mass production and sale of homes” (Kriegler, supra, 269 Cal.App.2d at p. 227), such as the 595-unit condominium project in this case.
4.
For the reasons above, we conclude that the allegations in the complaint are sufficient, if proven, to establish that defendants owed a duty of care to the homeowners who constitute the Association. Our conclusion, which coheres with a substantial body of case law (ante, at pp. 574-577), may be [586] summarized in terms of the Biakanja factors: (1) Defendants’ work was intended to benefit the homeowners living in the residential units that defendants designed and helped to construct. (2) It was foreseeable that these homeowners would be among the limited class of persons harmed by the negligently designed units. (3) Plaintiff’s members have suffered injury; the design defects have made their homes unsafe and uninhabitable during certain periods. (4) In light of the nature and extent of defendants’ role as the sole architects on the Project, there is a close connection between defendants’ conduct and the injury suffered. (5) Because of defendants’ unique and well-compensated role in the Project as well as their awareness that future homeowners would rely on their specialized expertise in designing safe and habitable homes, significant moral blame attaches to defendants’ conduct. (6) The policy of preventing future harm to homeowners reliant on architects’ specialized skills supports recognition of a duty of care. Options for private ordering are often unrealistic for typical homeowners, and no reason appears to favor homeowners as opposed to architects as efficient distributors of loss resulting from negligent design.
Defendants contend that the balance of Biakanja factors is no different in this case than in Weseloh, supra, 125 Cal.App.4th 152, where the court found no duty of care owed by a design engineer to the third party owner of commercial property. But the defendants in Weseloh played a materially different role in the construction project than defendants did here.
In Weseloh, a property owner (Weseloh) contracted with a general contractor (Wessel) to build an automobile dealership on the property. A subcontractor, Sierra Pacific Earth Retention Corporation (Sierra), built the retaining walls for the project. Sierra, in turn, enlisted Charles Randle, an employee of Owen Engineering Company (Owen), to design two retaining walls for a fee of $1,500 or $2,200. Neither Randle nor Owen had a contractual relationship with Weseloh, and neither supervised the construction of the retaining walls. At Sierra’s request, Randle and Owen inspected the retaining walls after construction. When a portion of the retaining walls failed, resulting in $6 million of property damage, Weseloh sued Wessel, Sierra, Randle and Owen. Weseloh entered into a settlement agreement with Wessel and Sierra, but the suits against Randle and Owen went forward. On summary judgment, the trial court concluded that Randle and Owen owed no duty to Weseloh, and the Court of Appeal affirmed. (See Weseloh, supra, 125 Cal.App.4th at pp. 158-162.)
As suggested by the size of their fee, the defendants in Weseloh had a limited role in the construction project. The “undisputed evidence” showed that “neither Randle nor Owen had a `role in the construction’ of the retaining walls….” (Weseloh, supra, 125 Cal.App.4th at p. 164.) In addition, [587] although “Randle was aware the property was owned by Weseloh,” the Court of Appeal found it significant that Randle and Owen provided their services to Sierra, another engineering firm. As the court observed, “the earth retention calculations prepared for Wessel … identified the preparer as [Sierra], not Randle or Owen. This evidence bolsters the position that Randle and Owen’s role in the project was to primarily benefit Sierra as the preparer of the calculations. To the extent Randle and Owen’s participation in the project would also benefit Wessel and the Weseloh plaintiffs, it was only through Sierra.” (Id.at p. 167; see id. at p. 171, fn. 5 [noting that Sierra paid $1.2 million of the alleged $6 million liability under the settlement agreement].)
The circumstances in this case are plainly different. Unlike Randle and Owen, whose work informed their client’s own exercise of technical expertise in preparing earth retention calculations, defendants here were the sole entities providing architectural services to the Project. They did not provide their specialized services to a client or other entity that in turn applied its own architectural expertise to the plans and specifications supplied by defendants. Moreover, defendants not only applied their expertise to designing the Project but further applied their expertise to ensure that construction would conform to approved designs. Weseloh, which expressly limited its holding to its facts (Weseloh, supra, 125 Cal.App.4th at p. 173), does not stand for the broad proposition that a design professional cannot be liable in negligence to third parties so long as it renders “professional advice and opinion” (id. at p. 169) without having ultimate decisionmaking authority. Instead, Weseloh merely suggests that an architect’s role in a project can be so minor and so subordinate to the role or judgment of other design professionals as to foreclose the architect’s liability in negligence to third parties.
Moreover, the Weseloh court, reviewing the case at the summary judgment stage, concluded that the plaintiffs had “failed to produce evidence showing how and the extent to which their damages were caused by the asserted design defects.” (Weseloh, supra, 125 Cal.App.4th at p. 168.) The court also noted the absence of evidence that “Sierra actually used Randle and Owen’s design without alteration in constructing the retaining walls.” (Ibid.) These observations regarding lack of causation not only informed Weseloh‘s duty analysis (see id. at pp. 168-169) but also provided an independent basis for granting summary judgment in the defendants’ favor. In the present case, which is before us on demurrer, no similar causation problem confronts us. According to the complaint, defendants approved the use of defective windows and designed a defective ventilation system, all of which created conditions that made the homes uninhabitable for portions of the year. The complaint sufficiently alleges the causal link between defendants’ negligence and plaintiff’s injury that was lacking in Weseloh.
[588] IV.
For the reasons above, we conclude that the trial court erred in sustaining defendants’ demurrer on the ground that they owed no duty of care to the Association’s members. Because the Court of Appeal correctly reversed the trial court’s judgment, we affirm the Court of Appeal’s judgment.
Cantil-Sakauye, C. J., Baxter, J., Werdegar, J., Chin, J., Corrigan, J., and Richman, J.,[*] concurred.
[*] Associate Justice, Court of Appeal, First Appellate District, Division Two, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.