[Membership List; Inspection Denial] A homeowners association (HOA) may restrict a member’s request for access to the HOA’s membership list when the request is for an improper purpose.
Wheeler & Associates and David C. Wheeler for Defendant and Appellant.
Wilson Keadjian Browndorf, Marc Y Lazo and Charles K. Stec for Plaintiff and Appellant.
OPINION
SORTINO, J.*—A member of a nonprofit mutual benefit corporation requested inspection of the corporation’s membership list, and other books and records. The corporation refused, and the member brought a petition for writ of mandate to compel inspection. The trial court agreed with the corporation that the member sought the inspection for an improper purpose, unrelated to his interest as a member of the corporation. As a result, the court denied the petition with respect to the books and records. However, the court concluded the corporation did not timely challenge the request for the membership list as required by statute, and therefore ordered the list disclosed. Both parties appeal. We conclude (1) substantial evidence supports the trial court’s finding that the member sought the information for an improper purpose and (2) the corporation’s challenge to disclosing the membership list was not barred [28] by statute. We therefore reverse that part of the court’s judgment requiring disclosure of the membership list, and otherwise affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Don Parker is a member of Tract No. 7260 Association, Inc., a nonprofit homeowners association (the HOA). This action arises out of his request for inspection of the HOA’s membership list and other records. As far as the HOA is concerned, though, the action also arises out of a dispute the HOA has with another entity known as Fix the City.
Parker used to be the treasurer of the HOA. When Parker was treasurer, a man named Michael Eveloff was the President. Eveloff created Fix the City. According to the HOA, it had been granted the right to control a substantial amount of money. However, Eveloff convinced the HOA board to transfer that money to Fix the City, which used it for purposes which were of no use to the HOA. The HOA is now suing Fix the City for usurping its corporate opportunity. The HOA believes that Parker is aligned with Eveloff and Fix the City, and that he sought access to the membership list and other HOA records [*3] to use them against the HOA in the dispute with Fix the City.
A. Parker’s Request
On January 29, 2015, the same day that the HOA filed suit against Fix the City (the “HOA/Fix the City” action), Parker requested seven categories of corporate information from the HOA, including its membership list. He stated legitimate reasons for which he sought the information. For example, he stated that he wanted to inspect the HOA’s books to make certain the HOA was following generally accepted accounting principles. He explained that he sought the membership list for possible communications with the members to ascertain whether there had been corporate misdeeds.
Parker sought the information under Corporations Code section 8330 et seq.1 Requests under those sections may be made by “[a]ny member” of the corporation (§ 8330, subd. (b)(1)) or by the “authorized number of members” (§ 8330, subd. (b)(2)). When the corporation has less than 1,000 voting members, the “authorized number” is 5 percent of voting power. (§ 5036.) As we shall discuss, different procedures apply depending on whether a single member, or the authorized number of members, is making the request. Parker made his request as “the undersigned member,” and signed it as “Homeowner—Tract 7260.” He did not state that he was [*4] acting for the authorized number of members, nor did he suggest that he had written authorizations from members holding sufficient voting power.
B. The HOA Largely Denies the Request
There is no serious dispute that the HOA did not fully comply with Parker’s request. A representative of the HOA met with Parker briefly and let him review certain of the documents he had sought—but not all of them, and not the membership list.
C. Parker Files His Petition
On April 6, 2015, Parker filed a petition for writ of mandate, seeking an order compelling the HOA to allow him to inspect and copy the membership list and the other books and records he had sought. As in his written request for inspection, Parker asserted he had a right to inspect “in his capacity as a member” of the HOA. The HOA answered the petition, arguing that Parker had no right to inspect because he sought the information for an improper purpose.
D. The HOA Fails to Have the Cases Related
On May 27, 2015, the HOA filed a notice of related case, in order to relate this case (Parker’s writ petition) to the HOA/Fix the City action. In its notice, the HOA argued that Parker was seeking inspection in this case in order to give Fix the [*5] City an unfair advantage in the HOA/Fix the City case. Parker opposed relation on both procedural and substantive grounds. On June 24, 2015, the court in the HOA/Fix the City case denied relation, stating that the writ petition must be decided in a writ and receivers department, and would not be moved to the civil department in which the HOA/Fix the City case was pending.
E. Briefing on the Writ Petition
The briefing on the merits of the writ petition turned to the issue of Parker’s reasons for seeking inspection of the membership list and other documents. Parker filed a declaration stating that he sought the information for legitimate reasons reasonably related to his interests as a member. He expressly represented that he did not make his demand “for any reason related to the other lawsuit subsequently filed by [the HOA] after I made the Demand.”
The HOA presented evidence as to why it believed Parker was, in fact, aligned with Fix the City, and seeking the inspection in order to improperly assist Fix the City in the HOA/Fix the City action. This included evidence of the following facts: (1) Parker had been aligned with Eveloff in convincing the HOA to transfer the corporate opportunity [*6] to Fix the City, which the HOA alleges Parker accomplished by misrepresentation; (2) the HOA’s then-lawyers gave the HOA an opinion that the transfer to Fix the City was lawful; (3) shortly after the transfer to Fix the City was approved by the HOA’s board, Parker and Eveloff simultaneously resigned, effective April 7, 2013; (4) on April 5, 2013, the last business day prior to his resignation, Parker e-mailed the HOA’s bank with an emergency request for a cashier’s check for nearly $49,000 to the attorneys who had opined on the legality of the transfer; (5) the HOA’s current treasurer can conceive of no “legitimate reason” why it would be in the HOA’s interest to pay the attorneys with a cashier’s check or to speed such a payment through as a treasurer’s last official act; (6) that same law firm has since represented Fix the City in other cases (but not the HOA/Fix the City case); and (7) Parker’s counsel in the current writ case is the same firm that is presently representing Fix the City in the HOA/Fix the City case.
In short, the HOA painted the picture of a treasurer who, by misrepresentations and aided by a possibly biased legal opinion, convinced the board to transfer an opportunity [*7] to Fix the City; then quit the board, making certain that the lawyers were paid off; and is now represented by the same firm that is defending Fix the City against the HOA’s allegation that the transfer was improper.
F. The Trial Court Grants the Writ in Part
The trial court recognized that the law requires a member seeking membership lists and other corporate records to have a purpose related to his interests as a member. The court considered the facts and concluded that Parker’s purpose was improper, stating, “Particularly since Parker approved the transfer to Fix the City and his lawyer is defending Fix the City in [the] lawsuit, a reasonable conclusion is that Parker is using his membership status to aid Fix the City in defending the [HOA/Fix the City] lawsuit.”
Based on this factual finding, the court denied Parker’s request for corporate books and records under section 8333. However, the court concluded the membership list must be disclosed. The court relied on section 8331, subdivision (i), which provides that, when a demand for membership lists is made by an authorized number of members, the corporation must seek an order setting aside the demand. If it does not do so, the requesting parties may seek mandamus and “[n]o [*8] inquiry may be made in such proceeding into the use for which the authorized number seek the list.” As the HOA did not timely seek a set-aside order, the court concluded, the HOA’s defense of improper purpose came too late insofar as the request involved the membership list.
G. Further Proceedings
Each party prepared a proposed judgment; each party objected to the other’s proposed judgment. Specifically, the HOA believed the trial court had erred in relying on section 8331, subdivision (i) to allow Parker to access the membership list, as that provision applies only when the “authorized number” seeks a membership list, not when a single member does so. The HOA’s counsel wrote Parker’s counsel suggesting that the court relied on this statute due to Parker’s counsel having misrepresented the law in this regard, and requesting that he inform the court of his error. Parker believed section 8331, subdivision (i) applied, and, in any event, it was too late for the HOA to raise the issue, as it would turn on the factual issue of whether Parker alone constituted the “authorized number” of members—an issue on which neither party had introduced evidence.
H. Judgment, Appeal, and Cross-Appeal
The trial court signed a judgment consistent with its ruling, [*9] granting Parker access to the membership list only. Both parties timely appealed.
DISCUSSION
On appeal, the HOA argues that the court erred in concluding the HOA was procedurally barred from challenging Parker’s purpose in seeking the membership list and that, instead, the court’s finding of Parker’s improper purpose should bar him from inspecting the membership list as well as the other documents. In his cross-appeal, Parker argues that the evidence of improper purpose is insufficient as a matter of law, and his mere assertion of a single proper purpose is sufficient to justify inspection. Considering the cross-appeal first, we conclude the evidence is sufficient to support the trial court’s finding of improper purpose, and that Parker’s assertion of a proper purpose does not defeat this finding. Turning to the HOA’s appeal, we conclude that the court erred in applying the “authorized number” law to Parker’s single member request. Under the proper authority, the HOA timely raised the issue of Parker’s improper purpose, and the court therefore should have also refused Parker’s request to inspect the membership list.
A. Parker Sought the Information for an Improper Purpose
(1) A member’s right [*10] of inspection is limited to purposes reasonably related to the member’s interests as a member. (§§ 8330, subd. (b)(1) [membership lists], 8333 [corporate financial records].) “This limitation is always subject to judicial review to determine whether a lawful purpose exists.” (Dandini v. Superior Court (1940) 38 Cal.App.2d 32, 35 [100 P.2d 535].) A corporation has the burden of proving that the member “will allow use of the information for purposes unrelated to the person’s interest as a member.” (WorldMark, The Club v. Wyndham Resort Development Corp. (2010) 187 Cal.App.4th 1017, 1029 [114 Cal. Rptr. 3d 546].) On appeal, we review the trial court’s order for substantial evidence. (Ibid.) (2) Mere speculation that the member will use the information for an improper purpose is not sufficient to nullify inspection rights; any suspicion must be based on adequate facts in order to justify denial of inspection. (Gilmore v. Emsco Derrick & Equipment Co. (1937) 22 Cal.App.2d 64, 67 [70 P.2d 251] [improper to deny shareholder inspection rights simply because she was employed by a detective agency, when there was no evidence her inspection demand was related to her employment].)
Here, Parker contends the court’s finding of improper purpose is unsupported by the evidence, as it is mere suspicion based on the fact that Parker’s counsel is currently representing Fix the City in “unrelated” litigation. In Parker’s briefing, he repeatedly characterizes the HOA/Fix the City case as [*11] “unrelated,” because the judge in the HOA/Fix the City matter refused to relate the two cases. But the court’s order declining to relate the cases was made on the procedural basis that a writ petition should remain in the writ department; it did not conclude that the two cases were factually unrelated. Indeed, they are factually related. The HOA/Fix the City litigation challenges a transfer which Parker himself recommended, allegedly by misrepresentations. That Parker is pursuing his inspection claim aided by the same counsel defending Fix the City in the HOA/Fix the City litigation certainly gives rise to the reasonable inference that Parker seeks the information to aid Fix the City in defending against that action. Parker argues that this cannot be the case, in that the HOA/Fix the City complaint was not filed until the day he served his inspection demand, and he did not learn of the complaint until it was served on Fix the City some weeks later. But this does not mean that Parker did not know that litigation was imminent, and does not undermine the conclusion that he sought inspection to defend Fix the City against the complaint that he knew was coming.
Moreover, the fact that Parker’s [*12] counsel is representing Fix the City in the HOA/Fix the City litigation is not the only fact supporting the trial court’s conclusion. That Parker and Eveloff simultaneously resigned from the board after pushing through the transfer to Fix the City tends to show Parker is aligned with the HOA’s litigation adversary. That Parker made certain that the HOA’s former counsel, which now represents Fix the City in other matters, was paid by a cashier’s check on an emergency basis confirms the conclusion. The court’s finding that Parker’s purpose was improper is supported by substantial evidence.
(3) Parker also argues that, even if he did have a “secondary” improper purpose, the fact that he asserted a proper purpose, related to his interests as a member, is sufficient to justify his inspection demand. Parker’s authority for this remarkable proposition is Private Investors v. Homestake Mining Co. (1936) 11 Cal.App.2d 488 [54 P.2d 535]. That case does not support the argument. In Homestake Mining, the trial court overruled a corporation’s demurrer to a shareholder’s complaint seeking to enforce inspection rights, and, as the corporation had filed no answer, issued a writ. The corporation sought a writ of supersedeas to stay enforcement pending its appeal. The court, therefore, [*13] was tasked with determining whether the appeal presented a substantial or debatable question. (Id. at p. 496.) One of the corporation’s arguments in its demurrer was that the shareholder’s complaint did not allege that the purposes for which inspection was sought were reasonably related to the plaintiff’s interests as a shareholder, although the reasons themselves had been alleged. The appellate court concluded the corporation’s argument was utterly meritless, in that two of the four reasons alleged by the plaintiff shareholder had been held, in another case, to be reasonably related to shareholders’ interests. The court stated that any one of the four reasons would have been sufficient for the demand, and concluded, “the additional allegation that any one of these alleged purposes was ‘reasonably’ related to the shareholder’s interest would have been but a conclusion of law.” (Id. at p. 497.) In other words, the court held only that when a plaintiff alleges a purpose reasonably related to the plaintiff’s interests as a shareholder, the plaintiff need not also allege the legal conclusion that the purpose was, in fact, reasonably related to the plaintiff’s interests as a shareholder. The court did not hold that [*14] the mere allegation of a proper purpose is sufficient to require inspection when the court has found other, improper purposes are actually motivating the shareholder.2
As the court’s finding that Parker’s purpose was improper is supported by substantial evidence, and Parker’s assertion of a proper purpose does not undermine the conclusion, the trial court did not err in denying Parker inspection of all books and records other than the membership list.
B. Parker’s Improper Purpose Defeats Inspection of the Membership List
We now turn to the HOA’s appeal, which requires a discussion of the procedures that apply when a single member, as opposed to an “authorized number” of members, seeks inspection of a nonprofit corporation’s membership list. This is a legal issue of statutory interpretation, which we review de novo. (Rodriguez v. Solis (1991) 1 Cal.App.4th 495, 502 [2 Cal. Rptr. 2d 50].)
(4) Section 8330, subdivision (a) provides for a right of membership list inspection. Subdivision (b) explains that this right applies to (1) any member and (2) the authorized number of members. Both can inspect only for a purpose reasonably related to their interest as members. The statutes provide for different procedures, however, when the corporation believes inspection is sought for an improper purpose. [*15]
If a demand is made by a single member and the corporation believes the demand is for an improper purpose, the corporation “may deny the member access to the list. In any subsequent action brought by the member [to enforce inspection], the court shall enforce the [inspection right] unless the corporation proves that the member will allow use of the information for purposes unrelated to the person’s interest as a member … .” (§ 8330, subd. (b)(1).)
(5) In contrast, if the demand is made by the authorized number of members, and the corporation believes the demand is for an improper purpose, the corporation “may petition the superior court … for an order setting aside the demand.” (§ 8331, subd. (a).) The corporation has only 10 business days in which to file its petition; this may be extended to 30 days, upon a showing of excusable neglect. (§ 8331, subds. (b) & (c).) If the corporation does not act within that time limit, it “shall comply with the demand … .” (§ 8331, subd. (e).) Where the corporation has not timely sought an order setting aside the demand, the “requesting parties” may petition for mandate to compel the corporation to comply with the demand. At the hearing, the court shall issue the writ unless it appears “that the demand was not made [*16] by an authorized number,” the demand has been complied with, or a protective order is in effect. “No inquiry may be made in such proceeding into the use for which the authorized number seek the list.” (§ 8331, subd. (i).) By the express terms of section 8331, subdivision (i), these procedures apply only when the demand is made by the “authorized number” of members.
In short, when the demand is made by a single member, the burden is on that member to bring court action to enforce the right—although once the action is brought, the corporation has the burden of proving the member’s purpose is improper. But when the demand is made by the authorized number of members, the corporation bears the burden of bringing court action, and must comply with the demand if it does not.
The two different procedures are intentional. The comments based on the legislative committee summary to section 6330, which deals with public benefit nonprofit corporations and which contains language virtually identical to section 8330, explain that prior law allowed a single member to gain access to the membership list, but “a member had to bring suit to enforce this right if the corporation refused to provide the list.” The new law adopts this law “as to the rights of a single member [*17] … .” (Coms. Based on Legis. Com. Summary, Deering’s Ann. Corp. Code (2009 ed.) foll. § 6330, p. 209.) However, the new law provides that upon demand by the “authorized number,” the corporation must provide the list, and if it fails to do so, the authorized number may enforce the right in a summary action. “The committee felt that the above provisions would draw a proper balance between a member’s need for adequate access to membership lists and the need of a corporation to protect itself from wrongful exploitation of an important asset.” (Ibid.)
(6) Here, Parker sought inspection rights of the membership list as a single member. As such, the HOA was not required to seek court involvement, and when Parker brought suit, the HOA had the right to argue that Parker’s purpose was improper. The court’s reliance on section 8331, subdivision (i), to conclude that the HOA was barred from relying on Parker’s improper purpose, was error. As noted above, that subdivision’s provisions apply only when the inspection demand is made by an authorized number of members, not a single member. When Parker sought writ relief, the HOA timely invoked Parker’s improper purpose, and the court found the purpose to be improper. Inspection of the [*18] membership list should have been denied.
In passing, Parker suggests that courts have eliminated the distinction between requests by a “member” and requests by the “authorized number” of members, due to some language in WorldMark, The Club v. Wyndham Resort Development Corp., supra, 187 Cal.App.4th at page 1037. In that case, the inspection demand was made by a single member acting on behalf of the authorized number, and the corporation filed a petition under section 8331 to set aside the demand. (WorldMark, at pp. 1025–1026.) On appeal, the corporation argued that although the member claimed he was acting on behalf of the authorized number of members, his paperwork did not properly establish that the other members had authorized him to act for them. The court responded that the membership list inspection rights “may be exercised either by a single member or by the authorized number of members. Thus, it was not necessary for [the member] to obtain authorizations from any other members in order to exercise his right of inspection and copying.” (Id. at p. 1037.) This was not a holding that the strict procedures applicable to a corporation refusing a membership list request by an authorized number also apply to a corporation refusing the same request by an individual member. Instead, the court was simply acknowledging the uncontroverted [*19] fact that a member alone may, in fact, request inspection of a membership list. The procedures for a corporation’s challenge to such a request were not at issue.
Parker also argues that the HOA may not raise this error for the first time on appeal. He notes that he relied on section 8331, subdivision (i)’s limitations in his briefing in the trial court in support of his petition, and that the HOA did not argue that this subdivision applied only to demands by the authorized number until after the trial court had relied on it to rule in Parker’s favor. Parker argues that it is too late to raise the issue now, when neither party has produced evidence as to whether Parker himself constituted the “authorized number”—that is, if the HOA was so small that Parker alone had a 5 percent voting share.
(7) “‘The rule is well settled that the theory upon which a case is tried must be adhered to on appeal. A party is not permitted to change his position and adopt a new and different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant. [Citation.]’ [Citations.] ‘Application of the doctrine may often be justified on principles of estoppel or waiver.’ [*20] [Citation.]” (Richmond v. Dart Industries, Inc. (1987) 196 Cal.App.3d 869, 874 [242 Cal. Rptr. 184].) Whether “the rule is to be applied is largely a question of an appellate court’s discretion. [Citation.]” (Ibid.) It is generally unfair to allow a party to raise a new theory which contemplates a factual situation not put at issue below. (Ibid.)
Here, we exercise our discretion to allow the HOA to raise on appeal the issue of whether a corporation must seek court relief against a single member’s improper membership list request or forever be barred from challenging the member’s purposes. This is a purely legal issue which raises no new facts. Moreover, public policy interests suggest we intervene to protect the innocent HOA members whose privacy rights are implicated.
On the contrary, it is Parker whose new argument raises factual issues. That is, Parker pursued his request, and his petition, solely on the theory that he was seeking the membership list as a single member. It was only when the HOA suggested that it was not barred from challenging Parker’s purpose that Parker raised the new legal theory that he, in fact, constituted the authorized number of members all by himself. He had not sought the membership list as the authorized number of members, and had not pursued [*21] writ relief on that basis. He cannot for the first time on appeal change his factual theory, and argue that he sought the list as the authorized number, when he never gave the HOA notice that he made his request in anything other than “his capacity as a member.”
DISPOSITION
That part of the court’s judgment requiring disclosure of the HOA’s membership list is reversed. The remainder of the judgment, denying inspection of all other documents due to Parker’s improper purpose, is affirmed. Parker is to pay the HOA’s costs on appeal.
Bigelow, P. J., and Grimes, J., concurred.
* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
1 All undesignated statutory references are to the Corporations Code.
2 Indeed, such a holding would entirely undermine the statutory limitation on inspection rights, as any member with an improper purpose would surely be capable of asserting a proper one.
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)
Parrott v. Mooring Townhomes Association
[Attorney’s Fees; Prevailing Party] The court found the Association to be the prevailing party and awarded its attorney fees after homeowners filed a request for dismissal of complaint.
Peter M. Parrott and Lane P. Parrott, in pro. per., for Plaintiffs and Appellants.
Swedelson & Gottlieb, Los Angeles, David C. Swedelson and Melanie J. Bingham for Defendant and Respondent.
DOI TODD, J.
Peter M. Parrott and Lane P. Parrott appeal the award of attorney fees to respondent [*118] The Mooring Townhomes Association, Inc. (the Association) after appellants voluntarily dismissed their complaint seeking injunctive and declaratory relief against the Association. Appellants contend (1) the trial court was without jurisdiction to award attorney fees after the dismissal of the complaint, and (2) attorney fees are barred by Civil Code section 1717, subdivision (b)(2). We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Association is comprised of owners of town homes located in a common interest development in Hermosa Beach, California. Appellants are members of the Association by virtue of their ownership of one of the town homes. On April 3, 2002, association members were notified that a vote was to be conducted on April 13, 2002 to consider approval of an assessment of $1,372,500, or $18,300, on each of the 75 owners, to replace all of the exterior siding of the town homes with stucco. Counsel for the Association informed the members that this “special assessment” required a vote of 51 percent of a quorum for approval. Appellants objected, asserting that the vote required a “super majority” of 75 percent, i.e., 57 members, pursuant to Section 7.01 of the Association’s Declaration of Covenants, Conditions and Restrictions (CC & R’s), as a “Restoration,” or a 66-2/3 percent vote, i.e., 50 members, to change the “exterior appearance” of the town homes, pursuant to section 9.01(d)(3) of the CC & R’s. At the meeting, a simple majority of 43 of the members approved the proposal.
On April 17, 2002, appellants filed suit against the Association for injunctive and declaratory relief to invalidate the vote approving the special assessment to replace the siding with stucco. On May 13, 2002, appellants sought a temporary restraining order and preliminary injunction, seeking to enforce the “super majority” rule. The court granted a preliminary restraining order to maintain the status quo, but on May 31, 2002, denied a preliminary injunction and dissolved the restraining order.
On June 14, 2002, the Association filed an answer to the complaint. On June 18, 2000, appellants filed a request for dismissal of their complaint without prejudice, which was entered by the clerk the same day.
Pursuant to Civil Code section 1354, subdivision (f), the Association then moved to be determined the prevailing party and for recovery of attorney fees incurred in defending the action. The court found the Association to be the prevailing party and awarded it $9,000 in fees. This appeal followed.
DISCUSSION
The Court Had Jurisdiction to Award Attorney Fees to Respondent
Appellants contend that the trial court “was ousted from subject matter jurisdiction” by their dismissal of the lawsuit under Code of Civil Procedure section 581, subdivision (b). Appellants argue that under Harris v. Billings (1993) 16 Cal.App.4th 1396, 1405, 20 Cal.Rptr.2d 718, a trial court is without jurisdiction to take further action after the plaintiff has voluntarily dismissed the lawsuit.[FN.1]
[*119] Appellants filed this lawsuit pursuant to Civil Code section 1354, subdivision (a), which provides that an owner of a separate interest in a common interest development may enforce covenants and restrictions as set forth in a recorded declaration which is intended to be an enforceable equitable servitude.
Subdivision (f) of Civil Code section 1354, pursuant to which the Association sought recovery of its fees, provides as follows: “In any action specified in subdivision (a) to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs. Upon motion by any party for attorney’s fees and costs to be awarded to the prevailing party in these actions, the court, in determining the amount of the award, may consider a party’s refusal to participate in alternative dispute resolution prior to the filing of the action.”
Relying on Harris v. Billings, supra, 16 Cal.App.4th at page 1405, 20 Cal.Rptr.2d 718, appellants contend that because the statute does not define who is a “prevailing party,” the trial court was required to make this “substantive determination” after the lawsuit had been dismissed and the court had lost subject matter jurisdiction. But as the Association points out, appellants rely on an incomplete statement of the rule set forth in Harris, which provides in full: “Following entry of a dismissal of an action by a plaintiff under Code of Civil Procedure section 581, a `trial court is without jurisdiction to act further in the action [citations] except for the limited purpose of awarding costs and statutory attorney’s fees.‘” (Id. at p. 1405, 20 Cal.Rptr.2d 718, italics added; quoting Associated Convalescent Enterprises v. Carl Marks & Co., Inc. (1973) 33 Cal.App.3d 116, 120, 108 Cal.Rptr. 782.)
Appellants assert that Associated Convalescent Enterprises “held that a trial court cannot make a substantive, prevailing party determination in a case after a voluntary dismissal of the action has been entered by the clerk.” But appellants misstate the holding of the case. The court in Associated Convalescent Enterprises held that the defendants, against whom a lawsuit had been voluntarily dismissed by the plaintiff, could not be considered prevailing parties under the then language of Civil Code section 1717 because no final judgment was rendered. (Associated Convalescent Enterprises v. Carl Marks & Co., Inc., supra, 33 Cal.App.3d at p. 121, 108 Cal.Rptr. 782.) But the appellate court never stated that the trial court was without authority to make this determination after the dismissal had been filed. To the contrary, the appellate court specifically stated that because the prevailing party had a statutory right to recover fees under section 1717, “such issue required a judicial determination.” (Associated Convalescent Enterprises, at p. 120, 108 Cal.Rptr. 782.) Nor do any of the other authorities cited by appellants state that a trial court may not make a determination of “prevailing party” status for the purpose of awarding statutory attorney fees after the action has been voluntarily dismissed.
Appellants attempt to distinguish the case of Heather Farms Homeowners Ass’n. v. Robinson (1994) 21 Cal.App.4th 1568, 26 Cal.Rptr.2d 758, but we find this case to be persuasive. In Heather Farms, a homeowners’ association dismissed its suit without prejudice against an association owner in a dispute to enforce the association’s CC & R’s after the parties had settled the action. The settlement judge made a finding that there were no prevailing parties with respect to the dismissal. [*120] ( Id. at p. 1571, 26 Cal.Rptr.2d 758.) Following the dismissal, the homeowner sought recovery of his attorney fees as a “prevailing party” under Civil Code section 1354. The trial court denied the request, agreeing with the settlement judge that there was no prevailing party within the meaning of section 1354. (Heather Farms, at p. 1571, 26 Cal.Rptr.2d 758.) The appellate court affirmed: “[W]e hold that a trial court has the authority to determine the identity of the `prevailing party’ in litigation, within the meaning of Civil Code section 1354, for purposes of awarding attorney fees.” (Id. at p. 1570, 26 Cal.Rptr.2d 758.) The court clarified that such an analysis should be made by determining who prevailed on a “practical level.” (Id. at p. 1574, 26 Cal.Rptr.2d 758.)
Accordingly, under Harris and Heather Farms, we conclude that the trial court had jurisdiction to determine who was a prevailing party under section Civil Code section 1354, subdivision (f), for the purposes of awarding attorney fees after appellants’ voluntary dismissal.[FN.2]
Civil Code Section 1717(b)(2) Does Not Apply
Appellants also contend that the award of attorney fees was barred by Civil Code section 1717, subdivision (b)(2).[FN.3] Under section 1717(b)(2), attorney fees shall be awarded to a prevailing party in an action on a contract that contains an attorney fee provision, except “[w]here an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.” Appellants assert that since they were seeking to enforce voting provisions in the CC & R’s, which other cases have determined constitute contracts,[FN.4] and because the CC & R’s contain an attorney fee provision (§ 6.24), their voluntary dismissal of the action brings into play the bar of section 1717(b)(2). The Association counters that section 1717(b)(2) has no application where, as here, attorney fees were not sought under a contract, but pursuant to statute (Civ.Code, § 1354, subd. (f)). We agree.
To support their position, appellants rely primarily on the case of Santisas v. Goodin (1998) 17 Cal.4th 599, 71 Cal.Rptr.2d 830, 951 P.2d 399. But Santisas does not advance appellants’ cause. In Santisas, the plaintiffs, who were buyers of a residence, sued the sellers under a real estate purchase agreement with an attorney fee clause. When the buyers dismissed their action with prejudice before trial, the sellers sought to recover their fees under the agreement. Our Supreme Court held that section 1717(b)(2) barred the recovery of attorney fees on the contract claim. (Santisas, at p. 617, 71 Cal.Rptr.2d 830, 951 P.2d 399.) But unlike the situation here, the defendants in Santisas were not seeking to recover their attorney fees under an independent statute. Indeed, the Santisas court itself specifically noted this distinction, stating, “The seller defendants do not contend that their claim for attorney fees [*121] has a legal basis that is both independent of the cost statutes and grounded in a statute or other noncontractual source of law.” (Id. at pp. 606-607, 71 Cal.Rptr.2d 830, 951 P.2d 399.)
In Damian v. Tamondong (1998) 65 Cal.App.4th 1115, 77 Cal.Rptr.2d 262, upon which the Association relies, the court also distinguished Santisas from the situation before it, which is far more analogous to the case at hand. In Damian, the lender under an automobile sales contract, which contained an attorney fee clause, sued the buyer to collect a deficiency judgment after the vehicle had been repossessed. (Id. at p. 1118, 77 Cal.Rptr.2d 262.) Prior to trial, the lender voluntarily dismissed the action. The buyer then sought to recover its attorney fees pursuant to Civil Code section 2983.4 of the Rees-Levering Automobile Sales Finance Act.[FN.5] Like appellants here, the lender opposed the fee request on the ground that section 1717(b)(2) barred the award. The lower court agreed, but the appellate court reversed. The appellate court held that section 1717(b)(2) does not bar a fee award where, as here, the prevailing party’s right to recover fees arises under a fee-shifting statute. In so holding, the court observed that “numerous California courts have held that section 1717 does not control upon dismissal of an `action on a contract’ where a fee-shifting statute, as opposed to a contract, authorizes an award of attorney fees.”[FN.6] (Damian, at p. 1124, 77 Cal.Rptr.2d 262, fn. omitted.) Thus, the court rejected the lender’s contention that even though attorney fees were being sought pursuant to statute, the mere existence of an attorney fee provision in the parties’ contract brings the case within section 1717.
Appellants criticize Damian for not following the proposition in Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 75 Cal.Rptr.2d 376, Jackson v. Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 113 Cal.Rptr.2d 363 and Wong v. Thrifty Corp. (2002) 97 Cal.App.4th 261, 118 Cal.Rptr.2d 276 that application of section 1717(b)(2) is mandatory in contract cases. But these cases are not applicable because in each case the parties were moving to recover attorney fees pursuant to a contract and not, as here, a fee-shifting statute.
Appellants also argue that applying Civil Code section 1354, subdivision (f), but not section 1717(b)(2), violates the rule that statutes which relate to the same subject matter should be harmonized to give effect to both. We disagree. Section 1717(b)(2) deals only with attorney fee provisions in contracts and limits the “prevailing party” specifically “for purposes of this section.” But here, the Association was not seeking [*122] to enforce a contractual attorney fee provision. To the contrary, it was seeking recovery of its fees under an independent fee-shifting statute, and a prevailing party would be entitled to its fees under this statute even without a contractual fee provision. (See, e.g., Heather Farms Homeowners Ass’n. v. Robinson, supra, 21 Cal.App.4th at p. 1572, 26 Cal.Rptr.2d 758.) As the court in Damian v. Tamondong, supra, 65 Cal.App.4th at page 1124, 77 Cal.Rptr.2d 262 noted, the Legislature could have made the attorney fee statutes uniform, but chose not do to so.
We conclude that because the Association sought to recover its attorney fees pursuant to a fee-shifting statute, and not pursuant to a contract, section 1717(b)(2) did not bar an attorney fee award.
DISPOSITION
The order awarding attorney fees is affirmed. Respondent to recover its costs and attorney fees on appeal.
We concur: BOREN, P.J., and NOTT, J.
[*] George, C.J., did not participate therein.
[FN.1] The Association asserts that appellants waived this jurisdictional issue by failing to assert it below. But appellants did raise this issue before the trial court in their pleading entitled “Notice of Objection to Entry of Proposed Judgment Due to the Court’s Lack of Subject Matter Jurisdiction.” In any event, a court’s lack of subject matter jurisdiction is never waived and can be raised for the first time on appeal. (Ash v. Hertz Corp. (1997) 53 Cal.App.4th 1107, 1110-1112, 62 Cal.Rptr.2d 192; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2003) ¶¶ 3:126, 3:128, p. 3-38.)
[FN.2] Because appellants do not otherwise challenge the trial court’s particular finding that the Association was the prevailing party or the reasonableness of the amount of attorney fees awarded, we do not address those issues here.
[FN.3] For convenience, we will hereafter refer to Civil Code section 1717, subdivision (b)(2) as “section 1717(b)(2).
[FN.4] See, e.g., MacKinder v. OSCA Development Co. (1984) 151 Cal.App.3d 728, 738-739, 198 Cal.Rptr. 864; Huntington Landmark Adult Community Assn. v. Ross (1989) 213 Cal.App.3d 1012, 1023-1024, 261 Cal.Rptr. 875.
[FN.5] Civil Code section 2983.4 provides: “Reasonable attorney’s fees and costs shall be awarded to the prevailing party in any action on a contract or purchase order subject to the provisions of this chapter….”
[FN.6] The Damian court also cited to Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 1997) ¶¶ 11:39.20 to 11:39.22, pp. 11-23 to 11-24 for the proposition that “section 1717(b)(2) does not apply where fees are awardable by statute to the `prevailing party’; in such cases, the trial court must determine which party prevailed on a practical level.” (Damian v. Tamondong, supra, 65 Cal.App.4th at p. 1125, 77 Cal.Rptr.2d 262.) Appellants note that in Wegner, Fairbank & Epstein, Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2002) ¶ 17:153.1, p. 17-71, the authors state “Statutory provisions authorizing attorney fees to the `prevailing party’ are not subject to the definition of `prevailing party’ in … Civ[il Code section] 1717.” In their reply brief, appellants ask to correct this misstatement in a published opinion. We decline to so because we find it to be a correct statement of the law.
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The court found the Association to be the prevailing party and awarded its attorneys fees after homeowners filed a request for dismissal of complaint
Mashiri v. Epsten Grinnell & Howell
[FDCPA; Collection Notice] Homeowner successfully alleged that HOA law firm violated FDCPA because pre-lien notice payment demand timeline was inconsistent with the right under the FDCPA to dispute the debt within 30 days of receipt of letter.
Asil Marhiri (argued), Mashiri Law Firm, San Diego, California, for Plaintiff-Appellant. Anne Lorentzen Rauch (argued), Mandy D. Hexom, and Rian W. Jones, Epsten Grinnell & Howell APC, San Diego, California, for Defendants-Appellees.
OPINION
[985] PAEZ, Circuit Judge:
Zakia Mashiri (“Mashiri”) appeals the dismissal of her complaint alleging that the [986] law firm of Epsten Grinnell & Howell and attorney Debora M. Zumwalt (collectively, “Epsten”) committed unlawful debt collection practices in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq., the Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code §§ 1788 et seq., and the California Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq. Mashiri alleges that Epsten sent her a debt collection letter in May 2013 demanding payment of an assessment fee from her homeowners’ association. She alleges that the letter contained language that overshadowed and conflicted with her FDCPA right to thirty days in which to dispute the debt. On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the district court dismissed Mashiri’s FDCPA claims, concluding that the collection letter satisfactorily explained her right to dispute the debt and therefore did not improperly threaten to record a lien. Because Mashiri’s state law claims were dependant on her FDCPA claims, the court also dismissed Mashiri’s Rosenthal Act and Unfair Competition Law claims.
We hold that the district court erred. Mashiri has alleged a plausible claim for relief because the collection letter contains language that overshadows and conflicts with her FDCPA debt validation rights when reviewed under the “least sophisticated debtor” standard. We also reject Epsten’s argument, raised for the first time on appeal, that in sending the collection letter, it merely sought to perfect a security interest and is therefore subject only to the limitations in § 1692f(6). We hold that Epsten is subject to the full scope of the FDCPA. We reverse and remand for further proceedings consistent with this Opinion.
I.
Mashiri alleges that she owns a home in San Diego, California and is a member of the Westwood Club homeowners’ association (“HOA”).1 As a member, Mashiri incurs annual assessment fees. Mashiri failed to pay in a timely manner the $385 fee assessed in July 2012.
In a collection letter dated May 1, 2013 (the “May Notice”), Epsten, on behalf of the HOA, sought to collect Mashiri’s overdue assessment fee, as well as corresponding late, administrative, and legal fees. The May Notice also included a warning that failure to pay the assessment fee would result in the HOA recording a lien against Mashiri’s property. This notice is required by section 5660 of the Davis-Stirling Common Interest Development Act, Cal. Civ. Code §§ 4000 et seq., which governs the collection of overdue homeowners’ association assessments.2 The May Notice stated, in pertinent part:
This letter is to advise you that $598.00 is currently owing on your Association assessment account. Failure to pay your assessment account in full within thirty-five (35) days from the date of this letter will result in a lien being recorded against your property upon authorization of the Board of Directors. All [987] collection costs incurred will be charged to your account.
Unless you notify this office within 30 days of receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within thirty (30) days of receiving this notice that the debt, or any portion thereof, is disputed, we will obtain verification of the debt or a copy of the judgment against you (if applicable) and a copy of [] such verification or judgment will be mailed to you.
. . . .
You have the right to inspect the association records pursuant to Corporations Code Section 8333. You may submit a written request to meet with the Board to discuss a payment plan for this debt. You shall not be liable to pay the charges, interest and costs of collection if it is determined the assessment was paid on time to the Association. You have the right to dispute the assessment debt by submitting a written request for dispute resolution to the association pursuant to the association’s “meet and confer” program required in Civil Code Section [5900] et seq., and the Board offers to participate in dispute resolution. You have the right to request alternative dispute resolution with a neutral third party pursuant to Civil Code Section [5925] et seq. before the association may initiate foreclosure against your separate interest, except that binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.
. . . .
IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION.
. . . .
This is a communication from a debt collector attempting to collect a debt and any information obtained will be used for that purpose.
Accompanying the May Notice, Epsten included copies of Mashiri’s account statement and the HOA’s assessment collection policy.
On or about May 20, 2013, in a letter to Epsten, Mashiri disputed the debt and requested that Epsten validate it. Mashiri also stated that she never received a bill for the July 2012 assessment fee. Approximately two weeks later, on June 5, Epsten responded with another copy of Mashiri’s account statement.
On June 18, 2013, Epsten, on behalf of the HOA, recorded a lien on Mashiri’s property in the amount of $928, reflecting the $598 she previously owed and $330 in additional legal fees. Three days later, on June 21, Mashiri sent the HOA a check for $385. In a letter accompanying the check, Mashiri disputed the balance of the debt. As required by the Davis-Stirling Act, on June 24, Epsten notified Mashiri of the lien. Cal. Civ. Code § 5675(e).
Mashiri ultimately filed her complaint alleging violations of the FDCPA, the Rosenthal Act, and the Unfair Competition Law based on the contents of the May Notice. Epsten subsequently moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. The district court granted Epsten’s motion to dismiss, concluding, inter alia, that the May Notice “complied with the clarity and accuracy requirements” of the FDCPA and therefore “did not threaten to take action that could not legally be taken” as prohibited by the FDCPA. The district court dismissed Mashiri’s state law claims as dependant on [988] her FDCPA claims. Mashiri timely appealed.
II.
We review de novo a dismissal under Rule 12(b)(6). Ariz. Students’ Ass’n v. Ariz. Bd. of Regents, 824 F.3d 858, 864 (9th Cir. 2016). For purposes of our review, we accept the complaint’s well-pleaded factual allegations as true and construe all inferences in favor of Mashiri. Id. The “complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (internal quotation marks omitted). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).
III.
Congress enacted the FDCPA “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). In furtherance of these stated goals, “[t]he FDCPA subjects ‘debt collectors’ to civil damages for engaging in certain abusive practices while attempting to collect debts.” Ho v. ReconTrust Co., NA, 840 F.3d 618, 620 (9th Cir. 2016).
Mashiri challenges the district court’s ruling that she did not allege a plausible violation of § 1692g of the FDCPA, and its corresponding dismissal of the § 1692e(5) and state law claims that depended on her § 1692g claim. See 15 U.S.C. § 1692g. She argues that the May Notice violated § 1692g for two reasons. First, she contends that the May Notice demanded payment sooner than the expiration of the debtor’s thirty-day dispute period. Second, she claims that by threatening to record a lien within thirty-five days, irrespective of whether she disputed the debt, Epsten failed to explain effectively a debtor’s right to dispute the debt. Epsten counters that it was not attempting to collect a debt and therefore the May Notice needed to comply only with the obligations in § 1692f(6) of the FDCPA relating to enforcement of security interests. Epsten further argues that even if it is subject to § 1692g, it complied with the statutory requirements. We turn first to whether Epsten is subject solely to § 1692f(6), and then discuss whether Mashiri has sufficiently alleged a violation of § 1692g and related claims.
A.
For the first time in its answering brief, Epsten argues that it is subject only to § 1692f(6)3 because it sent the May Notice to perfect the HOA’s right to record an assessment lien against Mashiri’s property under California Civil Code section 5660. “Ordinarily, we decline to consider arguments raised for the first time on appeal.” Dream Palace v. Cty. of Maricopa, 384 F.3d 990, 1005 (9th Cir. 2003). [989] We have, however, recognized an exception where “the issue presented is purely one of law and either does not depend on the factual record developed below, or the pertinent record has been fully developed.” Cold Mountain v. Garber, 375 F.3d 884, 891 (9th Cir. 2004) (quoting Bolker v. Commissioner, 760 F.2d 1039, 1042 (9th Cir. 1985)). Here, Epsten presents a legal issue concerning the applicability of FDCPA provisions when a debt collector seeks, in part, to perfect a security interest and preserve the creditor’s right to record a lien. The pertinent facts, including the communications between Epsten and Mashiri, are not disputed. In addition, Mashiri responded to Epsten’s argument in her reply brief and therefore suffers no prejudice if we consider the argument. See Dream Palace, 384 F.3d at 1005. Accordingly, we address the issue.
The FDCPA defines “debt” as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” 15 U.S.C. § 1692a(5) (emphasis supplied); see also Ho, 840 F.3d at 621 (“For the purposes of the FDCPA, the word ‘debt’ is synonymous with ‘money.'”). “The FDCPA imposes liability only when an entity is attempting to collect debt.” Ho, 840 F.3d at 621.
The contents of the May Notice plainly belie Epsten’s contention that it did not attempt to collect a debt. The May Notice requested payment of Mashiri’s homeowner’s assessment fee, stating: “This letter is to advise you that $598.00 is currently owing on your Association assessment account. Failure to pay your assessment account in full within thirty-five (35) days from the date of this letter will result in a lien being recorded against your property.” See supra at 5 (emphasis added). Mashiri’s obligation to pay the assessment fee relates to her household and arises from her membership in the HOA. The overdue assessment fee is a debt under § 1692a(5).
Epsten nonetheless argues that, based on the definition of a “debt collector” under § 1692a(6),4 entities engaged in the enforcement of security interests are subject only to § 1692f(6). There was, however, no existing security interest for Epsten to enforce at the time it sent the May Notice because a lien had yet to be recorded against Mashiri’s property. Rather than seeking to enforce an existing security interest or lien, the May Notice sought to collect Mashiri’s overdue assessment fee and to make necessary disclosures that would perfect the HOA’s security interest and permit it to record a lien at a later date. See Cal. Civ. Code § 5660 (providing that “[a]t least 30 days prior to recording a lien upon the separate interest of the owner of record to collect a debt that is past due under Section 5650, the association shall notify the owner of record in writing by certified mail” of specified information).5
[990] In addition, Epsten’s interpretation of § 1692a(6) is incorrect. As we recently observed in Ho, “[i]f entities that enforce security interests engage in activities that constitute debt collection, they are debt collectors.” 840 F.3d at 622. Ho addressed whether a trustee’s communications—limited solely to pursuing non-judicial foreclosure—were debt collection activities for purposes of the FDCPA. Id. at 619-20, 623. In contrast to this case, the trustee sought to enforce a secured loan and sent a notice of default that did not request payment but instead “merely informed Ho that the foreclosure process had begun, explained the foreclosure timeline, apprised her of her rights and stated that she could contact [the lender] (not [the trustee]) if she wished to make a payment.” Id. at 623. We held that where an entity is engaged solely in the enforcement of a security interest and not in debt collection, like the trustee and unlike Epsten, it is subject only to § 1692f(6) rather than the full scope of the FDCPA. See id. at 622 (“We do not hold that the FDCPA intended to exclude all entities whose principal purpose is to enforce security interests. . . . We hold only that the enforcement of security interests is not always debt collection.”).
Because Epsten sent the May Notice as a debt collector attempting to collect payment of a debt—irrespective of whether it also sought to perfect the HOA’s security interest and preserve its right to record a lien in the future—it is subject to the full scope of the FDCPA, including § 1692g and § 1692e. See id. Epsten’s attempt to escape liability under § 1692g and § 1692e therefore fails.
B.
As noted above, Mashiri argues that she alleged a violation of § 1692g on two grounds. First, she argues that the May Notice requested payment by a date that was inconsistent with a debtor’s right to dispute the debt within thirty days from receipt of the notice. Second, she argues that Epsten’s threat to record a lien within thirty-five days of the date of the letter overshadowed her right to dispute the debt. We address each of these arguments below, and hold that Mashiri has alleged a plausible § 1692g violation on both grounds.
The FDCPA requires a debt collector to send the debtor a written notice that informs the debtor of the amount of the debt, to whom the debt is owed, her right to dispute the debt within thirty days of receipt of the letter, and her right to obtain verification of the debt.6 Because the [991] notice must inform the debtor of her right to obtain verification of the debt, the notice is commonly referred to as a “validation” notice. However, “[t]he statute is not satisfied merely by inclusion of the required debt validation notice; the notice Congress required must be conveyed effectively to the debtor.” Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir. 1988).
Importantly, notice of the debtor’s right to dispute the debt and to request the name of the original creditor must not be overshadowed or inconsistent with other messages appearing in the communication.7 15 U.S.C. § 1692g(b). Overshadowing or inconsistency may exist where language in the notice would “confuse a least sophisticated debtor” as to her validation rights. Terran v. Kaplan, 109 F.3d 1428, 1432 (9th Cir. 1997). In other words, “[u]nder the law of this circuit, whether the initial communication violates the FDCPA depends on whether it is likely to deceive or mislead a hypothetical ‘least sophisticated debtor.'” Id. at 1431 (internal quotation marks omitted).
1.
Turning to Mashiri’s first basis for a § 1692g violation, Mashiri claims that the May Notice did not provide a debtor thirty days in which to dispute the debt. We have previously observed that a § 1692g violation would result if a debt collector demanded payment prior to the expiration of the thirty-day dispute period to which debtors are entitled. As we explained in Terran:
A demand for payment within less than the thirty-day timeframe necessarily requires the debtor to [forgo] the statutory right to challenge the debt in writing within thirty days, or suffer the consequences. For this reason, requiring a payment that would eliminate the debt before the debtor can challenge the validity of that debt directly conflicts with the protections for debtors set forth in section 1692g.
Id. at 1434.
In this case, the May Notice demanded payment within thirty-five days of the date of the letter, which is inconsistent with a debtor’s right to dispute a debt within thirty days of receipt of the letter. By the time a debtor receives such a letter, there may be fewer than thirty days before payment is due.8 Moreover, even if the debtor received the letter promptly, in order for the payment to be received within thirty-five days of the date of the letter, the debtor would likely need to mail the payment prior to the thirtieth day of the dispute period. See Chauncey v. JDR Recovery Corp., 118 F.3d 516, 519 (7th Cir. 1997). The least sophisticated debtor, when [992] confronted with such a notice, would reasonably forgo her right to thirty days in which to dispute the debt and seek verification. The infringement of the debtor’s right to thirty days in which to dispute the debt plausibly violates § 1692g. See Terran, 109 F.3d at 1434.
2.
Mashiri alleged a plausible § 1692g violation for the additional reason that the least sophisticated debtor may not understand, on the basis of the May Notice, that upon notifying Epsten of a dispute, debt collection activities would “cease . . . until the debt collector obtains verification of the debt . . . and a copy of such verification . . . is mailed to the consumer by the debt collector.” 15 U.S.C. § 1692g(b). Rather, the May Notice stated that a lien “will” be recorded if Mashiri “fail[ed] to pay.” The least sophisticated debtor would likely (and incorrectly) believe that even if she disputed the debt and Epsten had not yet mailed verification of the debt to her, Epsten would record a lien on the thirty-fifth day after the date of the letter. “In this manner, the letter effectively overshadows the disclosed right to dispute by conveying an inaccurate message that exercise of the right does not have an effect that the statute itself says it has.” Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98, 105 (1st Cir. 2014).
Epsten relies on Shimek v. Weissman, Nowack, Curry & Wilco, P.C., 374 F.3d 1011 (11th Cir. 2004) (per curiam) for the proposition that, upon receipt of a request for debt verification, the FDCPA does not require a debt collector to take affirmative action to stop the recording of a lien that had already been filed. That case, however, correctly recognizes that “sending a lien to the clerk of the court [for filing] after a verification of the debt was requested is clearly contrary to § 1692g(b)’s requirement that a debt collector shall ‘cease collection of the debt’ once the verification is requested.” Id. at 1014. In addition, Shimek is factually inapposite because “[u]nder Georgia law, the filing of a lien by a creditor is a necessary step for securing payment of a debt,” and the Eleventh Circuit “assum[ed] the propriety of filing the lien with the Court Clerk contemporaneously with the demand letter.” Id. at 1013-14. In California, pursuant to the Davis-Stirling Act, a homeowners’ association may not record a lien with a county recorder’s office contemporaneously with mailing the demand letter, but instead must provide notice of the debt at least thirty days prior to recording a lien, during which time a debtor-homeowner may dispute the debt. Cal. Civ. Code § 5660.
The obligations imposed on the HOA pursuant to the FDCPA, including the provision requiring suspension of debt collection activities pending debt verification, are thus consistent with the requirements the HOA must satisfy pursuant to the Davis-Stirling Act. The HOA’s right to record a lien thirty days after providing notice under section 5660 is not absolute, but instead is dependent on whether the homeowner disputes the debt. Indeed, pursuant to the Davis-Stirling Act, if the homeowner disputes the debt and requests an informal dispute resolution proceeding, the HOA must participate in dispute resolution “prior to recording a lien.” Cal. Civ. Code § 5670.
In this context, the threat of recording of a lien is a debt collection activity, which under the FDCPA must cease if the debtor-homeowner disputes the debt and the debt collector has not yet mailed verification of the debt to the debtor-homeowner. The Davis-Stirling Act does not mandate otherwise. Epsten was obligated to explain such debt validation rights in an effective manner. See Swanson, 869 F.2d at 1225. In [993] failing to do so, the threat of filing a lien overshadowed Mashiri’s right to dispute the debt, in violation of § 1692g. Because Mashiri has plausibly alleged a violation of § 1692g on the basis of inconsistency and overshadowing, we reverse the district court’s dismissal of that claim.
IV. Conclusion
We hold that Mashiri has plausibly alleged a claim under § 1692g, and we reverse the district court’s dismissal of that claim. Because we reverse the district court’s dismissal of Mashiri’s § 1692g claim, we reverse the district court’s dismissal of Mashiri’s claims that depended on § 1692g and arose under § 1692e(5), the Rosenthal Act, and the Unfair Competition Law.9
REVERSED and REMANDED.
1 The facts are derived from the complaint and its accompanying exhibits, as well as documents that the district court judicially noticed.
2 The Davis-Stirling Act “consolidated the statutory law governing condominiums and other common interest developments.” Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 62 Cal. Rptr. 3d 177, 183 (Cal. Ct. App. 2007) (internal quotation marks omitted). In enacting the Davis-Stirling Act, the California legislature “intended to protect homeowners from being foreclosed upon for small sums of delinquent assessments.” Huntington Cont’l Town House Ass’n v. Miner, 222 Cal. App. 4th Supp. 13, 167 Cal. Rptr. 3d 609, 612 (Cal. App. Dep’t Super. Ct. 2014).
3 Section 1692f(6) prohibits:
Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if—
(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;
(B) there is no present intention to take possession of the property; or
(C) the property is exempt by law from such dispossession or disablement.
4 Section 1692a(6) provides, in pertinent part:
The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. . . . For the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.
5 We also note that the Rosenthal Act, which functions as “the state analogue of the FDCPA,” does not exempt homeowners’ associations attempting to collect overdue assessment fees pursuant to California Civil Code § 5660. See Ho v. ReconTrust Co., NA, 840 F.3d 618, 623 n.8 (9th Cir. 2016).
6 Section 1692g(a) provides that the debt collector must notify the debtor of the following:
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
7 The terms “overshadowing” and “inconsistent” are often used interchangeably. See, e.g., Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98, 104 (1st Cir. 2014) (“We note at the outset that, in the section 1692g milieu, courts do not always distinguish between violations based on the overshadowing of a validation notice and violations based on inconsistencies.”).
8 Although Epsten asks us to take judicial notice of a certified mail receipt showing that Mashiri received the May Notice on May 2, 2013, the district court did not consider the certified mail receipt, and we decline to do so as well. The date on which Mashiri received the May Notice is irrelevant because we undertake an “objective analysis that takes into account whether the least sophisticated debtor would likely be misled by a communication.” Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1017 (9th Cir. 2012) (emphasis added and internal quotation marks omitted).
9 To the extent Mashiri asserted claims under § 1692e, the Rosenthal Act, or the Unfair Competition Law on grounds unrelated to her § 1692g claim, Mashiri does not challenge the district court’s dismissal of those claims.
Related Links
“Pre-Lien Demands and FDCPA Concerns” – Published on HOA Lawyer Blog (April, 2017)
Almanor Lakeside Villas Owners Association v. Carson
[Attorney’s Fees; Prevailing Party] Where both sides achieved some positive net effect as a result of the court’s ruling, a prevailing party determination is made by comparing the practical effect of the relief attained by each; After resolving the issue of prevailing party in an action to enforce the governing documents, a trial court has no discretion to deny attorney’s fees.
Mellen Law Firm, Matthew David Mellen and Sarah Adelaars for Defendants, Cross-complainants and Appellants.
Gagen, McCoy, McMahon, Koss and Richard C. Raines for Plaintiff, Cross-defendants and Respondent.
OPINION
[*765]
GROVER, J.—The Almanor Lakeside Villas Owners Association (Almanor) is the homeowners association for the common interest development where appellants James and Kimberly Carson own properties. Almanor sought to impose fines and related fees of $19,979.97 on the Carsons for alleged rule violations related to the Carsons’ leasing of their properties as short-term vacation rentals. The Carsons disputed both the fines and Almanor’s authority to enforce those rules, which the Carsons viewed as unlawful and unfair use restrictions on their commercially zoned properties. Almanor sued, contending that its enforcement of rules against the Carsons was proper under governing law and the covenants, conditions and restrictions (CC&Rs) for the development. The Carsons cross-complained for breach of contract, private nuisance, and intentional interference with prospective economic advantage. The Carsons contended their properties were exempt based on contract and equitable principles and argued Almanor’s actions amounted to an unlawful campaign to fine them out of business.
Following a bench trial, the court ruled against the Carsons on their cross-complaint but also rejected as unreasonable many of the fines that Almanor had sought to impose. The court upheld a subset of the fines pertaining to the use of Almanor’s boat slips and ordered the Carsons to pay Almanor $6,620 in damages. On the parties’ competing motions for attorney’s fees, the court determined Almanor to be the prevailing party and awarded $101,803.15 in attorney’s fees and costs.
On appeal, the Carsons challenge the disposition of their cross-complaint and the award of attorney’s fees in favor of Almanor. The Carsons contend that uncontroverted evidence supported a finding in favor of their breach of contract cause of action because they paid Almanor $1,160 in fines that the court ultimately disallowed. The Carsons also contend that the trial court abused its discretion when it deemed Almanor the prevailing party despite having disallowed a majority of the fines it sought to impose. The Carsons also challenge the amount of the attorney’s fees award in light of Almanor’s limited success at trial. Almanor responds that the Carsons have waived any appeal of alleged error in the court’s finding on damages because they failed to raise the issue in response to the trial court’s proposed statement of decision. As to the award of attorney’s fees, Almanor argues that the court correctly determined it to be the prevailing party and did not abuse its discretion in awarding Almanor’s full fees. For the reasons stated here, we will affirm the judgment as to the Carsons’ cross-complaint, the determination of Almanor as prevailing party, and the award of attorney’s fees.
[*766]
I. FACTUAL AND PROCEDURAL HISTORY
A. History of the Properties and Underlying Dispute
The Kokanee Lodge and Carson Chalets are located within the Almanor Lakeside Villa development on Lake Almanor in Plumas County.1 Almanor is a homeowners association operating under the Davis-Stirling Common Interest Development Act (Davis-Stirling Act), now codified at sections 4000 through 6150 of the Civil Code (see Civ. Code, former §§ 1350–1376). The lodge and two chalets (the properties) are among only a few lots in the Almanor development that accommodate commercial use; the development otherwise is strictly residential. The properties’ commercial designation stems from the historic use of the lodge, which preexisted the subdivision and operated as a hunting, fishing, and vacation lodge.
The Carsons purchased the properties in 2001 and 2005 for use as short-term vacation rentals. The properties are subject to the CC&Rs of the Almanor development. As relevant to this appeal, section 4.01 of the CC&Rs designated certain lots, including the properties, that could be utilized for commercial or residential purposes. Section 4.09 prohibited owners from using their lots “for transient or hotel purposes” or renting for “any period less than 30 days.” Section 4.09 also required owners to report any tenants to Almanor’s board of directors by notifying the board of the name and address of any tenant and the duration of the lease.
In approximately 2009, the Almanor board changed composition and began to develop regulations to enforce the CC&Rs. By way of example, the 2010 rules sought to enforce section 4.09 of the CC&Rs to limit rentals to a minimum of 30 days. The 2011 and 2012 rules exempted the commercial lots from the 30-day rental restriction but maintained the requirement to provide a copy of any rental agreement to the association seven days before the rental period. The rules also purported to regulate other aspects of association life affecting the properties, such as parking, trash storage, use of common areas, and issuing decals for any boats using Almanor boat slips. And they set a schedule of fines for violations.
The Carsons believed their properties were exempt from the use restrictions of the CC&Rs, including the section 4.09 restriction on short-term rentals and the related reporting requirements. Several historic factors supported this belief, including that the Carsons had operated the properties as a short-term vacation rental business for many years. The Carsons similarly did not believe that the rules adopted by the board in 2010, 2011, and 2012 applied to their properties.
[*767]
Although the Carsons initially tried to comply with the renter reporting requirements, they continued to insist that section 4.01 of the CC&Rs and the long-established commercial status of the properties exempted them from the use restrictions and related rules. The board issued its first fines against the Carsons in September 2010, and continued to fine the Carsons throughout 2011 and 2012 for a wide range of purported violations, which the Carsons disputed.
The Carsons had stopped paying homeowners association dues on the properties for about two years, for reasons unrelated to the dispute over fines. In June 2012, the Carsons paid $14,752.35 toward delinquent dues on the properties, instructing that all of the money be applied to unpaid dues, not to the disputed fines. They stated in writing that the lump payment brought them current on dues. At trial, the parties disagreed whether the June 2012 payment actually covered the balance of dues that the Carsons owed. According to the Carsons, Almanor improperly applied $1,160 of the payment toward the fines imposed in 2011. Almanor insisted that a balance of unpaid dues remained and was reflected on the following months’ bills to the Carsons, along with the unpaid fines, attorney’s fees, and accruing interest.
B. Trial Court Proceedings
In its trial brief, Almanor estimated that the Carsons owed about $54,000 in dues, fees, fines and interest. Having cross-complained for damages and equitable relief based on breach of contract, private nuisance, and intentional interference with prospective economic advantage, the Carsons sought to establish that Almanor’s imposition of fines was “totally unlawful,” arbitrary and unfair, and reflected an effort to try to “fine the Carson’s [sic] business out of existence.” They argued that the “CC&Rs clearly do not contemplate the commercial businesses that sit on the subdivision’s land. In fact, these commercial lots are exempt by contract, based on principles of waiver, and by public policy.” The Carsons asserted that they “have been nearly put out of business and, even if Cross-Defendant’s conduct halts now, they will have immense lost income for the next 5–10 years.”
After a bench trial, the court issued its tentative decision. It concluded that the 30-day minimum rental restriction imposed by section 4.09 of the CC&Rs presented an “obvious conflict” with section 4.01, which “expressly allow[ed] the Carsons to use their lots for commercial purposes (presumably including lodging, since the properties are, in fact, lodges).” Citing Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 386 [33 Cal. Rptr. 2d 63, 878 P.2d 1275] (Nahrstedt), the trial court determined that it would be unreasonable to strictly enforce the absolute use restrictions against the Carsons. It explained: “Given the conflict between Section 4.01 and 4.09, the [*768] general rule espoused in Nahrstedt, that a use restriction in an association’s recorded CC&Rs is presumed to be reasonable and ‘will be enforced uniformly against all residents of the common interest development,’ should not apply.” The court noted, however, that it did “not … accept the Carsons’ argument that the conflict completely eliminates Almanor’s ability to impose reasonable use restrictions on the Carsons’ lots, consistent with the Carsons’ right to use their lots for commercial lodging purposes.”
Of the fines imposed in 2010, 2011, and 2012, the court concluded only the fines pertaining to the nonuse of Almanor’s boat decals were reasonable. Those fines amounted to $6,620, including late charges and interest. The court did not find adequate support for Almanor’s claim that the Carsons continued to owe unpaid dues. As to the Carsons’ cross-complaint, the court found they had not proven by competent evidence that Almanor’s alleged breaches of the CC&Rs caused damages or resulted in discernible lost profits.
The Carsons requested a statement of decision, asking whether they had suffered damages based on a former renter’s decision not to return to the properties after alleged mistreatment by Almanor board members, and whether violations relating to boat slips and decals had been properly imposed. The court issued a proposed statement of decision, to which neither party responded, followed by a final statement of decision and judgment. The final statement of decision was consistent with the tentative decision and repeated the court’s findings regarding the applicability of reasonable use restrictions to the Carsons’ properties. On the cross-complaint, the court concluded that even assuming Almanor had breached the CC&Rs, the Carsons had not proven damages. The Carsons were ordered to pay $6,620.00 in damages to Almanor, and they received nothing on their cross-complaint.
C. Cross-motions for Attorney’s Fees and Costs
The parties moved for attorney’s fees and costs pursuant to the fees provision of the Davis-Stirling Act, Civil Code section 5975. Civil Code section 5975 awards attorney’s fees and costs to the prevailing party in an action to enforce the CC&Rs of a common interest development.
Each side argued it was the prevailing party under the statute. Because the statement of decision confirmed that the properties’ commercial zoning did not preclude reasonable use restrictions in the CC&Rs, Almanor argued that it had achieved one of its main litigation objectives. Almanor also argued that having prevailed on a portion of the fines claimed, an attorney’s fees award was mandatory under the Davis-Stirling Act.
The Carsons asserted that they had achieved their main objective, which was to deny Almanor the financial windfall it sought and to establish that the fines were unreasonable and imposed a severe and unfair burden on their lawful, commercial use of the properties. They also argued that monetarily, Almanor had prevailed as to only $6,620 out of $54,000. The Carsons asserted that this net monetary recovery was insufficient because they had largely prevailed on the pivotal issue at stake. Both sides challenged the other’s request for fees as unreasonable and excessive.
The trial court held a hearing and took the motions under submission. In a brief written order, it deemed Almanor the prevailing party. The court granted Almanor’s motion for $98,535.50 in attorney’s fees and $3,267.65 in costs and denied the Carsons’ motion. The court annotated the final judgment to reflect the $101,803.15 in attorney’s fees and costs, in addition to the $6,620 in damages.
II. DISCUSSION
The Carsons’ appeal presents three distinct issues. We first consider whether the trial court erred in disposing of the Carsons’ cause of action for breach of contract. We then consider the parties’ competing claims for attorney’s fees and whether the trial court erred in deeming Almanor the prevailing party. Last we consider whether the trial court abused its discretion in awarding Almanor its full attorney’s fees.
A. Disposition of the Carsons’ Cause of Action for Breach of Contract
The Carsons challenge the trial court’s determination that they failed to prove damages for their breach of contract cause of action. Almanor argues that the Carsons waived any alleged error regarding contract damages by failing to raise the issue in response to the court’s tentative decision.
- Standard of Review
On appeal from a determination of failure of proof at trial, the question for the reviewing court is “‘whether the evidence compels a finding in favor of the appellant as a matter of law.’” (Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 466 [126 Cal. Rptr. 3d 301] (Sonic).) Specifically, we must determine “‘whether the appellant’s evidence was (1) “uncontradicted and unimpeached” and (2) “of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.”’” (Ibid., quoting In re I.W. (2009) 180 Cal.App.4th 1517, 1527–1528 [103 Cal. Rptr. 3d 538].) We are also guided by the principle that the trial court’s judgment is presumed to be correct on appeal, and we indulge all intendments and presumptions in favor of its correctness. (In re [*770] Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 [275 Cal. Rptr. 797, 800 P.2d 1227] (Arceneaux).)
- Waiver
(1) Almanor contends the Carsons failed to preserve for appeal the issue of damages from fines paid, which according to Almanor is actually a claim for offset.2 Almanor points to Arceneaux, in which the California Supreme Court clarified the procedural basis for the presumption on appeal that a judgment or order of a lower court is correct. (Arceneaux, supra, 51 Cal.3d at p. 1133.) The court in Arceneaux held that pursuant to Code of Civil Procedure section 634,3 a litigant who fails to point the trial court to alleged deficiencies in the court’s statement of decision waives the right to assert those deficiencies as errors on appeal.4 (Arceneaux, at p. 1132.) Because the Carsons failed to raise the alleged error regarding damages when the court issued its proposed statement of decision, Almanor argues that any assertion of error is waived. The Carsons respond that Arceneaux and section 634 are inapposite because their appeal is not based on an issue that was omitted or treated ambiguously in the statement of decision.
(2) We agree that Arceneaux is of limited application because the Carsons’ appeal as to this issue is premised on an unambiguous factual finding in the statement of decision. A trial court’s statement of decision need not address all the legal and factual issues raised by the parties; it is sufficient that it set forth its ultimate findings, such as on an element of a claim or defense. (Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 559 [66 Cal. Rptr. 3d 1].) Here the court’s statement of decision did not specifically reference the $1,160 damages claim now asserted by the Carsons, but the court did address the element of damages, finding that it had not been proven by competent evidence.5 Inasmuch as the trial court stated its finding on damages and did not omit the issue or treat it ambiguously, the Carsons’ [*771] failure to identify deficiencies in that aspect of the proposed statement of decision did not result in waiver of the type discussed in Arceneaux, supra, 51 Cal.3d at pages 1132–1133.
Because the Carsons never asked the trial court to make specific findings on the theory of damages they now appeal, the doctrine of implied findings remains applicable. That is, we presume that the trial court made the necessary factual findings in support of its ultimate finding on damages. (§ 634; Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 61–62 [58 Cal. Rptr. 3d 225] [appellate court infers all necessary factual findings in support of prevailing party on issue to support judgment, then reviews the implied findings under substantial evidence standard].) We turn to a review of those findings.
- The Carsons’ Proof of Damages
To support their contention that the trial court erred in finding insufficient proof of damages on their breach of contract cause of action, the Carsons draw on the court’s findings that most of the fines imposed by Almanor were unreasonable. The Carsons assert that because Almanor imposed fines ultimately disallowed by the court, they must have proven a breach of the CC&Rs. They further assert that evidence of their payment of a portion of those fines was uncontroverted. The Carsons point to their June 2012 payment of $14,752.35 to bring the dues current on their properties and argue that Almanor applied $1,160 to fines the court determined were not owed. They argue that their payment constituted cognizable, measurable damage equivalent to the amount paid, plus interest. (Civ. Code, § 3302.) The Carsons argue that instead of considering this proof, the court focused solely on the Carsons’ evidence pertaining to loss of business income, which the court ultimately concluded was too speculative.
It is uncontroverted that the Carsons paid Almanor a lump sum of $14,752.35 intended to bring current the dues on the properties. However, whether this amount in fact paid the dues in full, or whether some went toward fines that ultimately were disallowed, is difficult to discern from the record. The trial court concluded as much when it reviewed the same evidence in connection with Almanor’s open book stated cause of action. Almanor used the same accounting and billing statements to try to prove its [*772] position on unpaid dues as the Carsons have cited on appeal as evidence that Almanor applied $1,160 toward disallowed fines. The court’s statement of decision demonstrated a careful review of this evidence and concluded: “The Court cannot, with any confidence, discern the amount of dues owed by the Carsons at any given time. Although it is undisputed that the Carsons fell behind at some point on their association dues, and that they made several large payments to Almanor to pay off some component of what they owed, the Court finds that Almanor has failed to carry its burden of proving the ‘amount owed’ on dues, which is a necessary element of their open book cause of action with respect to the dues component of any damage award.”
Moreover, the trial record does not reveal that the Carsons articulated this theory of contract damages. For example, in the cross-examination of Almanor’s accountant, who was responsible for Almanor’s billing during the relevant period in 2012, counsel did not raise the issue of $1,160 being improperly applied to fines. At closing argument on the cross-complaint, the record reflects no mention of this payment as a basis for contract damages. The damages case instead centered on the Carsons’ attempt to show lost profits and loss of business goodwill. At one point the trial court asked, “Where are the damages, the monetary damages associated with that alleged breach of contract?” The Carsons’ response referenced attorney’s fees to “enforce the CC&Rs,” interference with quiet enjoyment, and lost customers.
The only mention of the $1,160 payment appeared in the Carsons’ supplemental written closing argument, in which they argued that Almanor “intentionally, or recklessly” mislabeled “rental violations” as “[s]pecial [a]ssessments,” resulting in Almanor paying rental violations instead of the dues as requested and required. That argument is not evidence sufficient to compel a finding that the Carsons suffered financial loss as a result of Almanor’s alleged breach of the CC&Rs. (Bookout v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th 1478, 1486 [113 Cal. Rptr. 3d 356] [where the judgment is against the party with the burden of proof, it is “almost impossible” to prevail on appeal by arguing the evidence compels a judgment in that party’s favor].) The documentary evidence, which lacks any corroborating testimony to establish that Almanor shifted $1,160 of dues payment toward disallowed fines, does not satisfy the test for “‘“uncontradicted and unimpeached”’” evidence that leaves “‘“no room for a judicial determination that it was insufficient to support”’” the finding that the Carsons seek. (Sonic, supra, 196 Cal.App.4th at p. 466.)
On this record, the trial court’s finding that the Carsons failed to establish damages by competent evidence was sound, and the Carsons have not shown that evidence presented to the trial court should have compelled a contrary outcome.
[*773]
B. Determination of the Prevailing Party and Award of Attorney’s Fees
The Carsons and Almanor both claim to be the prevailing party, triggering an attendant award of fees and costs. The Carsons also contend that public policy and fairness require a reversal of the attorney’s fees award.
- Statutory Scheme
(3) The Davis-Stirling Act governs an action to enforce the recorded covenants and restrictions of a common interest development. Civil Code section 5975 provides that the CC&Rs may be enforced as “equitable servitudes” and that “[i]n an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” (Civ. Code, § 5975, subds. (a), (c).) Reviewing courts have found that this provision of the Davis-Stirling Act “‘reflect[s] a legislative intent that [the prevailing party] receive attorney fees as a matter of right (and that the trial court is therefore obligated to award attorney fees) whenever the statutory conditions have been satisfied.’” (Salehi v. Surfside III Condominium Owners Assn. (2011) 200 Cal.App.4th 1146, 1152 [132 Cal. Rptr. 3d 886] (Salehi), original italics, quoting Hsu v. Abbara (1995) 9 Cal.4th 863, 872 [39 Cal. Rptr. 2d 824, 891 P.2d 804] (Hsu).)
The Davis-Stirling Act does not define “prevailing party” or provide a rubric for that determination. In the absence of statutory guidance, California courts have analyzed analogous fee provisions and concluded that the test for prevailing party is a pragmatic one, namely whether a party prevailed on a practical level by achieving its main litigation objectives. (Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1574 [26 Cal. Rptr. 2d 758] (Heather Farms); Salehi, supra, 200 Cal.App.4th at pp. 1153–1154.)
The California Supreme Court implicitly has confirmed this test. In Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 94 [14 Cal. Rptr. 3d 67, 90 P.3d 1223], the court affirmed the award of attorney’s fees in an action to enforce a restrictive covenant under the Davis-Stirling Act, stating: “We conclude the trial court did not abuse its discretion in determining that the Association was the prevailing party [citation] … . On a ‘practical level’ [citation], the Association ‘achieved its main litigation objective.’” (Villa De Las Palmas, at p. 94, quoting Heather Farms, supra, 21 Cal.App.4th at p. 1574 and Castro v. Superior Court (2004) 116 Cal.App.4th 1010, 1020 [10 Cal. Rptr. 3d 865].)
[*774]
- Determination of The Prevailing Party
(4) We review the trial court’s determination of the prevailing party for abuse of discretion. (Villa De Las Palmas Homeowners Assn. v. Terifaj, supra, at p. 94; Heather Farms, at p. 1574.) “‘“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 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 [104 Cal. Rptr. 3d 219, 223 P.3d 77].) As the California Supreme Court has explained in the related context of determining the prevailing party on a contract under Civil Code section 1717, the trial court should “compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources. The prevailing party determination is to be made … by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’” (Hsu, supra, 9 Cal.4th at p. 876.)
The Carsons urge that they, not Almanor, attained their litigation objectives. They argue that but for their success in defeating most of the fines imposed by Almanor, they would have continued to face additional fines, making it impossible to continue to operate their business. They also argue that the trial court erred by focusing on net monetary recovery in determining who was the prevailing party.
In support of their position, the Carsons cite Sears v. Baccaglio (1998) 60 Cal.App.4th 1136 [70 Cal. Rptr. 2d 769] (Sears), in which the guarantor of a lease sued to recover $112,000 on a payment that he had made on the guaranty, which he contended was invalidated by a revocation. The defendant cross-complained for additional money under the guaranty. (Id. at p. 1140.) The trial court found that the guaranty was valid but that the plaintiff was entitled to recover some $67,000 plus interest because of payments the defendant had received in relation to the lease. (Id. at pp. 1140–1141.) Notwithstanding the plaintiff’s monetary recovery, the trial court deemed the defendant the prevailing party under the applicable fee provision and awarded attorney’s fees and costs. (Ibid.) The Court of Appeal affirmed the award, explaining: “The complaint and record demonstrate enforcement of the guaranty was the pivotal issue. [Plaintiff] received money not because the court found [defendant] liable for breach of contract. Instead, the court ordered [defendant] to return a portion of [plaintiff’s] payment because of the fortuitous circumstances [surrounding defendant’s receipt of other payments related to the lease].” (Id. at p. 1159.)
Whereas the pivotal issue in Sears was enforcement of the guaranty, the pivotal issue here was whether Almanor’s fines were enforceable under the [*775] CC&Rs and governing body of California law. It is true that the Carsons prevailed to the extent of the fines that the court disallowed. 6 That partial success substantially lowered the Carsons’ liability for damages and supported their position that the CC&Rs and associated rules could not impose an unreasonable burden on the properties. Yet by upholding a subset of the fines, the court ruled more broadly that Almanor could impose reasonable use restrictions on the Carsons’ properties, despite their authorized commercial use. That ruling echoed Almanor’s stated objective at trial that the association sought to counter the Carsons’ position that “because their lot is zoned ‘Commercial,’ they are not bound by the CC&R’s or the Rules.”
(5) The mixed results here are distinguishable from those in Sears, in which there was a clear win by the defendant on the pivotal issue of the guaranty, and the monetary award was fortuitous and unrelated to the determination of liability. (Sears, supra, 60 Cal.App.4th at p. 1159.) Where both sides achieved some positive net effect as a result of the court’s rulings, we compare the practical effect of the relief attained by each. (Hsu, supra, 9 Cal.4th at p. 876.) Here, the trial court’s findings eliminated many of the alleged rule violations that depended on the Carsons being in arrears on dues and rejected those fines by which Almanor tried to strictly enforce the absolute use restrictions on the Carsons’ lots. Insofar as the court found that some of the fines were enforceable, Almanor met its objective and satisfied the first part of the statutory criteria under the Davis-Stirling Act “to enforce the governing documents.” (Civ. Code, § 5975, subd. (c).) The fractional damages award does not negate the broader practical effect of the court’s ruling, which on the one hand narrowed the universe of restrictions that Almanor could impose on the properties, but on the other hand cemented Almanor’s authority to promulgate and enforce rules pursuant to the CC&Rs so long as they are not unreasonable under Nahrstedt. Thus the trial court rejected the Carsons’ position that the ambiguity in the CC&Rs “completely eliminate[d] Almanor’s ability to impose reasonable use restrictions on the Carsons’ lots, consistent with the Carsons’ right to use their lots for commercial lodging purposes.” The court also ruled entirely in favor of Almanor on the Carsons’ cross-complaint by finding that the Carsons’ alleged damages were unsupported by competent evidence and too speculative.
Taken together and viewed in relation to the parties’ objectives as reflected in the pleadings and trial record, we conclude that these outcomes were [*776] adequate to support the trial court’s ruling.7 (Goodman v. Lozano, supra, 47 Cal.4th at p. 1339.) In reviewing a decision for abuse of discretion, we do not substitute our judgment for that of the trial court when more than one inference can be reasonably deduced from the facts. (Ibid.) The trial court did not abuse its discretion in determining Almanor to be the prevailing party.
- Public policy
The Carsons argue that the fee award flouts public policy because it (1) creates disincentive for homeowners to defend against unlawful fines levied by the association and (2) rewards the association for acting in an egregious manner by imposing fines that were, for the most part, unlawful. The Carsons suggest that by granting attorney’s fees to Almanor, “the Court is stating that the Carsons should have paid the $54,000.00 that Respondent claimed was owed … , even though only $6,620.00 was actually owed, because they would be penalized for defending themselves and, in the end, owe an additional $101,803.15 in attorney’s fees for defending themselves.” The Carsons offer no direct authority to support their position but contend that this outcome contradicts California public policy which seeks to ensure that creditors do not overcharge debtors for amounts not owed.8
(6) This argument runs contrary to the statutory scheme governing the fee award in this case. As the trial court correctly noted at the hearing on the competing motions for attorney’s fees, the Davis-Stirling Act mandates the award of attorney’s fees to the prevailing party. (Civ. Code, § 5975; Salehi, supra, 200 Cal.App.4th at p. 1152 [language of Civ. Code, § 5975 reflects legislative intent to award attorney’s fees as a matter of right when statutory criteria are satisfied].) After resolving the threshold issue of the prevailing party, the trial court had no discretion to deny attorney’s fees. (Salehi, at p. 1152.) Any argument concerning the magnitude of the fees award, especially in comparison to the damages awarded or originally sought, is better directed at challenging the reasonableness of the award amount. The amount to be awarded is distinct from whether an award is justified, and “‘the factors relating to each must not be intertwined or merged.’” (Graciano v. Robinson [*777] Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 153 [50 Cal. Rptr. 3d 273], quoting Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629, 647 [71 Cal. Rptr. 2d 632].)
C. Reasonableness of the Fee Award
The remaining question is whether the attorney’s fees award of $98,535.50 was reasonable. What constitutes reasonable attorney’s fees is committed to the discretion of the trial court. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095–1096 [95 Cal. Rptr. 2d 198, 997 P.2d 511] (PLCM Group).) “An appellate court will interfere with the trial court’s determination of the amount of reasonable attorney fees only where there has been a manifest abuse of discretion.” (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1004 [156 Cal. Rptr. 3d 26] (Monroy).)
The Carsons argue that the trial court abused its discretion by awarding fees which are “grossly disproportionate” to the monetary award and scale of success on the claims litigated.9 The Carsons point to section 1033, subdivision (a) for the proposition that the court, in its discretion, can disallow attorney’s fees and costs if a party obtains less than the statutory minimum to be classified as an unlimited civil matter. Yet their briefs on appeal offer no case or other authority to support the proposed application of section 1033, subdivision (a) to a mandatory fees award under Civil Code section 5975.
(7) The Carsons also argue that the trial court should have apportioned the award to reflect the court’s rejection of all but a single category of fines imposed, representing eight out of 88 fines. Again, the Carsons fail to cite any authority to support a reduction based on the degree of success in a Davis-Stirling Act case. We observe that “it is counsel’s duty by argument and citation of authority to show in what respects rulings complained of are erroneous … .” (Wint v. Fidelity & Casualty Co. (1973) 9 Cal.3d 257, 265 [107 Cal. Rptr. 175, 507 P.2d 1383].) Although we will not treat the Carsons’ arguments as waived, we caution that “‘an appellate brief “should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration.”’” (Mansell v. Board of Administration (1994) 30 Cal.App.4th 539, 545 [35 Cal. Rptr. 2d 574], quoting In re Marriage of Schroeder (1987) 192 Cal.App.3d 1154, 1164 [238 Cal. Rptr. 12].)
Almanor does not respond to these arguments on appeal, though it argued in its attorney’s fees motion that when an owner’s association seeks to [*778] enforce CC&Rs and attains its litigation objective, based on the mandatory nature of the fee award, “it is irrelevant that the verdict/judgment amount is below $25,000.”
- Discretion to Reduce or Eliminate Fees Under Section 1033
(8) Under section 1033, subdivision (a), if a plaintiff brings an unlimited civil action and recovers a judgment within the $25,000 jurisdictional limit for a limited civil action, the trial court has the discretion to deny, in whole or in part, costs to the plaintiff.10 (Carter v. Cohen (2010) 188 Cal.App.4th 1038, 1052 [116 Cal. Rptr. 3d 303]; Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, 982–983 [104 Cal. Rptr. 3d 710, 224 P.3d 41] (Chavez).) Section 1033 relates to the general cost recovery provisions set forth in the Code of Civil Procedure. We briefly consider its applicability to the recovery of attorney’s fees under the Davis-Stirling Act.
In Chavez, the California Supreme Court examined the application of section 1033, subdivision (a) to an action brought under the California Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.), which grants the trial court discretion to award attorney’s fees to a prevailing party. (Chavez, supra, 47 Cal.4th at pp. 975–976.) The court in Chavez held that by its plain meaning, section 1033, subdivision (a) applies in the FEHA context and gives the trial court discretion to deny attorney’s fees to a plaintiff who prevails under FEHA but recovers an amount that could have been recovered in a limited civil case. (Chavez, at p. 976.) The court explained: “[W]e perceive no irreconcilable conflict between section 1033(a) and the FEHA’s attorney fee provision. In exercising its discretion under section 1033(a) to grant or deny litigation costs, including attorney fees, to a plaintiff who has recovered FEHA damages in an amount that could have been recovered in a limited civil case, the trial court must give due consideration to the policies and objectives of the FEHA and determine whether denying attorney fees, in whole or in part, is consistent with those policies and objectives.” (Chavez, at p. 986.)
(9) The reasoning of Chavez is of limited applicability here. Unlike the fee provision under FEHA, which is discretionary and therefore not irreconcilable with section 1033, subdivision (a), the fee-shifting provision of the Davis-Stirling Act is mandatory. (Civ. Code, § 5975; Salehi, supra, 200 Cal.App.4th at p. 1152.) The circumstances in which a court might deny or reduce a fee award under a permissive statutory provision, like FEHA, such [*779] as because special circumstances “‘“would render such an award unjust,”’” do not apply equally where a statute mandates attorney’s fees to the prevailing party. (Graciano v. Robinson Ford Sales, Inc., supra, 144 Cal.App.4th at p. 160 [principles applicable to permissive attorney’s fee statutory provisions do not apply to mandatory fee-shifting statutory provisions].) Given its uncertain applicability to the recovery of attorneys’ fees under Civil Code section 5975 and counsel’s failure to suggest specific authority for its application, we decline to find an abuse of discretion in this context.
- Discretion to Reduce Fee Award Based on Degree of Success
(10) The Carsons also contend that the trial court could have and should have apportioned the award to those attorney’s fees that Almanor incurred in proving the eight fines on which it succeeded. It is well settled that the trial court has broad authority in determining the reasonableness of an attorney’s fees award. (PLCM Group, supra, 22 Cal.4th at p. 1095.) This determination may, at times, include a reduction or apportionment11 of fees in order to arrive at a reasonable result. “‘After the trial court has performed the calculations [of the lodestar], it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the … award so that it is a reasonable figure.’” (PLCM Group, at pp. 1095–1096.)
We look to a few cases that address the justifications for reducing a fee award. In a case involving a mandatory fee-shifting statute similar to that under the Davis-Stirling Act, the appellate court upheld an attorney’s fees award of $89,489.60 for the defendant borrower and cross-complainant even though she recovered only a nominal $1 in statutory damages on her consumer debt-collection based claims. (Monroy, supra, 215 Cal.App.4th at p. 986.) The court deemed the borrower the prevailing party and found she was entitled to her full attorney’s fees relating to her successful cross-complaint based on the Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. [*780] § 1681 et seq.),12 as well as to her defense of the plaintiff’s complaint. (Monroy at p. 987.) The Monroy court rejected the financial institution’s argument that the award should have been reduced to reflect the borrower’s limited degree of success. (Id. at pp. 1004–1005.)
Citing United States Supreme Court13 and California precedent in various statutory fee-shifting contexts for the proposition that “the degree or extent of the plaintiff’s success must be considered when determining reasonable attorney fees,” the Monroy court concluded that the circumstances of the case did not warrant a reversal of the fee award for abuse of discretion. (Monroy, supra, 215 Cal.App.4th at pp. 1005–1006.) The court based its decision on factors including the borrower’s position as defendant and cross-complainant, her choice not to allege actual damages but to request only statutory damages under the FDCPA, the fact that the nominal award still represented a complete success and could prompt the financial institution “to cease unlawful conduct against other consumers.” (Monroy, at p. 1007.)
Reductions to the award of attorney’s fees also arise in cases applying California’s private attorney general statute.14 One such case, Sokolow, supra, 213 Cal.App.3d 231, involved alleged sex discrimination by a county sheriff’s department and a closely affiliated private mounted patrol that maintained a male-only policy. On cross-motions for summary judgment, the court ruled for the plaintiffs as to certain equal protection violations and imposed permanent injunctions on the patrol and the sheriff’s department directed at terminating their working relationship and any appearance of partnership. (Id. at pp. 241–242.) Yet the court denied the plaintiffs’ request for attorney’s fees under the applicable federal and state statutory fee provisions. (Id. at p. 242.)
The Court of Appeal reversed the attorney’s fees decision because the plaintiffs were the prevailing parties, but remanded to the trial court for a [*781] determination of the amount of reasonable fees. (Sokolow, supra, 213 Cal.App.3d at pp. 244, 251.) With respect to the fees under section 1021.5, the court noted that “a reduced fee award is appropriate when a claimant achieves only limited success.” (Sokolow, at p. 249.) The court offered specific examples of results that the plaintiffs had sought and failed to obtain through the injunction, such as “obtaining admission for women into the Patrol” or “entirely eliminating the County’s training and use of the Patrol for search and rescue missions.” (Id. at p. 250.) The court indicated that these “were important goals of appellants’ lawsuit which they failed to obtain.” (Ibid.) Thus, in arriving at an award of reasonable attorney’s fees, the court directed the trial court to “take into consideration the limited success achieved by appellants.” (Ibid.)
Similarly, in Environmental Protection Information Center v. Department of Forestry & Fire Protection (2010) 190 Cal.App.4th 217, 222–224 [118 Cal. Rptr. 3d 352] (Environmental Protection), the court addressed attorney’s fees after the plaintiff environmental and labor groups had succeeded in part in challenging the validity of regulatory approvals related to a logging plan affecting California old-growth forests. With regard to the defendants’ arguments that any fee award should be reduced based on the plaintiffs’ limited success on the merits, the appellate court conducted a two-part inquiry.15 (Environmental Protection, at p. 239.) It first determined that the environmental group plaintiffs’ unsuccessful claims were related to the successful claims, such that attorney’s work spent on both sets of claims were not practicably divisible. (Id. at p. 238.) The court explained that because the successful and unsuccessful claims were related, the trial court on remand would need to assess the level of success or “‘“significance of the overall relief obtained by the plaintiff[s] in relation to the hours reasonably expended on the litigation.”’” (Id. at p. 239, quoting Harman v. City and County of San Francisco (2007) 158 Cal.App.4th 407, 414 [69 Cal. Rptr. 3d 750].)
(11) We draw a few general conclusions from these cases. As we noted earlier, it is within the province and expertise of the trial court to assess reasonableness of attorney’s fees. Especially in certain contexts, such as in litigation seeking to enforce “‘an important right affecting the public interest,’” there is no question that degree of success is a “crucial factor” for that determination. (Environmental Protection, supra, 190 Cal.App.4th at pp. 225, fn. 2, 238.) Indeed, we find no indication that “degree of success” may not be considered, alongside other appropriate factors, in determining reasonable attorney’s fees in other contexts, including under Civil Code section 5975. “To the extent a trial court is concerned that a particular award is excessive, it has broad [*782] discretion to adjust the fee downward … .” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1138 [104 Cal. Rptr. 2d 377, 17 P.3d 735].)
It does not follow from these generalizations, or from the record the Carsons have provided, that the trial court committed a manifest abuse of discretion by awarding the full attorney’s fees sought. Though the order granting Almanor’s motion for attorney’s fees is silent as to the court’s reasoning, the moving papers and declarations of each side, as well as the hearing transcript, reflect that the court thoroughly considered the briefing and argument of the parties.16 Also, the Carsons did not request a statement of decision with regard to the fee award. Under this circumstance, “‘“[a]ll intendments and presumptions are indulged to support [the judgment] on matters as to which the record is silent, and error must be affirmatively shown.”’” (Ketchum v. Moses, supra, at p. 1140, quoting Denham v. Superior Court (1970) 2 Cal.3d 557, 564 [86 Cal. Rptr. 65, 468 P.2d 193].)
(12) Although the court in its discretion could have reduced the amount of the award to reflect the incomplete success of Almanor’s action, as in Monroy, supra, 215 Cal.App.4th at pages 1005–1006, there are ample factors to support the trial court’s decision. Almanor prevailed on only a minor subset of the fines that formed the basis for the monetary award requested, but that subset was sufficient to satisfy the statutory criteria of an action to enforce the governing documents. (Civ. Code, § 5975, subdivision (c).) In practical effect, Almanor’s limited success established a baseline from which it can continue to adopt and enforce reasonable use restrictions under the CC&Rs. Unlike the important goals of the sex discrimination civil rights lawsuit that the appellants failed to obtain in Sokolow, the objectives that Almanor failed to attain were primarily monetary. With respect to the time spent on the successful and unsuccessful aspects of Almanor’s suit (Environmental Protection, supra, 190 Cal.App.4th at p. 239), we note that the various fines do not represent different causes of action or legal theories dependent on different facts, but different instances of attempted enforcement based on the CC&Rs and a shared set of facts. Almanor’s fees, as established in its moving papers and supporting declarations, also accounted for its defense against the [*783] Carsons’ cross-complaint, which included the Carsons’ use of testifying expert witnesses. For these reasons, we do not find that the award of attorney’s fees, compared to the “‘“overall relief obtained”’” by Almanor, was so disproportionate as to constitute an abuse of discretion. (Ibid.)
III. DISPOSITION
The judgment on the Carsons’ cross-complaint and the award of attorney’s fees and costs to Almanor are affirmed. Respondent is entitled to its costs on appeal.
Rushing, P. J., and Márquez, J., concurred.
1 The venue of the underlying action is Santa Clara County, where the Carsons reside.
2 We need not resolve Almanor’s suggestion that the alleged damages be viewed as an offset because, as we will explain, we do not find support in the record for the Carsons’ claim that uncontroverted evidence established that fines paid were damages resulting from Almanor’s alleged breach of the CC&Rs.
3 Undesignated statutory references are to the Code of Civil Procedure.
4 A litigant who wishes to preserve a claim of error and avoid the application of inferences in favor of the judgment must follow the two-step process set by sections 632 and 634. First, when the court announces a tentative decision, “a party must request a statement of decision as to specific issues to obtain an explanation of the trial court’s tentative decision.” (Arceneaux, supra, 51 Cal.3d at p. 1134; see § 632.) Second, when the trial court issues its statement of decision, a party claiming deficiencies must raise any objection “to avoid implied findings on appeal favorable to the judgment.” (Arceneaux, at p. 1134; see § 634.)
5 The Carsons had offered trial testimony of a longtime renter who chose not to return after 2012 because she and her group felt uncomfortable and scrutinized by certain Almanor homeowners and board members during their stay. The court found the testimony insufficient to establish a breach of the CC&Rs. On the subject of damages the Carsons asked the court to explain its decision on the evidence related to the renter who had decided not to return. The trial court’s proposed statement of decision addressed that evidence but did not address the $1,160 on which basis the Carsons now appeal. The Carsons did not object to the proposed statement of decision. (Cal. Rules of Court, rule 3.1590(g) [parties have 15 days from service of proposed statement of decision to serve and file any objections].)
6 Out of 88 fines that Almanor sought to enforce at trial, the trial court upheld only eight. Almanor admits that it did not attain all of its litigation objectives and that a total victory would have resulted in a higher monetary recovery had the court found that all of the fines imposed were reasonable and enforceable.
7 We do not find support in the record for the Carsons’ contention that until the motion for attorney’s fees, Almanor’s sole litigation objective had been to collect a monetary award. From the inception of the litigation, Almanor’s ability to collect a monetary award depended on the court finding that it was authorized to impose those rules and to fine for violations. Throughout the trial record, including in Almanor’s trial brief, opening and closing remarks, and supplemental closing argument, Almanor emphasized that it sought to enforce the CC&Rs and disabuse the Carsons of their belief that the commercial zoning of their property immunized them from the use restrictions.
8 In support of this point, the Carsons cite to the Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.), which holds a debt collector liable to a debtor for violating the debt collection practices act (Civ. Code, § 1788.30).
9 The Carsons do not raise on appeal the trial court’s methodology or computation of time spent on the case.
10 Section 1033, subdivision (a) states that “[c]osts or any portion of claimed costs shall be as determined by the court in its discretion in a case other than a limited civil case in accordance with Section 1034 where the prevailing party recovers a judgment that could have been rendered in a limited civil case.”
11 The Carsons’ use of the term “apportion” is not entirely accurate. In the context of attorney’s fees awards, apportionment generally refers to divvying fees as between meritorious or paying parties in a multiparty case (see, e.g., Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 250 [261 Cal. Rptr. 520] (Sokolow) [fees statute did not address apportioning attorney’s fees between defendants, but court opined it would be “appropriate for the trial court to assess a greater percentage of the attorney fees award against the County rather than making an equal assessment between the County and the Patrol”]), or as between causes of action wherein a party has alleged multiple causes of action, only some of which are eligible for a statutory fee award (see, e.g., Chee v. Amanda Goldt Property Management (2006) 143 Cal.App.4th 1360, 1367–1368 [50 Cal. Rptr. 3d 40] [court granted in part defendants’ motions for attorney’s fees and apportioned the amount of fees requested to only those causes of action that “fell within the purview of Civil Code section 1354”]).
12 As with an attorney’s fees award under section 5975, part of the Davis-Stirling Act, the federal FDCPA provides for mandatory attorney fees to be awarded to the prevailing party, although courts have discretion in calculating the reasonable amount. (Monroy, supra, 215 Cal.App.4th at p. 1003.)
13 In Hensley v. Eckerhart (1983) 461 U.S. 424, 434–435 [76 L. Ed. 2d 40, 103 S. Ct. 1933], the Supreme Court addressed application of a fee-shifting statute in civil rights litigation (42 U.S.C. § 1988) when the plaintiffs had achieved only partial success. The fee provision in Hensley was permissive and provided that the court “may” in its discretion award the prevailing party a reasonable attorney’s fee. (Hensley, at p. 426.) Noting that when “a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount,” the court held that the district court “may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success.” (Id. at pp. 436–437.)
14 The fee recovery provision under this statute provides that a court “may award attorney’s fees to a successful party … in any action which has resulted in the enforcement of an important right affecting the public interest.” (§ 1021.5.)
15 The test articulated in Environmental Protection comes from a line of state court cases that refer to the approach set by the United States Supreme Court in Hensley, supra, 461 U.S. at page 434.
16 The court’s comments during the hearing on the motions for attorney’s fees at one point seem to indicate that the court did not believe that it could take into account the degree of success at trial. In a colloquy with counsel for Almanor, the court asked: “[O]nce the Court makes a determination of prevailing party, the only discretion the Court has with respect to the fee award is reasonableness of them, and that is not a function of how well they did at trial. There’s a threshold question, who’s the prevailing party, and then the next question, which is, are the fees reasonable?” We do not find this comment determinative because it reflects only part of an extended discussion at hearing, not the court’s final reasoning, after it heard from counsel for the Carsons and took the motions under submission. Even if the court had ascertained that it could consider degree of success, there were enough factors, as we have discussed, to support a full fees award.
Related Links
Clarifying When a HOA may be Deemed the ‘Prevailing Party’ in an Enforcement Suit – Published on HOA Lawyer Blog (January, 2017)
Nellie Gail Ranch Owners Association v. McMullin
[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)
Mission Shores Association v. Pheil
[Amendments to CC&Rs; Rent Restriction] An amendment to the CC&Rs which empowered the HOA to evict tenants who violate the CC&Rs was held to be reasonable.
Law Firm of Kaiser & Swindells, Raymond T. Kaiser and J. Rodney DeBiaso for Defendant and Appellant.
Peters & Freedman and Laurie S. Poole for Plaintiff and Respondent.
OPINION
HOLLENHORST, J. —
David Pheil (Pheil) appeals a trial court order that reduced the percentage of votes necessary to amend the Mission Shores Association’s (the Association) declaration of covenants, conditions and restrictions (CC&R’s). (Civ. Code, § 1356.)[FN.1] Pheil challenges the order on the grounds the trial court erred in finding that (1) the amendment was reasonable (§ 1356, subd. (c)(5)); (2) the balloting conformed to the CC&R’s (§ 1356, subd. (c)(2)); and (3) there was no impairment to the security interest of mortgagees (§ 1356, subd. (e)(3)). We affirm the order.
I. PROCEDURAL BACKGROUND AND FACTS
The Association is the homeowners association which governs the Mission Shores common interest development (Mission Shores) located in Rancho Mirage and consisting of 168 separate interests (Homes), in addition to common areas and facilities. On May 12, 2004, the CC&R’s were recorded for the development.
In 2004, Pheil and his wife decided to purchase a vacation home in Rancho Mirage. At Mission Shores, the developer’s agent represented to Pheil and his wife that they would be allowed to rent or lease a home without restriction. According to the applicable CC&R’s, an owner may rent to a single family where the rental agreement is in writing and subject to the CC&R’s. In reliance on the agent’s representation, Pheil and his wife purchased a Home, which they rented, on occasion, to others. As a homeowner, Pheil is a member of the Association.
The board of directors for the Association (Board) is composed of five members, three of which were appointed by the developer. The developer owns 11 of the 168 Homes in the development. Concerned with how some homeowners were renting their Homes, on May 19, 2005, the Board [793] unanimously voted to accept proposed rule 2.10.2 of the CC&R’s (Rule 2.10.2), which provided, “No short-term rentals or leases of less than 30 days are allowed.” Pheil challenged the rule. This dispute came before Mediator Peter J. Lesser. A July 31, 2006, mediation did not resolve the dispute. On August 23, Pheil, through his attorney, mailed a “Demand for Internal Dispute Resolution” to Attorney James R. McCormick, Jr., an attorney for the Association, with respect to Rule 2.10.2.
In response to the dispute over Rule 2.10.2, the Board decided to amend the CC&R’s to provide the same temporal limitation on rentals. Additionally, the proposed amendment granted the Association the right to evict a tenant for breach of the governing documents and to impose the related attorney fees and court costs on the homeowner. On September 28, 2006, the Association mailed a cover letter, voting instructions, official ballot, the proposed amendment to the CC&R’s (Amendment), and two envelopes to all members of record of the Association. It presented a “redlined” version of article II, section 2.1 of the CC&R’s, showing precisely the language to be added and to be deleted. A deadline of November 13, 2006, was set to return the ballots. The owners were further informed the ballots would be tabulated at the Board meeting on November 15.
Article IV, section 4.4.3 of the CC&R’s sets forth the different types of voting “classes.” “Class A” consists of members of the Association who own a Home. Of the 168 Homes, 157 had been sold such that there were 157 owner votes. The remaining 11 Homes were still owned by the developer, who was entitled to three “Class B” votes per Home, or a total of 33 developer votes. In order for the Amendment to pass, the Association had to obtain at least 67 percent of the voting power of both classes. Thus, passage of the Amendment required 105 owner votes and 22 developer votes. On November 13, 2006, 132 of the 168 ballots were received. The inspectors of the election opened the ballots and tabulated the results. In the “Class A” category, 93 owner votes were in favor of the Amendment, 28 owner votes were against the Amendment, and 36 owner votes abstained. In the “Class B” category, all 33 developer votes were cast in favor of the Amendment. Because the Amendment garnered only 59 percent of the owner vote, it failed.
On March 8, 2007, pursuant to section 1356, the Association petitioned the trial court for an order reducing the percentage of affirmative votes required for passage of the Amendment and approving the Amendment based upon the number of affirmative votes actually cast constituting at least a majority of each voting class. A hearing date was set for April 9, 2007. The Association filed a notice of hearing, memorandum of points and authorities, [794] and supporting declarations. Notice of the hearing was mailed to each homeowner of record on March 23, 2007.
Pheil opposed the petition, objecting to the imposition of a 30-day minimum for leases on the grounds that this violated an alleged representation made by the developers of the project when he purchased his Home. In reply, the Association stated the reason for the minimum lease term was to prevent use of any Home as a hotel. The Association provided a declaration from its counsel regarding the prevalence of CC&R restrictions containing a 30-day minimum provision.
At the initial hearing on April 9, 2007, the trial court continued the matter to allow Pheil’s counsel to obtain copies of the supporting declarations. The second hearing was continued to allow the Association to hold its election of directors to see if the new Board would want to continue pursuing the petition. During the final hearing on May 25, 2007, the trial court indicated its intent to grant the petition.
By order dated June 12, 2007, the trial court found that the Association had complied with the requirements of section 1356, subdivision (c)(1) through (6) and that granting the petition was “not improper” under section 1356, subdivision (e)(1) through (3). Thus, the trial court granted the petition, which reduced the percentage required to amend the CC&R’s. Pheil filed the instant appeal.
II. STANDARD OF REVIEW
(1) “[S]ection 1356, part of the Davis-Stirling Common Interest Development Act (the Act), provides that a homeowners association, or any member, may petition the superior court for a reduction in the percentage of affirmative votes required to amend the CC&R’s if they require approval by `owners having more than 50 percent of the votes in the association….’ [Citation.] The court may, but need not, grant the petition if it finds all of the following: Notice was properly given; the balloting was properly conducted; reasonable efforts were made to permit eligible members to vote; `[o]wners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment’; and `[t]he amendment is reasonable.’ [Citation.]” (Peak Investments v. South Peak Homeowners Assn., Inc. (2006) 140 Cal.App.4th 1363, 1366-1367 [44 Cal.Rptr.3d 892], fn. omitted.)
The purpose of section 1356 is to provide homeowners associations with the “ability to amend [their] governing documents when, because of voter [795] apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides [an] association with a safety valve for those situations where the need for a supermajority vote would hamstring the association.” (Blue Lagoon Community Assn. v. Mitchell (1997) 55 Cal.App.4th 472, 477 [64 Cal.Rptr.2d 81].)
Section 1356, subdivision (c), gives the trial court broad discretion in ruling on such petition. Accordingly, on appeal, we review the trial court’s ruling for abuse of discretion. (Fourth La Costa Condominium Owners Assn. v. Seith (2008) 159 Cal.App.4th 563, 570 [71 Cal.Rptr.3d 299].)
III. WAS THE AMENDMENT REASONABLE?
Pheil contends that because three of the five seats on the Board were held by representatives of the developer, the developer “in fostering the petition was clearly acting for its own purposes and not [those] of the owners.” Specifically, Pheil claims there is no evidence that any individual homeowner complained about the rental of a home without temporal restriction. Instead, Pheil notes the evidence is limited to the vague determination by the Board and the self-serving declaration of the Association’s attorney. Given the facts that (1) the Board was controlled by the developer who was behind the petition; (2) this was not a case of homeowner apathy; and (3) the trial court’s words suggest that it thought the owners were entitled to a representative board, Pheil argues the trial court abused its discretion in finding the Amendment to be reasonable.
(2) Clearly, the Association was charged with the burden of proving the Amendment was reasonable. (Fourth La Costa Condominium Owners Assn. v. Seith, supra, 159 Cal.App.4th at p. 577.) “The term `reasonable’ in the context of use restrictions has been variously defined as `not arbitrary or capricious’ [citations], `rationally related to the protection, preservation and proper operation of the property and the purposes of the Association as set forth in its governing instruments,’ and `fair and nondiscriminatory.’ [Citation.]” (Ibid.)
Here, the Association argued that the need to restrict rentals to 30 days or more was to ensure the property would not become akin to a hotel. Mission Shores is a residential community. According to the Association’s attorney, “The overwhelming majority of the [CC&R’s] that [she] review[s], both in preparing restated [CC&R’s] and reviewing existing [CC&R’s], contain[s] provisions regarding minimum lease terms of thirty (30) days or longer….” As the trial court noted, “these kinds of restrictions are very common. And … many counties and cities have these restrictions that essentially when [796] you rent for less than 30 days, you’re essentially operating a hotel in a residential district.” Furthermore, the court observed, “there is a movement afoot to restrict homes from being on vacation rentals. It is not just in this project. It is throughout California. [¶] So for example … I have a home in San Luis Obispo County and they have a very strict rule about vacation rentals. I was just reading in the paper in Palm Springs they’re talking about passing a law restricting rentals to only 30 days or more.”
“A CC&R is unreasonable if it is arbitrary and capricious, violates the law or a fundamental public policy or imposes an undue burden on property, and it is reasonable unless it meets those criteria. [Citation.]” (Fourth La Costa Condominium Owners Assn. v. Seith, supra, 159 Cal.App.4th at pp. 577-578.) On the record before this court, we cannot find that the imposition of a 30-day minimum lease term is unreasonable. The provision applies to all owners who rent their Homes, the restriction does not violate public policy (see, e.g., City of Oceanside v. McKenna(1989) 215 Cal.App.3d 1420, 1426-1427 [264 Cal.Rptr. 275] [restrictions requiring owner occupancy and forbidding the leasing of units were reasonable in view of the city’s redevelopment goals of providing a stabilized community of owner-occupied units for low- and moderate-income persons]), and any burden to enforce the minimum lease term is outweighed by its beneficial value in preserving the residential character of the development.
With cursory argument and no citation to any legal authority, Pheil contends the Amendment is unreasonable because it grants the Association the right to evict tenants for breach of the CC&R’s and to impose attorney fees and costs on the owner. “[E]very brief should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration. [Citations.]” (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 594, p. 627.) Although we may deem this point waived, we note the Association addressed it on the merits.[FN.2]
(3) The Association argues this provision is reasonable. First, the Association notes that associations have been analogized to landlords for purposes of determining tort liability. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 499-501 [229 Cal.Rptr. 456, 723 P.2d 573].) As such, if an association is held to a landlord’s obligations, it should equally benefit from any rights attributed to the landlord. We agree. Second, the Association argues that any tenant should be bound by the CC&R’s to the same extent that the homeowner is bound. In the event the homeowner fails [797] or refuses to take effective measures to assure his or her tenant is complying with the CC&R’s, the Association needs some means to assure compliance. We agree. Third, according to the Association, the enforcement remedies apply to any and all tenants in breach of the CC&R’s, and providing the Association with the right to enforce any breach of the CC&R’s does not violate public policy. (See, e.g., 1 Sproul & Rosenberry, Advising Cal. Common Interest Communities (Cont.Ed.Bar 2007 supp.) § 6.45, pp. 423-424.) Again, we agree. Nonetheless, in his reply brief, Pheil claims that commentators have criticized provisions allowing associations the right to enforce the CC&R’s against tenants as being “unlawful.” Reviewing the practice tip referenced by Pheil, we note the commentators merely caution practitioners to consider the risks involved. Specifically, an association may be liable for wrongful eviction given the fact that the association does not have possession of the property, and thus, is not the rightful party to bring the action. (Id. at pp. 424-425.)
(4) For the above reasons, we find that the trial court did not abuse its discretion in finding the Amendment to be reasonable.
IV. DID THE BALLOTING CONFORM WITH THE CC&R’S?
(5) According to Pheil, subdivision (c)(2) of section 1356 was not complied with because the letter that accompanied the ballot inaccurately portrayed the context of the Amendment and made improper reference to the ineffective rule. In response, the Association argues it complied with the procedures for amending the CC&R’s as governed by section 1363.03. According to that section, a secret ballot procedure must be used with a double envelope system, inspectors of the election must be appointed, and the results must be tabulated at a board meeting. (§ 1363.03, subds. (c), (e).) Here, the Association maintains it mailed the Amendment, the ballot, voting instructions, and two envelopes to each of its members. Furthermore, the results were tabulated at the Board meeting.
The Amendment clearly indicated the language to be added and the language to be deleted. Presenting the owners with a redlined version of the proposed Amendment constituted the reasonably detailed form the CC&R’s require. While Pheil claims the cover letter accompanying the ballot and other documents misled the owners, we note there is no evidence in the record that supports this claim. Not one owner submitted a declaration claiming he or she voted in a particular way solely due to the information contained in the cover letter. Moreover, as the Association points out, the [798] cover letter highlighted the fact that the Amendment would provide for a 30-day minimum leasing requirement and the ability of the Association to evict tenants.[FN.3]
Notwithstanding the above, Pheil claims the Association failed to give notice of the election results pursuant to section 1363.03, subdivision (g). That section provides, “The tabulated results of the election shall be promptly reported to the board of directors of the association and shall be recorded in the minutes of the next meeting of the board of directors and shall be available for review by members of the association. Within 15 days of the election, the board shall publicize the tabulated results of the election in a communication directed to all members.” The Association does not claim that it gave notice of the election results; however, it does claim the results were reported at the Board meeting on November 15, 2006, and recorded in the minutes of the Board meeting (which are available to each member). Thus, the Association argues that it provided the required notice to its members, but even if it had not, the petition was not precluded. We agree with the Association.
Pheil does not oppose the results of the election. Rather, he opposes the Amendment itself. Pheil does not provide any argument or legal citation to any authority as to the consequences which the Association should suffer given its failure to comply with section 1363.03, subdivision (g). Under the circumstances of this case, we find such failure to be trivial. Accordingly, we cannot agree that such failure should result in precluding the Association from proceeding with its petition. Moreover, we cannot find that the trial court abused its discretion in failing to find that the balloting did not comply with the CC&R’s.
V. DOES THE AMENDMENT IMPAIR THE SECURITY INTEREST OF MORTGAGEES?
In his final contention, Pheil argues that the CC&R’s require approval of 51 percent of first mortgagees who have previously requested notification [799] under two stated circumstances, namely, where any amendment affects the rights or protection granted to mortgagees and where any amendment could result in a mortgage being canceled by forfeiture. He claims the Association failed to give such notice and to obtain such approval. Again, we note that Pheil fails to support his claim with any legal argument with citation of authorities on the points made. His brief reference to section 1356, subdivision (e)(3), is insufficient. Nonetheless, given the fact that the Association addressed the merits of the issue, so will we.
(6) Section 1356, subdivision (e)(3), forbids the court from approving any amendment to CC&R’s that impairs the security interest of a mortgagee, if approval of a specified percentage of the mortgagees is required under the CC&R’s. According to article XIII, section 13.2.2 of the CC&R’s, the following amendments require 51 percent approval of the first mortgagees: “(a) Any amendment which affects or purports to affect the validity or priority of Mortgages or the rights or protection granted to Mortgagees, insurers or guarantors of first Mortgages. [¶] (b) Any amendment which would require a Mortgagee after it has acquired a Lot through foreclosure to pay more than its proportionate share of any unpaid Assessment or Assessments accruing before such foreclosure. [¶] (c) Any amendment which would or could result in a Mortgage being canceled by forfeiture, or in a Lot not being separately assessed for tax purposes. [¶] (d) Any amendment relating to (i) the insurance provisions in Article VIII, (ii) the application of insurance proceeds in Article IX, or (iii) the disposition of any money received in any taking under condemnation proceedings. [¶] (e) Any amendment which would subject any Owner to a right of first refusal or other such restriction, if such Lot is proposed to be transferred.” The Amendment does not fall under any item in this list.
In his reply brief, Pheil claims the temporal restriction on renting “clearly impacts the ability of owners to pay their mortgages.” However, Mission Shores is a residential development. Pheil has not provided any evidence to the contrary. Other than his claim that he was told he could lease or rent his home and that he thereafter on occasion rented it to others, there is no evidence that he needed to borrow money to purchase his home, that he obtained a non-owner-occupied loan, or that he purchased his home with the sole purpose of renting it out to pay the mortgage.
Accordingly, we conclude the trial court did not abuse its discretion in finding that there was no impairment to the security interests of mortgagees.
[800] VI. DISPOSITION
The order is affirmed. The Association is entitled to its costs on appeal.
Ramirez, P. J., and King J., concurred.
[FN.1] All further statutory references are to the Civil Code unless otherwise indicated.
[FN.2] The Association argues that this issue is waived because Pheil failed to raise it in his written opposition. While the Association discounts the fact that Pheil did raise the issue during oral argument before the trial court, we do not.
[FN.3] The cover letter provided, in part, the following: “The Association’s [CC&R’s] currently discuss[] rental of residences in a very broad manner. There are few protections afforded to the Owners against tenants who treat the Association not as their personal home, but instead as a weekend party place…. [¶] Enclosed is a proposed amendment of Article II, Section 2.1…. The purpose of the proposed amendment is to further define the rights and obligations of Owners who rent or lease their residences. Among other things and consistent with the current Rules and Regulations, the proposed amendment places a thirty (30) day minimum on any lease and provides the Association with the right, but not the obligation, to evict problem tenants on an Owner’s behalf if the Owner refuses to take corrective action.”
Related Links
Voter Apathy Not a Required Showing in a Petition to Reduce Percentage of Affirmative Votes Required to Amend CC&Rs – Published on HOA Lawyer Blog (04/19)
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.)
Peak Investments v. South Peak Homeowners Association, Inc.
[CC&R Amendments; Court Petition] Proposed HOA CC&R amendments must be approved by at least a simple majority of the total votes in a HOA before a trial court may reduce the approval requirement set in the CC&Rs.
Borton, Petrini & Conron, Matthew J. Trostler, Casandra P. Cushman, Hickey & Petchul, and Dirk Petchul for Appellant.
Garrison & McInnis, Gregory M. Garrison, Amelia A. McDermott, and Andrew R. Chivinski for Respondent.
OPINION
SILLS, P. J.-
South Peak Homeowners Association (the Association) appeals from the trial court’s order granting a homeowner’s petition to reduce the percentage of homeowner votes needed to approve an amendment to the declaration of covenants, conditions, and restrictions (CC&Rs). The Association claims the trial court improperly reduced the percentage to less than a simple majority of the homeowner votes. We find the Davis-Stirling Common Interest Development Act (Civ. Code, § 1350 et seq.) requires that a proposed amendment to the CC&Rs be approved by at least a simple majority of the total votes in the homeowners association before the trial court can reduce the percentage of votes set by the CC&Rs. Accordingly, we reverse.
FACTS
Peak Investments and Norman and Rita Lesman (the Lesmans) own lot 43 in South Peak, a planned community of custom homes in Laguna Niguel comprising 63 lots. The Association is governed by CC&Rs recorded in April 1984. In 1986, the Association amended the CC&Rs to change the building heights for each lot (CC&Rs, section 6.7.1) and the setback provisions for each lot (CC&Rs, section 6.7.2). These changes were reflected on Exhibit 1 to the amendment, entitled “Height and Setback Limitations,” which listed on a chart each lot number, its maximum height, its minimum setback from front lot line, its minimum setback from side lot lines, and its minimum setback from rear lot lines. The setback limit for lot 43’s side lot lines was listed as “20-7,” meaning the limit was 20 feet total minimum setback distance for both sides of the lot and 7 feet minimum setback distance for each side of the lot. The second page of Exhibit 1 started with listing lot 31; all the lots from lot 31 through 55 had sideline setbacks of 25-7 except lot 43.
The CC&Rs were amended again in 1990 to modify the building height limitations by removing the 35 foot cap (CC&Rs, section 6.7.1). The amended section refers to Attachment 2, which appears to be a retyped version of Exhibit 1 to the 1986 amendment. The only difference in the two is the minimum sideline setback for lot 43; that number was changed from 20-7 to 25-7.
The Lesmans purchased lot 43 in June 2001 and apparently wanted to build a larger structure than the 20-7 setback allowed. They contacted the lawyer who prepared the 1990 amendment, Edward Coss, who wrote to the Association’s Board of Directors in May 2002, opining that the change in the sideline setback on lot 43 was “an inadvertent typographical error.” Coss explained, “I can find no record or other communication to support the change in the side lot lines; in fact, the purpose of Amendment Number Three [1366] was limited to building height alterations.” Coss enclosed a proposed amendment to the CC&Rs to correct the error for the Association’s approval.
For whatever reason, the Board declined to effect the execution of the amendment. In July 2004, the Lesmans proposed an amendment to change the setback for their lot. In accordance with the bylaws, they caused a special meeting of the homeowners to be called to vote on the proposed amendment. The homeowners received a copy of the proposed amendment, which explained the requested change from 25-7 to 20-7; they also received a ballot allowing them to approve or disapprove the amendment or abstain from voting. The ballot noted, “[A]t least 25 percent (25%) of the voting power of the membership (16/63) must be present in person or by proxy in order to achieve a quorum. The written approval of at least 2/3rds of the Members (42 of 63) must be received for the proposed amendment to be approved.”
The meeting was held on July 29, 2004, with seventeen homeowners physically present. Thirty-two ballots were cast: Twenty-one voted in favor of the amendment, and eleven voted against it. Because an amendment to the CC&Rs requires the votes of two-thirds of the lot owners (CC&Rs, section 14.2), the proposed amendment failed.
The Lesmans petitioned the superior court to reduce the percentage necessary to amend the CC&Rs because the CC&Rs required a “supermajority” to amend and not enough members attended the special meeting, and to confirm the amendment as validly approved. (Civ. Code, § 1356.) The trial court granted the petition, finding that more than 50 percent of the voters voted in favor of the amendment, as required by the statute. “”[I]t seems to me . . . that this is what [section] 1356 was meant to apply to, the situation where you can’t get enough people interested to be there to provide for super majority. [¶] It isn’t like enough people came and voted against it. There just isn’t [sic] that many votes. . . . [T]he only question here is whether 50 percent of the voters voted in favor of the amendment. It appears to me they did, 21 out of 32 or 33.” The court also found the amendment was reasonable, another statutory requirement. The Association appeals from the order granting the petition.
DISCUSSION
[1] Civil Code section 1356, part of the Davis-Stirling Common Interest Development Act (the Act), provides that a homeowners’ association, or any member, may petition the superior court for a reduction in the percentage of affirmative votes required to amend the CC&Rs if they require approval by “owners having more than 50 percent of the votes in the association . . . .” [1367] (Civ. Code, § 1356, subd. (a).) fn. 1 The court may, but need not, grant the petition if it finds all of the following: Notice was properly given; the balloting was properly conducted; reasonable efforts were made to permit eligible members to vote; “[o]wners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment”; and “the amendment is reasonable.” (Civ. Code, § 1356, subd. (c)(1)-(5).)
On appeal, the Association contends the trial court erred in making an affirmative finding that more than 50 percent of the owners voted in favor of the amendment. It argues the statute requires an affirmative vote by more than 50 percent of all owners, whether or not they attended the meeting (i.e., 32 out of 63), while the trial court mistakenly construed the requirement to be merely more than 50 percent of the owners who attended the meeting (i.e., 17 out of 32).
[2] In construing a statute, we must ascertain the intent of the Legislature. The first step in the process is to look at the plain meaning of the words used. (Villa de las Palmas Homeowners Assoc. (2004) 33 Cal.4th 73, 82.) “If there is no ambiguity in the language of the statute, ‘then the Legislature is presumed to have meant what it said.'” (Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 358.)
The phrase in question here is “owners having more than 50 percent of the votes,” appearing in section 1356, subdivision (c)(4). The phrase is unqualified by language indicating “the votes” are those cast at a meeting; in the absence of such qualification, it must mean total votes in the Association.
Our interpretation is buttressed by language in other sections of the Act that carefully define votes cast at a meeting. For example, section 1355.5 allows the board of directors of an association to adopt an amendment to the governing documents deleting “any provision which is unequivocally designed and intended, or which by its nature can only have been designed or intended, to facilitate the developer in completing the construction or marketing of the development.” (§ 1355.5, subd. (a).) However, the board may not adopt such an amendment “without the approval of the owners, casting a majority of the votes at a meeting or election of the association constituting a quorum . . . . For the purposes of this section, “quorum” means more than 50 percent of the owners who own no more than two separate interests in the development.” (§ 1355.5, subd. (d).) Likewise, a rule change by the board of directors of an association may be reversed “by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which [1368] a quorum is present (which affirmative votes also constitute a majority of the required quorum) . . . .” (§ 1357.140, subd. (c).) And absent statutory notice (§ 1365), the board of directors of an association cannot levy assessment increases without the “approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association . . . .” (§ 1366, subds. (a) & (b).)
If a declaration fails to include provisions permitting its amendment, the Act provides that it may be amended after, inter alia, “the approval of owners representing more than 50 percent . . . of the separate interests in the common interest development has been given . . . .” (§ 1355, subd. (b).) Thus, it appears the Legislature made a conscious decision to provide that a bare majority of all the members would be the minimum required to amend the declaration. The comments to the Restatement of Property explain, “The declaration for a common-interest community functions like a constitution for the community. Like a constitution, the declaration should not be subject to change upon temporary impulse. Unlike rules, which can be adopted with a simple majority of votes cast, amendments require at least a majority of all votes that could be cast, and many types of amendment require substantially more.” (Rest.3d, Property, Servitudes (2000) § 6.10, com. a.)
The Restatement includes a section entitled “Judicial Power to Excuse Compliance with Requirements of the Governing Documents.” The section provides that “[a] court may excuse compliance with any of the following provisions in a governing document if it finds that the provision unreasonably interferes with the community’s ability to manage the common property, administer the servitude regime, or carry out any other function set forth in the declaration, and that compliance is not necessary to protect the legitimate interests of the members or lenders holding security interests: [¶] (4) a provision requiring approval of more than two-thirds of the voting power to adopt an amendment . . . .” (Rest.3d, Property, Servitudes, supra, § 6.12.) The section’s notes state, “The rule that quorum and supermajority requirements may be waived if necessary to permit adoption of amendments necessary to continued existence and proper functioning of the association is based on California Civil Code §§ 1356 and 1357, although it differs in some particulars.” (Id., reporter’s notes.) Notably, the Restatement section does not require the court to make threshold findings before it can exercise its discretion, as does section 1356.
There is no case law directly on point. The closest is Blue Lagoon Community Assoc. v. Mitchell (1997) 55 Cal.App.4th 472, in which this court held that a proceeding pursuant to section 1356 was not “adversarial” so as to entitle the party successfully opposing the petition to attorney fees as the prevailing party in an action to enforce the governing [1369] documents of a common interest development. (§ 1354, subd. (c).) In so holding, this court commented: “[T]he purpose of Civil Code section 1356 is to give a property owners’ association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association.” (Id. at p. 477.)
[3] It appears the legislative intent is to require at least a simple majority of all members of an association to amend the CC&Rs. Accordingly, the trial court erred in finding that the affirmative votes of 21 out of 63 owners met the statutory prerequisite that owners having more than 50 percent of the vote voted in favor of the amendment. Because we reach this conclusion, we need not discuss the Association’s contention that the amendment was not reasonable. We observe, however, that it appears the Lesmans may be merely attempting to correct a scrivener’s error. Nothing in this opinion shall be construed to hamper their ongoing efforts in that regard.
DISPOSITION
The order granting the petition is reversed. In the interest of justice, each party shall bear its own costs.
Rylaarsdam, J., and Fybel, J., concurred.
FN 1. All statutory references are to the Civil Code