[Director Inspection Rights; Former Director] A director loses his/her broader record-inspection rights upon loss of status as a director.
OPINION
HUFFMAN, Acting P. J.—
Plaintiff and appellant Walter E. Wolf, who formerly served as a corporate director of San Elijo Ranch, Inc. (SERI), brought this action against SERI and related parties, to seek enforcement of the “absolute” rights of a director to inspect SERI’s corporate records. (Corp. Code, [FN 1] § 1602.) Wolf is also a 20 percent shareholder of CDS Devco (Devco; [907] a Cal. real estate development corporation), which is the parent corporation of SERI. Wolf does not own shares in SERI itself.
Although Wolf was not reelected to the SERI board of directors, in his first amended petition for writ of mandate (the FAP), he continues to assert the rights of a director as against three defendants and respondents: (1) SERI; (2) HomeFed Corporation, the parent corporation of Devco, owning 80 percent of its shares; and (3) Paul J. Borden, who is the president of both Devco and SERI, as well as an officer of HomeFed Corporation (sometimes collectively defendants). (Code Civ. Proc., § 1085.)[FN 2]
In his FAP, Wolf alleges that he has a right and SERI and its controlling shareholders and officers, HomeFed Corporation and Borden, have a mandatory duty to allow him to pursue a complete inspection of SERI financial records. He had continually been requesting such documents for a period of almost a year, before he received notification he would not be nominated for reelection to the SERI board. Wolf contends that his removal from the SERI board was unlawful, and such removal should not affect his inspection rights or deprive him of standing to pursue this action as a former director.
In opposition to the petition, defendants filed demurrers, pointing out that Wolf’s petition admits he is no longer a director of SERI. Based on fairly recent case law, defendants argue this statutory scheme does not permit a person who is not currently serving as a director any further entitlement to inspect its records. (§§ 1602, 1603; Chantiles v. Lake Forest II Master Homeowners Assn. (1995) 37 Cal.App.4th 914 (Chantiles).) Defendants also argued that Wolf had not pled any sufficient basis for a judicial extension of the statutory scheme, or any other qualified equitable right to inspect SERI records for any valid purpose, in the capacity of a director or former director.
The superior court ruled that the demurrers must be sustained without leave to amend, because Wolf had no statutory standing as a director to pursue his demands for inspection of SERI records, nor had he presented any sufficient basis to create any exceptions to the rule. Wolf appeals, contending the trial court erred and abused its discretion when it sustained the demurrers without leave to amend, because he sufficiently pled his entitlement to an exception to the standing requirements of section 1602. Wolf claims that he [908] was unlawfully removed as a director, such that his rights to sue in that capacity, to protect minority shareholders’ or his own interests, had become fixed at the time he filed the original complaint (one day before the annual meeting at which he was not reelected).
The issues before us are narrow, and we decide only that Wolf’s statutory arguments of ongoing entitlement to inspect corporate records in a director’s capacity are without merit. (§ 1602.) He lacks the required status and standing to assert inspection rights that are properly due to a corporate director. Nor can he allege any realistic possibility of amendment, on a nonstatutory or equitable basis, to allege successfully on these facts that he is entitled to such continued director’s inspection rights.
Other forms of action exist in which a corporation’s rights may be enforced and its injuries redressed, if the corporate board will not take appropriate action. (See, e.g., Grosset v. Wenaas (2008) 42 Cal.4th 1100, 1108 [shareholder derivative suit].) Here, however, the trial court’s analysis of the relevant legal and policy considerations, as applied to the pleaded facts, was correct as a matter of law. We affirm the judgment of dismissal.
FACTUAL AND PROCEDURAL BACKGROUND
A. Petition and Demurrer
For purposes of analyzing the demurrer ruling, we take the facts properly pleaded to assess whether they may state a cause of action as a matter of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Originally, Wolf brought not only a complaint but also two petitions for relief in mandamus in his capacity as a director of SERI who was entitled to inspection of corporate records, and also as a 20 percent shareholder of Devco, who was entitled to shareholder rights. Pursuant to the parties’ stipulation, the FAP amended and consolidated all prior pleadings in the action and effectively became the operative pleading in the action, superseding the complaint filed on September 9, 2008, and the two petitions filed on October 17, 2008. The parties further agreed that the FAP, as the operative pleading, would relate back to the date the initial complaint was filed on September 9, 2008.
In the FAP, Wolf pleads as general background that SERI is governed by a board of directors, four of whom are nominated by majority shareholder Devco (85 percent owner). (Art. III, §§ 2-4.) The other director is nominated by the minority shareholders (15 percent owner), and elections are held at annual meetings or by written consent. Wolf was nominated to the SERI [909] board by Devco and was elected for 13 terms of one year. During his latter term, he began to believe that corporate mismanagement had occurred between SERI and its parent corporations, and that his efforts to investigate them were being met with resistance by SERI and the parent corporations, Devco and HomeFed Corporation.
Beginning in October 2007, Wolf began to make document requests to SERI, Devco, and HomeFed Corporation. The various responses he received from SERI, Devco and Borden were in the nature of summaries that he considered to be inadequate. The parties also disagreed over the terms of a nondisclosure agreement that SERI was requesting. After about eight months, some records were provided but not enough to satisfy Wolf.
In August 2008, SERI management sent Wolf a written consent action form to call the annual meeting for September 10, 2008, listing Wolf as a candidate for director. Wolf signed and returned it. Unfortunately, Wolf also inadvertently transmitted to defendant Borden a copy of a draft complaint that Wolf was preparing in order to compel SERI, Devco and others to provide more complete responses to the October 2007 request for information.
Upon receiving the draft complaint, Borden inquired what was going on, and in a letter dated September 5, 2008, he advised Wolf that SERI and Devco management had decided to replace him on the SERI board of directors, and would not be renominating him for election at the September 10 meeting.
Wolf filed his original pleading on September 9, 2008, alleging, among other things, that he had been removed because of his disclosure requests, and that mandamus should issue to allow him, as a director of SERI, to assert his ongoing inspection rights. [FN 3] Wolf sought a temporary restraining order (TRO) to postpone the annual meeting, once he learned he would not be renominated. At that hearing, Judge Steven Denton discussed Wolf’s theory that the filing of his complaint served to fix his rights as of that time. The TRO was denied and the FAP was filed. (The record is unclear whether and when Wolf has been replaced as a director.)
In defendants’ demurrer, they chiefly argued the pleading was defective on its face, because a statutorily required element to establish standing to bring an inspection petition was lacking, in that Wolf admitted he was no longer a director, and he therefore had no current duties to perform in that capacity. (§§ 1602, 1603.) Defendants also argued that the only proper respondent was [910] the corporation whose conduct was sought to be compelled, SERI, so that HomeFed Corporation and Borden should be dismissed for lack of binding allegations against them.
Opposition and reply papers were filed, disputing whether adequate facts were pled and proper parties named.
B. Ruling
After oral argument on December 19, 2008, the trial court sustained the demurrer without leave to amend on all of the allegations concerning a director’s right to inspect SERI records. The court first took judicial notice, as requested by Wolf, of the reporter’s transcript of the TRO request by Wolf to postpone the annual meeting, at which he was not being renominated to serve as a director. (Evid. Code, § 452.) The court also granted the request by SERI et al. to take judicial notice of Wolf’s verification in support of his original petition, which had originally been set for a November 14 hearing. That scheduled hearing apparently went off calendar when Wolf filed his FAP on November 10, 2008. The parties stipulated that the FAP was the operative pleading.[FN 4]
On the merits, the court expressed its view that the case presents a close call: “However, the court believes the better interpretation of Corp. Code section 1602 is that it required that petitioner plead and prove that he is a current director, both at the time the action is commenced and at the time of the activities proposed to be the subject of a writ of mandamus. Because it is undisputed that Wolf is no longer a director of SERI (Am. Pet. at paragraph 2), the demurrer must be sustained without leave to amend. And, because Wolf has no standing to demand inspection from SERI, it is appropriate to sustain the demurrer as to all defendants ….”
In explaining its reasoning that a “bright line” rule of entitlement to inspection rights should be adhered to, the superior court set forth these observations: “First, directors on both sides of similar disputes will know exactly where they stand. Far from `clogging the courts’ as supposed by petitioner [citation], this rule will insure that controversies over inspection rights are brought to the tribunal in a timely fashion. The court notes there was a delay of a year in this case, and the deferral has not been beneficial to either party ….”
[911] The superior court then explained its view that the issue of standing is critical in assessing a director’s statutory request to review corporate records. The court declined “to defer the standing issue while the parties litigate over whether Wolf was improperly denied re-election to the SERI board. [Citation.] This strikes the court as putting the cart before the horse. If, as respondents assert, it turns out that there was no impropriety in the decision not to re-elect Wolf, it will be clear he has no inspection rights—but in the meanwhile, both parties will be put to substantial time, energy, effort and expense. Given that it is petitioner’s obligation to establish standing [(Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 232-233; Connerly v. Schwarzenegger (2007) 146 Cal.App.4th 739, 749)], the court believes it is appropriate to address this threshold issue at the outset of the case.”
Further, the superior court found unpersuasive Wolf’s contention that in view of the denial of his ex parte application to postpone the September meeting and election, Wolf’s rights as a director were fixed or conclusively established, simply because he had filed suit before the board election. That TRO ruling was not binding or dispositive.
The superior court also declined to follow, on these facts, an out-of-state rule “allowing inspection rights to a former director where the director faces personal liability.” (See State of Tennessee ex rel. Oliver v. Society for Preservation of the Book of Common Prayer (Tenn. 1985) 693 S.W.2d 340, 343 (Oliver); Cohen v. Cocoline Products, Inc.(1955) 309 N.Y. 119, 124 [former director retains right to inspect records related to the period of service as a director, where access to the records is necessary to protect the director or shareholders].) Rather, the FAP contained no meaningful allegations to support Wolf’s contentions that he, as a former director, faced serious threats of personal liability exposure from his activities while a director, and instead, “[t]he court holds that a theoretical, inchoate exposure to personal liability is simply not enough.”
Accordingly, the demurrers were sustained without leave to amend and the court dismissed the action as to all defendants. Wolf timely filed his notice of appeal.
Along with the respondents’ brief, defendants have filed a request for judicial notice of a different first amended complaint filed by Wolf against them, including some claims as a Devco shareholder. (Evid. Code, §§ 452, 459.) That request has been deferred to this merits panel.
[912]
DISCUSSION
I. INTRODUCTION AND STANDARD OF REVIEW
(1) Mandamus is available in proper circumstances to compel the performance of duties of nongovernmental bodies or officers, such as a “corporation, board, or person,” or to compel performance of a duty resulting from “an office, trust, or station,” or to compel admission of a party to “the use and enjoyment of a right or office to which the party is entitled.” (Code Civ. Proc., § 1085, subd. (a); see Most v. First Nat. Bank of San Diego (1966) 246 Cal.App.2d 425 [corporation may be ordered to allow stockholder to inspect corporate books]; 8 Witkin, Cal. Procedure (5th ed. 2008) Extraordinary Writs, § 96, pp. 991-992.) Mandamus may be issued to require an appropriate exercise of discretion “under a proper interpretation of the applicable law.” (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 442 (Common Cause).)
Wolf contends that since he filed his original pleading the day before his term as a director ended, he is entitled to mandamus to allow him inspection of corporate records, in the nature of “use and enjoyment of a right or office” to which he remains entitled. He places himself in the role of a fiduciary director who suspects corporate mismanagement and has an absolute right to inspect records, to protect the interests of minority shareholders or to protect himself from personal liability. He contends such rights were effectively denied when these corporations stalled in allowing him full inspection, until he was no longer a director.
To address these arguments, we set forth basic rules for review and statutory standards for evaluating such petitions, and apply them to these allegations. “A demurrer tests the legal sufficiency of the complaint. [Citation.] Therefore, we review the complaint de novo to determine whether it contains sufficient facts to state a cause of action. [Citation.] `We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.’ [Citation.] The trial court exercises its discretion in declining to grant leave to amend. [Citation.] If it is reasonably possible the pleading can be cured by amendment, the trial court abuses its discretion by not granting leave to amend. [Citation.] The plaintiff has the burden of proving the possibility of cure by amendment. [Citation.]” (Grinzi v. San Diego Hospice Corp. (2004) 120 Cal.App.4th 72, 78 (Grinzi); see Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)
[913] (2) In ruling on this demurrer, the superior court was required to apply statutory standards to the pleaded facts. Determining the meaning of a statutory standard requires the resolution of a question of law. (People ex rel. Lockyer v. Shamrock Foods Co.(2000) 24 Cal.4th 415, 432.) “The soundness of the resolution of such a question is examined de novo.” (Ibid.) Remedial statutes such as section 1602 are liberally construed. (Havlicek v. Coast-to-Coast Analytical Services, Inc. (1995) 39 Cal.App.4th 1844, 1856 (Havlicek).)
In Saline v. Superior Court (2002) 100 Cal.App.4th 909, 913, the court interpreted section 1602 et seq. in the context of asserted free speech protections. The court treated the scope of a corporate director’s right to inspect corporate documents as a pure question of law that would be reviewed on a de novo basis, and we will do likewise.
II. EXTENT OF ISSUES PRESENTED
A. Identity of Defendants; Reinstatement Issues
Before turning to the pleading questions regarding the scope of protections afforded to Wolf under this statutory scheme, we first limit the issues that are actually presented for decision. Although the FAP makes generalized allegations against defendants other than SERI (i.e., parent corporation HomeFed Corporation and corporate official Borden; nothing is now claimed directly against Devco), the gist of the inspection right asserted only pertains to SERI itself, of which Wolf was formerly a director. Under Code of Civil Procedure section 1085, subdivision (a), both corporations and persons can be compelled to perform their official duties, but Wolf has made no specific arguments on appeal about the special role of HomeFed Corporation or Borden, beyond allegations of duties owed to him by SERI. Apparently, his only remaining theory is that SERI wrongfully denied him statutory or equitable director’s inspection rights, and we need not further consider any potential liability of those other two defendants and respondents. Any arguments about them have been waived on appeal.
Further, Wolf did not expressly argue until he filed his reply brief that the relief he sought might include a request for reinstatement to the SERI board of directors. In his opening brief, he only generally argued that he is somehow still entitled to director status, because he was “unlawfully” removed. However, the body and the prayer of the FAP only sought enforcement of SERI corporate obligations to provide him, as a director, with [914] inspection opportunities, regardless of his current official status, on the theory that the filing date of his complaint predated the annual meeting and election that did not retain him.
(3) Generally, we need not address arguments made for the first time in a reply brief (such as his reinstatement). (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894-895, fn. 10.) Normally, a party is not permitted “`to change [his] position and adopt a new and different theory on appeal’ because doing so would be unfair both to the court and to the opposing litigant. [Citation.]” (Grinzi, supra, 120 Cal.App.4th 72, 85.) The reinstatement request is such an unexpected change of position and need not be considered here.
No different result is required even if we look at appellant’s new reinstatement theory in light of the rule that, in considering an appeal from a dismissal after the sustaining of a demurrer without leave to amend, an appellate court will examine whether the allegations state a cause of action under any possible legal theory. (Grinzi, supra, 120 Cal.App.4th 72, 85 [“Under these circumstances, new theories may be advanced for the first time on appeal.”].) The gravamen of the FAP is found in the allegations of statutory and equitable director’s inspection rights, and not in any alleged right to official, ongoing director status (except as it might affect such inspection rights). We find no justification for expanding the issues beyond those actually pled in the mandamus request.
B. Judicial Notice
As the merits panel, we are next obligated to address the deferred request by defendants that we take judicial notice of an unconformed copy of a different first amended complaint filed by Wolf, seeking alternative relief against the same set of corporate defendants here, in the nature of a shareholder derivative action pursued in Wolf’s capacity as a 20 percent shareholder of Devco stock. (Wolf v. Borden (Super. Ct. San Diego County, 2009, No. 37-2009-00093090-CU-BC-CTL).) Those claims evidently include both contract and tort theories, such as breach of fiduciary duty, to seek damages and declaratory relief. It is not clear from the submission whether discovery has been pursued regarding any shareholder requests to seek Devco corporate records, similar to the director’s request here regarding SERI.
(4) Judicial notice is proper under Evidence Code section 452, subdivision (d)(2), of the records of “any court of record of the United States or of any state of the United States.” However, such a court record would normally show a conformed file stamp or other evidence of reliability. (Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 743 (Ross).)
[915] “‘ [W]hen a party desires the appellate court to take judicial notice of a document or record on file in the court below the parties should furnish the appellate court with a copy of such document or record certified by its custodian.’ [Citations.]” (Ross, supra, 100 Cal.App.4th 736, 743.) “It is the burden of the party seeking judicial notice to demonstrate a reason for the failure to furnish certified copies.” (Ibid.) Even though no opposition was filed to this judicial notice request, we decline the request because the document offered is not in proper form.
Even if the document were properly authenticated, we would take judicial notice only as to the existence of the pleading, not as to the truth of any of the allegations contained in it. (Ross, supra, 100 Cal.App.4th 736, 743; Day v. Sharp (1975) 50 Cal.App.3d 904, 914.) The fact that Wolf has apparently filed an alternative complaint against the same defendants does not assist us in our legal analysis of whether he can continue to pursue a director’s inspection rights, by statute or authorized extension of those rights. (§ 1602.) The judicial notice request is denied.
III. STATUTORY SCHEME
A. Purpose of Inspection Rights; Standing Issues
Wolf bases his claim of a lawful demand for inspection on several factors, including his status as a director when the request was made and the lawsuit filed, and his argument that he was unlawfully removed. In addition, he argues that he may be exposed to personal liability for his own or other directors’ activities that occurred before he left the board, such that he should be able to investigate on his own behalf, or on behalf of minority shareholders of SERI.
We begin with the normal rules of statutory interpretation, to ascertain the policies promoted by section 1602 and the criteria for pleading entitlement to relief under it. “First, we look to the words of the statute giving `”effect to the usual, ordinary import of the language, at the same time not rendering any language mere surplusage.”‘ [Citation.] We must give the statute `”`a reasonable and commonsense interpretation consistent with the apparent purpose and intention of the Legislature, practical rather than technical in nature, and which, when applied, will result in wise policy rather than mischief or absurdity. [Citations.]'”‘ [Citation.] `If the language of a statute is clear, we should not add to or alter it to accomplish a purpose which does not appear on the face of the statute or from its legislative history.’ [Citation.]” (Grinzi, supra, 120 Cal.App.4th 72, 85.)
[916] (5) Section 1602 grants to “[e]very director” an “absolute” right (albeit subject to appropriate legal qualifications), to inspect and copy corporate records and documents. (See Havlicek, supra, 39 Cal.App.4th 1844, 1855-1856; Tritek Telecom, Inc. v. Superior Court (2009) 169 Cal.App.4th 1385, 1390-1391 (Tritek) [“absolute” right is historically subject to exceptions].) This inspection right is subject to enforcement under section 1603, subdivision (a), which allows the superior court, “[u]pon refusal of a lawful demand for inspection,” to enforce the right of inspection under “just and proper conditions.”
(6) In Tritek, supra, 169 Cal.App.4th 1385, 1390-1391, this court discussed the scope of directors’ inspection rights, in terms of their intended function of promoting the directors’ proper exercise of fiduciary duties to the corporation and shareholders. (See § 309, subd. (a) [directors must serve “in good faith, in a manner such director believes to be in the best interests of the corporation and its shareholders”].) “Although it is generally presumed that the directors of a corporation are acting in good faith [citation], a court is required to defer to the business judgment only of disinterested directors. [Citation.] `”[A] director is independent when he is in a position to base his [or her] decision on the merits of the issue rather than being governed by extraneous considerations or influences.” [Citation.]'” (Tritek, supra, 169 Cal.App.4th 1385, 1390.)
(7) SERI challenges Wolf’s statutory standing as an independent director to conduct such a prospective inspection, because he lost status as a director immediately after filing suit. “Standing” is an aspect of justiciability, which is decided upon the intertwined criteria of standing and ripeness. (3 Witkin, Cal. Procedure, supra, Actions, § 21, pp. 84-85.) “`One who invokes the judicial process does not have “standing” if he, or those whom he properly represents, does not have a real interest in the ultimate adjudication because the actor has neither suffered nor is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented.'” (Id. at p. 84.) A plaintiff must “possess standing to have the underlying controversy adjudicated and the desired relief granted after a trial on the merits ….” (Common Cause, supra, 49 Cal.3d 432, 439-440.)
(8) In Californians for Disability Rights v. Mervyn’s, LLC, supra, 39 Cal.4th 223, 232-233,the Supreme Court applied principles of standing: “For a lawsuit properly to be allowed to continue, standing must exist at all times until judgment is entered and not just on the date the complaint is filed. `[C]ontentions based on a lack of standing involve jurisdictional challenges and may be raised at any time in the proceeding.’ [Citations.]” Arguably, the FAP fails to state its cause of action, because the requested relief, to a “director,” cannot now be granted personally to Wolf. A plaintiff may lose [917] standing even where an actual controversy originally existed “but, by the passage of time or a change in circumstances, ceased to exist.” (3 Witkin, Cal. Procedure, supra, Actions, § 21, pp. 84-86; see Wilson v. L. A. County Civil Service Com. (1952) 112 Cal.App.2d 450, 453 [246 P.2d 688].)
B.Authorities and Analysis
This court and other courts have strictly applied standing rules in this statutory context. In Chantiles, supra, 37 Cal.App.4th 914, 920-926, the court had before it an individual who was no longer on the board of a homeowners association, but who sought to assert a director’s inspection rights, in the context of challenging election results (under § 8334, creating association directors’ inspection rights that are parallel to those of § 1602). The Court of Appeal discussed the justification for considering the action not to be moot, in light of the director’s leaving office during the appeal. The court ruled that the inspection demand represented an issue of recurring interest that should be decided. (Chantiles, supra, at pp. 920-926.)
Next, on the merits of the inspection request by the former director, the court in Chantiles considered out-of-state authority, such as Oliver, supra, 693 S.W.2d 340, 343,in which it was held, “`the right of a director [of a nonprofit corporation] to inspect the books and records of the corporation ceases on his removal as a director, by whatever lawful means[.]'” (Chantiles, supra, 37 Cal.App.4th 914, 920.)
Although the former director, Chantiles, conceded he no longer had any director’s inspection rights, he continued to pursue his inspection request because he believed the election that removed him had not been fairly conducted. The corporation objected, raising privacy concerns about homeowner ballots that had been cast. The superior court created a limited ballot inspection procedure to be conducted by the former director’s own attorney, with certain privacy protections. However, the former director refused this proposed solution, “which strongly suggests his motive was not simply to check the math, but to find out how his neighbors actually voted. He cannot now complain that he was denied such an opportunity. The trial court’s order was appropriate.” (Chantiles, supra, 37 Cal.App.4th 914, 926.) The appellate court majority additionally based its holding upon the statement that “since Chantiles is no longer a director, he has no current inspection rights. Nor do we perceive any legitimate corporate interest he would have in the future, if reelected, for inspecting the [same] ballots.” (Chantiles, supra, 37 Cal.App.4th 914, 926, fn. 6.)
In a concurring opinion, Justice Crosby disagreed with the majority that there were any reasonably enforceable expectations of privacy by those [918] voters, but he concurred in the result because “Chantiles was a member of the homeowners association’s board of directors when he filed this action. He lost that seat in an election after the trial court entered judgment. As he is no longer a director, he enjoys no inspection rights under Corporations Code section 8334 [(parallel section to § 1602)]; and for that reason alone I concur in the decision not to award him any relief.” (Chantiles, supra, 37 Cal.App.4th 914, 927 (conc. opn. of Crosby, J.).) Further, the concurring opinion reasoned that the fiduciary duties of the former director were strong enough to override any privacy expectations of the homeowner/voters. “[A] director . . . is potentially liable for failure to exercise appropriate oversight, [so] an unconditional right to inspect is essential.” (Id. at p. 929 (conc. opn. of Crosby, J.).)
In Hartman v. Hollingsworth (1967) 255 Cal.App.2d 579 (Hartman), the petitioner was a director of a dissolved corporation, who sought inspection of corporate books.[FN 5] He claimed an ongoing need to inspect, based on “`various legal obligations'” flowing from his directorship and an “`absolute right'” to examine the corporate records to protect himself “accordingly.” (255 Cal.App.2d at pp. 581-582.)
In Hartman, supra, 255 Cal.App.2d 579, 582, the appellate court interpreted the statute (a former version of § 1602) with a view toward enforcement of its evident purposes. The unqualified statutory right of inspection allowed to a director was created only to aid the performance of his or her fiduciary duties to the corporation and its stockholders, such as in the winding-up process. When a “dead” corporation was no longer being wound up, the director had no further protected need to inspect corporate documents related to his former status. (255 Cal.App.2d at pp. 581-582.) Thus, the scope of the statute granting the right to inspect records was restricted to current, not former directors of corporations, when they retained responsibilities for winding up the corporation. That particular request for records was not properly made in pursuit of that legitimate purpose, so the petitioner (essentially a former director) did not qualify under the inspection statute. (Id. at pp. 581-582.)
In Tritek, supra, 169 Cal.App.4th 1385, 1390-1391, this court interpreted section 1602 to hold that a corporate director could lose the “absolute” right to inspect corporate documents. That director had filed his own shareholder action that was adversary to the corporation, and this served to remove any statutory basis for his right to access to all corporate documents: “In this situation, a court may properly limit a director’s inspection rights because the [919] director’s loyalties are divided and documents obtained by a director in his or her capacity as a director could be used to advance the director’s personal interest in obtaining damages against the corporation.” (169 Cal.App.4th at p. 1391.) In light of his newly acquired adversary status, the director could not properly continue to seek a director’s access to documents that would be covered by the attorney-client privilege. (Id. at pp. 1391-1392.)
(9) To be entitled to inspect corporate records, directors must remain disinterested and independent in the performance of their fiduciary duties. (Tritek, supra, 169 Cal.App.4th at p. 1391.) In our case, the pleadings and judicially noticeable materials from the original complaint and petition proceedings demonstrated to the trial court that before Wolf received notification he would not be renominated, Wolf had inadvertently transmitted to corporate official Borden a copy of the draft complaint in which he planned to sue SERI and Devco, to compel them to provide more complete responses to his October 2007 request for information. Even though Wolf remained a director when he filed suit, his director’s entitlement to inspection of corporate records was severely undermined by those admissions of his potential adversary status to SERI.
(10) Chantiles, supra, 37 Cal.App.4th 914, the leading case in this area, was decided in 1995, and has not been overruled or limited in its holding or reasoning that currentdirector status is required to pursue current inspection rights. This line of cases will not allow enforcement of any absolute director’s right of inspection to a former corporate director, when the reason for the inspection right (holding office and performing fiduciary duties as a director) no longer exists. These authorities strictly interpret standing rules in applying the language of section 1602. Under the law as we understand it, Wolf has lost the status and standing that are required to justify pursuit of his asserted director’s inspection rights. The trial court correctly applied standing principles and interpreted the statute to find that Wolf was no longer under such fiduciary obligations, as a former director, to justify his claim to an ongoing and enforceable right to inspect corporate records. (Common Cause, supra, 49 Cal.3d at pp. 439-440.)
However, Wolf makes alternative arguments to justify recognition of ongoing inspection rights, as we next discuss.
IV. IMPLIED STATUTORY OR EQUITABLE EXCEPTIONS
Wolf contends that his inspection rights as a corporate director became fixed when he filed his original pleading, and he therefore falls within some [920] implied statutory or equitable exception to the standing requirements of section 1602. He relies on out-of-state law that designates, for a discharged director, a “qualified right … covering a period of his directorship, whenever in the discretion of the trial court he can make a proper showing by appropriate evidence that such inspection is necessary to protect his personal responsibility interest as well as the interest of the stockholders.” (Cohen v. Cocoline Products, Inc., supra, 127 N.E.2d 906, 908, italics omitted; see also Oliver, supra, 693 S.W.2d 340 [Tenn. law].)
A. Nature of Removal from Office
Wolf first relies on language in Chantiles, supra, 37 Cal.App.4th 914, 920, to argue that “`the right of a director [of a nonprofit corporation] to inspect the books and records of the corporation ceases on his removal as a director, by whatever lawful means.‘” (Italics added.) According to Wolf, he was not “lawfully” removed, and he therefore retains inspection rights. In support, he argues that even if a valid notice were originally given for the September 10 annual meeting, when he received the letter from Borden that privately removed him from the notice of listed candidates, the meeting was no longer completely lawfully noticed, such that he was unlawfully not reelected. He relies on section 301, subdivision (b), generally holding that a director holds office “until the expiration of the term for which elected and until a successor has been elected and qualified,” to argue that he must retain directorship status for inspection purposes.
(11) Wolf’s argument about his status should be viewed in light of the purpose of the rules requiring adequate notice to shareholders about the agenda for an annual meeting. Section 601, subdivisions (a) and (f), set forth the requirements for notice of annual meetings, including their place, time and manner of shareholder participation. Section 601, subdivision (a) states: “The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the board for election.” (Italics added.) Section 601, subdivision (f) provides that shareholder approval of proposals is not valid unless the “general nature” of the proposal presented was stated in the notice of the meeting or in the written waiver of notice document. Those statutory requirements are reflected in the corporate articles for SERI, regarding notice of meetings.
The authors of 9 Witkin, Summary of California Law (10th ed. 2005) Corporations, section 86, page 859, explain that directors must properly call meetings, and obtain a quorum, for exercise of their powers as a board. This requirement of notice “is primarily for the protection of shareholders and may be relaxed where the shareholders have waived it or have otherwise consented to informal action.” (Ibid.)
[921] Under these standards, Wolf, as a director or former director, cannot show that the letter that notified him he would not be renominated amounted to a change in the notice given, that somehow invalidated the results of the election at the annual meeting. The notice was accurate when given, containing the names of nominees “intended at the time of the notice to be presented by the board for election,” including Wolf. (§ 601, subd. (a).) The general nature of the business of the meeting did not change. (§ 601, subd. (f).)
(12) Moreover, Wolf cannot successfully plead, as a matter of law, that it was wrongful for the board to decline to renominate him as a director. In the first place, not being renominated is not exactly the same as being removed, and Wolf’s term expired. His allegations that he was removed for the sole purpose of avoidance of corporate disclosure obligations amount only to contentions or conclusions of law that do not withstand demurrer. Under section 303, subdivision (a), a director may be removed without cause if the removal is approved by the shareholders, subject to certain protections. For example, section 303, subdivision (c) allows directors to be “removed” prior to the expiration of the director’s term of office, only under certain circumstances (for cause or incompetence as confirmed by court order; §§ 302, 304). This record does not reflect whether Wolf has been replaced, but in any case, he has not pled the corporation is unable to function due to an inadequate number of directors. (See § 301, subd. (b), providing that a director holds office until the expiration of his or her term and until a successor is in place.)
(13) Wolf has no authority to support his argument that his inspection rights continue simply because he was still in office when he made the inspection requests and when he filed suit. Despite his public policy arguments promoting corporate accountability, he has not been transformed into an ombudsman or freelance investigator, for purposes of inspecting corporate records. When he lost his seat on the board, he lost standing to assert recognized inspection rights, since they are intended to promote the appropriate exercise of a director’s fiduciary duties. (Common Cause, supra, 49 Cal.3d 432, 439-440.) The current record does not support a claim that he was unlawfully removed, and he has not shown how he can plead around the fact that his term expired, in order to plead an equitable right to inspection.
B. Potential Personal Liability of Former Director
Wolf alternatively asserts that he should be allowed to inspect SERI corporate records, even though he has left its board, because he might come under some personal exposure to liability, stemming from the time that he served upon the board. He again relies on the authority that a discharged director seeking to inspect corporate records may have a “qualified right . . . covering a period of his directorship, whenever in the discretion of the trial [922] court he can make a proper showing by appropriate evidence that such inspection is necessary to protect his personal responsibility interest as well as the interest of the stockholders.” (Cohen v. Cocoline Products, Inc., supra, 127 N.E.2d 906, 908, italics added & omitted.)
Wolf fears that he may be subject to claims (by minority shareholders) that, while he was in office, he did not do enough to combat corporate mismanagement, so he should be able to defend himself by inspecting records of SERI transactions. He cites to several sections that might have been violated by others, such as those prohibiting corporate officers or directors from making false reports or altering records, which might lead to some imposition of penalties for defrauding shareholders or misusing corporate assets. (§§ 1507, 2201, 2251, 2254, 2255.)
(14) At the pleading stage, to support allegations of continued inspection rights of a director, Wolf would have to set forth facts supporting his potential exposure to personal liability for his own acts as a director or acts of other corporate officers, such as if he “(1) participated in the acts, (2) was negligent in supervising the business, or (3) was negligent in the appointment of the wrongdoer. The director cannot be held liable for wrongs of officers that take place after the director has ceased to be a director.” (9 Witkin, Summary of Cal. Law, supra, Corporations, § 105, pp. 881-882.) Thus, Wolf would have to show facts supporting allegations that the business judgment rule would not likely protect him from personal liability, for any ultimately adjudicated failure on his watch as a director, such as failing to remedy corporate misconduct by wrongdoers. (See ibid.) Wolf has not shown facts to support assertions of continued inspection rights of a director, on the basis that personal liability is a realistic threat to him.
We emphasize that our analysis is restricted to Wolf’s claims for statutory or equitable relief due him, in his capacity as a director or former director, and we do not discuss any alternative remedies to which he may theoretically be entitled, on some other legal theory or in some other pleading. He may be able to pursue other avenues to redress alleged corporate mismanagement to promote his corporate accountability position. We decide only that Wolf has not shown any error or abuse of discretion in the superior court’s well-reasoned ruling that dismissed the FAP, for failure to state a claim upon which relief can be granted.
[923]
DISPOSITION
The judgment of dismissal is affirmed. Costs are awarded to respondents.
Nares, J., and McIntyre, J., concurred.
FN1 – All further statutory references are to the Corporations Code unless noted. Section 1602 in relevant part provides: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director and also of its subsidiary corporations, domestic or foreign.”
FN 2 – Originally, Wolf also sought relief in mandamus in another respect, as a 20 percent shareholder of Devco, but he has dismissed those shareholder claims from this action. A judicial notice request has been brought by defendants regarding another such related shareholder action, as we will discuss in part IIB., post.
FN 3 – Section 1603, subdivision (a) in relevant part provides: “Upon refusal of a lawful demand for inspection, the superior court of the proper county, may enforce the right of inspection with just and proper conditions ….”
FN 4 – It must be emphasized that the subject ruling did not sustain the demurrers without leave to amend as to Wolf’s shareholder petition with respect to Devco, but as noted, Wolf has voluntarily dismissed that portion of his claims in order to obtain this immediate appellate review of his inspection theory as a SERI director.
FN 5 – Hartman, supra, 255 Cal.App.2d 579, was disapproved on another point in Penasquitos, Inc. v. Superior Court (1991) 53 Cal.3d 1180, 1184, for its adherence to common law rules about the lack of any surviving actions against a dissolved corporation; now, causes of action are not entirely lost by reason of such dissolution.
[Director Inspection Rights; Breach of Duties] A director’s rights to inspect corporate records may be denied where the corporation believes such rights will be used to commit a tort against the corporation.
McCutchen, Doyle, Brown & Enersen, Susan L. Hoffman, James G. Snell and Neil A. Rubin for Plaintiffs and Appellants.
Richards, Watson & Gershon, Timothy L. Neufield and Alison E. Maker for Defendants and Respondents.
OPINION
YEGAN, J.
Appellants Mary Havlicek and Stephen C. Havlicek, directors of respondent Coast-to-Coast Analytical Services, Inc. (CCAS), sought an[1849]order from the superior court allowing them to inspect the books and records of CCAS. In addition, appellants unsuccessfully sought to enjoin a pending merger by CCAS until they had completed their inspection. Appellants contend they have an “absolute right” to review all CCAS documents and are not required to explain or justify their inspection demands. (Corp. Code, § 1602.) fn. 1
CCAS objected to the inspection on the theory that Delaware law applied because CCAS is a Delaware corporation. Pursuant to the Delaware statute, a director may review corporate documents only for “a purpose reasonably related to his position as a director[,]” and the Delaware Court of Chancery has exclusive jurisdiction to enforce inspection rights. (Del. Code Ann. tit. 8, § 220, subd. (d) (1995).) The trial court agreed with CCAS and denied appellants’ request, stating that it lacked “jurisdiction” to order an inspection.
We conclude that the trial court erred in applying Delaware law and in refusing to grant appellants, at the very least, an “inspection with just and proper conditions.” (§ 1603, subd. (a).) fn. 2
Facts
CCAS is a Delaware corporation. When appellants filed their request in the superior court, CCAS maintained its principal executive office in Camarillo, California. Appellants are two of the five directors of CCAS and control 40 percent of its stock. They reside in California. The three remaining directors of CCAS are employees of respondent ISS International Service System, Inc. (ISS), which owns 60 percent of CCAS stock.
Appellants allege that, on April 24, 1994, they were constructively terminated from their positions as officers and employees of CCAS. In early May,[1850]CCAS announced plans to merge its assets with those of two other corporations to form Pace Incorporated. Appellants opposed the merger and demanded broad access to CCAS documents. Although CCAS allowed appellants to review certain documents, other documents were withheld because CCAS became suspicious that appellants would use them to establish a competing business.
A majority of the CCAS directors approved the merger on June 6, 1994. Appellants voted against it and continued, unsuccessfully, to demand access to company documents. They filed this action on July 27, 1994, five days before the merger was scheduled to close. At the hearing on July 28, the trial court denied relief. On August 1, 1994, we also denied appellants’ petition for writ of mandate.
On August 3, 1994, CCAS merged with Pace. CCAS no longer maintains an office in California. Although it continues to exist as a corporation, its only assets are shares of stock in Pace. Pace, located in New York, now owns the documents appellants wish to inspect but CCAS has represented that they continue to exist and can be made available for inspection. The controversy is not over. Litigation between the parties is extant.
The Relocation of CCAS’s Principal Office and Removal of the Documents From California Does Not Render This Action Moot.
[1] CCAS argues this appeal is moot because CCAS has transferred its documents and assets to Pace and no longer maintains an executive office in California. An action becomes moot when ” ‘pending an appeal from the judgment of a lower court, and without any fault of the defendant, an event occurs which renders it impossible for this court, if it should decide the case in favor of plaintiff, to grant him any effectual relief whatever ….’ ” (Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 10 [244 Cal.Rptr. 581].)
The fact that CCAS has relocated and removed the documents from California is insufficient to render the action moot. Changed circumstances render a matter moot only when they occur ” ‘without any fault of the defendant ….’ ” (199 Cal.App.3d at p. 10.)
CCAS is, of course, responsible for closing the California office and its moving of the documents out of state. We need not decide whether section 1603, subdivision (a) limits the right of a director to inspect “… books and records kept in this state …” or whether the “in the state” aspect of the statute applies only to court-appointed inspectors or accountants. Where, as[1851]here, the books and records are moved, section 1603 cannot be used as a shield to defeat inspection. This rule is but a variation of the equitable maxim, “[n]o one can take advantage of his own wrong.” (Civ. Code, § 3517.) Moreover, an “… appeal reviews the correctness of the judgment or order as of the time of its rendition ….” (Karrin v. Ocean-Air Mobile Home Estates (1991) 1 Cal.App.4th 1066, 1070 [2 Cal.Rptr.2d 581]; see also In re Elise K. (1982) 33 Cal.3d 138, 149 [187 Cal.Rptr. 483, 654 P.2d 253].)
Choice of Law
[2a] Appellants insist that California law governs the inspection issue. CCAS argues that Delaware law applies because CCAS is a Delaware corporation. [3] To determine the correct choice of law, we apply a three-step analysis. First, we determine whether the two concerned states have different laws. Second, we consider whether each state has an interest in having its law applied to this case. Finally, if the laws are different and each state has an interest in having its own law applied, we apply the law of the state whose “interests would be more impaired if its policy were subordinated to the policy of the other state.” (North American Asbestos Corp. v. Superior Court (1986) 180 Cal.App.3d 902, 905 [225 Cal.Rptr. 877]. See also Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313, 320 [128 Cal.Rptr. 215, 546 P.2d 719].)
[2b] The California statute provides: “Every director [has] the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind ….” (§ 1602.) Under the analogous Delaware statute, a director has “the right to examine the corporation’s … books and records for a purpose reasonably related to his position as a director.” (Del. Code Ann. tit. 8, § 220, subd. (d) (1995).) In addition, the Delaware statute grants its Court of Chancery exclusive jurisdiction to resolve disputes concerning inspections by corporate directors. (Ibid.)
If Delaware law applies, the Delaware Court of Chancery has exclusive jurisdiction and appellants must prove that they have a proper purpose for their request. The California statutory scheme does not impose a “proper purpose” requirement (Valtz v. Penta Investment Corp. (1983) 139 Cal.App.3d 803, 810 [188 Cal.Rptr. 922]), and appellants have never articulated the purpose for their inspection demand. Thus, while the California[1852]statutory scheme would grant appellants an inspection, the same would not necessarily be true under the more restrictive Delaware statute. fn. 3
The directors of a corporation owe a fiduciary duty to the corporation and its shareholders. (Hartman v. Hollingsworth (1967) 255 Cal.App.2d 579, 581-582 [63 Cal.Rptr. 563].) Section 1602 represents a legislative judgment that directors are better able to discharge those duties if they have free access to information concerning the corporation. Thus, California has a public policy favoring broad inspection rights for the directors. The Legislature has also declared that it is the public policy of California to apply the same standards to foreign corporations whose principal executive offices are located in California. We may not ignore that declaration of public policy. (California Casualty Indemnity Exchange v. Pettis (1987) 193 Cal.App.3d 1597, 1605 [239 Cal.Rptr. 205].)
Delaware also has important interests at stake. Because CCAS is a creation of Delaware law, Delaware has an interest in prescribing the powers of CCAS, imposing uniform regulations on its internal affairs, and controlling its rights and liabilities. (Riley v. Fitzgerald (1986) 178 Cal.App.3d 871, 877 [223 Cal.Rptr. 889].) The Delaware statute expresses a public policy which attempts to protect corporations against unreasonable or burdensome inspections by directors.
We must decide which state’s interests would be more impaired if its policy were subordinated to the policy of the other state. (Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157, 166 [148 Cal.Rptr. 867, 583 P.2d 721].) Delaware’s interest in regulating the activities of its domestic corporations is less substantial where, as here, its only contact with the corporation is in issuing a certificate of incorporation. CCAS has no Delaware shareholders or directors. It does not have an office or store its documents in Delaware. The record does not reflect whether CCAS ever conducted business in Delaware. By contrast, California has strong contacts with CCAS. CCAS maintained its principal office and most of the documents at issue in this state until the merger occurred. CCAS also conducted business in California and employed California residents. Forty percent of its stock and two of the five seats on its board of directors are controlled by California residents.[1853]
California’s interests would be impaired by the application of Delaware law because Delaware cannot at the same time honor a director’s “absolute” inspection right and limit inspections to a “purpose reasonably related to his position as a director.” However, as we shall explain, the trial court can protect Delaware’s interest in avoiding a burdensome inspection by imposing reasonable conditions. We conclude, therefore, that California’s interest would be more impaired by the application of Delaware law than Delaware’s interest would be impaired by the opposite result. California law applies to the inspection issue. fn. 4
Section 2115 Does Not Render Section 1602 Inapplicable.
[4] CCAS argues that it need not comply with section 1602 because it does not meet the test provided in section 2115 for the application of California law to a foreign corporation. Section 2115 provides that portions of the Corporations Code, including section 1602, apply to a foreign corporation if, among other things, “more than one-half of its outstanding voting securities are held of record by persons having addresses in this state.” (§ 2115, subd. (a).) ISS owns 60 percent of the CCAS voting securities and does not have an address in California.
CCAS fails the test under section 2115, but that does not settle the question because section 1602 contains a separate and distinct test; i.e., a “long arm” provision. The statute provides that it “applies to a director of any foreign corporation having its principal executive office in this state ….” (§ 1602.) CCAS meets this test but argues that section 1602 applies only where the corporation also meets the test established in section 2115.
Section 1602 was amended to apply to foreign corporations after section 2115 was enacted. We assume that the Legislature was aware of section 2115 when it amended section 1602 and that it intended to maintain a consistent body of statutes. (Schmidt v. Southern Cal. Rapid Transit Dist. (1993) 14 Cal.App.4th 23, 27 [17 Cal.Rptr.2d 340].) We must also avoid an interpretation of section 2115 which requires that section 1602 be ignored unless ” ‘the two acts are so inconsistent that there is no possibility of concurrent operation ….’ ” (Hays v. Wood (1979) 25 Cal.3d 772, 784 [160 Cal.Rptr. 102, 603 P.2d 19].)[1854]
Here, although the two sections contain different tests, they are capable of concurrent operation. Each section may be given effect because each establishes a separate and distinct test for determining whether a foreign corporation must comply with section 1602. CCAS met one such test and is therefore required to comply with section 1602, regardless of whether it also meets the other available test.
The Internal Affairs Doctrine Does Not Require Application of Delaware Law.
[5] CCAS argues that Delaware law must be applied because the appellants’ claim involves the internal affairs of a Delaware corporation, a matter traditionally controlled by the state of incorporation. (Valtz v. Penta Investment Corp., supra, 139 Cal.App.3d at p. 807.) “The internal affairs doctrine is a conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation’s internal affairs … because otherwise a corporation could be faced with conflicting demands.” (Edgar v. MITE Corp. (1988) 457 U.S. 624, 645 [73 L.Ed.2d 269, 285, 102 S.Ct. 2629].) Here, complying with California law will not require CCAS to violate Delaware law. The Delaware statute allows, but does not require, that a corporation restrict the inspection rights of its directors. CCAS will not violate Delaware law by granting appellants greater access to its documents. The internal affairs doctrine does not apply.
Section 1602 Does Not Violate the Commerce Clause.
[6] CCAS also argues that application of California law in this case would violate the commerce clause of the United States Constitution. (U.S. Const., art. I, § 8, cl. 3.) We disagree. The commerce clause prohibits states from discriminating against interstate commerce. (Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources (1992) 504 U.S. 353 [119 L.Ed.2d 139, 147, 112 S.Ct. 2019].) It also “precludes the application of a state statute to commerce that takes place wholly outside of the State’s borders … ,” (Edgar v. MITE Corp., supra, 457 U.S. at pp. 642-643 [73 L.Ed.2d at p. 283]) and invalidates regulations that “adversely … affect interstate commerce by subjecting activities to inconsistent regulations.” (CTS Corp. v. Dynamics Corp. of America (1987) 481 U.S. 69, 88 [95 L.Ed.2d 67, 84, 107 S.Ct. 1637].)
Section 1602 does not suffer from these defects. It does not discriminate against foreign corporations because it imposes on those corporations the same burdens imposed upon domestic corporations. It does not apply to[1855]activities occurring wholly outside the borders of California because, until the merger, most CCAS documents were located in California. The same would probably be true for any foreign corporation maintaining its principal office in this state. Finally, section 1602 does not subject CCAS to conflicting regulatory demands. Application of section 1602 to CCAS does not, therefore, violate the commerce clause.
Section 1602 Does Not Violate the Full Faith and Credit Clause.
[7] Similarly, section 1602 does not violate the full faith and credit clause. (U.S. Const., art. IV, § 1 [“Full Faith and Credit … be given in each State to the public Acts, Records and Judicial Proceedings of every other State ….”].) A state’s choice of law decision does not violate the full faith and credit clause if the state has significant contacts with the dispute ” ‘such that choice of its law is neither arbitrary nor fundamentally unfair.’ ” (Wilson v. Louisiana-Pacific Resources, Inc. (1982) 138 Cal.App.3d 216, 222-223 [187 Cal.Rptr. 852].) For purposes of the full faith and credit clause, the location of a corporation’s principal executive office within a state is a “significant contact.” (Valtz v. Penta Investment Corp., supra, 139 Cal.App.3d at p. 807.)
CCAS located its principal executive office in this state and has more substantial contacts with California than it does with Delaware. Accordingly, the choice of California law as opposed to Delaware law is neither arbitrary nor fundamentally unfair. Application of section 1602 does not violate the full faith and credit clause.
The Trial Court May Impose Limitations on Appellants’ Inspection Rights Under Sections 1602 and 1603.
[8] The trial court must apply California law but is not obligated to grant appellants unfettered access to every document ever created by CCAS. Instead, the trial court may impose “just and proper conditions” upon appellant’s otherwise “absolute” inspection rights. We admit that the Legislature’s choice of the word, “absolute,” in section 1602 does give us pause. But one hypothetical illustrates that “absolute” cannot mean “absolute.” A disgruntled director unambiguously announces his or her intention to violate his or her fiduciary duties to the corporation and the shareholders by using inspection rights to learn trade secrets, gain access to confidential customer lists, and compete with the corporation. In this situation, does the Legislature[1856]want the judiciary to come to the aid of the disgruntled director, enforce the “absolute right” to inspect and help the director commit a tort against the corporation? No. fn. 5 ” ‘ “The literal meaning of the words of a statute may be disregarded to avoid absurd results ….” ‘ [Citation.]” (Unzueta v. Ocean View School Dist. (1992) 6 Cal.App.4th 1689, 1698 [8 Cal.Rptr.2d 614].)
The “absolute right” to inspect documents is the general rule in California. However, section 1602 must be read in pari materia with section 1603. (Unzueta v. Ocean View School Dist., supra, 6 Cal.App.4th at p. 1695.) The language of section 1603, subdivision (a) is expansive. It is not expressly limited to an inspection request by a shareholder. Being a remedial statute, it must be liberally construed. (Ford Dealers Assn. v. Department of Motor Vehicles (1982) 32 Cal.3d 347, 356 [185 Cal.Rptr. 453, 650 P.2d 328].)Where the corporation determines that an unfettered inspection will result in a tort against the corporation, it may decline the request for inspection.In this situation, “… directors can enforce their inspection rights by court action…. [§ 1603].” (Friedman, Cal. Practice Guide: Corporations 2 (The Rutter Group 1995) ¶ 6:502, pp. 6-98; see also 15 Cal.Jur.3d, Corporations, § 263, p. 367 )
Upon a director’s request for inspection pursuant to section 1603 in the superior court, the corporation must demonstrate, by evidentiary showing, that a protective order is necessary to prevent a tort against the corporation. Whether there are other situations where a director’s inspection rights may be curtailed is not before us and we offer no opinion thereon. The superior court may then exercise its broad discretion under section 1603, subdivision (a) to fashion a protective order imposing just and proper conditions on the inspection. Precisely what “just and proper conditions” are necessary in this case, if any, is a question we leave to the superior court.
Conclusion
The trial court erred in applying Delaware law and denying appellants any inspection rights. We reverse and remand the matter to allow the trial court[1857]to enter an order granting appellants an appropriate inspection. Each party shall bear its own costs. Stone (S. J.), P. J., and Gilbert, J., concurred.
FN *. Retired judge of the Ventura Municipal Court sitting under assignment by the Chairperson of the Judicial Council.
FN 1. All statutory references are to the Corporations Code unless otherwise stated.
Section 1602 provides: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director and also of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts. This section applies to a director of any foreign corporation having its principal executive office in this state or customarily holding meetings of its board in this state.”
FN 2. Section 1603, subdivision (a) provides: “Upon refusal of a lawful demand for inspection, the superior court of the proper county, may enforce the right of inspection with just and proper conditions or may, for good case shown, appoint one or more competent inspectors or accountants to audit the books and records kept in this state and investigate the property, funds and affairs of any domestic corporation or any foreign corporation keeping records in this state and of any subsidiary corporation thereof, domestic or foreign, keeping records in this state and to report thereon in such manner as the court may direct.”
FN 3. Appellants place great reliance on Valtz v. Penta Investment Corp., supra, 139 Cal.App.3d 803. There, owners of over 5 percent of the shares sought to enforce their “absolute right” to inspect and copy the shareholders list. The corporation refused, alleging that the information would be used in a competing business. (Id., at p. 806.) The opinion does observe that the “unclean hands” defense was tantamount to the “proper purpose” rule and therefore inapplicable. (Id., at p. 810.) The opinion, however, is silent with respect to section 1603 subdivision (a) and its provision for a protective order.
FN 4. Our construction of section 1603, subdivision (a) (see post, at pp. 1855-1856) does not render the conflict of laws issue moot. The California and Delaware rules for director inspection remain different.
Were we to rule that Delaware law applied to this inspection controversy, a director’s right to inspect would not only be chilled, it might be frozen. Whether appellants would suffer the burden of litigating the inspection issue in the Delaware chancery court is unknown.
FN 5. We also note the recent case of Chantiles v. Lake Forest II Master Homeowners Assn. (1995) 37 Cal.App.4th 914 [45 Cal.Rptr.2d 1]. There, an analogous provision in section 8334, provided for an “absolute right” of inspection for a homeowners association director. Notwithstanding the use of the word “absolute,” a majority of the court were of the opinion that the right to privacy could, and there did, outweigh the “absolute” right of inspection. (37 Cal.App.4th at pp. 925-926.)
[Director Inspection Rights; Attorney-Client Privilege] A director’s right to inspect corporate records does not include the right to access attorney-client privileged information that was generated in defense of a suit filed by the director against the corporation.
The Gomez Law Group and Alvin M. Gomez for Petitioner.
No appearance for Respondent.
The Law Offices of Shawn A. McMillan, Shawn A. McMillan; and Kathryn E. Karcher for Real Party in Interest.
OPINION MCINTYRE, J.-
Although corporate directors have an “absolute right” to “inspect and copy all [corporate] books, records and documents of every kind” (Corp. Code, § 1602), including documents protected by the attorney-client privilege, we conclude that a corporate director does not have the right to access documents covered by the attorney-client privilege that were generated in defense of a suit for damages that the director filed against the corporation.(All undesignated statutory references are to the Corporations Code unless otherwise specified.) As such, we grant the petition and direct the trial court to conduct further proceedings to determine whether: (1) the requested documents are covered by the attorney-client privilege and (2) if the requested documents are privileged, whether an exception exists or there was an express or implied waiver of the privilege.
FACTUAL AND PROCEDURAL BACKGROUND
Tritek Telecom, Inc. (Tritek) is a California corporation with two equal shareholders, Andre Rerolle and Prospect Development Inc. (Prospect), a[1388]company solely owned by Chik-Lun Mak. Tritek initially had three members on its board of directors, Alvin Ly, Rerolle and Mak. In May 2007, Rerolle and Mak hired L. Michael Wilson of the Apollo Law Group to act as Tritek’s corporate counsel in relation to Ly’s resignation from the board, leaving Rerolle and Mak as the sole members of Tritek’s board of directors.
The following month, conflicts arose between Rerolle and Mak regarding the operation of Tritek and management responsibilities. Mak claimed, among other things, that Rerolle improperly locked him out of Tritek facilities, stopped paying his salary and misappropriated Tritek assets. In turn, Rerolle claimed that Mak engaged in numerous corporate improprieties.
Mak and Prospect sued Tritek, Rerolle and others, alleging various causes of action and seeking return of their $410,000 investment and damages against all defendants. (Prospect Development, Inc. v. Tritek Telecom, Inc., (Super. Ct. San Diego County, 2007, No. 37-2007-00072571-CU-MC-CTL (the shareholder action).) The shareholder action was assigned to the Honorable Ronald S. Prager. Tritek later filed a cross-complaint against Mak, Prospect, Ly and others alleging, among other things, that Mak breached his fiduciary duties to and defrauded the corporation. Wilson initially represented Tritek and Rerolle in the shareholder action, but Judge Prager granted a motion to disqualify him as counsel, noting that Wilson removed himself as counsel for Tritek and finding that Wilson had previously given advice to both Mak and Rerolle and was now precluded from representing one against the other.
Mak and Prospect later filed a complaint against Tritek and Rerolle, seeking the removal of Rerolle as a director for Tritek (which is pending before Judge Prager) and a separate petition for the appointment of a provisional director which was assigned to the Honorable Joan M. Lewis. Judge Lewis has since entered a judgment appointing Richard M. Kipperman as a provisional director of Tritek.
Mak filed the instant petition under section 1603 against Tritek, Rerolle and Wilson, seeking to enforce his right as a director of Tritek to inspect Tritek’s books and records and the matter was assigned to the Honorable Yuri Hofmann. Tritek, Rerolle and Wilson answered, asserting the petition sought attorney-client privileged documents generated by Tritek and Rerolle in defense of Mak’s related actions. Tritek also raised the attorney work product doctrine. After Mak dismissed Wilson and Rerolle, the trial court tentatively granted the petition, stating that Tritek’s evidentiary showing was insufficient to justify withholding the documents and noting that Tritek had previously given Mak access to the requested documents and this “seemingly render[ed] the privilege objections moot.”[1389]
At a hearing on the ruling, the trial court denied Tritek’s requests for an evidentiary hearing and for judicial notice of additional documents. The trial court concluded that Tritek failed to meet its burden to show cause why the records should not be produced and adopted its tentative ruling.
After Mak filed a proposed judgment and proposed peremptory writ of mandate, Tritek objected to them on the ground they ordered disclosure of confidential attorney-client communications generated by Tritek in defense of litigation brought by Mak in other related actions. Wilson substituted out as Rerolle’s attorney and objected to the proposed judgment and writ because they ordered disclosure of confidential attorney-client communications between himself and Rerolle. Rerolle also objected to the proposed judgment and writ on the same grounds and suggested submitting a privilege log. The trial court took no action on the objections, entered the proposed judgment and issued the peremptory writ of mandate.
Among other things, the judgment ordered Tritek to produce: (1) the entire content of the Apollo Law Group case files relating to the shareholder action and any other matters for which Apollo Law Group has been consulted or employed by Tritek; (2) all communications between Apollo Law Group and any officer, director or employee of Tritek; and (3) any case files evidencing Tritek’s involvement in any litigation.
Tritek sought writ review of the judgment, arguing the trial court abused its discretion by failing to continue the evidentiary hearing and ordering disclosure of documents covered by the attorney-client privilege and attorney work product doctrine. We stayed production of the documents and the subsequent judgment and issued an order to show cause why the relief sought should not be granted. During the pendency of this proceeding, the parties settled the underlying case; however, they requested a decision on the unresolved legal issue presented in this writ proceeding.
(Mak’s requests for judicial notice of various documents in the related actions are granted. (Evid. Code, § 452, subd. (d).) Tritek’s request to strike portions of Shawn A. McMillan’s declaration is denied.)
DISCUSSION
1. General Legal Principles
[1] A client has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between the client and his or her lawyer unless the privilege is waived. (Evid. Code, § 954.) A corporation is a “client” protected by the attorney-client privilege[1390](Evid. Code, §§ 175, 951;D.I. Chadbourne, Inc. v. Superior Court(1964) 60 Cal.2d 723, 736) and a “confidential communication” includes “a legal opinion formed and the advice given by the lawyer in the course of that [attorney-client] relationship.” (Evid. Code, § 952.) [2] Once a party establishes that a privilege applies, the burden shifts to the party opposing the privilege to demonstrate that the privilege did not apply, that an exception existed, or that there was an express or implied waiver. (Evid. Code, §§ 405, 917, subd. (a);Titmas v. Superior Court(2001) 87 Cal.App.4th 738, 745.)
[3] Corporate directors owe a fiduciary duty of care to the corporation and its shareholders and must serve “in good faith, in a manner such director believes to be in the best interests of the corporation and its shareholders[.]” (§ 309, subd. (a).) Although it is generally presumed that the directors of a corporation are acting in good faith (Katz v. Chevron Corp.(1994) 22 Cal.App.4th 1352, 1366), a court is required to defer to the business judgment only of disinterested directors. (See, e.g., Gaillard v. Natomas Co.(1989) 208 Cal.App.3d 1250, 1265-1266.) “[A] director is independent when he is in a position to base his [or her] decision on the merits of the issue rather than being governed by extraneous considerations or influences. [Citation.]” (Katz v. Chevron Corp., supra, 22 Cal.App.4th at p. 1367.)
[4] Corporate directors also have the “absolute right” at any reasonable time to inspect and copy all corporate books, records, and documents of every kind (§ 1602) and a court may enforce this right “with just and proper conditions.” (§ 1603.) This right “represents a legislative judgment that directors are better able to discharge [their fiduciary] duties if they have free access to information concerning the corporation.” (Havlicek v. Coast-to-Coast Analytical Services, Inc.(1995) 39 Cal.App.4th 1844, 1852.)The absolute right, however, is subject to exceptions and may be denied where a disgruntled director announces his or her intention to violate his or her fiduciary duties to the corporation, such as using inspection rights to learn trade secrets to compete with the corporation. (Id. at pp. 1855-1856.)
2. Analysis
Initially, we note that four separate but related matters were assigned to three different judges and there is a possibility of conflicting rulings on discovery matters. There are rules to prevent this. (Cal. Rules of Court, rule 3.300.) Accordingly, the presiding judge of the superior court is directed to send this petition and any pending related matters to one judge.[1391]
On the merits, Tritek does not dispute Mak’s right to inspect general corporate documents; rather, it contends that the trial court’s ruling was overbroad because it encompassed documents protected by the attorney-client privilege. We agree.
Mak filed this action to enforce his inspection rights as a director after he filed the shareholder action against Tritek and Rerolle in his individual capacity as a shareholder to vindicate his personal rights. Accordingly, Mak is not a disinterested director and the presumption of good faith does not apply. Additionally, enforcing Mak’s “absolute” inspection rights in this case is problematic because it gives him access to documents he could not obtain via discovery in the shareholder action.
[5] Although Mak is still a Tritek director, his filing of the shareholder action makes him Tritek’s adversary. Mak cannot take off his “shareholder’s hat” and swap it for his “director’s hat” and claim an absolute right to access all corporate documents. In this situation, a court may properly limit a director’s inspection rights because the director’s loyalties are divided and documents obtained by a director in his or her capacity as a director could be used to advance the director’s personal interest in obtaining damages against the corporation.(La Jolla Cove Motel and Hotel Apartments, Inc. v. Superior Court(2004) 121 Cal.App.4th 773, 787-788 [corporate counsel has no duty to disclose privileged information to dissident director with which the corporation has a dispute].)
[6]Accordingly, we conclude that a corporate director does not have the right to access documents that are covered by the attorney-client privilege and were generated in defense of a suit for damages that the director filed against the corporation. Although the trial court noted that Tritek had given Mak access to corporate documents and this production “seemingly” rendered the privilege objections moot, Mak presented no evidence showing Tritek had produced attorney-client privileged documents in response to his earlier request. Thus, the trial court had no factual basis on which to conclude Tritek had waived its right to assert the attorney-client privilege.
Furthermore, Wilson and the Apollo Law Group jointly represented Rerolle in the shareholder action for a period of time and Rerolle properly asserted his individual attorney-client privilege. Mak is not entitled to any documents covered by Rerolle’s individual attorney-client privilege. Finally, while it is unlikely that Tritek has documents covered by the attorney work product doctrine that would not also be covered by the attorney-client privilege, the trial court should allow the parties to address the application of this doctrine.
Under these circumstances, the trial court is directed to conduct further proceedings to determine whether: (1) any of the requested documents are[1392]covered by the attorney-client privilege or attorney work product doctrine, and (2) if the requested documents are privileged, whether an exception exists or there was an express or implied waiver of the privilege.
DISPOSITION
Let a writ of mandate issue directing the superior court to vacate its May 12, 2008, judgment and peremptory writ of mandate and to conduct further proceedings in accordance with the views expressed in this opinion. The presiding judge of the superior court is further directed to transfer this matter to one judge. Tritek is entitled to its costs in this writ proceeding. The stay issued on May 12, 2008, will be vacated when the opinion is final as to this court.
[Director Inspection Rights; Privacy] A director’s record inspection rights may be limited by the association’s duty to protect the privacy rights of its members in their voting decisions.
John F. Kunath, Jr., for Plaintiff and Appellant. Richard A. Tinnelly and Anthony M. Garcia for Defendant and Respondent.
OPINION
WALLIN, J.
In this case we are asked to consider the extent of a homeowner association director’s rights to inspect the records of the association under Corporations Code section 8334. fn. 1 Here a director asks us to conclude his inspection rights are absolute and include an unfettered right to review and copy the ballots cast by the association’s homeowner members in its annual election of its board of directors. The association asks us to hold, as the trial court did, that a director’s rights of inspection must be balanced against the members’ legitimate expectations of privacy in their voting decisions. We affirm.
Thomas J. Chantiles was an elected member of the board of directors of the Lake Forest II Master Homeowners Association (the Association). The Association elects its seven directors annually. Voting is cumulative, meaning that each homeowner member has seven votes per election which may be divided however he or she wishes among the candidates, for example, the member may cast one vote for each of seven candidates or all seven votes for one candidate.
As required by law, voting is done by a proxy ballot, rather than by direct written ballot. The proxy ballots are mailed to each member. The ballot[919]gives the member several options. He or she first designates a person as that member’s voting proxy holder. If no person is named, by default, the chair of the Association’s election committee is the designated proxy holder. The proxy holder is authorized to cast the member’s seven votes. The member may indicate on the ballot how those votes are to be cast, i.e., he or she may directly vote for the candidates listed on the ballot. If no direction is made, the proxy holder has discretion to cast the votes in whatever way he or she chooses. The member may indicate on the ballot that the proxy designation is solely for the purpose of achieving a quorum and no votes may be cast for any candidate.
The member may either mail the proxy back to the Association or hand deliver it and place it in the ballot box. The chair of the election committee holds the ballots for tabulation. As an alternative, candidates may directly solicit proxies from members which the candidate hand delivers at the annual meeting for tabulation. The proxy ballot form which a candidate might directly solicit is slightly different from the form which is mailed to members, but contains the same options and information.
Chantiles had served as a director of the Association for many years. He ran for a 10th term in 1992 and was reelected, apparently as a member of a minority faction. Believing that he had been shorted by 800 to 1,300 proxy votes, which he presumably would have cast for other candidates from his faction, Chantiles demanded the Association allow him to inspect and copy all of the ballots cast in the 1992 annual election. Citing its concern for preserving the privacy of individual voting members, the Association refused.
In July 1992 Chantiles filed a complaint Orange County Superior Court case No. 693389, seeking a judicial determination of the validity of the election under section 7616. On August 19, counsel for the Association met with Chantiles to attempt to resolve the matter. The meeting was unproductive. In September the parties agreed to allow Chantiles to inspect the ballots in the Association’s counsel’s office, in the presence of a monitor for each side, but that meeting never took place. The complaint was dismissed without prejudice on December 1.
On December 18, 1992, Chantiles filed this petition for writ of mandate (Code Civ. Proc., § 1085) to compel the Association to permit the inspection and copying of the ballots under section 8334, which gives directors of nonprofit corporations the right to inspect and copy corporate records. The Association opposed the writ, arguing that unfettered access to the ballots[920]would violate its members’ expectations that their votes were private. It submitted declarations from 120 members who stated they believed their ballots to have been secret when they cast them, and they did not wish the ballots to be divulged to Chantiles.
The trial court concluded the ballots were the type of record to which a director had a right of inspection pursuant to section 8334. However, members had a legitimate expectation of privacy in their ballots against which the inspection right must be balanced. In May 1993 the court issued its writ of mandate. It ordered the Association to make available to Chantiles’s attorney, John Kunath, Jr., all ballots cast in the 1992 election. Counsel for the Association, or another representative, could be present during the inspection. Mr. Kunath could take notes while inspecting, but those notes could not contain the names of voting members, only the names of their designated proxy holders. He could not disclose to anyone the names of persons who voted or how any individual voted, without further order of the court. The court reserved the issue of attorney fees and costs. Rather than conduct the inspection authorized by the court, Chantiles filed the instant appeal.
I.
[1a] The Association contends the appeal is moot because Chantiles is no longer on its board of directors and therefore cannot assert a director’s inspection rights. At the annual meeting on June 3, 1993, Chantiles was not reelected to the board of directors. fn. 2 Although we have located no California case addressing the effect of a director’s defeat, other states have held “the right of a director [of a nonprofit corporation] to inspect the books and records of the corporation ceases on his removal as a director, by whatever lawful means[.]” (State v. Soc. for Pres. of Common Prayer (Tenn. 1985) 693 S.W.2d 340, 343.) Chantiles essentially concedes he no longer has a director’s inspection rights, but asserts the appeal is not moot for several reasons. First, the trial court specifically reserved the issues of costs and attorney fees (see § 8337), which, Chantiles argues, cannot be decided if we dismiss the appeal. He also argues the issue of a director’s inspection rights is one of public importance which we should decide, even if it is technically moot.[921]Finally, he contends the issue is likely to recur between these same parties, as he may be reelected.
[2] It is this court’s duty ” ‘to decide actual controversies by a judgment which can be carried into effect, and not to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it. It necessarily follows that when, pending an appeal from the judgment of a lower court, and without any fault of the defendant, an event occurs which renders it impossible for this court, if it should decide the case in favor of plaintiff, to grant him any effectual relief whatever, the court will not proceed to a formal judgment, but will dismiss the appeal.’ ” (Consol. etc. Corp. v. United A. etc. Workers (1946) 27 Cal.2d 859, 863 [167 P.2d 725]; see also Eye Dog Foundation v. State Board of Guide Dogs for the Blind (1967) 67 Cal.2d 536, 541 [63 Cal.Rptr. 21, 432 P.2d 717]; Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 10 [244 Cal.Rptr. 581].)
We may, in appropriate circumstances, exercise our discretion to retain and decide an issue which is technically moot. (Davies v. Superior Court (1984) 36 Cal.3d 291, 294 [204 Cal.Rptr. 154, 682 P.2d 349].) We do so when the issue is of substantial and continuing public interest. (DeRonde v. Regents of University of California (1981) 28 Cal.3d 875, 880 [172 Cal.Rptr. 677, 625 P.2d 220].) Such a resolution is particularly appropriate when the issue is “presented in the context of a controversy so short-lived as to evade normal appellate review” (Evans Products Co. v. Millmen’s Union No. 550 (1984) 159 Cal.App.3d 815, 820, fn. 5 [205 Cal.Rptr. 731]; see also San Jose Mercury-News v. Municipal Court (1982) 30 Cal.3d 498 [179 Cal.Rptr. 772, 638 P.2d 655]; Hardie v. Eu (1976) 18 Cal.3d 371, 379 [134 Cal.Rptr. 201, 556 P.2d 301]), or when it is likely to affect the future rights of the parties (Evans Products Co. v. Millmen’s Union No. 550, supra, 159 Cal.App.3d at p. 820, fn. 5).
Membership in condominiums, cooperatives and planned unit developments, known as “common interest” developments, is increasingly common. (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 370 [33 Cal.Rptr.2d 63, 878 P.2d 1275].) Common interest developments number in the tens of thousands. (See Sproul & Rosenberry, Advising California Condominium and Homeowners Associations (Cont.Ed.Bar 1991) § 1.1, p. 2 (Sproul & Rosenberry) [by 1986 there were 13,000 to 16,000 common interest developments in California.].) Such developments are usually governed by a homeowners association which is incorporated as a nonprofit mutual benefit corporation under section 7110 et seq. (Sproul & Rosenberry,[922]supra, § 1.9, p. 9.) The homeowners association is governed by a board of directors. (§ 7210.) The directors are elected by the association members for a term specified by the articles of incorporation, not to exceed four years. (§ 7220, subd. (a).) Chantiles, and the other directors of the Association, are elected for terms of only one year, as is common with many homeowners associations.
[1b] We agree with Chantiles that the issue presented here, the extent of an elected director’s rights to inspect election ballots, is of significant public interest concerning a large number of citizens. For many Californians, the homeowners association functions as a second municipal government, regulating many aspects of their daily lives. The court in Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642 [191 Cal.Rptr. 209], noted the “quasi-governmental” nature of homeowners associations. ” ‘[U]pon analysis of the association’s functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a “mini-government,” the association provides to its members, in almost every case, utility services, road maintenance, street and common area lighting, and refuse removal. In many cases, it also provides security services and various forms of communication within the community. There is, moreover, a clear analogy to the municipal police and public safety functions. All of these functions are financed through assessments or taxes levied upon the members of the community, with powers vested in the board of directors … clearly analogous to the governing body of a municipality.’ ” (Id. at p. 651, italics added.)
We also agree that the controversy would often be so short-lived as to escape appellate review. The Association’s directors serve only for one-year terms. That is often the case with homeowners’ associations. Therefore, we exercise our discretion to retain the matter and decide the issue. fn. 3
II.
[3a] Although the writ of mandate was ostensibly in Chantiles’s favor, he contends the restrictions the trial court placed upon inspection of the ballots effectively wiped out any inspection rights he had. He argues section 8334 confers an absolute right to inspect and copy all corporate books, records and property and the ballots are documents to which a director has a right of access. The Association concedes the ballots are the kind of record subject to section 8334, but argues a director’s right to inspect them must be[923]balanced against its members’ expectation of privacy in voting. We consider first the nature of any privacy right in the ballots and the nature of a director’s inspection rights. We then consider whether the trial court properly balanced those rights in fashioning its order.
Chantiles begins by asserting that the homeowner members of the Association have no legitimate expectation of privacy in their voting decisions because the voting is done by proxy. A proxy by its very nature connotes revealing to another person one’s voting choice. Furthermore, he argues, the homeowners must certainly realize that their votes will be revealed to the inspector of elections who is charged with tabulating the proxy votes, again negating any expectation of privacy. fn. 4
Section 7513 governs the balloting process in the election of directors. Although that section does not mandate confidentiality in voting, the Department of Real Estate Regulations governing common interest developments specifies, “Voting for the governing body shall be by secret written ballot.” (Cal. Code Regs., tit. 10, § 2792.19, subd. (b)(1).) fn. 5 However, proxy voting is required when an association’s bylaws provide for cumulative voting, as is the case here. (§§ 7513, subd. (e), 7615.) A “proxy” is defined as the “written authorization” of one member giving another person “power to vote on behalf of such member.” (§ 5069.)
Article I, section 1 of the California Constitution provides: “All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.” (Italics added.) [4] This privacy right protects against invasions by private citizens as well as by the state. (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 20 [26 Cal.Rptr.2d 834, 865 P.2d 633]; Heda v. Superior Court (1990) 225 Cal.App.3d 525, 527 [275 Cal.Rptr. 136]; Chico Feminist Women’s Health Center v. Scully (1989) 208 Cal.App.3d 230, 242 [256 Cal.Rptr. 194].)[924]
[3b] Although the issue of whether ballots cast in a homeowners association election are confidential or subject to a constitutional privacy right has not been previously addressed, we must examine the “reasonable expectations of the members” in deciding the issue. (Sproul & Rosenberry, supra, § 2.44, p. 92.) In Hill v. National Collegiate Athletic Assn., supra, 7 Cal.4th 1, the court stated there is a legally recognized privacy interest “in precluding the dissemination or misuse of sensitive and confidential information (‘informational privacy’)[.] … [] Informational privacy is the core value furthered by [California Constitution, article I, section § 1]. A particular class of information is private when well-established social norms recognize the need to maximize individual control over its dissemination and use to prevent unjustified embarrassment or indignity. Such norms create a threshold reasonable expectation of privacy in the data at issue.” (Id. at p. 35.)
Certainly in the case of direct written ballots cast by a member for a candidate, “… the reasonable expectation of members is that their personal voting decision will not be known to other members, as it would be in a vote conducted by a show of hands.” (Sproul & Rosenberry, supra, § 2.44, pp. 92-93.) We reject Chantiles’s assertion that there is no similar expectation of privacy in a written proxy ballot. A member has three choices in casting a proxy vote. He or she may give a proxy to a specific person, or the inspector of elections if no one is designated, to vote as that member directs. The member may give a proxy to a person to vote the member’s vote as the proxy holder desires. The member may give a proxy to a person or the inspector of elections for the sole purpose of establishing a quorum so the annual meeting may go forward. In choosing any of those options, a member has an expectation of privacy. “And, of course, the custodian of such private information may not waive the privacy rights of persons who are constitutionally guaranteed their protection.” (Board of Trustees v. Superior Court (1981) 119 Cal.App.3d 516, 526 [174 Cal.Rptr. 160].)
The trial court correctly concluded homeowners association voting was a class of information in which members have a reasonable expectation of privacy. The Association submitted declarations of 120 members stating they believed their ballots were private and they did not want them divulged. In its written tentative ruling, after noting the increasing power homeowners associations wield in their members’ everyday lives (see also Cohen v. Kite Hill Community Assn., supra, 142 Cal.App.3d at p. 651), the trial court stated, “Homeowner association elections may raise emotions as high or higher than those involved in political elections. Under these circumstances a degree of privacy afforded to the electors in such elections appears to be desirable. Neighbors may cease to speak to each other if it became publicly [925] known that certain votes were cast. Voters may be intimidated to vote in a certain way should their ballot be subject to public scrutiny. [] Under these circumstances, the expectation of privacy to which many of the voters certified in their declarations gains credibility.” Chantiles submitted nothing to the contrary.
We consider next the extent of a director’s inspection rights. Section 8334 provides, “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director.” (See also Cal. Code Regs., tit. 10, § 2792.23, subd. (f).) Chantiles contends his inspection and copying rights are absolute and not subject to any privacy rights of the members. Although section 8336 provides that the trial court “may enforce the demand or right of inspection with just and proper conditions[,]” he argues that proviso applies only to conditions on the hours of inspection, not on the manner or extent of his inspection.
We reject Chantiles’s assertion because section 8334 gives him an “absolute right” to inspect, this right need not yield to any other right, not even a constitutional right. As Sproul and Rosenberry note, “[Section 8334’s] broad and unqualified statement of a director’s inspection rights can present difficult ethical and legal issues …. [For] example, what if a director who ran for office on a platform critical of the present general manager’s conduct and salary demands the right to inspect the general manager’s personnel file and to disclose its contents to the members …? [] [T]he manager’s constitutional right of privacy under [California Constitution, article I, section 1] may preempt a director’s general rights of inspection[.]” (Sproul & Rosenberry, supra, § 2.52, pp. 103-104; see also Advising California Nonprofit Corporations (Cont.Ed.Bar 1984) § 8.53, p. 439 [“A director’s right of inspection may be subordinate to other statutes specifically protecting confidential, private, or privileged records against inspection, although there is no such express provision.”].)
The need for balancing privacy rights against other statutory rights is well recognized. In Board of Trustees v. Superior Court, supra, 119 Cal.App.3d 516, the court conducted a ” ‘careful balancing’ of the ‘compelling public need’ for discovery against the ‘fundamental right of privacy’ ” when it denied a plaintiff’s request for discovery of confidential personnel records. (Id. at p. 525.) In Heda v. Superior Court, supra, 225 Cal.App.3d 525, the court concluded a plaintiff’s statutory right to trial preference based on the defendant’s ill health was outweighed by the defendant’s right of privacy when it denied the plaintiff discovery of the defendant’s medical records. [926](Id. at p. 529.) Chantiles offers no compelling argument for concluding a balancing of rights is inappropriate.We hold that homeowners association members have a constitutional privacy right in their voting decisions, even when conducted by proxy ballot. A homeowners association director’s statutory right to inspect the records of the association must be balanced against this privacy right.
[5] We consider finally, whether the trial court’s order properly balanced these competing interests. Chantiles states his purpose in inspecting the ballots was to determine whether he had been shorted proxy votes. It was his intention to compare the ballots with his own list of homeowners on which he monitored the proxies promised him. He would later determine whether a judicial challenge would be brought. Chantiles wanted to compare the votes he believed he had been promised to the votes he actually received. We can conceive of no greater violation of the privacy of the Association’s members. Any neighbor may well have told Chantiles he would receive his or her proxy votes, but actually cast his or her votes otherwise. To now give Chantiles personal access to the names of those voting and how they voted certainly violates well-established social norms.
The trial court offered a reasonable resolution. It appointed Chantiles’s own attorney to review and tally the ballots, provided he not disclose the name of any individual voter, or how he or she voted, without further order of the court. Chantiles refused this resolution, which strongly suggests his motive was not simply to check the math, but to find out how his neighbors actually voted. He cannot now complain that he was denied such an opportunity. The trial court’s order was appropriate. fn. 6
III.
[6] The trial court specifically reserved the issues of attorney fees and costs. Section 8337 provides that in any action to enforce inspection rights “if the court finds the failure of the corporation to comply with a proper demand … was without justification,” the court may award reasonable costs and expenses, including attorney fees. Chantiles argues the matter must be remanded for a determination of costs and attorney fees below.
We need not remand the matter. The trial court may only exercise its discretion to award costs and attorney fees if it finds the Association acted[927]without justification. It is not reasonably probable that the court would make such a finding here. Implicit in its ruling was that the Association had a duty to guard the privacy rights of its members in their voting decisions. Furthermore, the trial court offered a reasonable remedy to Chantiles which he refused. We affirm the trial court’s conclusion. The Association’s refusal to allow Chantiles the unfettered access to the ballots which he demands was not unjustified. Therefore, he is not entitled to costs and attorney fees. The judgment is affirmed. Respondent is entitled to its costs on appeal.
Sills, P. J., concurred.
CROSBY, J.,
Concurring.-Thomas J. Chantiles was a member of the homeowners association’s board of directors when he filed this action. He lost that seat in an election after the trial court entered judgment. As he is no longer a director, he enjoys no inspection rights under Corporations Code section 8334; and for that reason alone I concur in the decision not to award him any relief.
While the appeal is technically moot, in my view, as to Chantiles, the issue is one “of continuing public interest and likely to recur in circumstances where, as here, there is insufficient time to afford full appellate review” (Leeb v. DeLong (1988) 198 Cal.App.3d 47, 51-52 [243 Cal.Rptr. 494]). Accordingly, I agree with my colleagues that it should be addressed. But I disagree with their analysis.
Corporations Code section 8334 was enacted in 1978, years before the election in this case. And the inspection rights it confers on directors of corporations are unconditional: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind … of the corporation of which such person is a director.” Where, as here, a statute is unambiguous, a court should simply apply it without indulging in interpretation. (See, e.g., Brewer v. Patel (1993) 20 Cal.App.4th 1017, 1021 [25 Cal.Rptr.2d 65].)
My colleagues suggest this absolute right of inspection is nevertheless qualified and may be defeated when the director’s request is animated by an improper motive. (Maj. opn., ante, p. 926.) They also conclude it must yield to the association members’ constitutional right of privacy (Cal. Const., art. I, § 1), i.e., to keep voting decisions confidential. But the members could not have had any expectation-reasonable or otherwise-that proxies could be withheld from the association’s directors, and the majority’s improper motive analysis is at odds with both clear statutory language and case law.[928]
The constitutional right to privacy is not absolute (County of Alameda v. Superior Court (1987) 194 Cal.App.3d 254, 260 [239 Cal.Rptr. 400]); it only applies where there is an objectively reasonable expectation of privacy. (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 36-37 [26 Cal.Rptr.2d 834, 865 P.2d 633].) Although some association members submitted declarations attesting to their belief in the confidentiality of the proxies, they had no objectively reasonable expectation of privacy. Quite the contrary. A director could have no more important duty than assuring the honesty of association elections by carefully monitoring the tally of proxies. This certainly could involve a personal audit of the vote and a challenge to any questionable proxy.
In any event, a proxy is, by definition, not confidential. It is “a written authorization signed by a member or the member’s attorney in fact giving another person or persons power to vote on behalf of such member. ‘Signed’ for the purpose of this section means the placing of the member’s name on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the member or such member’s attorney in fact.” (Corp. Code, § 5069.) Under these circumstances, how homeowners association members could reasonably expect the proxies could not be scrutinized by the association’s directors, with their “absolute” statutory right to inspect, is beyond me. fn. 1
Moreover, because the right of inspection under Corporations Code section 8334 has no exceptions, a director’s motive for requesting an inspection is irrelevant. No reported decisions construe Corporations Code section 8334, but cases involving virtually identical provisions elsewhere in the Corporations Code conclude motive is irrelevant. For example, Valtz v. Penta Investment Corp. (1983) 139 Cal.App.3d 803 [188 Cal.Rptr. 922] concerned the “absolute right” under Corporations Code section 1600 of any shareholder with more than 5 percent of a company’s stock to examine the shareholder list. The corporation contended a shareholder’s inspection request was prompted by his desire to form a competing enterprise and refused the demand, asserting an unclean hands defense. (139 Cal.App.3d at p. 806.) Rejecting the argument, the Court of Appeal declared, “The California Legislature chose to allow inspection without any restriction based on the[929]shareholder’s purpose and we cannot impose such a restriction via the unclean hands doctrine.” (Id. at p. 810.)
True, Valtz involved a shareholder rather than a director. But a director has a stronger case for unqualified inspection rights than a shareholder. A director is a fiduciary charged with running the corporation in an informed manner. (National Automobile & Cas. Ins. Co. v. Payne (1968) 261 Cal.App.2d 403, 412-413 [67 Cal.Rptr. 784].) Because a director, unlike a shareholder, is potentially liable for failure to exercise appropriate oversight, an unconditional right to inspect is essential. (Hoiles v. Superior Court (1984) 157 Cal.App.3d 1192, 1201 [204 Cal.Rptr. 111]; see also 1A Ballantine & Sterling, Cal. Corporation Law (4th ed. 1995) § 272.02 at p. 1322 [“A director must be familiar with the affairs of the corporation in order to perform his duties and the absolute right of inspection is to assist him in performing (those) duties in an intelligent and fully informed manner.”].)
Also, in light of a director’s potential exposure, the denial of unconditional access to corporate books and records constitutes poor policy: well qualified individuals might decline to serve with something less than absolute inspection rights. (Cf. Gould v. American Hawaiian Steamship Company (D.Del. 1972) 351 F.Supp. 853, 859.) As this case illustrates, to allow defenses based on a director’s alleged motive would in many cases result in the right to inspect being buried in litigation before it could ever be exercised, good motive or bad.
Nor does a director’s unfettered access to corporate books and records leave the corporation unprotected. Any number of tort theories may be used to redress a misuse of information gleaned via an improperly motivated inspection. (Hoiles v. Superior Court, supra, 157 Cal.App.3d at p. 1201.) Damages for misapplication of corporate information, rather than a threshold rejection of a director’s inspection rights, is the appropriate remedy. fn. 2 (Ibid.)
FN 1. Corporations Code section 8334 provides: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director.” All further statutory references are to the Corporations Code unless otherwise indicated.
FN 2. The Association requested it be allowed to produce this additional fact on appeal. (Code Civ. Proc., § 909.) Its proffered evidence is the declaration of the Association’s general manager to the effect that Chantiles was not reelected. Chantiles objects to our receiving the declaration because it does not indicate the geographic location where it was signed. However, he readily concedes he was not reelected in 1993, and does not object to our receiving this fact. Because that is the only salient fact contained in the proffered declaration, we grant the Association’s motion to take additional evidence. The Association also filed a separate motion to dismiss which we consider in conjunction with the appeal.
FN 3. Accordingly, the Association’s request for sanctions against Chantiles for maintaining a moot appeal is denied.
FN 4. The board of directors may appoint an inspector of elections before the annual election. The inspector has the power to “determine the number of memberships outstanding and the voting power of each, the number represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all members.” (§ 7614, subd. (b).) The inspector must perform those duties “impartially, in good faith, to the best of [his or her] abilit[ies] and as expeditiously as is practical.” (§ 7614, subd. (c).)
FN 5. Also, the California Constitution, article II, section 7, governing voting for public office provides, “Voting shall be secret.”
FN 6. As discussed in section I, ante, since Chantiles is no longer a director, he has no current inspection rights. Nor do we perceive any legitimate corporate interest he would have in the future, if reelected, for inspecting the 1992 election ballots. Thus, as far as that election is concerned, this controversy is ended.
[Membership List; Email Addresses] The “addresses” of members which must be disclosed with a member’s request to inspect the membership list pursuant to Corp. Code § 8330(a) includes the members’ email addresses.
Romero, Park & Wiggins, H. Troy Romero; Baker Hostetler, Peter W. James, Thomas D. Warren and Lisa I. Carteen for Plaintiff and Appellant.
Snell & Wilmer, Richard A. Derevan, Steven T. Graham and Todd E. Lundell for Defendant and Appellant.
Robin D. Miller, in pro. per., for Defendant and Respondent.
Girard Gibbs, Jonathan K. Levine and Elizabeth C. Pritzker for Interveners and Respondents.
OPINION
BLEASE, Acting P. J.—
California’s Corporations Code grants members of a nonprofit mutual benefit corporation the right to inspect and copy, or obtain for a reasonable charge, the record of the names, addresses, and voting rights of the members of the corporation upon 10 business days’ written notice, provided it is for a purpose reasonably related to the person’s interest as a member. (Corp. Code, § 8330, subd. (a)(1), (2).)[1] Such a record may be kept in electronic form. (§ 8320.) A record that is “written” includes an “electronic communication[]” (§§ 5079, 8310) and an electronic communication includes an e-mail. (§§ 5079, 20.)
Appellant WorldMark, The Club (WorldMark), is a California nonprofit mutual benefit corporation owned by its more than 260,000 members. It owns vacation time-share resorts throughout North America, including California, and the Pacific. Respondent Wyndham Resort Development Corporation (Wyndham) is an Oregon corporation that manages the operations of WorldMark’s resorts pursuant to a management agreement.
A WorldMark member, respondent Robin Miller, invoked section 8330 to demand that WorldMark “make available” to its members a petition proposing amendments to the corporation’s bylaws. When WorldMark refused to do [1022] so, Miller demanded a right to inspect and copy WorldMark’s membership records, including the e-mail addresses of its members, for the purpose of distributing his petition to amend the bylaws. E-mail is one of the methods that WorldMark uses to communicate with its members. When WorldMark denied the demand, it proposed the use of a third party mail house to send the petition by conventional mail as a “reasonable alternative” that achieved the purpose identified in Miller’s demand. (§§ 8330, subds. (b) & (c), 8331, subd. (a).)
When Miller refused, WorldMark petitioned the superior court to set aside Miller’s demand (§ 8331, subd. (a)) on the ground it had satisfied its statutory obligations in proposing an alternative (§ 8330, subd. (b)(1)). The trial court denied the petition because the alternative was not reasonable as it was too costly and ordered WorldMark to allow Miller to inspect and copy WorldMark’s membership register, including the names, addresses, e-mail addresses, telephone numbers, and voting rights of its members. (§ 8331.) This appeal followed.
WorldMark’s primary contention is that there is no statutory authority for the trial court’s order requiring it to produce its member e-mail addresses. We shall conclude that the term “members’ … addresses,” in section 8330, subdivision (a)(1), which a corporation is required to disclose, is sufficiently broad to encompass e-mail addresses in light of the section’s purpose and in light of allied sections that allow a corporation to communicate with its members for the purpose of the corporation’s business.
We shall modify the trial court’s order to provide that the information Miller seeks may be made available to him electronically at his option, that no further written demand is necessary, and affirm the order as modified.
FACTUAL AND PROCEDURAL BACKGROUND
WorldMark is a California nonprofit mutual benefit corporation. It is owned by its more than 260,000 members. WorldMark owns vacation time-share resorts in California and throughout North America and the Pacific. WorldMark members own credits, rather than a fractional ownership interest in a particular resort.
Wyndham is an Oregon corporation that manages the operations of WorldMark’s resorts pursuant to a management agreement. All of WorldMark’s properties were purchased and developed by Wyndham. Wyndham transferred ownership of the resorts to WorldMark, and retained [1023] the exclusive right to market and sell the original credits created by the development of each resort. WorldMark members may also advertise, sell, and transfer their credits to others.[2] Other companies also compete with Wyndham for the resale of existing time-share credits.
Miller’s first attempt to contact other WorldMark members is evidenced by a letter dated August 8, 2008, addressed to the WorldMark board of directors. Enclosed with the letter was a membership petition with proposed resolutions attached. Miller requested that the board make the petition available to the membership via WorldMark’s e-mail list in order to have the measures voted on at WorldMark’s annual meeting, which was scheduled to be held on October 23, 2008. Miller did not request a list of WorldMark member e-mail addresses, but merely requested that the board distribute his petition via e-mail. Miller indicated that by including the measures at the board’s annual meeting, the significant expense of calling a special meeting would be avoided.
Miller’s proposed petition expressed a concern over the domination of WorldMark’s board of directors by current or former Wyndham executives, the failure to conduct meetings at which member motions could be raised and voted upon, the absence of any independent owners on the board, and the lack of meaningful member representation in the governance of WorldMark. The proposed resolutions would, if passed, revise WorldMark’s bylaws to address these concerns.
The response to Miller’s letter came from Stephanie Aardal, WorldMark’s director of board and owner relations. Aardal’s letter stated that Miller’s request did not comply with section 3.3(c) of WorldMark’s bylaws requiring a written request signed by members holding 5 percent of the voting power.[3] Miller’s request was declined.
[1024] Miller sent a second letter on August 25, 2008. He urged the board to reconsider, and noted that the board could call a meeting without obtaining any signatures, and he was requesting that the board do so. He also noted that no signatures were required to distribute his petition to the membership.
Aardal answered Miller’s letter, and again informed him that it was his responsibility to gather the minimum 5 percent owner support to bring the petition to the membership. Aardal stated that the board would take appropriate action when he submitted the names of those signing the petitions and copies of the original signed petitions, provided he had received a valid number of signatures.
Miller responded by letter (his third) on September 9, 2008. Since the board refused the request to distribute his petition, he gave notice that he wanted an opportunity within five days to personally inspect WorldMark’s membership records, including its e-mail list. He acknowledged that he would use the information only to distribute his petition.
Instead of scheduling an opportunity for Miller to inspect the membership register as provided in the WorldMark bylaws, Aardal wrote back to Miller informing him that the membership register did not include e-mail addresses, and enclosing a copy of WorldMark’s “Policies and Procedures” regarding the inspection of WorldMark’s membership roster. The Policies and Procedures were approved by WorldMark’s board of directors, but were not part of the bylaws.
The document stated that the policy of the board was that members not be allowed to inspect or copy the membership roster “because of privacy concerns and because [of] the roster’s tremendous commercial value ….” Instead, the board would provide a “reasonable alternative as provided by California law.” The alternative procedure required that the member deliver to WorldMark’s offices a copy of the materials he or she desired to be sent to the other members. If WorldMark determined that the content was not commercial in nature and was reasonably related to the affairs of the corporation, it would contact the member demanding payment for WorldMark’s cost of providing the information, then upon receipt of payment, would provide the member with the name of a mail house to contact in order to arrange the mailing of the materials at the owner’s expense.
Miller sent a fourth letter on September 26, 2008, and for the first time referenced section 8330. The letter stated in part:
“Notwithstanding the Club’s refusal to acknowledge the hundreds of member signed Petitions submitted over the past month, you’ve been made [1025] amply aware of the substantial owner voting power endorsing this Petition and supporting its distribution to the membership.
“Be advised that this demand for membership access has been endorsed by WorldMark owners holding voting rights well in excess of the `authorized number’ specified in section 5036 of the California Corporation[s] Code. Be further advised that pursuant to section 8330 of that Code the undersigned, individually & collectively, hereby demand access to the Club’s records of the member names, voting rights and corresponding e-mail addresses for personal inspection & copying at the Redmond office within five (5) business days from the date of this communication. Further evidence of endorsement is now being executed and sent to your attention.
“The purpose for the requested information is to enable a timely & cost effective electronic distribution of the Membership Petition prior to the Annual Meeting set for October 23, 2008.”
On October 7, 2008, the WorldMark board of directors sent Miller a letter detailing its “serious concerns about the detrimental effect the petition measures would have on the Club if implemented.”
On October 10, 2008, Miller went to WorldMark’s offices in Redmond, Washington, and presented WorldMark with a list of members purporting to constitute the authorized number to make a demand under section 8330. Miller demanded the e-mail addresses of the members.
On October 15, 2008, Aardal sent Miller a letter acknowledging the receipt of the signed membership petitions, but rejecting Miller’s request to disclose e-mail addresses. Aardal stated this time that the e-mail addresses were owned by Wyndham, and that Wyndham “strenuously” objected to their production. The letter stated that it would “take some time” to determine whether the petitions submitted by Miller satisfied the authorized number of members. WorldMark again proposed the alternative of providing the membership list to a mailing house, which would distribute the petitions, and further agreed to pay 50 percent of “the costs associated with administering the mailing, including processing, presorting, addressing and delivering your mailing” to the post office. Miller would, however, be responsible for providing the finished printed materials and paying the postage.
On October 22, 2008, Miller sent a fifth letter to WorldMark. He rejected the alternative WorldMark offered because (1) it was not responsive to his stated objectives, (2) it lacked the efficiency of e-mail communication, (3) it [1026] lacked the cost-effectiveness of e-mail communication, (4) the cost of the alternative was unreasonable, and (5) the alternative could not achieve the stated objectives in a timely manner. Miller again demanded compliance with his request, referencing section 8331.
The same day (Oct. 22, 2008) WorldMark filed its petition under section 8331 to set aside the demand for inspection and copying. The petition alleged WorldMark had offered Miller a reasonable alternative, but that he had rejected the alternative and “escalated” his demand to include e-mail addresses. WorldMark alleged (1) Miller had not satisfied the requirements of section 8330 in submitting his request, (2) e-mail addresses were not part of the membership list, therefore not subject to disclosure under section 8330, subdivision (a)(1), (3) WorldMark did not own the e-mail address list, (4) WorldMark believed the e-mail addresses would be used for an improper purpose, and (5) the alternative proposed by WorldMark was reasonable.
On October 27, 2008, the trial court set a hearing and stayed the production of any information pending the hearing. It was, of course, impossible at this point to get any information to the membership in advance of the October 23, 2008, meeting. On October 30, 2008, the Wixons filed a motion for leave to intervene, and applied to stay the hearing pending a ruling on their motion. The Wixons asserted that they were plaintiffs in a class action against Wyndham in federal court. The federal action alleged, inter alia, that WorldMark directors refused to provide WorldMark members who were attempting to mount a proxy drive with access to the WorldMark membership register, and that this was part of a long effort to manipulate WorldMark board elections to ensure Wyndham’s continued domination of WorldMark.
The trial court denied interveners’ application to stay the hearing, stating that interveners’ rights would not be affected by disposition of the case, since it bore only on Miller’s rights. However, the trial court granted the motion to intervene.
On January 23, 2009, the trial court denied WorldMark’s application for a protective order, and ordered WorldMark to make the membership register, including names, addresses and e-mail addresses, telephone numbers, and voting rights available for inspection and copying.
WorldMark appealed the order, and petitioned this court for a stay of the trial court order pending appeal. This court initially granted the stay pending appeal. However, Miller and the Wixons moved to vacate the stay after WorldMark placed a ballot proposal before its membership seeking to retroactively amend the bylaws to authorize WorldMark to respond to any [1027] request to inspect and copy the membership register by distributing the member’s message through a mail house or other third party distributor.
In response to the motion to vacate, this court modified the stay to permit enforcement of the trial court’s order except insofar as the order required that e-mail addresses be subject to disclosure.
Five days after we modified the stay, the attorney for interveners sent a letter to WorldMark formally demanding production in electronic form of the membership register, including names, addresses, and telephone numbers.[4]
WorldMark responded to interveners by letter from its counsel refusing the demand. The excuses given were that (1) the trial court order required only inspection and copying, not production in electronic form, (2) the attorney’s representation that the information would not be used for an improper purpose was insufficient, (3) the letter did not specify the purpose of the request, and (4) the member had not given reasonable notice. The letter further stated that WorldMark had “grave concerns about the process it has been afforded in the Court of Appeal,” and that notwithstanding its bylaw provisions, “WorldMark’s constituent documents do not permit WorldMark to disclose the Membership Register because of the coalescence of the Bylaws and the laws of other states where WorldMark has members and properties.”
On November 19, 2009, Miller personally sent a letter to WorldMark renewing his demands for access to the membership list, including the mailing addresses, voting rights and telephone numbers of the members. He reiterated his declaration that he would comply with all restrictions on terms of use of the information as contained in the bylaws and ordered by the court.
WorldMark responded to Miller’s letter by letter from its counsel advising Miller that there were “significant new facts and circumstances” bearing on his request. The letter referenced a Florida judgment prohibiting the copying and distribution of the names, addresses, or e-mail addresses of any WorldMark members without their consent. The letter further stated that since Miller had made several requests for information, none of which complied with the bylaws, WorldMark did not know to which request to respond. It further stated Miller had not complied with the conditions of the trial court order.
The Florida judgment to which WorldMark referred was entered in a case filed by five WorldMark members, and referenced a Florida law prohibiting the disclosure of the names, addresses, or e-mail addresses of any members. [1028] WorldMark filed its answer to the Florida complaint two days after the complaint was filed, and essentially admitted all the allegations of the complaint.[5] In response to the Florida plaintiffs’ motion for judgment on the pleadings, WorldMark submitted no vigorous opposition, but specifically referenced the California action against Miller and indicated that without a judicial declaration under Florida law it might be compelled to produce the membership register under order of the California court. Accordingly, a final judgment was entered in the Florida matter granting the plaintiffs a permanent injunction from the production of WorldMark’s membership register. The Florida judgment was entered on November 4, 2009, a mere nine days (seven business days) after the action was filed.
DISCUSSION
I. Rights of Inspection
(1) Section 8330 provides that a member of a mutual benefit corporation has the right to “[i]nspect and copy the record of all the members’ names, addresses and voting rights, at reasonable times, upon five business days’ prior written demand upon the corporation which demand shall state the purpose for which the inspection rights are requested ….” (§ 8330, subd. (a)(1).) A member may also “[o]btain from the secretary of the corporation, upon written demand and tender of a reasonable charge, a list of the names, addresses and voting rights of those members entitled to vote for the election of directors …. The demand shall state the purpose for which the list is requested. The membership list shall be made available on or before the later of ten business days after the demand is received or after the date specified therein as the date as of which the list is to be compiled.” (§ 8330, subd. (a)(2).)
The corporation may deny a member or members access to the list if it “reasonably believes that the information will be used for another purpose, or where it provides a reasonable alternative pursuant to subdivision (c) ….” (§ 8330, subd. (b)(1).)[6]
[1029] Both sections 8330, subdivision (b)(1) and 8331, subdivision (f) provide that in any subsequent action to enforce the rights of a member to inspect membership records of the corporation, the 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 or that the alternative method it proposes will reasonably and in a timely manner achieve the purpose set forth in the demand.
Thus, in reviewing the trial court’s order, we must determine (1) whether the trial court’s determination that the member will not permit the membership list to be used for an improper purpose is supported by substantial evidence, and (2) whether the alternative proposed by the corporation was reasonable.
A. Substantial Evidence Supports Miller’s Proper Purpose
The trial court’s order is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of the correctness of the order. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 [275 Cal.Rptr. 797, 800 P.2d 1227].) “When a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and endswith the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.” (Primm v. Primm (1956) 46 Cal.2d 690, 693 [299 P.2d 231].) “Substantial evidence is evidence that is `reasonable, credible, and of solid value’; such that a reasonable trier of fact could make such findings. [Citation.] [¶] It is axiomatic that an appellate court defers to the trier of fact on such determinations, and has no power to judge the effect or value of, or to weigh the evidence; to consider the credibility of witnesses; or to resolve conflicts in, or make inferences or deductions from the evidence.” (In re Sheila B. (1993) 19 Cal.App.4th 187, 199 [23 Cal.Rptr.2d 482].)
Miller repeatedly asserted in his communications to WorldMark his intent to use the membership information solely to contact other members regarding his proposed petition to amend the corporation’s bylaws. WorldMark’s contrary evidence consisted of its claim that Bill Stephan, one of the 36 members who signed an endorsement of Miller’s petition, was the director of sales and marketing for a company in direct competition with Wyndham.
[1030] Inherent in the trial court’s ruling was the finding that WorldMark’s speculation in this regard was not sufficient to meet its burden of proving that “the member will allow use of the information for purposes unrelated to the person’s interest as a member ….” (§ 8330, subd. (b)(1).) Miller’s representations regarding his intent to use the information solely for a proper purpose constitutes sufficient evidence to support the trial court’s finding on that issue.
B. The Alternative Was Unreasonable
The trial court made several findings with respect to the reasonableness of the alternative presented by WorldMark. It found that the cost to Miller of the proposed alternative would be $1 per member for alternative mailing, resulting in a cost of over $260,000.[7] It also found the alternative did not comport with section 7.1 of WorldMark’s bylaws, which provides that the membership register shall be made available to any member for inspection and copying upon reasonable notice. The trial court found that the Policies and Procedures for requests to inspect and copy the membership register passed by the board were a violation of the bylaws that had not been shown to be in compliance with the provisions for modification of the bylaws.
In determining whether the alternative offered by WorldMark was reasonable, we look to the purposes of the statutory scheme, as well as the purpose of Miller’s request. The obvious purpose of the statute is twofold: to allow members access to the membership list for purposes related to their interests as members, and to protect the sensitive nature of a nonprofit corporation’s membership lists.
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, states in part:
“A danger exists in allowing too free an access to membership lists; however, the potential for abuse must be balanced against a member’s legitimate needs and rights to utilize lists in election contests and for purposes reasonably related to a member’s interest.
[1031] “The old nonprofit law allowed one member to gain access to a membership list for a purpose reasonably related to the member’s interest as a member. However, a member had to bring suit to enforce this right if the corporation refused to provide the list. The new nonprofit law adopts the former law as to the rights of a single member except that it allows the corporation to provide a `reasonable alternative.’ …
“… 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.” (Coms. Based on Legis. Com. Summary, Deering’s Ann. Corp. Code (2009 ed.) foll. § 6330, p. 209.)
We derive from Miller’s numerous requests that in addition to wanting the membership list for the proper purpose of contacting the membership about bylaw changes, he specifically requested e-mail addresses in order to distribute his materials in an inexpensive and timely manner, so they could be considered at the annual meeting of the WorldMark board scheduled to occur approximately two and one-half months after his first request.[8] The process proposed by WorldMark would have served its own interest in protecting the membership list, but would have failed to satisfy either of the interests asserted by Miller.
(2) The cost of contacting and distributing information to other members is a legitimate factor in determining the reasonableness of any alternative. It is especially pertinent to the consideration of this case, where the membership of the corporation is extremely large, making the cost of contacting the other members by conventional mail such a significant factor that, as a practical matter, a member is completely prohibited from attempting to contact other members for corporate business. The costs go even higher when a third party is paid to physically sort, copy, and mail the information.
The proposed alternative also would not have accomplished Miller’s purpose in a timely manner. Although Miller sent his original request some two and one-half months prior to the annual meeting, WorldMark did not propose its alternative until October 15, 2008, only eight days before the scheduled meeting.[9] At that point the only way to transmit the information in a timely manner was electronically.
[1032] WorldMark argues that the trial court erred in assuming that member e-mail addresses were required to be produced under section 8330. WorldMark reasons that the cost of mailing the information through a third party mail house would not have been significantly more expensive than Miller’s cost of mailing the information himself, especially since WorldMark offered to share the cost associated with using the mail house.
However, we shall conclude in the next part that the language of part 8330, read in the light of allied sections, is sufficiently broad to encompass e-mail addresses in light of the obvious purpose of the statute. Thus, in determining what constituted a reasonable alternative for purposes of sections 8330 and 8331, the trial court could consider options that involved the electronic transfer of the information to the members, including e-mail.
II. E-mail Addresses
WorldMark argues it had no obligation to disclose the e-mail addresses of its members because neither section 8330 nor its own bylaws required it to do so, and because it does not own the membership roster, which it claims is owned by Wyndham.
WorldMark’s claim that e-mail addresses are not part of its membership register, if accurate, is relevant only to its disclosure requirements under its own bylaws, since section 8330 et seq., do not include the term “membership register.” Even if e-mail addresses are not considered part of the membership register under WorldMark’s bylaws, this fact would not invalidate WorldMark’s obligation to disclose the e-mail addresses as required by statute or under other terms of its bylaws.
Section 7.1(a) of the WorldMark bylaws states that the “Membership register (including mailing addresses and telephone numbers)” must be made available for inspection and copying by any member. However, in addition to the membership register, WorldMark must also make available its articles, bylaws, declaration, rules, books of account, minutes of proceedings, “and all other records of the Program maintained by the Club or its Manager ….” (§ 7.1(a), italics added.) This inclusive language is broad enough to encompass the e-mail addresses of its members.
[1033] Moreover, as indicated, section 8330 provides for the disclosure of the members’ names, addresses, and voting rights. WorldMark argues that this language does not include e-mail addresses because the statute was enacted in 1978, and at the time it was passed the Legislature did not contemplate the inclusion of e-mail addresses. We disagree.
(3) Although section 8330 has not been amended since its enactment, allied sections within the statutes governing nonprofit corporations have been amended since the advent of electronic mail.[10] The ultimate purpose of these amendments is to allow electronic communication for the purpose of communicating with shareholders regarding the corporation’s business.
Thus section 8320 was amended in 2004, as part of legislation providing for the use of electronic communications, to provide that the “record of [the corporation] members … their names and addresses and the class of membership held by each ….[¶] … shall be kept either in written form or in any other form capable of being converted into clearly legible tangible form ….” (Id., subds. (a) & (b); Stats. 2004, ch. 254, § 27.) The distinction between a tangible form and one that is not, clearly includes an electronic form that can be made into a tangible form. This reading is supported by the simultaneous enactment of sections 8321 and 8322, which allow certain financial information of the corporation to be distributed annually via “electronic transmission by the corporation (Section 20).” (Stats 2004, ch. 254, §§ 28, 29.)
(4) In the same enactment section 5079, which applies to section 8330 by virtue of section 5002, was amended to provide that the term “[w]ritten” includes “an electronic transmission by a corporation that satisfies the requirements of Section 20.” (Stats. 2004, ch. 254, § 13.)[11] Section 20 specifically includes electronic mail within the definition of an electronic transmission.[12]
[1034] WorldMark points to other statutes that specifically reference both addresses and electronic mail addresses, and argues that these indicate the Legislature made a deliberate choice to exclude e-mail addresses from section 8330. For example, Civil Code section 1798.91, subdivision (a)(2) defines individually identifiable information to mean information that “includes or contains any element of personal identifying information sufficient to allow identification of the individual, such as the individual’s name, address, electronic mail address, telephone number, or social security number, or other information that, alone or in combination with other publicly available information, reveals the individual’s identity.” (Italics added.)
(5) However, the term “address” as used in section 8330 is sufficiently broad to include e-mail addresses. (6) Even before the advent of the Internet and electronic mail, the term “address” was defined as: “[t]he location at which a particular organization or person may be found or reached.” (The American Heritage Dict. (New College ed. 1981) p. 15.) An e-mail address fits within this definition because it is a location, albeit an electronic location, at which a person or organization can be reached. Nothing in the statute limits the term “address” to mean only a physical street address. One could not seriously argue that the term excludes post office boxes. An electronic mail address is nothing more than an electronic post office box.
(7) Where, as here, the term used in the statute is susceptible to more than one reasonable interpretation, we may look to the purpose the Legislature sought to achieve and the statutory scheme of which the statute is a part. (Polster v. Sacramento County Office of Education (2009) 180 Cal.App.4th 649, 663 [103 Cal.Rptr.3d 291].) The Legislature could not have intended in 1978 that the term “addresses” specifically would include e-mail addresses, since the concept of widespread and instantaneous communication by electronic mail was the stuff of science fiction in 1978. Nevertheless, as noted, the code, of which section 8330 is a part, was amended in 2004 to provide for [1035] electronic communications to and from nonprofit mutual benefit corporations and their members, including specifically e-mail. The purposes implicit in the enactment of the amendments were to provide for the disclosure of records the corporation maintained electronically and to allow the corporation to communicate information to and from its members via electronic mail. (§§ 20, 5079, 8320, 8321, 8322.)
(8) Furthermore, the legislative purpose of the statute indicates the Legislature would have intended the inclusion of e-mail addresses in the original statute had it anticipated the existence of such. The comments based on the legislative committee summary indicate the purpose of the statute was to balance a member’s legitimate right to contact the membership for election contests or purposes reasonably related to the member’s interest, against the potential for abuse in allowing too free an access. (Coms. Based on Legis. Com. Summary, Deering’s Ann. Corp. Code, supra, foll. § 6330, p. 209.)
The addition of e-mail addresses would do nothing to upset the balance that the Legislature sought to achieve. Such balancing was accomplished by the process of allowing the corporation to propose a reasonable alternative. The use of e-mail addresses to achieve this goal does not affect the balance. Thus, the corporation may either give the list of member e-mail addresses to a requesting member for a proper purpose, or propose an alternative in which it sends the requested information to the membership via e-mail, without disclosing the e-mail addresses to the requesting member.[13]
In this case, because of the extremely large membership and the resulting cost of copying and mailing any kind of communication to each member, denial of the right to contact other members by e-mail effectively denies a member the right to contact other members for a proper purpose. Such a result would unfairly upset the balance sought by the enactment of this legislation, and cannot be a result that the Legislature intended.
[1036] (9) The application of an expanded definition of the term “address” to section 8330 fulfills the direction that “courts must be sufficiently receptive to the notion of adapting legal principles to address societal changes brought upon by new technologies, [and] where, as here, the issue involves an interpretation of existing statutes, we must maintain our usual deference to the Legislature in such matters and ask ourselves first how that body would have handled the problem if it had anticipated it. [Citation.]” (People v. Butler (1996) 43 Cal.App.4th 1224, 1229 [51 Cal.Rptr.2d 150].) “This is a particularly apt formulation of the standard in cases of emerging technology lest our laws be interpreted only in light of yesterday’s accomplishments.” (Id. at p. 1235.)
We are not persuaded differently by the cases cited by Wyndham, Citizens for Civic Accountability v. Town of Danville (2008) 167 Cal.App.4th 1158 [84 Cal.Rptr.3d 684] (Citizens) and InSyst, Ltd. v. Applied Materials, Inc. (2009) 170 Cal.App.4th 1129 [88 Cal.Rptr.3d 808] (InSyst). InSyst held that delivery of instructions to obtain an electronic copy of a judgment did not amount to service of a file-stamped copy of the judgment for purposes of triggering the time in which to appeal. (Id. at p. 1140.) However, the court indicated that a superior court clerk could electronically serve a triggering document if electronic service had been authorized. (Id. at p. 1139.) The court’s decision turned on whether an e-mail explaining where to obtain a document was the same as actually transmitting the document. The decision is not helpful to our analysis.
Citizens, supra, 167 Cal.App.4th 1158, also involved whether an e-mail from the superior court clerk directing the parties to a Web site where they could find an electronic copy of the judgment was the equivalent of service of a file-stamped copy of the judgment. (Id. at p. 1160.) Citizens held that the time for appeal was triggered only by the mailing of the judgment via the United States Postal Service. (Ibid.) However, the court recognized that the term “mail” was reasonably susceptible of multiple meanings, and resolved the ambiguity by applying the principle that ambiguities should be resolved in favor of preserving the right to appeal. (Id. at p. 1163.) That principle is not at play in this case.
We reject WorldMark’s claim that it does not “own” the e-mail addresses of its members, but that such addresses are “owned” by Wyndham. WorldMark’s bylaws provide that a member may inspect and copy all records of the vacation owner program, whether maintained by the corporation or by its manager [1037] (Wyndham).[14] Moreover, Miller presented evidence that WorldMark’s online reservation system operated via the e-mail addresses of the participating members, and that its online proxy/ballot voting system also utilizes the members’ e-mail addresses. WorldMark may not thwart a member’s legitimate attempt to communicate via e-mail by claiming that it does not “own” the addresses of its own members.
III. Miller’s Demand Satisfied Section 8330
We reject WorldMark’s argument that Miller’s request did not comply with section 8330, subdivision (b)(2). Subdivision (b)(2) states that the right of inspection and copying may be exercised by: “The authorized number of members for a purpose reasonably related to the members’ interest as members.” The “authorized number of members” is defined in section 5036, which also provides that any right that may be exercised by the authorized number may be exercised “by a member with written authorizations obtained within any 11-month period from members who, in the aggregate, hold the equivalent voting power. Any such authorization shall specify the right to be exercised thereunder and the duration thereof (which shall not exceed three years).” (Id., subd. (d).) WorldMark claims Miller’s authorizations were inadequate because they did not specify the duration of the authorization.
(10) However, section 8330 provides that the rights of inspection and copying may be exercised either by a single member or by the authorized number of members. Thus, it was not necessary for Miller to obtain authorizations from any other members in order to exercise his right of inspection and copying.
IV. Scope of 8330 Request
WorldMark argues the trial court should not have allowed the Wixons to intervene, or considered WorldMark’s bylaws in determining the scope of disclosure in a section 8330 proceeding. We disagree.
We will not reverse the order either because the trial court allowed the Wixons to intervene or because the trial court considered the bylaws when [1038] making its determination. The intervention of the Wixons has no bearing on our determination, and our conclusion that the e-mail addresses must be disclosed is based upon statute, not upon WorldMark’s bylaws.
(11) Finally, WorldMark rejected respondents’ postjudgment request for the disclosure of its membership register in electronic form because the trial court order did not require disclosure in electronic form. Our review of the relevant statutory framework indicates that if the records are maintained in electronic form, a member may request that such records be turned over in electronic form. Section 8310 provides that if a record subject to inspection and copying under the statute is not maintained in written form, the corporation must make the record available in written form. That section provides that the terms “written” and “in writing” also include “cathode ray tube and similar electronic communications methods.” Section 5079, which has been amended since section 8310 was last amended in 1982, further provides that the terms “[w]ritten” and “in writing” include “facsimile, telegraphic, and other electronic communication as authorized by this code ….”
The first sentence of section 8310 provides: “If any record subject to inspection pursuant to this chapter is not maintained in written form, a request for inspection is not complied with unless and until the corporation at its expense makes such record available in written form.” Substituting the word “electronic” for the word “written,” as both sections 8310 and 5079 indicate we must, we conclude that if a record is maintained in electronic form, the corporation must make the record available in electronic form or written form, at the member’s request.
We shall therefore modify the trial court’s order to provide for the disclosure of the information in electronic form or written form at the option of respondents. Respondents need not make any further request for information.
DISPOSITION
The trial court’s order is modified to provide that the information Miller seeks, including e-mail addresses, shall be made available to him in electronic form at his option and that no further written demand is necessary. If any member’s address is not in electronic form WorldMark shall provide a written copy of such address to Miller. Consistent with the trial court’s order, Miller or his duly appointed representative must acknowledge in writing his agreement not to use or allow use of the membership information for commercial or other purposes not reasonably related to the affairs of the club. In all other respects the judgment (order) is affirmed. The stay is vacated upon finality of the judgment.
[1039] Costs are awarded to Robin Miller and interveners.
Robie, J., and Cantil-Sakauye, J., concurred.
[1] Further references to a section are to the Corporations Code unless otherwise indicated.
[2] The Wixons are named plaintiffs in a federal class action against Wyndham. Their federal complaint alleges that an active resale market in WorldMark credits has arisen with the advent of the Internet, and that because the price of resale credits is typically lower than the price of credits purchased from Wyndham, Wyndham has suffered a negative impact on its sales. As a result, they allege, Wyndham has instituted certain programs that destroy the resale market for credits and have a negative impact on WorldMark members.
[3] Section 3.3(c) of WorldMark’s bylaws, entitled “Special Meetings” states: “Special meetings of the Members for any lawful purpose and at any time shall be scheduled in response to a call by the President, by the Board, or upon receipt of a written request signed by Members holding five percent (5%) of the Voting Power held by Members other than Declarant. Such meetings must be duly noticed and held not less than thirty-five (35) days nor more than ninety (90) days after request therefore is received by the President or Secretary. If notice is not given by the Secretary within twenty (20) days of such receipt by the Club of a request for special meeting, then the person(s) requesting the meeting may give notice.”
Miller’s initial request was not directed at a special meeting of the Board. Moreover, section 8330 imposes no such limitation upon a member’s request.
[4] Respondents’ request for judicial notice is granted.
[5] WorldMark stated it had no knowledge of some of the allegations.
[6] Subdivision (c) of section 8330, states in full: “The corporation may, within ten business days after receiving a demand under subdivision (a), deliver to the person or persons making the demand a written offer of an alternative method of achieving the purpose identified in said demand without providing access to or a copy of the membership list. An alternative method which reasonably and in a timely manner accomplishes the proper purpose set forth in a demand made under subdivision (a) shall be deemed a reasonable alternative, unless within a reasonable time after acceptance of the offer the corporation fails to do those things which it offered to do. Any rejection of the offer shall be in writing and shall indicate the reasons the alternative proposed by the corporation does not meet the proper purpose of the demand made pursuant to subdivision (a).”
[7] WorldMark argues for the first time in its reply brief that Miller never tendered evidence that the cost of mailing under the alternative would be at least $260,000. Arguments raised for the first time in the reply brief are untimely and may be disregarded. (Hernandez v. Vitamin Shoppe Industries Inc. (2009) 174 Cal.App.4th 1441, 1461, fn. 10 [95 Cal.Rptr.3d 734].) In any event, we may take judicial notice under Evidence Code section 452, subdivision (h), that the current cost of a first-class stamp is 44 cents, thus for postage alone (not including the cost of paper, copying, sorting, and handling) the cost to mail 260,000 first-class letters would be $114,400, an amount that is still prohibitive for the average member.
[8] Although Miller’s purpose of contacting the membership prior to the 2008 annual meeting can no longer be accomplished, his purpose of having his proposed bylaw amendments distributed to the membership and put up for a vote may still be accomplished at a future meeting.
[9] Section 8330, subdivision (c) provides that the “corporation may, within ten business days after receiving a demand … deliver to the person or persons making the demand a written offer of an alternative method of achieving the purpose identified in said demand without providing access to or a copy of the membership list.”
[10] Both parties also point to the Vacation Ownership and Time-share Act of 2004 (Bus. & Prof. Code, § 11210 et seq.). WorldMark cites it to show that the language is similar to that of the Corporations Code, and does not specify e-mail addresses. Respondents cite it to show more expansive language which they contend would include e-mail addresses. Neither party contends the time-share act is applicable here.
[11] “`Written’ or `in writing’ includes facsimile, telegraphic, and other electronic communication as authorized by this code, including an electronic transmission by a corporation that satisfies the requirements of Section 20.” (§ 5079.)
[12] Section 20 provides: “`Electronic transmission by the corporation’ means a communication (a) delivered by (1) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, for that recipient on record with the corporation, (2) posting on an electronic message board or network which the corporation has designated for those communications, together with a separate notice to the recipient of the posting, which transmission shall be validly delivered upon the later of the posting or delivery of the separate notice thereof, or (3) other means of electronic communication, (b) to a recipient who has provided an unrevoked consent to the use of those means of transmission for communications under or pursuant to this code, and (c) that creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form. However, an electronic transmission under this code by a corporation to an individual shareholder or member of the corporation who is a natural person, and if an officer or director of the corporation, only if communicated to the recipient in that person’s capacity as a shareholder or member, is not authorized unless, in addition to satisfying the requirements of this section, the consent to the transmission has been preceded by or includes a clear written statement to the recipient as to (a) any right of the recipient to have the record provided or made available on paper or in nonelectronic form, (b) whether the consent applies only to that transmission, to specified categories of communications, or to all communications from the corporation, and (c) the procedures the recipient must use to withdraw consent.”
[13] Our holding does not mean that a corporation will be unable to prevent the disclosure of e-mail addresses or physical mailing addresses in the future. Miller originally presented WorldMark with an alternative that would have satisfied the concerns of both sides—the transmission by WorldMark of Miller’s petition via e-mail. This would have accomplished a quick and inexpensive dissemination of the material to the WorldMark membership without necessitating the disclosure of membership information. However, WorldMark rejected the request, and that alternative is no longer at issue here. The important point in terms of the individual member’s access, is that in this day and age of instantaneous electronic transmission of data, a corporation may not insist on a slower and more expensive form of communication when a member requests a form of electronic communication and the corporation has the capability of complying with the request.
[14] The bylaws provide that a member’s access to such documents must be “for a purpose reasonably related to his interests as a Member.” Thus, Wyndham’s alarm that any member would be able to access the Social Security numbers or consumer credit histories of other members is unfounded.
[Assessments & Collection; Collection Fees] An association’s vendors are permitted to earn a profit on the fees it charges in connection with collecting delinquent assessments owed to the association.
Richard Paul Herman for Cross-complainant and Appellant. Fiore, Racobs & Powers, John R. MacDowell, Michael C. Fettig; Jackson, DeMarco & Peckenpaugh and Paul E. Van Hoomissen for Cross-defendants and Respondents.
OPINION
IKOLA, J.-
Cross-complainant Sabina Brown cross-complained against her homeowners association, Lake Forest Keys (LFK), and its property management company, Professional Community Management, Inc. (PCM). She alleged under various legal theories that she, and the class she purported to represent, had been charged assessments or fees exceeding the amount necessary to defray the costs for which the assessments or fees had been levied. In her “Corrected Third Amended Cross-Complaint” (cross-complaint), Brown claimed the alleged conduct of both LFK and PCM violated Civil Code section 1366.1 fn. 1 and gave rise to remedies against both cross-defendants for negligence, a violation of section 52.1 and article I of the California Constitution, civil conspiracy, and a violation of sections 1750 et seq., the Consumers Legal Remedies Act. [536]
The court sustained PCM’s demurrer to Brown’s cross-complaint without leave to amend, and entered a judgment of dismissal on the cross-complaint as to PCM. Brown contends the court erred by concluding PCM owed no duty to Brown under section 1366.1. She also contends the litigation privilege, section 47, subdivision (b)(2), does not apply to the alleged conduct. fn. 2 We disagree with Brown’s first contention, find it unnecessary to reach the second, and affirm the judgment.
FACTS
Our factual summary “accepts as true the facts alleged in the complaint, together with facts that may be implied or inferred from those expressly alleged.” (Barnett v. Fireman’s Fund Ins. Co.(2001) 90 Cal.App.4th 500, 505.) Brown’s cross-complaint is not a model of clarity. But she appears to challenge the legality of certain fees charged by PCM for providing collection services to LFK, which fees are then passed along to the delinquent homeowner. We extract from her cross-complaint the following material allegations.
PCM is in the business of providing services to homeowners associations such as LFK. The homeowners associations serviced by PCM levy “various fees, fines, liens, imposts, charges, [and] interest charges . . . against thousands of homeowners. . . .” In connection with its services to LFK, PCM prepares “‘late letters’ and ‘lien letters’ for which it charges a fee and therefore shares in the profits of these illegal fees.” The subject fees, “under whatever name, exceed ‘the amount necessary to defray the cost for which they are levied’ in violation of Civil Code, section 1366.1.” Brown alleges the fees in excess of those permitted by section 1366.1 have been charged negligently by PCM (first cause of action), the excessive charges entitle Brown to damages under section 52.1 (second cause of action), PCM conspired with LFK to charge excessively and shared in the “profits” by charging a “late letter fee” (third cause of action), and PCM has “represented that transaction [sic] involves rights, remedies or obligations which does not have or involve and which are specifically prohibited by flaw [sic] under Civil Code, Section 1366.1, in violation of Civil Code, Section 1770(a)(14)” (fourth cause of action).[537]
DISCUSSION
[1] “In determining whether plaintiff properly stated a claim for relief, our standard of review is clear: ‘”We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.” [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment; if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.'” Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.
Section 1366.1 Does Not Limit PCM’s Fees
[2] At the outset, we note that Brown offers no argument as to why the demurrer to her third cause of action should have been overruled. Her third cause of action alleged entitlement to a remedy under section 52.1, presumably on the ground that imposition of PCM’s fees constituted an infringement of rights secured to her by the federal and state Constitutions. We decline to address the third cause of action. “When an issue is unsupported by pertinent or cognizable legal argument it may be deemed abandoned and discussion by the reviewing court is unnecessary.” (Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th 691, 699-700.) We turn to the other three causes of action, each of which is premised on conduct alleged to violate section 1366.1. fn. 3
[3] Because this case turns on the language of section 1366.1, and an understanding of the conduct it prohibits, we begin with the words of the statute. “An association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied.” (Italics added.) Section 1366.1 is part of the Davis-Stirling Common Interest Development Act (the Act), section 1350 et seq. Under the Act, an “‘association’ means a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development.” [538] (§ 1351, subd. (a).) The Act requires that “[a] common interest development shall be managed by an association which may be incorporated or unincorporated.” (§ 1363, subd. (a).) An “association” is charged under the Act with many specific duties, responsibilities, and restrictions, one of which is set forth in section 1366.1 — not to charge an assessment or fee in excess of the amount necessary to defray the costs for which it is levied.
[4] In construing section 1366.1, “‘”as with any statute, we strive to ascertain and effectuate the Legislature’s intent”‘ [Citations.] ‘Because statutory language “generally provide[s] the most reliable indicator” of that intent [citations], we turn to the words themselves, giving them their “usual and ordinary meanings” and construing them in context [citation].’ [Citation.] If the language contains no ambiguity, we presume the Legislature meant what it said, and the plain meaning of the statute governs.” (People v. Robles (2000) 23 Cal.4th 1106, 1111.)
[5]Here, the language of section 1366.1, in context, contains no ambiguity. The statute prohibits an “association” from charging fees or assessments in excess of the costs for which the fee or assessment is charged. As noted ante, an “association” is a defined term under the Act, and the definition requires the “association” to be a nonprofit entity. In contrast, the Act imposes separate duties on a managing agent. (See §§ 1363.1 & 1363.2.) And those statutory duties are owed to the “association” and its board of directors, not to individual owners of separate property interests in the common interest development. (Ibid.) Significantly, the Act does not require a managing agent to be a nonprofit entity. It is clear, both from the definitions in the Act and from the separately imposed duties, the Legislature meant “association,” when it used that term, and it meant “managing agent,” when it used that term.
[6] Thus, we understand the section 1366.1 prohibition, which runs expressly against an “association,” to mean, for example, that fees or assessments levied against homeowners for the purpose of defraying the cost of mowing the grass in the common areas, or of painting the association’s clubhouse, or of replacing the deck of the association’s swimming pool, or any other of the myriad of the association’s management and maintenance responsibilities, may not exceed the cost to the association for providing those services.
The Act contemplates the officers and directors of an association will be volunteer homeowners. (See § 1365.7 [limiting liability of volunteer officers and directors].) Surely, the individual homeowners acting as volunteer officers [539] and directors are not expected to perform all of the required services personally, and at no cost. Instead, the association must either hire employees or contract with others to provide the services. Landscape maintenance contractors are hired to mow the grass, painters are hired to paint the clubhouse, swimming pool contractors are hired to repair the pool deck, and managing agents, such as PCM, are hired to make these arrangements, and, importantly, to collect the fees and assessments levied against the homeowners. The costs incurred by the association, for which it levies an assessment or charges a fee, necessarily include the fees and profit the vendor charges for its services. While section 1366.1 prohibits an association from marking up the incurred charge to generate a profit for itself, the vendor is not similarly restricted. Plaintiff would have it that no vendor selling its services to an association could charge a fee, or, indeed, continue in business as a profit making enterprise. That cannot be the law.
Indeed, section 1366, subdivision (e), authorizes an association to charge homeowners the very type of fees challenged by plaintiff. “If an assessment is delinquent the association may recover all of the following: (1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney’s fees. [] (2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, . . . [] (3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney’s fees, at an annual interest rate not to exceed 12 percent . . . . ” (Italics added.) In spite of this statutory authorization, Brown alleges that PCM prepares “‘late letters’ and ‘lien letters’ for which it charges a fee and therefore shares in the profits of these illegal fees.” The allegation is circular. The fees are not “illegal” unless they exceed the association’s costs, costs that necessarily include the fee charged for the service. And section 1366 contemplates that the association will incur reasonable costs in connection with its collection efforts.
[7]We conclude the duty to refrain from the conduct prohibited by section 1366.1 is imposed solely on the “association,” the nonprofit entity designated by statute as having the responsibility to manage the affairs of the common interest development. Section 1366.1 has no application to an association’s vendors. Competitive forces, not the statute, will constrain the vendors’ fees and charges.[540]
The Conspiracy Allegations Do Not Create a Duty Where None Exists
[8] Perhaps recognizing section 1366.1 applies only to an association, Brown nevertheless attempts to impose liability on PCM by alleging it conspired with the association to violate section 1366.1. The effort is unavailing. In Doctor’s Co. v. Superior Court(1989) 49 Cal.3d 39 (Doctor’s Company), the California Supreme Court held: “A cause of action for civil conspiracy may not arise . . . if the alleged conspirator, though a participant in the agreement underlying the injury, was not personally bound by the duty violated by the wrongdoing . . . .” (Id. at p. 44, italics added.) Thus, in Doctor’s Company, attorneys and expert witnesses hired by an insurance company could not be held liable for conspiring with the insurance company to violate a statutory duty owed only by the insurance company. (Id. at p. 49.)
[9] The rule established by Doctor’s Company is plain enough. But it was firmly cemented into our law in Applied Equipment Corp. v. Litton Saudi Arabia Ltd.(1994) 7 Cal.4th 503. “The invocation of conspiracy does not alter [the] fundamental allocation of duty. Conspiracy is not an independent tort; it cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles.” (Id. at p. 514, italics added.)
Having concluded PCM does not owe an independent duty under section 1366.1, we need only follow the high court’s precedent. PCM cannot be liable in tort for conspiring with LFK to charge fees in excess of the amount necessary to defray LFK’s costs. If, as Brown alleges, PCM “shares” in the “profits” represented by the fees for “late letters” and “lien letters,” PCM violates no duty owed by it, either to the association or its members, because it is not prohibited from earning a profit, or from charging any fee the competitive market will bear. On the other hand, if LFK is, in fact, “sharing” in the fees charged by PCM (i.e., kickbacks), LFK may be violating section 1366.1, but to the detriment, not the advantage, of PCM.
Since we conclude PCM owed no duty, we do not reach the issue whether the alleged conduct was privileged under section 47, subdivision (b)(2), the so-called litigation privilege. The demurrer was properly sustained without leave to amend as to all causes of action of Brown’s cross-complaint.[541]
DISPOSITION
The judgment is affirmed. PCM shall recover its costs on appeal.
Sills, P. J., and O’Leary, J., concurred.
FN 1. All further statutory references are to the Civil Code unless otherwise stated.
FN 2. The notice of appeal also purports to appeal from the denial of a motion for class certification. Because Brown has not briefed these issues, she has waived her appeal from the order denying class certification. (See People v. Stanley(1995) 10 Cal.4th 764, 793 [“‘[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.]'”].)
[Zoning Variance] An administrative agency must render findings supporting its decision to issue a zoning variance, and such findings must be supported by substantial evidence.
Amdur, Bryson, Caplan & Morton and David L. Caplan for Plaintiff and Appellant. John D. Maharg, County Counsel, Joe Ben Hudgens, John W. Whitsett and David H. Breier, Deputy County Counsel, for Defendants and Respondents.
Arnold J. Provisor for Real Parties in Interest.
OPINION -TOBRINER, J.
We examine, in this case, aspects of the functions served by administrative agencies in the granting of zoning variances and of courts in reviewing these proceedings by means of administrative mandamus. We [510] conclude that variance boards like the ones involved in the present case must render findings to support their ultimate rulings. We also conclude that when called upon to scrutinize a grant of a variance, a reviewing court must determine whether substantial evidence supports the findings of the administrative board and whether the findings support the board’s action. fn. 1 We determine in the present case that the last of these requisites has not been fulfilled.
The parties in this action dispute the future of approximately 28 acres in Topanga Canyon located in the Santa Barbara Mountains region of Los Angeles County. A county ordinance zones the property for light agriculture and single family residences; fn. 2 it also prescribes a one-acre minimum lot size. Upon recommendation of its zoning board and despite the opposition of appellant-petitioner — an incorporated nonprofit organization composed of taxpayers and owners of real property in the canyon — the Los Angeles County Regional Planning Commission granted to the Topanga Canyon Investment Company a variance to establish a 93-space mobile home park on this acreage. fn. 3 Petitioner appealed without success to the county board of supervisors, thereby exhausting its administrative remedies. Petitioner then sought relief by means of administrative mandamus, again unsuccessfully, in Los Angeles County Superior Court and the Court of Appeal for the Second District.
In reviewing the denial of mandamus below, we first consider the proper role of agency and reviewing court with respect to the grant of variances. We then apply the proper standard of review to the facts of the case in order to determine whether we should sustain the action of the Los Angeles County Regional Planning Commission.[511]
1. An administrative grant of a variance must be accompanied by administrative findings. A court reviewing that grant must determine whether substantial evidence supports the findings and whether the findings support the conclusion that all applicable legislative requirements for a variance have been satisfied.
A comprehensive zoning plan could affect owners of some parcels unfairly if no means were provided to permit flexibility. Accordingly, in an effort to achieve substantial parity and perhaps also in order to insulate zoning schemes from constitutional attack, fn. 4 our Legislature laid a foundation for the granting of variances. Enacted in 1965, section 65906 of the Government Code establishes criteria for these grants; it provides: “Variances from the terms of the zoning ordinance shall be granted only when, because of special circumstances applicable to the property, including size, shape, topography, location or surroundings, the strict application of the zoning ordinance deprives such property of privileges enjoyed by other property in the vicinity and under identical zoning classification [¶] Any variance granted shall be subject to such conditions as will assure that the adjustment thereby authorized shall not constitute a grant of special privileges inconsistent with the limitations upon other properties in the vicinity and zone in which such property is situated.” fn. 5
Applicable to all zoning jurisdictions except chartered cities (Gov. Code, § 65803), section 65906 may be supplemented by harmonious local legislation. fn. 6 We note that Los Angeles County has enacted an ordinance which, [512] if harmonious with section 65906, would govern the Topanga Canyon property here under consideration. Los Angeles County’s Zoning Ordinance No. 1494, section 522, provides: fn. 7 “An exception [variance] may … be granted where there are practical difficulties or unnecessary hardships in the way of carrying out the strict letter of the ordinance, and in the granting of such exception the spirit of the ordinance will be observed, public safety secured, and substantial justice done.”
Both state and local laws thus were designed to establish requirements which had to be satisfied before the Topanga Canyon Investment Company should have been granted its variance. Although the cases have held that substantial evidence must support the award of a variance in order to insure that such legislative requirements have been satisfied fn. 8 (see, e.g., Siller v. Board of Supervisors (1962) 58 Cal.2d 479, 482 [25 Cal.Rptr. 73, 375 P.2d 41]; Bradbeer v. England (1951) 104 Cal. App.2d 704, 707 [232 P.2d 308]), they have failed to clarify whether the administrative agency must always set forth findings and have not illuminated the proper relationship between the evidence, findings, and ultimate agency action. fn. 9
One of the first decisions to emphasize the importance of judicial scrutiny of the record in order to determine whether substantial evidence supported administrative findings that the property in question met the legislative variance requirements was that penned by Justice Molinari in [513] Cow Hollow Improvement Club v. Board of Permit Appeals (1966) 245 Cal.App.2d 160 [53 Cal.Rptr. 610]. Less than one year later, we followed the approach of that case in Broadway, Laguna etc. Assn. v. Board of Permit Appeals (1967) 66 Cal.2d 767 [59 Cal.Rptr. 146, 427 P.2d 810], and ordered that a zoning board’s grant of a variance be set aside because the party seeking the variance had failed to adduce sufficient evidence to support administrative findings that the evidence satisfied the requisites for a variance set forth in the same San Francisco ordinance.
Understandably, however, the impact of these opinions remained uncertain. The San Francisco ordinance applicable in Cow Hollow and Broadway explicitly required the zoning board to specify its subsidiary findings and ultimate conclusions; this circumstance raised the question whether a court should require findings and examine their sufficiency in a case in which the applicable local legislation did not explicitly command the administrative body to set forth findings. Indeed language in Broadway intimated that such a case was distinguishable. (Broadway, Laguna etc. Assn. v. Board of Permit Appeals, supra, at pp. 772-773. See also Stoddard v. Edelman (1970) 4 Cal.App.3d 544, 549 [84 Cal.Rptr. 443]. Cf. Friends of Mammoth v. Board of Supervisors (1972) 8 Cal.3d 247, 270 [104 Cal.Rptr. 761, 502 P.2d 1049].) Further, neither Cow Hollow nor Broadway confronted Government Code section 65906, since both cases concerned a chartered city. fn. 10 There thus also remained uncertainty with respect to cases involving zoning jurisdictions other than chartered cities.
Nevertheless, in an opinion subsequent to Broadway; Hamilton v. Board of Supervisors (1969) 269 Cal.App.2d 64 [75 Cal.Rptr. 106], a Court of Appeal set aside the grant of a variance by a planning commission under circumstances different from those in Broadway and Cow Hollow. The zoning jurisdiction involved in that controversy was a county, not a chartered city, and the court’s opinion did not suggest that any applicable ordinance required administrative findings. Deeming Government Code section 65906 “concededly controlling,” (Hamilton v. Board of Supervisors, supra, at p. 67), the court undertook the task of squaring the findings announced by the commission with the commission’s grant of the variance and concluded that the findings were insufficient to sustain the variance.
[1] Consistent with the reasoning underlying these cases, we hold that [514] regardless of whether the local ordinance commands that the variance board set forth findings, fn. 11 that body must render findings sufficient both to enable the parties to determine whether and on what basis they should seek review and, in the event of review, to apprise a reviewing court of the basis for the board’s action. [2] We hold further that a reviewing court, before sustaining the grant of a variance, must scrutinize the record and determine whether substantial evidence supports the administrative agency’s findings and whether these findings support the agency’s decision. In making these determinations, the reviewing court must resolve reasonable doubts in favor of the administrative findings and decision.
Our analysis begins with consideration of Code of Civil Procedure section 1094.5, the state’s administrative mandamus provision which structures the procedure for judicial review of adjudicatory decisions rendered by administrative agencies. [3] Without doubt, this provision applies to the review of variances awarded by bodies such as the Los Angeles County zoning agencies that participated in the present case. fn. 12 [4] Section 1094.5 clearly contemplates that at minimum, the reviewing court must determine both whether substantial evidence supports the administrative [515] agency’s findings and whether the findings support the agency’s decision. Subdivision (b) of section 1094.5 prescribes that when petitioned for a writ of mandamus, a court’s inquiry should extend, among other issues, to whether “there was any prejudicial abuse of discretion.” Subdivision (b) then defines “abuse of discretion” to include instances in which the administrative order or decision “is not supported by the findings, or the findings are not supported by the evidence.” (Italics added.) Subdivision (c) declares that “in all … cases” (italics added) other than those in which the reviewing court is authorized by law to judge the evidence independently, fn. 13 “abuse of discretion is established if the court determines that the findings are not supported by substantial evidence in the light of the whole record.” (See Zakessian v. City of Sausalito (1972) 28 Cal.App.3d 794, 798 [105 Cal.Rptr. 105].)
[5] We further conclude that implicit in section 1094.5 is a requirement that the agency which renders the challenged decision must set forth findings to bridge the analytic gap between the raw evidence and ultimate decision or order. If the Legislature had desired otherwise, it could have declared as a possible basis for issuing mandamus the absence of substantial evidence to support the administrative agency’s action. By focusing, instead, upon the relationships between evidence and findings and between findings and ultimate action, the Legislature sought to direct the reviewing court’s attention to the analytic route the administrative agency traveled from evidence to action. In so doing, we believe that the Legislature must have contemplated that the agency would reveal this route. Reference, in section 1094.5, to the reviewing court’s duty to compare the evidence and ultimate decision to “the findings” (italics added) we believe leaves no room for the conclusion that the Legislature would have been content to have a reviewing court speculate as to the administrative agency’s basis for decision.
Our ruling in this regard finds support in persuasive policy considerations. (See generally 2 Davis, Administrative Law Treatise (1958) § 16.05, pp. 444-449; Forkosch, A Treatise on Administrative Law (1956) § 253, pp. 458-464.) According to Professor Kenneth Culp Davis, the requirement that administrative agencies set forth findings to support their adjudicatory decisions stems primarily from judge-made law (see, e.g., Zieky v. Town Plan and Zon. Com’n of Town of Bloomfield (1963) 151 Conn. 265 [196 A.2d 758]; Stoll v. Gulf Oil Corp. (1958) 79 Ohio L.Abs. 145 [155 N.E.2d 83]), and is “remarkably uniform in both federal and state [516] courts.” As stated by the United States Supreme Court, the “accepted ideal … is that ‘the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained.’ (S.E.C. v. Chenery Corp. (1943) 318 U.S. 80, 94.)” (2 Davis, supra, § 16.01, pp. 435-436. See also Saginaw Broadcasting Co. v. Federal C. Com’n (1938) 96 F.2d 554, 559 [68 App.D.C. 282].)
Among other functions, a findings requirement serves to conduce the administrative body to draw legally relevant sub-conclusions supportive of its ultimate decision; the intended effect is to facilitate orderly analysis and minimize the likelihood that the agency will randomly leap from evidence to conclusions. (See 2 Cooper, State Administrative Law (1965) pp. 467-468; Feller, Prospectus for the Further Study of Federal Administrative Law (1938) 47 Yale L.J. 647, 666. Cf. Comment, Judicial Control Over Zoning Boards of Appeal: Suggestions for Reform (1965) 12 U.C.L.A. L.Rev. 937, 952.) fn. 14 In addition, findings enable the reviewing court to trace and examine the agency’s mode of analysis. (See California Motor Transport Co. v. Public Utilities Com. (1963) 59 Cal.2d 270, 274 [28 Cal.Rptr. 868, 379 P.2d 324]; Swars v. Council of City of Vallejo (1949) 33 Cal.2d 867, 871 [206 P.2d 355].)
Absent such roadsigns, a reviewing court would be forced into unguided and resource-consuming explorations; it would have to grope through the record to determine whether some combination of credible evidentiary items which supported some line of factual and legal conclusions supported the ultimate order or decision of the agency. fn. 15 [6] Moreover, [517] properly constituted findings fn. 16 enable the parties to the agency proceeding to determine whether and on what basis they should seek review. (See In re Sturm (1974) ante, pp. 258, 267 [113 Cal.Rptr. 361, 521 P.2d 97]; Swars v. Council of City of Vallejo, supra, at p. 871.) They also serve a public relations function by helping to persuade the parties that administrative decision-making is careful, reasoned, and equitable.
By setting forth a reasonable requirement for findings and clarifying the standard of judicial review, we believe we promote the achievement of the intended scheme of land use control. Vigorous and meaningful judicial review facilitates, among other factors, the intended division of decision-making labor. [7] Whereas the adoption of zoning regulations is a legislative function (Gov. Code, § 65850), the granting of variances is a quasi-judicial, administrative one. (See Johnston v. Board of Supervisors (1947) 31 Cal.2d 66, 74 [187 P.2d 686]; Kappadahl v. Alcan Pacific Co. (1963) 222 Cal.App.2d 626, 634 [35 Cal.Rptr. 354].) If the judiciary were to review grants of variances superficially, administrative boards could subvert this intended decision-making structure. (See 1 Appendix to Sen. J. (1970 Reg. Sess.) Final Rep. of the Joint Committee on Open Space Land (1970) pp. 102-103.) They could “[amend] … the zoning code in the guise of a variance” (Cow Hollow Improvement Club v. Board of Permit Appeals, supra, at p. 181), and render meaningless, applicable state and local legislation prescribing variance requirements.
Moreover, courts must meaningfully review grants of variances in order to protect the interests of those who hold rights in property nearby the parcel for which a variance is sought. [8] A zoning scheme, after all, is similar in some respects to a contract; each party foregoes rights to use its land as it wishes in return for the assurance that the use of neighboring property will be similarly restricted, the rationale being that such mutual restriction can enhance total community welfare. (See, e.g., 1 Appendix to Sen. J. (1970 Reg. Sess.) Final Rep. of the Joint Committee on Open Space Land (1970) p. 91; Bowden, Article XXVIII — Opening the Door to Open Space Control (1970) 1 Pacific L.J. 461, 501.) If the interest of [518] these parties in preventing unjustified variance awards for neighboring land is not sufficiently protected, the consequence will be subversion of the critical reciprocity upon which zoning regulation rests.
Abdication by the judiciary of its responsibility to examine variance board decision-making when called upon to do so could very well lead to such subversion. fn. 17 Significantly, many zoning boards employ adjudicatory procedures that may be characterized as casual. (See Comment, Judicial Control over Zoning Boards of Appeal: Suggestions for Reform (1965) 12 U.C.L.A. L.Rev. 937, 950. Cf. Bradbeer v. England (1951) 104 Cal. App.2d 704, 710 [232 P.2d 308].) The availability of careful judicial review may help conduce these boards to insure that all parties have an opportunity fully to present their evidence and arguments. Further, although we emphasize that we have no reason to believe that such a circumstance exists in the case at bar, the membership of some zoning boards may be inadequately insulated from the interests whose advocates most frequently seek variances. (See e.g., 1 Appendix to Sen. J. (1970 Reg. Sess.) Final Rep. of the Joint Committee on Open Space Land (1970) p. 100.) Vigorous judicial review thus can serve to mitigate the effects of insufficiently independent decision-making.
2. The planning commission’s summary of “factual data” — its apparent “findings” — does not include facts sufficient to satisfy the variance requirements of Government Code section 65906.
As we have mentioned, at least two sets of legislative criteria appear applicable to the variance awarded: Government Code section 65906 and Los Angeles County Zoning Ordinance No. 1494, section 522. [9] The variance can be sustained only if all applicable legislative requirements have been satisfied. Since we conclude that the requirements of section 65906 have not been met, the question whether the variance conforms with the criteria set forth in Los Angeles County Zoning Ordinance No. 1494, section 522 becomes immaterial. fn. 18 [519]
We summarize the principal factual data contained in the Los Angeles County Regional Planning Commission’s report, which data the commission apparently relied on to award the variance. fn. 19 The acreage upon which the original real party in interest fn. 20 sought to establish a mobile home park consists of 28 acres; it is a hilly and in places steep parcel of land. At the time the variance was granted, the property contained one single-family residence. Except for a contiguous area immediately to the southeast which included an old and flood-damaged subdivision and a few commercial structures, the surrounding properties were devoted exclusively to scattered single-family residences.
The proposed mobile home park would leave 30 percent of the acreage in its natural state. An additional 25 percent would be landscaped and terraced to blend in with the natural surroundings. Save in places where a wall would be incompatible with the terrain, the plan contemplated enclosure of the park with a wall; it further called for rechanneling a portion of Topanga Canyon Creek and anticipated that the developers would be required to dedicate an 80-foot-wide strip of the property for a proposed realignment of Topanga Creek Boulevard. [520]
The development apparently would partially satisfy a growing demand for new, low cost housing in the area. Additionally, the project might serve to attract further investment to the region and could provide a much needed fire break. Several data indicate that construction on the property of single-family residences in conformance with the zoning classification would generate significantly smaller profits than would development of the mobile home park. Single-family structures apparently would necessitate costly grading, and the proposed highway realignment would require a fill 78 feet high, thereby rendering the property unattractive for conventional residential development. Moreover, the acreage is said not to be considered attractive to parties interested in single-family residences due, in the words of the report’s summary of the testimony, to “the nature of the inhabitants” in the vicinity and also because of local flood problems.
These data, we conclude, do not constitute a sufficient showing to satisfy the section 65906 variance requirements. That section permits variances “only when, because of special circumstances applicable to the property, … the strict application of the zoning ordinance deprives such property of privileges enjoyed by other property in the vicinity and under identical zoning classification.” (Italics added.) [10] This language emphasizes disparities between properties, not treatment of the subject property’s characteristics in the abstract. (See Minney v. City of Azusa (1958) 164 Cal. App.2d 12, 31 [330 P.2d 255]; cf. In re Michener’s Appeal (1955) 382 Pa. 401 [115 A.2d 367, 371]; Beirn v. Morris (1954) 14 N.J. 529 [103 A.2d 361, 364]; Note, Administrative Discretion in Zoning (1969) 82 Harv. L.Rev. 668, 671-672.) It also contemplates that at best, only a small fraction of any one zone can qualify for a variance. (See generally 3 Anderson, American Law of Zoning (1968) § 14.69, pp. 62-65.)
The data contained in the planning commission’s report focus almost exclusively on the qualities of the property for which the variance was sought. In the absence of comparative information about surrounding properties, these data lack legal significance. Thus knowledge that the property has rugged features tells us nothing about whether the original real party in interest faced difficulties different from those confronted on neighboring land. fn. 21 Its assurances that it would landscape and terrace parts of the property and leave others in their natural state are all well and good, but they bear not at all on the critical issue whether a variance [521] was necessary to bring the original real party in interest into substantial parity with other parties holding property interests in the zone. (See Hamilton v. Board of Supervisors, supra, at p. 66.)
The claim that the development would probably serve various community needs may be highly desirable, but it too does not bear on the issue at hand. Likewise, without more, the data suggesting that development of the property in conformance with the general zoning classification could require substantial expenditures are not relevant to the issue whether the variance was properly granted. Even assuming for the sake of argument that if confined to the subject parcel and no more than a few others in the zone, such a burden could support a variance under section 65906, for all we know from the record, conforming development of other property in the area would entail a similar burden. Were that the case, a frontal attack on the present ordinance or a legislative proceeding to determine whether the area should be rezoned might be proper, but a variance would not. (1 Appendix to Sen. J. (1970 Reg. Sess.) Final Rep. of the Joint Committee on Open Space Land (1970) p. 95; Bowden, Article XVIII — Opening the Door to Open Space Control (1970) 1 Pacific L.J. 461, 506.)
Although they dispute that section 65906 requires a showing that the characteristics of the subject property are exceptional, the current real parties in interest would nevertheless have us speculate that the property is unlike neighboring parcels. They point out that the plot has rugged terrain and three stream beds fn. 22 and that the Topanga Creek Boulevard realignment would bisect the property. [11] Speculation about neighboring land, however, will not support the award of a variance. The party seeking the variance must shoulder the burden of demonstrating before the zoning agency that the subject property satisfies the requirements therefor. (Tustin Heights Association v. Board of Supervisors (1959) 170 Cal.App.2d 619, 627 [339 P.2d 914].) Thus neither an administrative agency nor a reviewing court may assume without evidentiary basis that the character of neighboring property is different from that of the land for which the variance is sought. fn. 23 [522]
[12] Moreover, the grant of a variance for nonconforming development of a 28-acre parcel in the instant case is suspect. Although we do not categorically preclude a tract of that size from eligibility for a variance, we note that in the absence of unusual circumstances, so large a parcel may not be sufficiently unrepresentative of the realty in a zone to merit special treatment. By granting variances for tracts of this size, a variance board begins radically to alter the nature of the entire zone. Such change is a proper subject for legislation, not piecemeal administrative adjudication. (See Sinclair Pipe Line Co. v. Village of Richton Park (1960) 19 Ill.2d 370 [167 N.E.2d 406]; Appeal of the Catholic Cemeteries Association (1954) 379 Pa. 516 [109 A.2d 537]; Civil City of Indianapolis v. Ostrom R. & Construction Co. (1931) 95 Ind.App. 376 [176 N.E. 246].) [13] Since there has been no affirmative showing that the subject property differs substantially and in relevant aspects from other parcels in the zone, we conclude that the variance granted amounts to the kind of “special privilege” explicitly prohibited by Government Code section 65906.
We submit, in summary, that this case illumines two important legal principles. First, by requiring that administrative findings must support a variance, we emphasize the need for orderly legal process and the desirability of forcing administrative agencies to express their grounds for decision so that reviewing courts can intelligently examine the validity of administrative action. Second, by abrogating an unsupported exception to a zoning plan, we conduce orderly and planned utilization of the environment.
We reverse the judgment and remand the cause to the superior court with directions to issue a writ of mandamus requiring the Los Angeles Board of Supervisors to vacate its order awarding a variance. We also direct the superior court to grant any further relief that should prove appropriate.
Wright, C. J., McComb, J., Mosk, J., Burke, J., Sullivan, J., and Clark, J., concurred.
FN 1. We recently held in Strumsky v. San Diego County Employees Retirement Association (1974) 11 Cal.3d 28 [112 Cal.Rptr. 805, 520 P.2d 29], that if the order or decision of a local administrative agency substantially affects a “fundamental vested right,” a court to which a petition for a writ of mandamus has been addressed upon the ground that the evidence does not support the findings must exercise its independent judgment in reviewing the evidence and must find abuse of discretion if the weight of the evidence fails to support the findings. Petitioner does not suggest, nor do we find, that the present case touches upon any fundamental vested right. (See generally Bixby v. Pierno (1971) 4 Cal.3d 130, 144-147 [93 Cal.Rptr. 234, 481 P.2d 242]; Temescal Water Co. v. Dept. Public Works (1955) 44 Cal.2d 90, 103 [280 P.2d 1].)
FN 2. Los Angeles County Zoning Ordinance No. 7276.
FN 3. Originally the real party in interest, the Topanga Canyon Investment Company has been replaced by a group of successoral real parties in interest. We focus our analysis on the building plans of the original real party in interest since it was upon the basis of these plans that the zoning authorities granted the variance challenged by petitioner.
FN 4. 1 Appendix to Journal of the Senate (1970 Reg. Sess.) Final Report of the Joint Committee on Open Space Land (1970) pages 94-95; Bowden, Article XVIII — Opening the Door to Open Space Control (1970) 1 Pacific L.J. 461, 506. See Metcalf v. County of Los Angeles (1944) 24 Cal.2d 267, 270-271 [148 P.2d 645]; Gaylord, Zoning: Variances, Exceptions and Conditional Use Permits in California (1958) 5 U.C.L.A. L.Rev. 179; Comment, The General Welfare, Welfare Economics, and Zoning Variances (1965) 38 So.Cal.L.Rev. 548, 573. See generally Note, Administrative Discretion in Zoning (1969) 82 Harv.L.Rev. 668, 671. The primary constitutional concern is that as applied to a particular land parcel, a zoning regulation might constitute a compensable “taking” of property.
FN 5. A third paragraph added to section 65906 declares: “A variance shall not be granted for a parcel of property which authorizes a use or activity which is not otherwise expressly authorized by the zone regulation governing the parcel of property.” This paragraph serves to preclude “use” variances, but apparently does not prohibit so-called “bulk” variances, those which prescribe setbacks, building heights, and the like. The paragraph became effective on November 23, 1970, 19 days after the Los Angeles County Regional Planning Commission granted the variance here at issue. Petitioner does not contend that the paragraph is applicable to the present case.
FN 6. Government Code section 65800 declares that the code chapter of which section 65906 is a part is intended to provide minimum limitations within which counties and cities can exercise maximum control over local zoning matters. Article XI, section 11 of the California Constitution declares that “[a]ny county, city, town, or township may make and enforce within its limits all such local, police, sanitary and other regulations as are not in conflict with general laws.”
FN 7. This section recently was repealed but was in force when the zoning agencies rendered their decisions in the present case. For purposes of more succinct presentation, we refer in text to the section in the present tense.
FN 8. The rule stated finds its source in authorities holding that all adjudicatory determinations of local agencies are entitled to no more than substantial evidence review. As indicated above (fn. 1, ante) those authorities no longer state the law with respect to adjudicatory determinations of such agencies which affect fundamental vested rights. Since no such right is involved in this case, however, the substantial evidence standard remains applicable. We note by way of caution, however, that merely because a case is said to involve a “variance” does not necessarily dictate a conclusion that no fundamental vested right is involved. The term “variance” is sometimes used, for example, to refer to permits for nonconforming uses which predate a zoning scheme. (See Hagman, Larson, & Martin, Cal. Zoning Practice (Cont. Ed. Bar) pp. 383-384.)
FN 9. For descriptions of the history of judicial action in this state with respect to zoning variance grants, see Bowden, Article XVIII — Opening the Door to Open Space Control (1970) 1 Pacific L.J. 461, 507-509; 1 Appendix to Journal of the Senate (1970 Reg. Sess.) Final Report of the Joint Committee on Open Space Land (1970) pages 95-98; Hagman, Larson,& Martin, Cal. Zoning Practice, supra, pages 287-291.
FN 10. See page 511, ante.
FN 11. We note the apparent applicability of section 639 of the Los Angeles County Zoning Ordinance which was in effect at the time respondent granted the variance. That section provided: “After a hearing by a zoning board the said zoning board shall report to the commission its findings and recommend the action which it concludes the commission should take.” As explained in text, however, we rest our ruling upon Code of Civil Procedure section 1094.5.
FN 12. Allen v. Humboldt County Board of Supervisors (1963) 220 Cal.App.2d 877, 882 [34 Cal.Rptr. 232]. See also Siller v. Board of Supervisors (1962) 58 Cal.2d 479, 481 [25 Cal.Rptr. 73, 375 P.2d 41]. The California Judicial Council’s report reflects a clear desire that section 1094.5 apply to all agencies, regardless of whether they are subject to the Administrative Procedure Act and regardless of their state or local character. (See Judicial Council of Cal., 10th Biennial Rep. (1944) pp. 26, 45. See also Temescal Water Co. v. Dept. Public Works (1955) 44 Cal.2d 90, 101 [280 P.2d 1]; Deering, Cal. Administrative Mandamus (1966) p. 7.) “In the absence of compelling language in [a] statute to the contrary, it will be assumed that the Legislature adopted the proposed legislation with the intent and meaning expressed by the council in its report.” (Hohreiter v. Garrison (1947) 81 Cal.App.2d 384, 397 [184 P.2d 323].)
Section 1094.5 makes administrative mandamus available for review of “any final administrative order or decision made as the result of a proceeding in which by law a hearing is required to be given, evidence is required to be taken and discretion in the determination of facts is vested in the inferior tribunal, corporation, board or officer.” (Italics added.) Government Code section 65901 satisfies these requisites with respect to variances granted by jurisdictions other than chartered cities such as Los Angeles County’s zoning agencies. Section 65901 provides, in part: “The board of zoning adjustment or zoning administrator shall hear and decide applications for conditional uses or other permits when the zoning ordinance provides therefor and establishes criteria for determining such matters, and applications for variances from the terms of the zoning ordinance.”
FN 13. See footnote 1, supra.
FN 14. Although at first blush, judicial enforcement of a findings requirement would appear to constrict the role of administrative agencies, in reality, the effect could be to the contrary. Because, notes Judge Bazelon, it provides a framework for principled decision-making, a findings requirement serves to “diminish the importance of judicial review by enhancing the integrity of the administrative process.” (Environmental Defense Fund, Inc. v. Ruckelshaus (D.C.Cir. 1971) 439 F.2d 584, 598.) By exposing the administrative agency’s mode of analysis, findings help to constrict and define the scope of the judicial function. “We must know what [an administrative] decision means,” observed Mr. Justice Cardozo, “before the duty becomes ours to say whether it is right or wrong.” (United States v. Chicago, Milwaukee, St. Paul & Pacific Railroad Co. (1935) 294 U.S. 499, 511 [79 L.Ed. 1023, 1032, 55 S.Ct. 462].)
FN 15. “Given express findings, the court can determine whether the findings are supported by substantial evidence, and whether the findings warrant the decision of the board. If no findings are made, and if the court elects not to remand, its clumsy alternative is to read the record, speculate upon the portions which probably were believed by the board, guess at the conclusions drawn from credited portions, construct a basis for decision, and try to determine whether a decision thus arrived at should be sustained. In the process, the court is required to do much that is assigned to the board. …” (3 Anderson, American Law of Zoning (1968) § 16.41, p. 242.)
FN 16. Although a variance board’s findings “need not be stated with the formality required in judicial proceedings” (Swars v. Council of City of Vallejo, supra, at p. 872), they nevertheless must expose the board’s mode of analysis to an extent sufficient to serve the purposes stated herein. We do not approve of the language in Kappadahl v. Alcan Pacific Co. (1963) 222 Cal.App.2d 626, 639 [35 Cal.Rptr. 354], and Ames v. City of Pasadena (1959) 167 Cal.App.2d 510, 516 [334 P.2d 653], which endorses the practice of setting forth findings solely in the language of the applicable legislation.
FN 17. See generally Comment, Zoning: Variance Administration in Alameda County (1962) 50 Cal.L.Rev. 101, 107 and footnote 42. See also Note, Administrative Discretion in Zoning (1969) 82 Harv.L.Rev. 668, 672 and sources cited therein.
FN 18. We focus on the statewide requirements because they are of more general application. If we were to decide that the criteria of section 65906 had been satisfied, we would then be called upon to determine whether the requirements set forth in the county ordinance are consistent with those in section 65906 and, if so, whether these local criteria also had been satisfied.
The local criteria need be squared with the state criteria since the section 65906 requirements prevail over any inconsistent requirements in the county ordinance. The stated purpose of title 7, chapter 4, of the Government Code, which includes section 65906, is to provide limitations — albeit minimal ones — on the adoption and administration of zoning laws, ordinances, and regulations by counties and nonchartered cities. (See fn. 6, ante.) Section 65802 of the code declares that “[n]o provisions of [the Government Code], other than the provisions of [chapter 4], and no provisions of any other code or statute shall restrict or limit the procedures provided in [chapter 4] by which the legislative body of any county or city enacts, amends, administers, or provides for the administration of any zoning law, ordinance, rule or regulation.” The clear implication is that chapter 4 does restrict or limit these procedures. (See also Cal. Const., art. XI, § 11.)
If local ordinances were allowed to set a lesser standard for the grant of variances than those provided in section 65906, a county or city could escape the prohibition against granting use variances added to section 65906 in 1970 (see fn. 5, ante) merely by enacting an ordinance which would permit the grant of use variances. Clearly the Legislature did not intend that cities and counties to which the provisions of chapter 4 apply should have such unfettered discretion.
FN 19. We confine our analysis to the relationship between the commission’s fact summary and its ultimate decision; we do not consider the testimonial evidence directly. To sustain the grant of the variance of course would require that we conclude that substantial evidence supports the findings and that the findings support the variance award. Since we decide below, however, that the commission’s fact summary does not include sufficient data to satisfy the section 65906 requirements, we need not take the further step of comparing the transcript to the fact summary. Our basis for so proceeding lies in Code of Civil Procedure section 1094.5, which defines “abuse of discretion,” one of several possible grounds for issuance of a writ of mandamus, to include instances in which “the order or decision [of the administrative agency] is not supported by the findings, or the findings are not supported by the evidence.” (Italics added.)
FN 20. See footnote 3, ante.
FN 21. Indeed, the General Plan for Topanga Canyon suggests that the subject property is not uniquely surfaced; it states that the entire area is characterized by “mountainous terrain, steep slopes and deep canyons interspersed with limited areas of relatively flat or rolling land.”
FN 22. Interestingly, since the witnesses who testified in favor of the variance never mentioned the stream beds, the original real party in interest apparently did not regard the beds as disadvantageous. Rather, a witness who opposed the variance offhandedly mentioned the beds as illustrative of the scenic beauty of the area. The trial court seized upon this testimony and used it in justifying the variance award.
FN 23. In fact, other parcels in the zone may well have the features that the successoral real parties in interest speculate are confined to the subject property. Rugged terrain apparently is ubiquitous in the area (see fn. 21, ante), and because the stream beds and highway must enter and exit the subject property somewhere, they may all traverse one or more neighboring parcels. Further, for all we know from the commission’s findings, stream beds may traverse most parcels in the canyon.
[Discrimination; ADA Compliance] Americans with Disabilities Act (ADA) and related federal regulations implementing the ADA do not apply to portions of private residential facilities that are not open to the general public.
Oren & Oren, Inc. and Charles D. Oren for Plaintiff and Appellant. Prindle, Decker & Amaro and Jack C. Nick for Defendants and Respondents.
OPINION
KANE, J.-
Plaintiff Joseph Coronado, a disabled man who is wheelchair-bound, decided to rent a particular apartment at Cobblestone Village, a multi-unit complex owned and operated by defendants Cobblestone Village Community Rentals, L.P. and Equity Residential Properties Management Corporation. fn. 1 A barrier to wheelchair access existed on the path outside the apartment. Specifically, the concrete sidewalk leading from plaintiff’s apartment to the parking area ended in a raised curb with no access ramp for wheelchairs. Plaintiff was subsequently injured when his wheelchair toppled over while his wife tried to maneuver it off of the raised curb. Plaintiff sued defendants for violation of the Unruh Civil Rights Act (Civ. Code, § 51) fn. 2 and the Disabled Persons Act (§ 54 et seq.). After plaintiff’s case was presented at [836] trial, the trial court ruled that the above causes of action would not go to the jury because the statutory provisions were inapplicable to private residential apartments. Plaintiff appeals from that nonsuit order. We will affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Cobblestone Village is an apartment complex located in the City of Fresno along both sides of Fruit Avenue. It was constructed in 1982 to 1983 using exclusively private funds. No substantial structural modifications or additions that would require a building permit have occurred since the original construction. The complex is owned and/or managed by defendants.
The leasing office for Cobblestone Village is open to the general public and a wheelchair access ramp is provided at that location. fn. 3 The apartments and common areas around the apartments are reserved for use by tenants and guests of tenants only, although other persons might enter the complex since defendants’ employees do not patrol the grounds. Vehicles are able to enter the apartment complex by means of a private driveway that connects with Fruit Avenue and winds through the interior of the complex.
Plaintiff is a quadriplegic. He has some use of his arms and can push his manual wheelchair to some extent, but a certain balance must always be maintained because he lacks upper torso control. He is able to get up a curb ramp in his wheelchair, but with no ramp a raised curb is an access barrier.
Cobblestone Village has apartment units that are fully accessible to disabled persons; however, such units were already rented at the time plaintiff and his wife, Krystal Coronado, were looking for an apartment. Plaintiff and his wife were shown apartment number Coro117 (the apartment) by one of the defendants’ leasing agents. The apartment was not designed for disability access, but the interior was adequate for plaintiff’s needs. There is a concrete path or sidewalk leading from the front door of the apartment to a common use parking area. This path or sidewalk ends at a raised curb next to plaintiff’s assigned parking spot. When plaintiff observed the raised curb at the time he was first shown the apartment, he informed defendants’ leasing agent that a wheelchair ramp would be needed. The agent indicated he would have to check with management, but he did not think it would be a problem. [837]
At the time plaintiff and his wife moved into the apartment in October of 2002, fn. 4 a temporary wooden ramp had been placed in the parking lot at the location of the raised curb at the end of the path leading to the apartment. The wooden ramp was placed there at the instruction of defendants’ apartment manager. It was constructed out of plywood and two-by-fours by defendants’ maintenance employee, who also repaired or replaced it on at least one occasion.
Plaintiff asserted at trial that defendants made numerous promises to put in a concrete wheelchair ramp at the curb. Plaintiff, his wife and a paralegal testified that assurances were given by several of defendants’ employees that a concrete ramp would in fact be built at defendants’ expense. Plaintiff and his wife also testified that they were ready and willing at all times to pay the expense themselves of putting in the concrete ramp, and made this fact known to defendants.
Defendants’ leasing agents who dealt with plaintiff and his wife denied ever promising a permanent concrete ramp. Linda Kelley, the apartment manager, testified that she told plaintiff and his wife that they had the option of putting in a permanent ramp at their own expense. According to Ms. Kelley, plaintiff and/or his wife never came forward and said “‘Yes[, we] want to put a ramp in.'” Eventually the wooden ramp, which was put in as a temporary convenience only, had to be removed. Thus, defendants’ position was that plaintiff simply failed to take advantage of the option of putting in a concrete ramp at plaintiff’s expense.
In spring of 2003, for reasons that are not entirely clear, fn. 5 the wooden ramp was removed by defendant Equity Residential Properties Management Corporation. On June 18, 2003, plaintiff’s wife was helping plaintiff get down the curb to the parking area in his wheelchair. In the process, the wheelchair tipped over and plaintiff and his wife were injured.
Plaintiff’s complaint was filed on February 17, 2005. A first amended complaint set forth the following causes of action: (1) premises liability, (2) constructive eviction, (3) violation of the Unruh Civil Rights Act (§ 51), (4) violation of the Disabled Persons Act (§ 54.1), and (5) injunctive relief under the Disabled Persons Act (§ 55.1). [838]
On the eighth day of trial and shortly before it would be time to instruct the jury, the trial court ruled on its own motion that the Unruh Civil Rights Act and the Disabled Persons Act were inapplicable in the circumstances of this case and therefore the statutory causes of action would not go to the jury. fn. 6 As explained by the trial court from the bench, even though the defendants’ leasing office was a public accommodation (and hence subject to the disability access provisions), that fact did not convert the entirety of the apartment complex — including residential areas — into a public accommodation for purposes of the relevant statutes. The minute order stated as follows:
“The Court determines, given the law, the research the Court has conducted and the authorities that have been provided for the Court’s consideration … it does not appear, given the law, nor does there appear to be any facts that would cause an interpretation of the law that would cause or allow the plaintiff’s causes of action under any of the disabled persons statutes or discriminatory behavior statutes to go to the jury…. [A]nd so, I do not intend to give instructions that pertain to those statutes. [¶]…[¶] The Court advises the parties a determination has been made that the corporate entity or partnership of Cobblestone Village is a business, they maintain a business office on the premises and the office is located on the opposite side of the street from the plaintiff’s unit in a different section of the apartment complex. The business office is a public accommodation, but the private apartments are not public accommodations within the meaning of any of the statutes cited.”
After the conclusion of the trial, the jury returned a defense verdict on the premises liability and constructive eviction causes of action. Judgment in favor of defendants was entered on July 13, 2007. Plaintiff timely appealed from the trial court’s order of dismissal or nonsuit of the causes of action under the Unruh Civil Rights Act and the Disabled Persons Act.[839]
DISCUSSION
I. Standard of Review
Plaintiff appeals from the equivalent of a “nonsuit” order entered after the presentation of plaintiff’s evidence. (Code Civ. Proc., § 581c.) Thus, we review whether the trial court was correct in concluding that the evidence, when viewed most favorably toward plaintiff’s case, afforded no basis for a cause of action under either the Unruh Civil Rights Act or Disabled Persons Act as a matter of law. (See Pinero v. Specialty Restaurants Corp. (2005) 130 Cal.App.4th 635, 639.) “We will not sustain the judgment ‘”unless interpreting the evidence most favorably to plaintiff’s case and most strongly against the defendant and resolving all presumptions, inferences and doubts in favor of the plaintiff a judgment for the defendant is required as a matter of law.”‘ [Citations.]” (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291.)
The substance of plaintiff’s appeal is that the trial court erred because defendants had a statutory duty to install a wheelchair ramp at the location of the raised curb so that plaintiff would have access on the only path of travel between the apartment and the parking area (and beyond). The interpretation and application of statutes present a question of law that we review de novo. (Sutco Construction Co. v. Modesto High School Dist. (1989) 208 Cal.App.3d 1220, 1228; 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 317, p. 355.) Similarly, the issue of whether a statutory scheme such as the Unruh Civil Rights Act is applicable in a particular context is a question of law that is reviewed de novo. (Warfield v. Peninsula Golf & Country Club (1995) 10 Cal.4th 594, 607, fn. 7 [question of whether private club was business enterprise under statute was one of law].)
[1] We consider questions of statutory interpretation in accordance with well-established principles of statutory construction. “[C]ourts must begin with the language of a given statute as the purest expression of legislative intent.” (Gunther v. Lin (2006) 144 Cal.App.4th 223, 233.) Our task is “to ascertain the Legislature’s intent so as to effectuate the purpose of the law. [Citation.] Toward this end, we must accord a reasonable and commonsense interpretation consistent with the Legislature’s purpose. [Citation.]” (Donald v. Cafe Royale, Inc. (1990) 218 Cal.App.3d 168, 176-177.) “Moreover, ‘every statute should be construed with reference to the whole system of law of which it is a part, so that all may be harmonized and have effect.’ [Citation.] Statutes relating to the same subject matter are to be read together insofar as reasonably possible. [Citation.]” (Donald v. Sacramento Valley Bank (1989) 209 Cal.App.3d 1183, 1190.)[840]
II. Causes of Action Based on Structural Barrier Under Unruh Civil Rights Act and Disabled Persons Act
As noted, plaintiff contends that the existence of the particular structural barrier (i.e., lack of a curb ramp) on the pathway outside the apartment denied his right to full and equal access to a public accommodation, which was therefore actionable under the Unruh Civil Rights Act and the Disabled Persons Act. Defendants counter that the trial court properly granted nonsuit because the barrier did not constitute a violation of any structural access standard applicable to residential facilities. We now address these respective arguments by considering the statutes in question
A. Unruh Civil Rights Act
[2] Section 51, also known as the Unruh Civil Rights Act, provides in part: “All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability… are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.” (§ 51, subd. (b), italics added.) This section “shall not be construed to confer any right or privilege on a person that is conditioned or limited by law or that is applicable alike” to all persons. (§ 51, subd. (c).) [3] Section 52, subdivision (a), authorizes recovery of damages to persons denied the rights that are protected under section 51. However, a plaintiff seeking to establish a cause of action for damages under the Unruh Civil Rights Act “must plead and prove intentional discrimination in public accommodations in violation of the terms of the Act.” (Harris v. Capital Growth Investors XIV(1991) 52 Cal.3d 1142, 1175, italics added; see Hankins v. El Torito Restaurants, Inc.(1998) 63 Cal.App.4th 510, 518 [damages under § 52 require intentional violation of § 51];Gunther v. Lin,supra, 144 Cal.App.4th at pp. 247, 257 [same].) fn. 7
[4] The provisions of the Unruh Civil Rights Act, “in light of its broad application to ‘all business establishments,’ have been held to apply with full force to the business of renting housing accommodations.” (Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 721, 731.) Thus, the residential apartment complex in Marina Point correctly conceded that “like other business establishments that deal with the public, its freedom or authority to exclude ‘customers,’ i.e., prospective tenants, from the goods and services it offers, i.e., rental units, is limited by the provisions of the [841] Unruh Act.” (Ibid., fn. omitted; O’Connor v. Village Green Owners Assn. (1983) 33 Cal.3d 790, 794-796 [private condominium association was a “business establishment” covered by the Unruh Act].) It is clear from Marina Point and O’Conner that section 51 is fully applicable to defendants’ apartment complex business in the present case, i.e., Cobblestone Village. The question then is not whether section 51 applies to the business enterprise of renting apartments (it does), but whether a cause of action for violation of section 51 may be established in this case under plaintiff’s evidence presented at trial.
[5] We therefore consider whether section 51 may have been violated by the existence of the structural barrier (i.e., no curb ramp) — a theory that depends on a conclusion that defendants were required to make a structural modification to the property. Subdivision (d) of section 51 states: “Nothing in this section shall be construed to require any construction, alteration, repair, structural or otherwise, or modification of any sort whatsoever, beyond that construction, alteration, repair, or modification that is otherwise required by other provisions of law, to any new or existing establishment, facility, building, improvement, or any other structure….” (Italics added.) Subdivision (e) of section 51 further declares that “A violation of the right of any individual under the Americans with Disabilities Act of 1990 (Public Law 101-336) [ADA] shall also constitute a violation of this section.” Thus, on the question of whether a particular structural modification (such as a wheelchair ramp) is required in a given context, section 51 by its own terms looks to other provisions of law.
It follows from the above discussion that a cause of action in which a plaintiff seeks damages for disability discrimination under section 51 based on a structural or architectural barrier requires a showing that the barrier existed due to an intentional violation of an applicable law relating to disability access standards. (See Gunther v. Lin,supra, 144 Cal.App.4th at p. 247 [§ 51 violation may be founded on structural and architectural barriers that are intentional violation of ADA].) Plaintiff contends that defendants were required to construct a wheelchair ramp in the present case under the following provisions of law: (1) Government Code section 4450 et seq. and Health and Safety Code section 19955 et seq., and (2) the ADA. We will shortly turn our attention to these statutory schemes to determine if plaintiff is correct. At this point, we emphasize that plaintiff’s cause of action under section 51 premised on the existence of a structural barrier depends on whether the lack of a wheelchair ramp at the subject curb constituted an intentional violation of one of these other provisions of law relating to disability access.[842]
B. Disabled Persons Act
In 1968, the Legislature enacted sections 54, 54.1 and 54.3 as one of two statutory schemes that were specifically designed to prevent discrimination against the physically disabled. (People ex rel.Deukmejian v. CHE, Inc. (1983) 150 Cal.App.3d 123, 131-134.) The other statutory scheme, which we address later, consisted of Government Code section 4450 et seq. and Health and Safety Code section 19955 et seq. (People ex. rel. Deukmejian v. CHE, Inc., supra, at pp. 131-134.)
Sections 54 through 55.2 are now commonly referred to as the Disabled Persons Act and are “intended to secure to disabled persons the ‘same right as the general public to the full and free use’ of facilities open to the public. [Citation.]” (Urhausen v. Longs Drug Stores California, Inc. (2007) 155 Cal.App.4th 254, 261.) As originally enacted, violation of sections 54 or 54.1 constituted a misdemeanor as stated in former section 54.3, and enforcement was by government prosecution. (Marsh v. Edwards Theatres Circuit, Inc. (1976) 64 Cal.App.3d 881, 887 (Marsh).) In 1974, section 55 was added to give individuals aggrieved by violation of sections 54 or 54.1 a right to obtain injunctive relief; and in 1976, section 54.3 was amended to allow such individuals a right to maintain a civil cause of action for damages. (Donald v. Cafe Royale, Inc., supra, 218 Cal.App.3d at p. 179 [summarizing statutory history].) These additional enforcement methods were included by the Legislature to “guarantee compliance with equal access requirements” and to help remove “impediments to the physically handicappeds’ interaction in community life….” (Ibid.)
The Disabled Persons Act (§§ 54-55.2) differs from the Unruh Civil Rights Act (§§ 51 & 52) in at least two respects: (1) there is no intent element under the Disabled Persons Act (Donald v. Cafe Royale, Inc., supra, 218 Cal.App.3d at p. 177), but intentional discrimination is a required element for recovery of damages under the Unruh Civil Rights Act; and (2) each Act provides for a distinct measure of statutory penalties (cf. §§ 52 & 54.3;Gunther v. Lin, supra, 144 Cal.App.4th at p. 257). Due to these significant differences, a plaintiff must elect between seeking damages under sections 52 or 54.3. (§ 54.3, subd. (c); Gunther v. Lin, supra, 144 Cal.App.4th at p. 257.) fn. 8
Section 54, subdivision (a), declares that “Individuals with disabilities have the same right as the general public to the full and free use of the streets, highways, sidewalks, walkways, public buildings, medical facilities, including hospitals, clinics, and physicians’ offices, public facilities, and other [843] public places.” Section 54.1, subdivision (a)(1), states in similar fashion that “Individuals with disabilities shall be entitled to full and equal access, as other members of the general public, to accommodations, advantages, facilities, … privileges of all common carriers, airplanes, motor vehicles, railroad trains, motorbuses, streetcars, boats, or any other public conveyances or modes of transportation, … telephone facilities, adoption agencies, private schools, hotels, lodging places, places of public accommodation, amusement, or resort, and other places to which the general public is invited, subject only to the conditions and limitations established by law … and applicable alike to all persons.” Both sections 54 and 54.1 were amended in 1996 to add a provision declaring that “A violation of the right of an individual under the [ADA] also constitutes a violation of this section….” (§§ 54, subd. (c) & 54.1, subd. (c); see Stats. 1996, ch. 498, §§1 & 1.5.)
Subdivision (b)(1) of section 54.1 includes a specific provision relating to housing accommodations that declares as follows: “Individuals with disabilities shall be entitled to full and equal access, as other members of the general public, to all housing accommodations offered for rent, lease, or compensation in this state, subject to the conditions and limitations established by law, or state or federal regulation, and applicable alike to all persons.” “‘Housing accommodations’ means any real property, or portion thereof, that is used or occupied, or is intended, arranged, or designed to be used or occupied, as the home, residence, or sleeping place of one or more human beings, but shall not include any accommodations included within subdivision (a) or any single-family residence the occupants of which rent, lease, or furnish for compensation not more than one room therein.” (§ 54.1, subd. (b)(2).)
[6] In addition to declaring that the protections of the Disabled Persons Act apply to housing accommodations, subdivision (b) of section 54.1 affirmatively requires that those who rent, lease or otherwise provide such housing do the following: (1) make reasonable accommodations in rules, policies, practices, or services, when necessary to afford individuals with a disability equal opportunity to use and enjoy the premises (§ 54.1, subd. (b)(3)(B)), and (2) permit a disabled tenant to make reasonable modifications at his or her own expense to the rented premises when necessary to afford that tenant full use and enjoyment of the rented premises, which modifications may be conditioned on the tenant entering into a written agreement to restore the interior of the premises to the original condition (§ 54.1, subd. (b)(3)(A)). fn. 9 Finally, it is provided that “Nothing in this subdivision shall require any person renting, leasing or providing for compensation real property to modify his or her property in any way or provide a [844] higher degree of care for an individual with a disability than for an individual who is not disabled.” (§ 54.1, subd. (b)(4), italics added.) The latter section clarifies that subdivision (b) does not by itself mandate the owner or operator of the real property to make any structural modifications, which is consistent with the interpretation that the courts have generally given the Disabled Persons Act, as we discuss below.
[7] Historically, sections 54 and 54.1 have been construed to mean that “all physically handicapped are entitled to the same right as the able-bodied to full and free use of public facilities and places,” requiring operators of such public facilities and accommodations to “‘open [their] doors on an equal basis to all that can avail themselves of the facilities without violation of other valid laws and regulations.'” (People ex. rel. Deukmejian v. CHE, Inc., supra, 150 Cal.App.3d at p. 133, citing Marsh, supra, 64 Cal.App.3d at p. 892.) It has been held that these provisions do not, by themselves, require that a business owner structurally modify his or her facilities. (Marsh, supra, at pp. 886, 891 [§ 54.1 “does not require affirmative action by way of modifying existing structures”].) As the Marsh court concluded following an analysis of the legislative history, “the operator of a business of a type enumerated in Civil Code section 54.1 is not required by the force of that section alone to modify its facilities to allow for their use by handicapped persons.” (Marsh, supra, at p. 892; see Hankins v. El Torito Restaurants, Inc.,supra, 63 Cal.App.4th at p. 522 [acknowledging Marsh rule “that a structural impediment to access does not violate Civil Code section 54.1 unless the impediment also violates a structural access standard”].)
We know of no reason to depart from the analysis in Marsh on this issue. In fact, there are at least two sound reasons to follow it. First, it is clear that the Legislature adopted a distinct statutory scheme in 1968-1969 (i.e., Gov. Code § 4450 et seq. and Health & Saf. Code § 19955 et seq.) to address the separate matter of building access standards and structural modifications. (See, e.g.,People ex. rel. Deukmejian v. CHE,Inc.,supra, 150 Cal.App.3d at pp. 131-134 [structural access standards, applicable to new construction or modification of existing facilities, were enacted to “give meaning” to §§ 54 & 54.1];Donald v. Sacramento Valley Bank,supra, 209 Cal.App.3d at pp. 1190-1192 [same].) This fact strongly indicates sections 54 and 54.1 were not themselves intended to require business owners to modify the structure of their premises, as other statutes were adopted for that purpose. Second, the Legislature specifically responded to one aspect of the holding in Marsh (i.e., that there was no private cause of action for damages) by amending section 54.3 to authorize a private cause of action for specified damages (Stats. 1976, ch. 971, § 2; Stats. 1976, ch. 972, § 2.5; and Stats. 1977, ch. 881, § 3), but left fully intact Marsh’s fundamental interpretation of the statutory scheme that a structural barrier does not violate sections 54 or 54.1 unless it also violates a separate structural access standard. (See [845] Gunther v. Lin, supra, 144 Cal.App.4th at p. 236 [legislative acquiescence in prior judicial construction of statutory language creates inference that Legislature agreed with that construction].)
[8] We conclude that in order to state a cause of action for violation of sections 54 or 54.1 based on a structural or architectural barrier, the existence of the barrier must be in violation of a separate provision of law relating to structural access standards. This means that, as was true in our analysis of section 51, we must look to other provisions of law before we can determine whether a cause of action on this theory was sufficiently supported by the evidence.
We now proceed to consider those other laws.
C. Government Code Section 4450 et seq. and Health and Safety Code Section 19955 et seq.
As noted, Government Code section 4450 et seq. and Health and Safety Code section 19955 et seq. were enacted in 1968 and 1969 respectively as means of providing structural access standards in regard to public buildings and facilities. The scope and purpose of these provisions have been aptly summarized as follows: “To give meaning to the public accommodation law prohibiting discrimination against the handicapped, the Legislature enacted Government Code section 4450 et seq. providing for the establishment of standards for buildings constructed with public funds designed to insure accessibility by the handicapped. A year later, the Legislature expanded these requirements to facilities constructed with private funds ([Health & Saf. Code, ]§ 19955 et seq.) and, with certain limited exceptions, required conformance with the same standards set forth within Government Code section 4450 et seq. The underlying legislative intent of these statutory schemes is to require affirmative conduct so as to guarantee access to the physically handicapped upon construction of new facilities or with the repair and alteration of existing facilities. [Citation.]” (People ex. rel. Deukmejian v. CHE, Inc., supra, 150 Cal.App.3d at p. 133.) That is, disability access standards were first implemented with respect to public buildings or facilities constructed with public funds (Gov. Code, §§ 4450-4458), and were later expanded to include public buildings or facilities constructed with private funds (Health & Saf. Code, §§ 19955-19959;Donald v. Sacramento Valley Bank, supra, 209 Cal.App.3d at p. 1191).
Since Cobblestone Village was constructed with private funds, plaintiff’s contention is that Health and Safety Code section 19955 et seq. required the construction of a curb ramp at the location where the incident occurred. Defendants respond that the walkway outside plaintiff’s apartment is not a [846] public facility, and therefore Health and Safety Code section 19955 is inapplicable. As explained below, we conclude defendants are correct.
[9] Health and Safety Code section 19955, subdivision (a), explains that the purpose of Part 5.5 of the code (including sections 19955 to 19959.5) is “to insure that public accommodations or facilities constructed in this state with private funds adhere to the provisions of Chapter 7 (commencing with Section 4450) of Division 5 of Title 1 of the Government Code.” The same section defines the term “‘public accommodation or facilities'” as follows: “a building, structure, facility, complex, or improved area which is used by the general public and shall include auditoriums, hospitals, theaters, restaurants, hotels, motels, stadiums, and convention centers.” (Health & Saf. Code, § 19955, subd. (a), italics added.) Similarly, Health and Safety Code section 19956.5, which relates to public curbs and sidewalks constructed with private funds, states that it applies to “Any curb or sidewalk intended for public use….” (Italics added.)
In the present case, there was no evidence to suggest that the cement walkway outside plaintiff’s apartment was an area used by the general public or that it was intended for use by the general public. The relevant testimony on this issue indicated that although the general public was invited to the leasing office, only tenants and guests of tenants were supposed to be in residential areas and common areas around the residential areas. Additionally, there was no evidence to indicate that the private lane or driveway going through the interior of defendants’ complex, as a means of vehicular access, was intended for use by the general public. Thus, the curb located on the walkway outside plaintiff’s apartment was not a public facility or public sidewalk to which the provisions of Health and Safety Code sections 19955 and 19956.5 would apply.
This determination is in accord with a well-reasoned 1982 Attorney General Opinion concluding that a mobilehome park recreational building is not a public accommodation or facility within the meaning of the above statutes. (65 Ops.Cal.Atty.Gen. 72, 75 (Jan. 26, 1982).) As explained by that opinion:
“Undoubtedly that facility is open to a more general class than the residents of the park, for surely it is available to their families and invited guests. Use by the expanded group of persons in our view, however, does not reach the use ‘by the general public’ spoken of in [Health and Safety Code] section 19955. There are still meaningful restrictions on who may use the facilities, which considerably narrows their amenability to user from being generally available to the public — as is the case with an auditorium, hospital, theater, restaurant, hotel, motel, stadium or convention center — to being available to a select and definable few. Furthermore, unlike those facilities, the purpose for whose creation is based upon their being made continuously available to the [847] general public and whose economic viability cannot survive without their being so available, the recreation center at a mobilehome park is neither so created nor dependent. Rather, it is a secondary appendage to another unit, the park itself which, like it, neither contemplates nor needs accessibility of continuous use by the general public for its sustenance. Thus, we do not believe the fact that a recreational building in a mobilehome park might well be used by the residents’ families, friends, and invited guests makes it ‘a building … or facility used by the general public’ or a ‘public facility or accommodation’ within the meaning of [Health and Safety Code] section 19955.”
Of further interest in our present case, the same Attorney General Opinion rejected an argument that the presence of a commercial office within the mobilehome park converted all structures or areas in the park into a commercial establishment within the meaning of Health and Safety Code section 19955.5. “The main office of the park might be considered engaging in a commercial activity, but surely the individual mobilehomes cannot be so considered, nor do we believe the recreation building itself can be so considered…. Thus, while the office of the mobilehome park would be covered by [Health and Safety Code] section 19955.5, since commercial activity is performed within it, that does not extend to the park’s recreation building and it would not be covered by the section’s mandate.” (65 Ops.Cal.Atty.Gen. 72, 76 (Jan. 26, 1982).)
[10] In granting the nonsuit order in the present case, the trial court explained that even though defendants’ leasing office was a public accommodation (and hence subject to the structural access standards), that fact would not convert the entirety of the apartment complex — including residential areas — into a public accommodation for purposes of the relevant statutes. We concur with the trial court’s analysis on this point — which is also suggested in the above referenced Attorney General Opinion. In a multi-use complex such as this, where there is a commercial office open to the general public but also residential and common areas that are not open to the general public, it is appropriate to consider the particular area in question when attempting to determine the applicability of statutes that provide for structural access standards. We conclude that these statutory provisions did not require defendants to install a curb ramp at the location where plaintiff fell.
D. Americans With Disabilities Act
[11] Plaintiff claims that removal of the structural barrier in this case was required by the ADA. As noted previously, the California Legislature has declared that a violation of the ADA constitutes a violation of the Unruh Civil [848] Rights Act and the Disabled Persons Act. fn. 10 The ADA provides: “No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” (42 U.S.C. § 12182(a).) The ADA defines discrimination in a place of public accommodation to include “a failure to remove architectural barriers … in existing facilities … where such removal is readily achievable ….” (42 U.S.C. § 12182(b)(2)(A)(iv).) The term “readily achievable” means “easily accomplishable and able to be carried out without much difficulty or expense.” (42 U.S.C. § 12181(9).)
“Thus, under the ADA, the duty to remove such barriers from public accommodations now extends beyond initial construction and significant alterations of existing structures. ‘A public accommodation shall remove architectural barriers in existing facilities, … where such removal is readily achievable, i.e., easily accomplishable and able to be carried out without much difficulty or expense.’ [Citation.]” (Madden v.Del Taco, Inc. (2007) 150 Cal.App.4th 294, 302 (Madden).) In Madden, the Court of Appeal held that a restaurant was required to remove a structural barrier (i.e., a cement trash container blocking an accessible route of travel to an entrance) based on the requirement in the ADA to remove barriers where such removal is readily achievable. (Madden, supra, at pp. 302-303.) fn. 11 This was so even though the restaurant was otherwise in compliance with structural access standards and had not engaged in any triggering alterations. fn. 12 (Madden, supra, at p. 302)[849]
Plaintiff contends that Madden directly applies here because the installation of a curb ramp, as a means of removal of a structural barrier to access, was readily achievable in this case, especially when the evidence that plaintiff was willing to pay for the installation is considered. Defendants argue that Madden is inapplicable because it involved a place of public accommodation as defined under the ADA, while the instant case did not. We agree with defendants’ position.
Section 12181 of the ADA defines the term “public accommodation” in terms of “12 extensive categories, which the legislative history indicates ‘should be construed liberally’ to afford people with disabilities ‘equal access’ to the wide variety of establishments available to the nondisabled.” (PGA Tour, Inc. v. Martin (2001) 532 U.S. 661, 676-677, fns. omitted.) Section 12181(7) of the ADA states:
“The following private entities are considered public accommodations for purposes of this subchapter, if the operations of such entities affect commerce
“(A) an inn, hotel, motel, or other place of lodging, except for an establishment located within a building that contains not more than five rooms for rent or hire and that is actually occupied by the proprietor of such establishment as the residence of such proprietor;
“(B) a restaurant, bar, or other establishment serving food or drink;
“(C) a motion picture house, theater, concert hall, stadium, or other place of exhibition or entertainment;
“(D) an auditorium, convention center, lecture hall, or other place of public gathering;
“(E) a bakery, grocery store, clothing store, hardware store, shopping center, or other sales or rental establishment;
“(F) a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment;
“(G) a terminal, depot, or other station used for specified public transportation;
“(H) a museum, library, gallery, or other place of public display or collection;[850]
“(I) a park, zoo, amusement park, or other place of recreation;
“(J) a nursery, elementary, secondary, undergraduate, or postgraduate private school, or other place of education;
“(K) a day care center, senior citizen center, homeless shelter, food bank, adoption agency, or other social service center establishment; and
“(L) a gymnasium, health spa, bowling alley, golf course, or other place of exercise or recreation.”
[12] Plaintiff argues the category “inn, hotel, motel, or other place of lodging” (42 U.S.C. § 12181(7)(A)) should be interpreted to include a residential apartment complex. Even when liberally construed, the wording cannot reasonably stretch that far. The described category of “inn, hotel, motel, or other place of lodging” obviously entails places that provide only short-term or transient lodging, not places of residence. This is confirmed by congressional legislative history that explicitly states only nonresidential facilities were intended to be covered by the ADA. (H.R.Rep. 101-485 (II), 2d Sess., p. 303 (1990), reprinted in 1990 U.S. Code Cong. & Admin. News, p. 383.) Finally, federal courts addressing the issue have consistently held that the ADA does not apply to residential facilities such as apartments or condominiums. (Regents of Mercers. College v. Rep. Franklin Ins. (3d Cir. 2006) 458 F.3d 159, 165-166, fn. 8 [“residential facilities such as apartments and condominiums are not transient lodging and, therefore, not subject to ADA compliance”]; Lancaster v. Phillips Investments, LLC (M.D.Ala. 2007) 482 F.Supp.2d 1362, 1367;Indep. Housing Services v. Fillmore Ctr. (N.D.Cal. 1993) 840 F.Supp. 1328, 1344, fn. 14; Mabson v. Assn. of Apt. Owners (D.Hawaii August 13, 2007, Civ. No. 06-00235DAE-LEK) 2007 U.S. Dist. LEXIS 59260 at *30;Phibbs v. Am. Prop. Mgmt. (D.Utah March 19, 2008, No. 2:02CV00260DB) 2008 U.S. Dist. LEXIS 21879 at **6-8.) We concur with the reasoning and conclusions expressed in these cases.
We hold that the portions of Cobblestone Village that are a residential apartment complex are not a public accommodation under the ADA, and therefore are not subject to compliance with the ADA or federal regulations implementing the ADA. Consequently, defendants were not required by the ADA to install a curb ramp at the location outside plaintiff’s apartment.
[13] As was the case with the California discrimination statutes, the mere fact that there was a business office in the apartment complex does not change our conclusion. The legislative history of the ADA indicates it was not intended to apply to portions of a multi-use facility that are residential in character. The 1990 House Report relating to the ADA stated: “Only nonresidential facilities are covered by this title. For example, in a large hotel that [851] has a residential apartment wing, the residential wing would be covered under the Fair Housing Act … rather than by this title. The nonresidential accommodations in the rest of the hotel would be covered by this title.” (H.R.Rep. 101-485 (II),supra, at p. 303, reprinted in 1990 U.S. Code Cong. & Admin. News, p. 383.) Accordingly, the ADA should be reasonably construed and applied in accordance with this intent. This means that where there is a multi-use facility in which there is a commercial office open to the general public but also residential and common areas that are not open to the general public, it is appropriate to consider the particular area in question when attempting to determine the applicability of ADA structural access standards or other ADA requirements. (See also 28 C.F.R § 36, Appen. B [indicating that in a mixed use facility the residential portion thereof would not be covered by ADA]; Indep. Housing Services v. Fillmore Ctr., supra, 840 F.Supp. at p. 1344 [ADA held inapplicable to residential portions of the larger facility].)
E. Summary of Conclusion Regarding Structural Barrier Causes of Action
[14] As explained herein above, a plaintiff seeking to establish a cause of action under the Unruh Civil Rights Act or the Disabled Persons Act based solely on the existence of a structural barrier must be able to show that the failure to remove the barrier constituted a violation of a structural access standard set forth in other provisions of law. In the instant case, none of the statutes that were referred to by plaintiff as the source of such structural access standards was applicable to the residential and common areas of the apartment complex. We have also observed that this result is not affected in this case by the fact that the apartment complex had a leasing office within the facility. Accordingly, no structural barrier cause of action was presented under the allegations and facts of this case as a matter of law and the trial court correctly kept such causes of action from the jury.
In reaching this conclusion regarding the scope of the various statutory schemes, we emphasize that our role is to construe and apply the legislation as it is. This court is not insensitive to the hardships suffered by individuals who have disabilities, but these are peculiarly legislative matters. As aptly stated by the court in Marsh, supra, 64 Cal.App.3d at page 888: “The varied and distinctive nature of the numerous handicaps from which so many people suffer suggests … that the problem is one which the legislative branch of government is uniquely equipped to solve. It is in the legislative halls where the numerous factors involved can be weighed and where the needs can be properly balanced against the economic burdens which of necessity will have to be borne by the private sector of the economy in providing a proper and equitable solution to the problem.”[ 852]
DISPOSITION
The judgment is affirmed. Costs are awarded to defendants.
Cornell, Acting P.J., and Hill, J., concurred.
FN 1. For simplicity, we refer to these entities jointly as defendants unless it seems helpful to the discussion to refer to one defendant separately.
FN 2. Unless otherwise indicated, all further statutory references are to the Civil Code.
FN 3. The leasing office is located on the other side of Fruit Avenue from plaintiff’s apartment. In addition to the leasing office, the swimming pool area and at least two of the apartment units had full disability access.
FN 4. Plaintiff and his wife began renting the apartment in late October of 2002 and moved out in August of 2003.
FN 5. There was some testimony to the effect that the ramp was removed because it did not appear to be safe or it was in poor condition. Other testimony reflects it may have been mistakenly thrown out because it appeared to be a skateboard ramp or a piece of wood that did not belong there.
FN 6. Plaintiff points out that the trial court failed to comply with standard procedures governing nonsuit motions (see Code Civ. Proc., § 581c). Although the trial court’s sua sponte order was unusual, no basis for reversal is shown. First, it is clear the trial court was acting to fulfill its judicial duty to ensure the jury was properly instructed on the law applicable to the case. Once the trial court concluded the disability access statutes were inapplicable in the context of this case, and hence claims based thereon could not as a matter of law go to the jury, it promptly informed the parties of its decision. Second, plaintiff made no objection below on grounds of procedural error or unfairness, and it is apparent the parties understood this was a legal issue that had to be resolved in the case. Third, since the instant appeal requires us to resolve the same legal issues as the trial court faced, and we agree that no cause of action existed under the statutes in question, it would be an idle act for us to reverse the case on procedural grounds simply to have the trial court enter a dismissal. (See § 3532.)
FN 7. In contrast, recovery under the Disabled Persons Act (§§ 54-55.2) does not require an intentional violation. (Donald v. Cafe Royale, Inc., supra, 218 Cal.App.3d at p. 177;Gunther v. Lin, supra, 144 Cal.App.4th at pp. 240-241.)
FN 8. Another difference is that the Unruh Civil Rights Act has an express provision authorizing punitive damages (§ 52, subd. (b)(1)), but the Disabled Persons Act does not.
FN 9. Plaintiff does not argue that this section is applicable to his claim that a curb ramp should have been installed. This is correct, since the curb is situated in a common area that is not part of plaintiff’s apartment.
FN 10. Of course, in the case of the Unruh Civil Rights Act, the violation must be an intentional discrimination or an intentional violation of a structural access standard, as previously discussed.
FN 11. Madden suggests that California building standards would now, like the ADA, require removal of architectural barriers in existing public accommodations that come within the scope of Government Code section 4450 and Health and Safety Code 19955 et seq. (Madden, supra, 150 Cal.App.4th at p. 302, fn. 3.)
FN 12. When a public accommodation that was constructed prior to the effective date of the ADA is altered or a part of it is altered, the ADA requires that the alterations be made such that “the altered portions of the facility are readily accessible to and usable by individuals with disabilities, including individuals who use wheelchairs.” (42 U.S.C. § 12183(a).) Similar provisions for applicability of access standards to post-construction alteration are set forth in Health and Safety Code section 19959 and Government Code section 4456 regarding buildings constructed prior to the effective dates thereof. These standards are applied to “new facilities or with the repair and alteration of existing facilities.” (People ex rel. Deukmejian v. CHE, Inc., supra, 150 Cal.App.3d at p. 133.) This is presumably what the Madden court meant by a “triggering alteration.” The concept of a triggering alteration is not at issue here because, as explained herein, the referenced statutes do not apply to the residential apartment complex or common areas thereof, and in any event there is no evidence of any significant alteration to Cobblestone Village.
[Architectural Control; Solar Energy] An association may consider aesthetic impacts in connection with reviewing and approving an owner’s application for a proposed solar energy system.
Law Offices of Michael L. McQueen and Michael L. McQueen for Defendants and Appellants. Greenberg Glusker Fields Claman & Machtinger and Ricardo P. Cestero for Plaintiff and Respondent.
OPINION
DOI TODD, Acting P.J.-
Defendants and appellants Martin and Carolyn Griffin appeal from a judgment following a jury verdict in favor of plaintiff [623] and respondent Tesoro del Valle Master Homeowners Association (Tesoro) on its claims that appellants installed a solar energy system at their residence in contravention of conditions, covenants and restrictions governing their property. Unmindful of applicable standards of review, appellants raise a host of issues in an effort to undermine the jury verdict. We affirm. The jury properly determined the disputed issues and substantial evidence supported the determinations; Tesoro properly evaluated appellants’ application for their system, brought suit and received a jury trial; and the trial court properly exercised its discretion in the admission and exclusion of expert testimony.
FACTUAL AND PROCEDURAL BACKGROUND
Tesoro’s Governing Documents.
Tesoro is a nonprofit mutual benefit corporation that manages, administers, maintains, preserves and operates the residences and common areas in the Tesoro community. On May 29, 2003, the developer of the Tesoro community recorded with the Los Angeles County Recorder’s Office a Master Declaration of Establishment of Covenants, Conditions, and Restrictions for Tesoro del Valle (CC&R’s). The purpose of the CC&R’s is to enhance and protect the value, desirability and attractiveness of the Tesoro community, as well as to give the Tesoro Board of Directors (Tesoro Board) the authority to maintain community standards.
Article 7 of the CC&R’s addresses the duties and responsibilities of Tesoro’s volunteer Architectural Control Committee (ACC), providing that homeowners must obtain the ACC’s approval before making any improvements to their property. Section 7.2 of the CC&R’s outlines the application process, providing the application requirements and stating that the ACC may grant approval only if the applicant has complied with those requirements and the ACC, in its discretion, concludes that the proposed improvement conforms to the CC&R’s and is harmonious with the existing development.
Section 8.1.18 of the CC&R’s reiterates that “[t]here shall be no construction, alteration, or removal of any Improvement in the Project (other than repairs or rebuilding done by the Association pursuant hereto) without the approval of the Architectural Control Committee.” Further, section 8.1.20 of the CC&R’s states: “Within slope areas, no structure, planting, fencing, . . . shall be placed or permitted to remain or other activities undertaken which may damage or interfere with established slope ratios, create erosion or sliding problems, or which may change the direction of flow of drainage channels or obstruct or retard the flow of water through drainage channels.” That provision also imposes on the homeowner the duty to maintain the landscaping installed on the slope by Tesoro. [624]
In December 2003, Tesoro approved Design Guidelines to “help assure continuity in design, which will help preserve and improve the appearance of the community.” Section III, paragraph G, specifically directed to the architectural standards for solar energy systems, provides: “As provided for in Section 714 of the California Civil Code, reasonable restrictions on the installation of solar energy systems that do not significantly increase the cost of the system or significantly decrease its efficiency or specified performance, or which allow for an alternative system of comparable costs, efficiency, and energy conservation benefits may be imposed by the Committee [ACC]. [¶] Whenever approval is required for the installation or use of a solar energy system, the application for approval shall be processed and approved by the Committee in the same manner as an application for approval of a modification to the property, and shall not be willfully avoided or delayed.”
Appellants’ Solar Energy System Installation.
In 2005, appellants purchased their home at 29313 Hacienda Ranch Court (property) in the Tesoro development. fn. 1 Their corner property was approximately 15,000 square feet and included a slope outside the perimeter wall. They were provided with a copy of the CC&R’s at that time and understood they would be bound by them. They also received Tesoro’s Design Guidelines and agreed to be bound by those as well. Appellants were aware that they were required to maintain their property, including the slope, and to submit a written application to obtain approval from the ACC before making any improvements to their property. After submitting the required applications, they made several improvements to their property, such as the installation of a pool, casita and landscaping including a fountain and hardscape.
In 2007, appellants met with Joe Hawley, then with Advanced Solar Electric, who gave them a proposal for the installation of a solar energy system for their property. They told Hawley they were interested in the system being installed on the slope adjacent to their residence. Appellants submitted an application to install a solar energy system on October 2, 2007. fn. 2
Euclid Management Company was responsible for Tesoro’s day-to-day management. When Martin walked the application into the Euclid Management office, association manager Patty Prime told him it was not likely to be approved. She informed him that the application was incomplete in several areas and that she was unaware of any other solar energy systems being [625] installed outside a perimeter wall. According to the CC&R’s, the ACC had 45 days from the submission of appellants’ application to review and rule on it.
The CC&R’s and Design Guidelines specify the application requirements, which include the submission of a plot plan drawn to scale, a detailed description of the proposed materials, a landscape plan and a drainage plan. Appellants’ application met none of the requirements. It contained only a handwritten drawing with a rectangle signifying the approximate location of the proposed solar panels. It did not contain information concerning the panels’ dimensions, number or color; the setback; the proposed alterations to the landscaping; or the amount of electricity proposed to be generated.
Because of Prime’s negative comment, while their application was pending appellants sought a proposal from Hawley for the installation of solar panels on the roof of their residence. They received a proposal on October 10, 2007, which provided for the installation of 36 solar panels on their roof and 22 panels on the slope, but they did not amend their pending application or submit a revised application to reflect the changes. Instead, on November 8, 2007, they signed a $97,000 contract with Advanced Solar Electric for the installation of the new proposed solar energy system.
Also on November 8, 2007–before the expiration of the 45-day time limit–the ACC issued a letter denying appellants’ application. fn. 3 The denial letter was misaddressed, however, and appellants did not receive it until November 17, 2007–46 days after October 2, 2007. Summarizing the ACC’s position, Tim Collins handwrote four comments on appellants’ application noting that the roof of the casita adjacent to appellants’ residence should be considered as a location for the panels; that the project’s dimensions and minimum setbacks needed to be provided on the site plan; that appellants needed to indicate how the slope beneath the solar panels would be maintained; and that they needed to submit photographs of the existing landscape and superimpose the proposed panel elevation. The ACC was concerned about the proposed slope-mounted system because it was at the entry to the neighborhood, adjacent homes had a direct line of sight, the CC&R’s prohibited slope alteration and any alteration or landscape removal could impact drainage. The ACC expected that appellants would address the expressed concerns and submit a revised application.
After receiving the denial letter, Martin attended and spoke at a meeting of the Tesoro Board, informing the board members that he deemed the untimely denial of his project an approval, he had engaged a solar contractor and he [626] intended to proceed with his project starting in January 2008. Hawley also tried to respond to the ACC’s concerns. The ACC, however, saw no indication that appellants had investigated installation of the solar panels on the casita roof or that they had made efforts to comply with the ACC’s other requests. The Tesoro Board also directed Prime to prepare a timeline of events concerning appellants’ application, and after review concluded that all applicable time limits had been satisfied.
On December 18, 2007, appellants received a letter from Tesoro’s attorney, Jeffrey Beaumont, instructing them to stop further efforts to install a solar energy system on their property. Beaumont wrote to appellants again during the first week of January 2008, instructing them to stop construction.
Nonetheless, appellants proceeded with the installation of a solar energy system in January 2008. The system involved installing solar panels on the roof, and, in preparation for additional panels to be installed on the slope, removing landscaping and pouring a concrete foundation for pylons. Ultimately, by mid-January 2008, appellants agreed to stop construction temporarily pending Tesoro’s request for additional information. Following a January 23, 2008 meeting between appellants, Hawley, and Tesoro and Euclid Management representatives, appellants agreed to submit a revised application and Tesoro agreed to review and rule on the application within one week. The supplemental application added the installation of solar panels on the roof.
On January 29, 2008, the ACC denied the supplemental application in part, specifically disapproving the installation of solar panels on the slope and directing appellants to return the slope to its original condition. The ACC remained concerned about the same issues that led to the denial of the initial application, including that appellants had not considered alternative locations. After receiving this letter, appellants directed their contractor to complete the installation of solar panels on the slope. The system was fully installed by the end of March 2008.
Pleadings, Trial and Judgment.
The Tesoro Board met in an executive session in mid-February and authorized the filing of a lawsuit against appellants. It understood that it had the authority to initiate a lawsuit to enforce the CC&R’s without a vote of the entire Tesoro membership. As part of its decision, the Tesoro Board considered that several homeowners had complained about the solar panels on the slope; they had submitted a signed petition and communicated their concerns to Euclid Management.
During a full meeting of the Tesoro homeowners on March 25, 2008, an ACC representative reported that a lawsuit had been filed that day against [627] appellants because they had not followed architectural procedures before installing a solar energy system on their slope. Tesoro’s complaint alleged causes of action for breach of contract and negligence and sought declaratory and injunctive relief. The trial court denied appellants’ special motion to strike the complaint pursuant to Code of Civil Procedure section 425.16. Tesoro thereafter filed the operative first amended complaint, which alleged the same causes of action and generally alleged that appellants’ solar energy system construction and installation failed to comply with several provisions of the CC&R’s.
Appellants answered and cross-complained against Tesoro, alleging claims for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of the California Solar Rights Act (Civ. Code, § 714) fn. 4 and declaratory and injunctive relief. Generally, they alleged that Tesoro failed to comply with both section 714 and its own CC&R’s in denying their solar energy system application.
Tesoro moved for summary judgment on its complaint and the cross-complaint, and appellants moved for summary judgment on the complaint only. The trial court denied both motions, ruling that triable issues of fact existed as to whether Tesoro complied or substantially complied with its CC&R’s and applicable law; whether Tesoro filed the action in accordance with the CC&R’s; whether Tesoro’s asserted noncompliance excused appellants’ proceeding with the installation of their solar energy system despite having notice of Tesoro’s denial; and whether Tesoro’s denial complied with section 714. Summarizing, the trial court ruled that the claims in the complaint and cross-complaint turned on whether the parties met their obligations under the CC&R’s and governing law.
In June 2009, Tesoro designated four expert witnesses to testify at trial. It designated solar energy forensic consultant Rod Bergen to testify regarding Tesoro’s compliance with section 714 in dealing with appellants’ solar energy system; the engineering, design and installation of solar energy systems generally; appellants’ solar energy system as installed; and alternatives to that system. Appellants did not designate any expert witnesses. In September 2009, the trial court granted Tesoro’s motion to strike appellants’ untimely expert designation offered three weeks late. The parties later stipulated that appellants would be permitted to call experts to rebut any of the facts relied on by Tesoro’s experts; appellants experts were precluded, however, from offering their own opinions.
In October 2009, the trial court granted Tesoro’s request for a jury trial. Appellants had objected to trial by jury, arguing that although Tesoro had [628] timely posted jury fees in accordance with a local rule requiring posting 25 days before the actual trial date, it had not complied with Code of Civil Procedure section 631 requiring that jury fees be posted 25 days before the “initial” trial date. The trial court allowed a jury trial, determining there was some ambiguity between the two provisions and that appellants had failed to demonstrate any prejudice as a result of allowing trial by jury.
Before trial began, the trial court also ruled on several motions in limine, denying appellants’ motion to preclude Tesoro from offering expert testimony, appellants’ motion to limit the testimony concerning the meaning of the CC&R’s, appellants’ motion to preclude evidence that Tesoro did not timely provide its notice of denial and appellants’ motion to preclude evidence that the notice of denial was incomplete.
As part of the jury instructions, the trial court informed the jury about the nature of the dispute and the parties’ contentions, stating that Tesoro claimed it was entitled to declaratory and injunctive relief because appellants had breached the CC&R’s by installing their solar energy system without written approval. It further stated that appellants claimed Tesoro breached section 714 and the CC&R’s by improperly reviewing and denying their solar energy system application, thereby entitling them to declaratory and injunctive relief.
Following a 10-day trial, on November 2, 2009, the jury returned a special verdict. It found that Tesoro did nothing prohibited by the CC&R’s or governing law, nor did it fail to do anything required by the CC&R’s and governing law with respect to its consideration of appellants’ solar energy system. It further found that Tesoro did not breach the implied covenant of good faith and fair dealing, did not violate section 714, responded to appellants’ application within the time limits set forth in the CC&R’s, responded to appellants’ application in the same manner as other applications for a change or modification to property and was entitled to the relief requested. With respect to appellants, the jury found that they either did something prohibited or failed to do something required by the CC&R’s and governing law in connection with their solar energy system. It found they were not excused from complying with the CC&R’s and governing law. The jury determined that appellants were not entitled to any relief and were required to remove the 22 solar panels from their hillside slope.
In December 2009, the trial court entered a judgment in favor of Tesoro that incorporated the special verdict findings. As part of the judgment, appellants were ordered to remove the 22 solar panels installed on the slope and to return the slope landscaping to its original condition within 60 days of entry of judgment. The trial court further ordered that appellants take nothing on their cross-complaint and awarded Tesoro its attorney fees and costs. [629]
Appellants thereafter filed motions for judgment notwithstanding the verdict and for a new trial. Following a February 10, 2010 hearing, the trial court denied both motions. This appeal followed.
DISCUSSION
Appellants contend there are multiple reasons why the judgment should be reversed. We loosely classify their arguments into three categories: Legal, procedural and evidentiary. Addressing each category in turn, we find no basis for reversal.
I. Appellants’ Legal Claims.
Appellants raise several issues relating to the interpretation and application of section 714, contending that any issue relating to that provision should not have gone to the jury, the CC&R’s as a matter of law failed to comply with that provision and Tesoro did not satisfy its burden under the statute. Keeping in mind that we review these questions from a jury verdict, we find no merit to appellants’ contentions.
A. Appellants Properly Submitted the Question of Compliance with Civil Code Section 714 to the Jury.
[1] Section 714 prohibits homeowners associations from imposing covenants, conditions or restrictions that effectively prohibit the installation of a solar energy system. (§ 714, subd. (a).) The statute further provides: “This section does not apply to provisions that impose reasonable restrictions on solar energy systems. However, it is the policy of the state to promote and encourage the use of solar energy systems and to remove obstacles thereto. Accordingly, reasonable restrictions on a solar energy system are those restrictions that do not significantly increase the cost of the system or significantly decrease its efficiency or specified performance, or that allow for an alternative system of comparable cost, efficiency, and energy conservation benefits.” (§ 714, subd. (b).) Section 714 defines “significantly” as “an amount exceeding 20 percent of the cost of the system or decreasing the efficiency of the solar energy system by an amount exceeding 20 percent, as originally specified and proposed” for a solar water or swimming pool heating system, and as “an amount not to exceed two thousand dollars ($2,000) over the system cost as originally specified and proposed, or a decrease in system efficiency of an amount exceeding 20 percent as originally specified and proposed” for a photovoltaic system. (§ 714, subds. (d)(1)(A) & (B).)
[2] Appellants now contend that the issue of Tesoro’s compliance with section 714 was a question of law that should not have been submitted to the [630] jury. They ignore the well settled rule “‘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.’ [Citations.]” (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1351, fn. 12; see also Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316 [“It is a firmly entrenched principle of appellate practice that litigants must adhere to the theory on which a case was tried. Stated otherwise, a litigant may not change his or her position on appeal and assert a new theory”].)
Consistently throughout the proceedings below, appellants maintained that the question of Tesoro’s compliance with section 714 was a question of fact. In opposing Tesoro’s motion for summary judgment, they argued that whether Tesoro acted reasonably under the statute was a question of fact. Before trial began, they did not ask the trial court to determine the issue of compliance as a matter of law. During their opening statement, they told the jury that whether they had the right to install their solar panels involved a “factual determination” that it would have to make. They questioned witnesses about the application of section 714. During closing argument, they reiterated that it was the jury’s obligation to apply California law to the situation presented. They stipulated that the jury receive instructions on section 714; the jury received those instructions and determined by special verdict that Tesoro did nothing to violate the statute. In their post-trial motions, they argued that substantial evidence did not support the jury’s verdict that Tesoro complied with section 714–not that the jury was prohibited from deciding the question.
Appellants are bound by their decision to submit to the jury the question of Tesoro’s compliance with section 714. As aptly stated by the court in Shumate v. Johnson Publishing Co.(1956) 139 Cal.App.2d 121, 130: “A party cannot successfully take advantage of asserted error committed by the court at his request. [Citation.] The request that the jury be instructed as requested by defendants necessarily constituted consent to submission of the issue as a question of fact to be resolved by the jury. [Citation.] A party cannot request that an issue be submitted to a jury as a question of fact and on review escape the consequences.”
[3] Moreover, appellants’ position below was correct. Section 714, subdivision (b) permits homeowners association to impose “reasonable restrictions” on solar energy systems that do not significantly increase the cost of the system or decrease its efficiency. The determination of whether Tesoro’s CC&R’s and Design Guidelines imposed “reasonable” restrictions was necessarily a question of fact for the jury. (See Ayres v. City Council of [631] Los Angeles(1949) 34 Cal.2d 31, 41 [considering reasonableness of subdivision restrictions enacted pursuant to the Subdivision Map Act and observing “[q]uestions of reasonableness and necessity depend on matters of fact”]; Terry v. Atlantic Richfield Co. (1977) 72 Cal.App.3d 962, 966 [“Except where there is no room for a reasonable difference of opinion, the reasonableness of an act or omission is a question of fact, that is, an issue which should be decided by a jury”]; Robinson v. City and County of San Francisco (1974) 41 Cal.App.3d 334, 337 [“Where evidence is fairly subject to more than one interpretation, the question ofreasonablenessis a triable factual issue for the jury to decide”].)
B. Substantial Evidence Supported the Jury’s Finding that the CC&R’s Imposed Reasonable Restrictions.
Appellants’ next–and also new–contention is that the CC&R’s and Design Guidelines applicable to solar energy systems are unreasonable as a matter of law. Again, their position on appeal is contrary to the position they took below, where they requested and the jury received an instruction providing: “The parties stipulate that they are bound by the C.C.&Rs, Bylaws, and Design Guidelines which have been referred to as part of the Governing Documents and that such Governing Documents constitute the binding contract between Plaintiff and Defendants.” The jury was further instructed that appellants claimed Tesoro breached the governing documents by not complying with their provisions, and that Tesoro had the burden to show its procedures were fair and reasonable. Having submitted to the jury the question of whether Tesoro complied with the CC&R’s and Design Guidelines, appellants cannot now ignore the jury’s determination by attempting to change the question. (E.g., Kantlehner v. Bisceglia (1951) 102 Cal.App.2d 1, 6 [“Counsel may not so conduct themselves in the trial of a case as to lead the jury to proceed upon one theory and then seek to abandon that theory upon appeal and adopt another one”].)
[4] Again, appellants’ position below was correct. Generally, homeowners associations have the right to impose reasonable CC&R’s on improvements to property. (§ 1354, subd. (a) [“The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development”];Dolan-King v. Rancho Santa Fe Assn. (2000) 81 Cal.App.4th 965, 977 [“California and many other jurisdictions have long upheld such general covenants vesting broad discretion in homeowners associations or boards to grant or withhold consent to construction”]; Palos Verdes Homes Assn. v. Rodman (1986) 182 Cal.App.3d 324, 328 (Palos Verdes Homes) [“The right to enforce [632] covenants that require approval of construction has long been recognized in California”].) Generally, recorded use restrictions are accorded a presumption of validity and are enforced “unless they are wholly arbitrary, violate a fundamental public policy or impose a burden on the use of affected land that far outweighs any benefit.” (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 382.)
In Palos Verdes Homes, supra, 182 Cal.App.3d 324, the court determined that whether a homeowners association’s design restrictions on a solar energy system were reasonable was a question of fact. There, a homeowner installed a residential solar energy system after the Palos Verdes Homes Association had denied his application for installation on the basis that the system did not conform to its solar unit guidelines. The association prevailed on its declaratory relief claim at trial, and the court of appeal affirmed. According to the court: “The issue here is whether the Association’s Guidelines are a ‘reasonable restriction’ on the installation of solar units, as required by section 714. This is a question of fact to be determined by the trier of fact. Its conclusion will not be disturbed unless unsupported by substantial evidence. [Citation.]” (Id. at p. 328.) The court summarized the testimony of the association’s expert, who opined that the solar energy systems permitted by the association’s guidelines were comparable to the homeowner’s proposed system in performance and cost. (Id. at pp. 328–329.) Because the testimony showed that the “guidelines do not prohibit all solar units but are formulated to promote the installation of solar units which are comparable in costs and aesthetically acceptable,” the court concluded that substantial evidence supported the judgment. (Id. at p. 328.)
[5] The same result is required here. The CC&R’s provide that the approval or disapproval of applications for improvements “shall be in the sole and absolute discretion of the [ACC] and may be based upon such aesthetic considerations as the [ACC] determines to be appropriate.” The Design Guidelines temper this discretion with respect to the installation of solar energy systems. They specifically mirror section 714 and provide that the ACC may impose reasonable restrictions “that do not significantly increase the cost of the system or significantly decrease its efficiency or specified performance, or which allow for an alternative system of comparable costs, efficiency, and energy conservation . . . .” As in Palos Verdes Homes, supra, 182 Cal.App.3d at page 328, an expert testified about a comparable alternative system to appellants’ installation of 22 panels on their slope. Bergen explained that the installation of 16 to 20 panels in an area above the casita would yield the same performance efficiency but have a 14 percent reduction in output. He further testified that the proposed system would be less expensive to install than the slope panels. Bergen’s testimony established that the CC&R’s and Design Guidelines allowed for an alternative solar energy system of comparable costs and efficiency that did not significantly increase [633] the cost or decrease the efficiency of the system sought by appellants. Substantial evidence supported the jury’s conclusion that CC&R’s imposed reasonable restrictions that were in compliance with section 714.
[6] That the CC&R’s permit the ACC to consider the aesthetic impact of a solar energy system provides no basis for reversal. Nothing in the language of section 714 prohibits the consideration of aesthetic impacts. To the contrary, the provision in section 714 that “the application for approval shall be processed and approved by the appropriate approving entity in the same manner as an application for approval of an architectural modification to the property” indicates that the Legislature specifically anticipated that an evaluation of a proposed solar energy system–just as any other proposed improvement–would involve the consideration of aesthetics. (§ 714, subd. (e)(1).) Consistent with that language, the Palos Verdes Homes court concluded that guidelines primarily involving aesthetic considerations were reasonable and met the standards of section 714. (Palos Verdes Homes, supra,182 Cal.App.3d at p. 327.)
[7] We are likewise unpersuaded by appellants’ argument that Tesoro had the burden to propose a comparable alternative system at the time it denied appellants’ application. Again, nothing in the language of section 714 imposes such a burden on a homeowners association. The statute requires only that the denial of a solar energy system application be in writing and in a timely manner. (§ 714, subd. (e)(2).) Nor do the CC&R’s or Design Guidelines require that the ACC redesign a solar energy system that fails to garner approval. Instead, the burden is on the homeowner to submit an application that is complete and sufficient to generate approval. ACC member Collins testified that it has never been the practice of the ACC to propose an alternative design and that he did not feel qualified to redesign a solar energy system. The evidence established that once the ACC informed appellants of the bases of its denial, it was their burden to reapply for approval of a solar energy system utilizing an application that satisfied the procedural requirements in the CC&R’s and that addressed the ACC’s concerns about location, safety and aesthetics. Appellants failed to meet their burden
II. Appellants’ Procedural Claims.
Notwithstanding the bases for Tesoro’s denial of appellants’ solar energy system application, appellants contend that the process by which Tesoro denied the application and initiated and tried this action was invalid. Specifically, they contend that the ACC’s denial was untimely, inadequately mailed and incomplete; that the lawsuit was improperly initiated without a vote of the entire association; and that Tesoro should not have received a jury trial because it did not timely pay its jury fees. With the exception of the payment [634] of jury fees, appellants submitted these issues to the jury for resolution, asserting during closing argument that the key question in the matter was whether Tesoro followed the appropriate procedures. We find no merit to any of appellants’ procedural challenges.
A. Substantial Evidence Established That Tesoro’s Denial Complied with the CC&R’s.
The jury answered “yes” to the question of whether “Plaintiff respond[ed] to Defendants’ application for approval or disapproval of the installation of their solar energy system within the time limits set forth in the Governing Documents?” We review a jury’s findings of fact under the deferential substantial evidence standard. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053 superseded by statute in another point as stated in DeBarard Properties, Ltd. v. Lim (1999) 20 Cal.4th 659, 668.) According to this standard, “‘”the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted,” to support the findings below.'” (Ibid.) We must view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor. (Ibid.) We are not at liberty to reweigh the evidence or judge the credibility of witnesses. (Electronic Equipment Express, Inc. v. Donald H. Seiler & Co. (1981) 122 Cal.App.3d 834, 849.)
According to a provision in the section of the CC&R’s governing improvement applications, “all approvals given pursuant to this Article shall be in writing; and any request for approval which has not been approved or disapproved, in writing, within forty-five(45) days from the date of receipt of all documentation required to be submitted by the Committee shall be deemed approved . . . .” Here, the evidence showed that appellants submitted their solar energy system application on October 2, 2007. Prime testified that Martin personally delivered the application on that date, and the application itself bore a “received” stamp dated October 2, 2007. The jury was entitled to discredit Martin’s alternating recollection that he submitted the application on September 27 or October 1, 2007. (E.g., Moreno v. Sayre(1984) 162 Cal.App.3d 116, 121 [“It is the province of the jury to resolve conflicts in the evidence and to determine the credibility of witnesses”].)
The ACC denied appellants’ application by letter dated November 8, 2007, a date within 45 days of receipt of appellants’ application. Thus, substantial evidence supported the jury’s finding that Tesoro responded within the time limits provided by the CC&R’s. The evidence further showed, however, that [635] appellants did not receive the denial letter until November 17, 2007 because it was misaddressed. But the jury was instructed that Tesoro had the burden to prove that it “did all, or substantially all, of the significant things that the Governing Documents required it to do or that it was excused [from] doing those things.” It was well within the jury’s province to conclude that Tesoro substantially complied with its obligations under the CC&R’s notwithstanding appellants’ receipt of the denial letter 46 days after they submitted their application. (See Moreno v. Sayre, supra,162 Cal.App.3d at p. 121 [“When two or more inferences can be reasonably drawn from the facts, the reviewing court is without power to substitute its deductions for those of the jury”].) The jury could have concluded that the one-day delay was inconsequential given that appellants had already signed the contract to proceed with the installation of their solar energy system several days before the time to rule on their application had expired.
The evidence further showed that Prime mailed the denial letter by regular mail. We reject appellants’ argument that this evidence showed Tesoro failed to comply with section 16.11 of the CC&R’s, which provides in relevant part: “Any notice permitted or required by this Declaration shall be considered received on the date the notice is personally delivered to the recipient or forty-eight (48) hours after the notice is deposited in the United States mail, first-class, registered or certified mail, postage prepaid and addressed to the recipient at the address which the recipient has provided to the Association . . . .” Contrary to appellants’ suggestion that this provision requires notices to be sent by registered or certified mail, the provision is plainly limited to specifying a date by which notice is deemed received if it is sent by first-class, registered or certified mail. In short, appellants’ argument affords no basis to disturb the jury’s finding that Tesoro did all or substantially all of the significant things it was required to do under the CC&R’s.
Finally, appellants contend that substantial evidence did not support the jury’s affirmative answer to the question “Did Plaintiff respond to Defendants’ application for approval or disapproval of their solar energy system in the same manner as any other applications for a change or modification to property?” They argue that the denial letter improperly failed to articulate the bases for the denial. (See § 1378, subd. (a)(4) [“If a proposed change is disapproved, the written decision shall include both an explanation of why the proposed change is disapproved and a description of the procedure for reconsideration of the decision by the board of directors”].) The evidence belies their claim. Martin himself testified that attached to the November 2007 denial letter were four handwritten comments from the ACC indicating that the casita roof should be considered as an alternate location, the site plan failed to show dimensions and setbacks, the application omitted any provision for slope maintenance and the application lacked photographs of the proposed site. Martin conceded that he read the comments when he received the denial [636] letter. He further conceded that his application in fact lacked the requisite items identified by the ACC as missing. Later, in January 2008, the ACC approved the rooftop panel installation but disallowed the panels on the slope for the reasons stated earlier and discussed by all parties at their January 23, 2008 meeting. Substantial evidence showed that Tesoro provided an adequate explanation of why appellants’ solar energy system application was ultimately denied in part.
The evidence further showed that to the extent Tesoro denied appellants’ application, it adequately advised him of his appeal rights. (§ 1378, subd. (a)(4).) Though the January 2008 letter did not include information about appeal rights, Martin testified that at all times he had in his possession copies of the CC&R’s and Design Guidelines and was aware of the provision for appeal contained in the CC&R’s. Section 7.2.8 of the CC&R’s provides a detailed explanation of a homeowner’s appeal rights in the event the ACC disapproves an application. Evidence that appellants had been advised of their appeal rights through the CC&R’s supported the jury’s findings that Tesoro did all or substantially all it was required to do under California law and appropriately responded to appellants’ application in a manner required for all similar applications. (See Stasher v. Harger-Haldeman (1962) 58 Cal.2d 23, 29 [“Substantial compliance, as the phrase is used in the decisions, means actual compliance in respect to the substance essential to every reasonable objective of the statute”].
B. Substantial Evidence Established That Tesoro Properly Brought This Action in Accordance with the CC&R’s.
As part of its claim that Tesoro failed to comply with its own CC&R’s, appellants sought to show that Tesoro improperly initiated this action without a full vote of the membership. fn. 5 The jury resolved this question against appellants, concluding that Tesoro did all or substantially all it was required to do under the CC&R’s. Appellants do not contend that the jury should not have resolved this question, but instead simply choose to ignore that conflicting evidence was presented on the issue, the jury received multiple instructions on contract interpretation and the jury decided the issue. Where extrinsic evidence has been properly admitted to aid in the interpretation of a contract, we uphold a reasonable construction of the agreement by the trier of fact which is supported by substantial evidence. (In re Marriage of Fonstein (1976) 17 Cal.3d 738, 746–747.)[637]
During cross-examination, appellants’ counsel questioned Collins about section 4.1.2(k) of the CC&R’s, which provides in part that Tesoro has the right “to prosecute or defend, in the name of the Association, any action affecting or relating to the Project or the personal property thereon . . . provided, however, that without the prior vote or written consent of a majority of the voting power of the Members of the Association, the Board may not institute any legal proceeding (including any arbitration or judicial reference proceeding) against any person or entity the cost of which could reasonably be expected to exceed Two Thousand Five Hundred Dollars ($2,500.00),” including an estimate of attorney fees and costs. Collins testified that no poll or vote of the homeowners was taken prior to Tesoro’s initiating this action against appellants. Martin similarly testified that he was unaware of any meeting of the homeowners where they were given an opportunity to vote on or receive notice of any intent to file a lawsuit, nor was he given any notice of the special assessment ultimately imposed to finance the litigation.
On redirect examination, however, Collins testified that the Tesoro Board had relied on other provisions in the CC&R’s–as well as the advice of counsel–to conclude it had the ability to initiate suit without a full vote. Specifically, it relied on section 4.1.2(e), which gives Tesoro the right “to enforce, in its discretion, the provisions of this Declaration, the Bylaws, Articles and Rules and Regulations of the Association . . . .” He testified that counsel had advised him section 4.1.2(k) was never intended to limit the Tesoro Board’s discretion under section 4.1.2(e) to file suit against a homeowner. The Tesoro Board also relied on section 10.9 of the CC&R’s, which provides: “Notwithstanding anything herein to the contrary, no judicial or administrative proceeding shall be commenced or prosecuted by the Association unless approved by a majority of the voting power of the membership. This Section shall not apply, however, to (a) actions brought by the Association to enforce the provisions of this Declaration,” the collection of assessments, challenges to ad valorem taxes and counterclaims brought by Tesoro.
The owner of Euclid Management, Glennon Gray, further testified that he was familiar with section 4.1.2(k) of the CC&R’s and that the provision did not operate to prevent Tesoro from filing an action against a single homeowner to enforce the CC&R’s. Rather, his understanding was that it applied when a homeowners association was contemplating suing the developer.
[8] On the basis of this testimony, substantial evidence supported the jury’s determination that Tesoro complied with the CC&R’s in bringing this action without a full vote of the homeowners. (See Rosen v. E. C. Losch Co. (1965) 234 Cal.App.2d 324, 331 [“‘The practical construction placed upon the agreement by the parties is, of course, substantial [638] evidence of their intent'”]; Nicolaysen v. Pacific Home (1944) 65 Cal.App.2d 769, 773 [“‘The law recognizes the practical construction of a contract as the best evidence of what was intended by its provisions'”].
C. Tesoro Properly Received a Jury Trial.
Appellants’ final procedural challenge is that Tesoro should not have received a jury trial because it did not post jury fees in a timely manner. Before trial, appellants argued that Tesoro had waived its right to a jury trial on the ground that it had not posted jury fees in accordance with Code of Civil Procedure section 631, subdivision (b), which specifies that jury fees must be deposited “at least 25 calendar days before the date initially set for trial” by “[e]ach party demanding a jury trial . . . .” Tesoro conceded that it had posted jury fees 25 days before the date set for the actual trial, which was timely according to Los Angeles County Superior Court Local Rule 5.0. Following briefing and argument by counsel, the trial court permitted a jury trial to go forward, reasoning that Tesoro had demonstrated an inadvertent mistake in relying on the local rules and appellants had failed to demonstrate any prejudice from proceeding with a jury trial.
[9] Generally, the failure to deposit jury fees at least 25 calendar days before the date initially set for trial constitutes a waiver of the right to a jury trial. (Code Civ. Proc., § 631, subds. (b) & (d)(5); Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, 956.) Nonetheless, in the event of a waiver, the trial court retains discretion to allow a trial by jury. (Code Civ. Proc., § 631, subd. (e); Johnson-Stovall v. Superior Court (1993) 17 Cal.App.4th 808, 810; Gann v. Williams Brothers Realty, Inc. (1991) 231 Cal.App.3d 1698, 1703–1704.) In exercising such discretion, courts are mindful of the requirement “to resolve doubts in interpreting the waiver provisions of section 631 in favor of a litigant’s right to jury trial. [Citations.]” (Grafton Partners v. Superior Court, supra,at p. 956.) Accordingly, “[w]here the right to jury is threatened, the crucial focus is whether any prejudice will be suffered by any party or the court if a motion for relief from waiver is granted. [Citation.] A trial court abuses its discretion as a matter of law when ‘. . . relief has been denied where there has been no prejudice to the other party or to the court from an inadvertent waiver. [Citations.]’ [Citations.]” (Wharton v. Superior Court (1991) 231 Cal.App.3d 100, 104.)
Here, the trial court properly exercised its discretion to allow the case to be heard before a jury. Tesoro demonstrated that it made an inadvertent mistake by relying on the local rule timeline. (Winston v. Superior Court (1987) 196 Cal.App.3d 600, 602–603 [inadvertent waiver shown where failure to post fees occurred from inconsistency in the time requirement among statutes].) And neither below nor on appeal have appellants [639] demonstrated any prejudice from a trial by jury. (See Johnson-Stovall v. Superior Court, supra, 17 Cal.App.4th at p. 811 [“The mere fact that trial will be by jury is not prejudice per se”]; Gann v. Williams Brothers Realty, Inc., supra, 231 Cal.App.3d at p. 1704 [“The prejudice which must be shown from granting relief from the waiver is prejudice from the granting of relief and not prejudice from the jury trial”].) “The court abuses its discretion in denying relief where there has been no prejudice to the other party or to the court from an inadvertent waiver.” (Gann v. Williams Brothers Realty, Inc., supra, at p. 1704.) Indeed, it would have been an abuse of discretion for the trial court to deny relief here.
III. Appellants’ Evidentiary Issues.
In two related arguments, appellants contend that the trial court abused its discretion by permitting Bergen to testify as an expert on Tesoro’s behalf and by not permitting them to present rebuttal expert testimony. We review the trial court’s admission or exclusion of expert testimony under the deferential abuse of discretion standard. (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467; Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 972.)
A. Allowing Bergen to Testify was a Proper Exercise of Discretion.
Bergen, a licensed contractor and electrical engineer who had installed over 2,000 solar energy systems, evaluated appellants’ solar energy system as installed and opined that the slope location was inappropriate based on a number of factors. He further testified that a different configuration of panels could be more efficient and cost-effective. He also opined about how removal of the slope panels and replacement with his suggested alternative would affect the efficiency and cost of appellants’ solar energy system.
[10] Appellants contend that it was an abuse of discretion to admit Bergen’s testimony because he lacked any “special knowledge” that would qualify him as an expert. (Evid. Code, § 720, subd. (a) [“A person is qualified to testify as an expert if he has special knowledge, skill, experience, training, or education sufficient to qualify him as an expert on the subject to which his testimony relates”].) They contend that the matters about which he testified were matters of common knowledge inappropriate for expert testimony. (See Evid. Code, § 801, subd. (a) [expert opinion is admissible when it is “[r]elated to a subject that is sufficiently beyond common experience that the opinion of an expert would assist the trier of fact”]; People v. Torres (1995) 33 Cal.App.4th 37, 45 [“Expert opinion is not admissible if it consists of inferences and conclusions which can be drawn as easily and intelligently by the trier of fact as by the witness”].) They claim that [640] Bergen’s testimony about the reduction in efficiency resulting from a modification to appellants’ system could have been calculated using simple math–that is, a reduction of 22 panels from a total of 56 would have equaled an approximate 40 percent reduction in efficiency.
[11] But the calculation was not so simple. Bergen explained that efficiency is calculated taking into account the angle of the solar panels, the orientation of the panels in relation to the sun, the inverter design, surface area and shade factor. He used an incronometer to measure the angle of the slope panels. In describing the design of his alternative system, Bergen explained how an installation of fewer than 22 panels would result in only a minimal reduction in output. He further testified about the cost of labor and materials for his alternative design. All of these matters were beyond the jury’s common knowledge. (See Mann v. Cracchiolo (1985) 38 Cal.3d 18, 38 [witness qualifies as an expert where he “has sufficient skill or experience in the field so that his testimony would be likely to assist the jury in the search for the truth, and ‘no hard and fast rule can be laid down which would be applicable in every circumstance'”].)
Nor are we persuaded by appellants’ renewed argument that Bergen should not have been permitted to testify because he described an alternative solar energy system that Tesoro did not propose at the time it disallowed appellants’ proposed system. Again, nothing in either section 714 or the CC&R’s required Tesoro to design an alternative system, and the evidence established that it was not the ACC’s practice to redesign an applicant’s proposal. The trial court properly exercised its discretion to permit Bergen to testify about the efficiency and cost of appellants’ system as compared to an alternative system
B. Appellants Stipulated They Would Not Offer Expert Testimony in Rebuttal.
As a means of resolving Tesoro’s motion to preclude appellants from offering any expert testimony because of their failure timely to designate experts, the parties stipulated that appellants would be permitted to call Tesoro’s experts and their own experts to rebut the factual bases for any opinions offered by Tesoro’s experts. Appellants specifically agreed, however, that they would not be permitted to call their own experts to offer rebuttal opinions. Notwithstanding this stipulation, they now argue that the trial court abused its discretion by not permitting them to call rebuttal witnesses to offer their own expert opinions. By stipulating not to offer expert opinions, appellants have waived any claim on appeal that the trial court abused its discretion by enforcing the stipulation. (E.g., In re Marriage of Broderick (1989) 209 Cal.App.3d 489, 501 [“an appellant waives [641] his right to attack error by expressly or implicitly agreeing or acquiescing at trial to the ruling or procedure objected to on appeal”].)
[12] Even absent any stipulation, we would find no abuse of discretion. The general rule, set forth in Code of Civil Procedure section 2034.300, is that an undesignated expert witness may not testify. An exception to that rule is provided in Code of Civil Procedure section 2034.310, which permits a party to call an undesignated expert witness to testify if the expert has already been designated by another party, or if “[t]hat expert is called as a witness to impeach the testimony of an expert witness offered by any other party at the trial. This impeachment may include testimony to the falsity or nonexistence of any fact used as the foundation for any opinion by any other party’s expert witness, but may not include testimony that contradicts the opinion.” (Code Civ. Proc., § 2034.310, subds. (a) & (b).) Trial courts strictly construe the foundational fact requirement in Code of Civil Procedure section 2034.310 “so as to ‘prevent a party from offering a contrary opinion of his expert under the guise of impeachment.’ [Citation.]” (Mizel v. City of Santa Monica (2001) 93 Cal.App.4th 1059, 1068.)
Here, there was no indication that any of appellants’ three proposed rebuttal expert witnesses satisfied the requirements of the statutory exception. fn. 6 Appellants sought to call Jamie Muniak, a certified property manager, to offer his own opinions about customs and practices in the property management industry. They also called Marco Suarez, the owner of Advanced Solar Electric, as a percipient witness, but the trial court sustained objections to questions designed to elicit expert opinion about solar energy system installations. Finally, appellants sought to call a contractor, identified as Mr. Alcantar, to offer an opinion about the cost of Bergen’s proposed alternative system and testify about his proposed bid. His testimony would have been based on his construction experience and did not include any testimony designed to establish the falsity or nonexistence of any fact relied on by Bergen in making his costs estimate. In any event, Martin was permitted to testify about other estimates he had received to construct the solar energy system proposed by Bergen.
[13] “The trial court is vested with a sound discretion as to the permissible scope of evidence offered in rebuttal. [Citation.]” (Johnston v. Brewer (1940) 40 Cal.App.2d 583, 588.) Because appellants’ proffered rebuttal expert testimony failed to satisfy the requirements of Code of Civil Procedure section 2034.310, the trial court properly exercised its discretion in precluding such testimony.[642]
DISPOSITION
The judgment is affirmed. Tesoro is awarded its costs on appeal. fn. 7
Ashmann-Gerst, J., and Chavez, J., concurred.
FN 1. We occasionally refer to appellant Martin Griffin individually by first name to avoid confusion and not out of disrespect.
FN 2. At trial, Martin testified that he believed he submitted the application on September 27, 2007.
FN 3. The ACC had cancelled its regularly-scheduled October meeting because the area was evacuated for a fire. For that reason, it did not consider appellants’ application until November 6, 2007.
FN 4. Unless otherwise indicated, all further statutory references are to the Civil Code.
FN 5. We decline to address appellants’ argument on this issue to the extent it is premised on the denial of their summary judgment motion. (E.g., California Housing Finance Agency v. Hanover/California Management & Accounting Center, Inc. (2007) 148 Cal.App.4th 682, 688-689 [denial of summary judgment unreviewable after a full trial on the same issues]; Waller v. TJD, Inc. (1993) 12 Cal.App.4th 830, 833-836 [same].)
FN 6. That appellants failed to make an offer of proof of their witnesses’ proposed testimony is yet an independent reason why any claim of error has been waived. (E.g., In re Mark C. (1992) 7 Cal.App.4th 433, 444.)
FN 7. In its respondent’s brief, Tesoro has requested an award of attorney fees on appeal. We decline to consider its request. California Rules of Court, rule 3.1702(c) sets forth the procedure for claiming attorney fees on appeal. (See also Cal. Rules of Court, rule 8.278(d)(2).)
[Discrimination; ADA Compliance] HOA’s private common area facilities not held to be places of “public accommodation” subject to Americans with Disability Act (ADA) requirements
Law Offices of B. Paul Husband and B. Paul Husband; and Cheryl Alison Skigin for Plaintiff and Appellant.
Kulik, Gottesman, Mouton & Siegel and Mitchell S. Brachman for Defendant and Respondent.
OPINION IKOLA, J.-
Defendant Orange Park Community Association (OPCA) fn. 1 maintains and exercises control over a series of recreational trails on portions of the association “common area” (Civ. Code, § 1351, subd. (b)). The trails border Broadmoor Park homes and Saddlehill development, OPCA residential developments in Orange Park Acres. The OPCA trails connect to a larger system of trails maintained by other associations or by government entities (such as Orange County and nearby municipalities). In 2007, citing safety concerns for “horseback riders and trail hikers,” as well as damage to trail fencing, OPCA installed barriers on its trail entry points to prevent vehicles from utilizing the trails.
Plaintiff Evan Carolyn sued OPCA, alleging he “made plans to use the OPCA Trail System by means of a horse drawn carriage in or about early July, 2007, but discovered that the trails were no longer available for use by disabled people such as himself in a horse drawn carriage and/or other horse drawn vehicle as a result of the alteration of the OPCA Trail System by OPCA . . . .” Based on these factual allegations, Carolyn pleaded five separate causes of action: (1) for violation of title III of the Americans with Disabilities Act (42 U.S.C. § 12181 et seq.; the ADA); (2) for violation of the California Disabled Persons Act (Civ. Code, §§ 54, 54.1); (3) for violation of the Unruh Civil Rights Act (Civ. Code, §§ 51-52); (4) for violation of Health and Safety Code section 19955 et seq.; and (5) for violation of Government Code section 4450 et seq.
The court granted summary judgment in favor of OPCA. The court based its ruling on the determination “that the trails are not a ‘public accommodation’ within the definition of the Americans with Disabilities Act, California Disabled Persons Act, Unruh Act, Government Code § 4450 and Health and Safety Code § 19955. Unless the trails are a public accommodation within the meaning of the statutes, there is no violation.” Carolyn appeals the judgment, claiming the court erred in concluding the trails are not a public accommodation. We affirm.
FACTS
OPCA filed a summary judgment motion based almost entirely on the argument that its trails did not constitute a public accommodation under [1094] the ADA or state law. Carolyn filed a summary judgment motion as well, but the court denied his motion and the denial of Carolyn’s motion is not before us on appeal.
In support of its motion, OPCA filed declarations of the president of OPCA’s Board of Directors and a member of the Arena and Trails Committee for OPCA, properly referencing this evidence by way of a separate statement of material facts. (Code Civ. Proc., § 437c, subd. (b)(1).) We set forth herein only those material facts identified by OPCA that are pertinent to our review, as well as allegedly disputed material facts offered by Carolyn in opposition to OPCA’s motion. (Code Civ. Proc., § 437c, subd. (b)(3).)
OPCA’s Separate Statement
We deem the following six facts set forth in OPCA’s separate statement to be undisputed, either because Carolyn: (1) failed to meet his obligation of unequivocally stating whether the fact was disputed or undisputed (Code Civ. Proc., § 437c, subd. (b)(3)); (2) raised unmeritorious objections to competent evidence; or (3) presented evidence that failed to raise a triable issue with regard to OPCA’s stated fact.
(1) “[OPCA] is a non-profit corporation operating, organized and existing under the laws of the State of California.” (2) “Plaintiff Evan Carolyn is not a homeowner or resident of [OPCA], does not pay assessments and is not entitled to the protections of the Association’s CC&Rs.” (3) “[OPCA’s] trails are privately owned as common area of the Association and are operated by a Board of Directors . . . .” fn. 2 (4) “Under Article IV, Section 1 of the Association CC&Rs, ‘each member of the Association has a right and easement of access, use and enjoyment in and to the Common Area and such easement shall be appurtenant to and shall pass with the title to every Lot subject to assessment.” (5) “The Arena and Trails Committee made recommendations to the Association Board of Directors for ways to remedy dangerous conditions on the Association’s trails.” fn. 3 (6) “[OPCA] is a private entity which funds the [1095] maintenance and operation of its Common Area through monthly assessments paid by the Residential Lot Owners.”
Carolyn’s Additional Material Facts
Carolyn did not “set forth plainly and concisely any other material facts” he contended were disputed (i.e., by separately listing additional disputed facts in his separate statement). (Code Civ. Proc., §437c, subd. (b)(3).) Nevertheless, we set forth herein the relevant evidence submitted by Carolyn bearing on the question of whether OPCA’s trails are “public accommodations.”
Of primary importance to Carolyn’s opposition is certain deposition testimony. Utilizing leading questions, counsel for Carolyn elicited key admissions from OPCA representatives at their depositions. An OPCA director admitted “[t]he OPCA board doesn’t know who actually takes the trail on a daily basis,” “there’s no security guard at the front of Orange Park Acres or [OPCA] that checks everyone in and takes IDs when they come in to” the community of Orange Park Acres, and the OPCA trail system is “open to the public.” The same director agreed with the following hypothetical question: “Anyone in Southern California who knows where the OPCA trail system is could put their horse in the trailer, drive over to Orange Park Acres park, unload the trailer, saddle up the horse and go for a ride on the OPCA trails.” A second OPCA director admitted “a rider could ride from someplace well outside the OPCA trail system onto . . . the OPCA trails readily” and “[t]he OPCA trails are really open to the public in terms of access.” A member of the OPCA Arena and Trails committee admitted “[p]eople other than just the residents of OPCA ride horses on the OPCA trail system” and “the OPCA trail system is a system that can be accessed by a member of the public at any time.”
Carolyn also relied on several declarations in support of his opposition papers and Carolyn’s summary judgment motion. Cheryl A. Skigin, one of Carolyn’s attorneys, declared she has owned a home and lived in the Broadmoor-Saddlehill subdivision since 1999, and that she has lived in Orange Park Acres since 1991. Construed liberally, Skigin’s declaration indicates she and others she knows (who are not members or residents of OPCA) have ridden horses on “trails which are the subject of this litigation” since 1991 (the declaration is not clear as to whether the “trails which are the subject of this litigation” are OPCA’s trails or the interconnected “trail system” into which OPCA’s trails feed). Skigin also attests: “There is no [1096] distinction between where the trails which are within the Broadmoor-Saddlehill development begin and where the trails which are part of the County of Orange, City of Orange end or commence. Certain trails, such as the trail referred to as Pig Trail border both Broadmoor-Saddlehill and the property in the unincorporated portion of Orange County, the City of Orange and potentially other developments within the Orange Park Acres area. The trails are integrated and form a network.”
The remainder of Skigin’s declaration, as well as the declaration of Carolyn’s other attorney, B. Paul Husband, relates to the issue of whether the OPCA trails affect interstate commerce as required to invoke the applicability of the ADA. As discussed in the analysis below, we do not reach the question of whether the trails affect interstate commerce. Thus, we need not lay out in detail Carolyn’s evidence attempting to establish this component of his ADA claim. Nor need we wrestle with whether the court properly sustained evidentiary objections to the Skigin and Husband declarations. Even if the evidence is allowed, our analysis is unaffected.
Although Carolyn’s declaration was not specifically submitted in opposition to OPCA’s motion, we set forth pertinent portions to assist us in our review. “At this time, I am too weak from a muscular standpoint, and my balance is too poor to ride a horse. It is now too difficult for me to maintain my grip with my legs if I were to try to ride astride a horse, plus I cannot maintain my balance sufficiently to ride.” “I would like to participate in an equestrian sport by means of riding in a horse-drawn carriage, or some other appropriate horse-drawn vehicle. I live near Orange Park Acres, and I am aware of the [OPCA] Trail System. . . . I made plans to use the [OPCA] Trail System by means of a horse-drawn carriage in or about July 2007, but to my great dismay, I found that the trails in the OPCA Trail System were no longer available for my use because the OPCA Trail System had been blocked to use by horse-drawn carriages by means of large posts having been embedded in the ground at entrances to the Trails.” “I had intended to use the OPCA Trail System two or three times per month, or more, if my health permitted.” “Because of my disability, the only way that I could have access to the equestrian trails of the OPCA Trail System is in a horse-drawn carriage.”
DISCUSSION
The court found the trails did not constitute a public accommodation as a matter of law. This determination, according to the trial court, precluded Carolyn from seeking relief under any of his five causes of action. (See Code [177 Cal.App.4th 1097] Civ. Proc., § 437c, subd. (o)(1) [cause of action has no merit if “[o]ne or more of the elements of the cause of action cannot be separately established”].) Carolyn appears to concede that establishing the trails are “public accommodations” is an element of each of his causes of action, as his briefs do not argue otherwise. We will review de novo whether there is any triable issue of material fact on the classification of the trails as public accommodations. (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.)
We will not address whether OPCA actually discriminated against Carolyn under any of the causes of action pleaded by Carolyn. (See 42 U.S.C. § 12182; Civ. Code, §§ 51, subd. (b), 54, subd. (a), 54.1, subd. (a).) This issue was not the subject of OPCA’s motion for summary judgment and played no role in the court’s grant of OPCA’s motion for summary judgment. We emphasize at the outset of our analysis that the merits of Carolyn’s discrimination claim (i.e., OPCA discriminated against him as a disabled person by blocking vehicle access to the trails) should be kept separate from the issue of whether OPCA’s trails are a public accommodation. It is also unnecessary to reach the question of whether the trails affect interstate commerce. The court did not grant summary judgment to OPCA on that ground and the state law causes of action cannot be decided with regard to the trails’ effect (or lack thereof) on interstate commerce.
Public Accommodation
Title III of the ADA fn. 4 provides: “No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” (42 U.S.C. § 12182(a), italics added.)
[1] Under the ADA, “[t]he phrase ‘public accommodation’ is defined in terms of 12 extensive categories . . . .” (PGA Tour, Inc. v. Martin (2001) 532 U.S. 661, 676.) Two of the 12 public accommodation categories listed in the ADA are arguably applicable to the OPCA trails: “The following private entities are considered public accommodations . . . , if the operations of such entities affect commerce –” “a park, [1098] zoo, amusement park, or other place of recreation”; “a gymnasium, health spa, bowling alley, golf course, or other place of exercise or recreation.” (42 U.S.C. § 12181(7).) The ADA’s “legislative history indicates [the public accommodation categories] ‘should be construed liberally’ to afford people with disabilities ‘equal access’ to the wide variety of establishments available to the nondisabled.” (Martin, at pp. 676-677 [professional golf tour is public accommodation].) For instance, a private marina, which rents slips to an exclusive clientele in Marina Del Rey, is a public accommodation under the ADA even though marinas are not specifically identified by name in title III of the ADA. (Nicholls v. Holiday Panay Marina, L.P. (2009) 173 Cal.App.4th 970-972 [also holding “restricted access does not, by itself, make an accommodation nonpublic”].) “Whether a particular facility is a ‘public accommodation’ under the ADA is a question of law.” (Jankey v. Twentieth Century Fox Film Corp.(C.D.Cal. 1998) 14 F.Supp.2d 1174, 1178 (Jankey).)
[2] California law defines “public accommodation” in a different manner. Health and Safety Code section 19955 defines “‘public accommodation'” to mean “a building, structure, facility, complex, or improved area which is used by the general public and shall include auditoriums, hospitals, theatres, restaurants, hotels, motels, stadiums, and convention centers.” The structural access standards promulgated in connection with Health and Safety Code section 19955 et seq. and Government Code section 4450 et seq. “‘give meaning to the public accommodation law prohibiting discrimination against the handicapped . . . .'” (Hankins v. El Torito Restaurants, Inc. (1998) 63 Cal.App.4th 510, 520.)
Under applicable provisions of the Disabled Persons Act (Civ. Code, § 54 et seq.), “[i]ndividuals with disabilities shall be entitled to full and equal access, as other members of the general public, to . . . places of public accommodation, amusement, or resort, and other places to which the general public is invited . . . .” (Civ. Code, § 54.1, subd. (a)(1), see also § 54, subd. (a) [“Individuals with disabilities or medical conditions have the same right as the general public to the full and free use of the streets, highways, sidewalks, walkways, public buildings, . . . public facilities, and other public places”].)
The Unruh Civil Rights Act entitles all persons, regardless of “sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status, or sexual orientation . . . to . . . full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.” (Civ. Code, § 51, subd. (b).) As Carolyn has not argued otherwise, we assume, without deciding, that his Unruh Civil Rights Act claim can only proceed if the trails are deemed a public accommodation. [1099]
Common Areas and Public Accommodations
Stated with precision, the question presented is whether recreational common areas within a common interest development are public accommodations under the following circumstances, which are undisputed in the record before us: (1) the recreational area at issue is a fenced trail with various entry points spread over OPCA’s common area; (2) the entry points include architectural barriers to access by vehicles; (3) the trails are linked to a larger web of privately owned and publicly owned trails in Orange County; (4) the OPCA trails are accessible to the general public, in that OPCA follows a custom of not precluding members of the general public from utilizing the OPCA trails; and (5) OPCA does not charge fees to members of the general public for utilizing its trails or otherwise attempt to commercially exploit the trails.
We first dispense with what might be termed a “standing” argument made by OPCA throughout its brief. Carolyn does not own property within the common interest development. As the trails are on private land owned by the members of OPCA and operated by OPCA, it is clear OPCA could bar the general public, including Carolyn, from accessing the trails if it wished to do so. (See Liebler v. Point Loma Tennis Club (1995) 40 Cal.App.4th 1600, 1611-1612 [association may limit usage of tennis facilities to residents of condominiums]; Civ. Code, § 1009 [no “public recreational use” of private real property “shall ever ripen to confer upon the public or any governmental body or unit a vested right to continue to make such use permanently”].) The record, however, discloses no indication OPCA has ever attempted in the past or intends in the future to restrict access to its trails. If the OPCA trails are a public accommodation by reason of the public’s use of the trails, OPCA may not discriminate against disabled individuals in its management of the trails, regardless of whether they are residents within the confines of the common interest development.
[3] Moving to the substantive issue before us, purely residential areas of a common interest development are not public accommodations. (See Coronado v. Cobblestone Village Community Rentals, L.P. (2008) 163 Cal.App.4th 831 [holding residential apartment complex, including path from apartment to parking area, was not public accommodation and noting “ADA does not apply to residential facilities such as . . . condominiums”], disapproved on other grounds in Munson v. Del Taco, Inc. (2009) 46 Cal.4th 661, 678; Indep. Housing Services v. Fillmore Ctr. (N.D.Cal. 1993) 840 F.Supp. 1328, 1344 [“The residential portions of Fillmore Center (the only portions at issue in this suit) do not themselves fall within the bounds of the ADA, since apartments and condominiums do not constitute public accommodations within the meaning of the Act”].) [1100]
Conversely, commercial real estate open to the public qualifies as a public accommodation even though it is a part of a residence or residential development. (See Baltimore Neighborhoods, Inc. v. Rommel Builders, Inc. (D.Md. 1999) 40 F.Supp.2d 700, 705-706 [denying summary judgment in part because model unit at real estate development could be public accommodation if found to be sales office]; 28 C.F.R. § 36.207(a) [“When a place of public accommodation is located in a private residence, the portion of the residence used exclusively as a residence is not covered by this part, but that portion used exclusively in the operation of the place of public accommodation or that portion used both for the place of public accommodation and for residential purposes is covered by this part”].)
The instant case deals solely with recreational common area space within a common interest development, not residential space. Two recent California cases provide some guidance in resolving whether the OPCA trails are “public accommodations.” (Birke v. Oakwood Worldwide(2009) 169 Cal.App.4th 1540 (Birke); Coronado v. Cobblestone Village Community Rentals, L.P., supra, 163 Cal.App.4th 831.)
In Birke, the trial court sustained defendant Oakwood’s demurrer to a complaint which alleged, inter alia, that Oakwood violated title III of the ADA by failing to limit secondhand smoke in the outdoor common areas at the residential complex where plaintiff Birke lived. (Birke, supra, 169 Cal.App.4th at pp. 1543-1546.) The common areas at issue included swimming pools and a playground. (Id. at p. 1553.) The Birke appellate court affirmed the trial court’s order sustaining the demurrer without leave to amend as to Birke’s ADA claim, finding persuasive the “contention that the ADA does not apply to apartments and condominiums” and also citing the dearth of specific facts alleged in the operative complaint. (169 Cal.App.4th at p. 1553.)
Presiding Justice Perluss wrote a separate opinion in Birke, dissenting with regard to the majority holding Birke did not adequately plead a cause of action under the ADA. (Birke, supra, 169 Cal.App.4th at p. 1553-1556 (conc. & dis. opn. of Perluss, J.).) In addition to questioning whether Oakwood’s housing complex might constitute “transient lodging” (like boarding houses, dormitories, resorts, hotels, motels, and inns) and therefore qualify as a public accommodation in its entirety, Justice Perluss also asserted “the fact a facility such as an apartment complex itself may not fall within the ADA’s statutory definition of ‘public accommodation’ does not mean the site may not contain one or more of the enumerated public accommodations within its confines.” (Id. at p. 1554.) Justice Perluss suggested the common areas at issue “are places of recreation within the meaning of title 42 United States Code section 12187(7)(L) (‘a gymnasium, health spa, bowling alley, golf course, or other place of exercise or [1101] recreation’) even if the apartment complex itself is a residential property and not a public accommodation.” (Id. at p. 1555.)
In Coronado, supra, 163 Cal.App.4th at page 835, plaintiff Coronado sued Cobblestone Village, the apartment complex where Coronado resided. Coronado claimed the existence of a raised curb rather than an access ramp on the path outside his apartment leading to the parking lot was a violation of the Unruh Civil Rights Act and the Disabled Persons Act. (Coronado, at p. 835.) “The apartments and common areas around the [Cobblestone Village] apartments are reserved for use by tenants and guests of tenants only, although other persons might enter the complex since defendants’ employees do not patrol the grounds. Vehicles are able to enter the apartment complex by means of a private driveway that connects with [a public street] and winds through the interior of the complex.” (Id. at p. 836.) The Coronado trial court, on its own motion during trial, dismissed the Unruh Civil Rights Act and Disabled Persons Act claims, explaining that the residential areas of the apartment complex (not including the leasing office) were not public accommodations. (Coronado, at p. 838.)
The Coronado appellate court affirmed after finding the sidewalk/parking lot common area outside Coronado’s apartment was not a public accommodation under the ADA and was not an area used by the general public subject to the structural access standards of Health and Safety Code section 19955 et seq. and Government Code section 4450 et seq. (Coronado, at pp. 845-851.) Of note to the dispute here, the Coronado court explained: “[T]he ADA should be reasonably construed and applied in accordance with this intent. This means that, where there is a multiuse facility in which there is a commercial office open to the general public but also residential and common areas that are not open to the general public, it is appropriate to consider the particular area in question when attempting to determine the applicability of ADA structural access standards or other ADA requirements.” (Id. at p. 851.)
In sorting through whether OPCA’s trails are “public accommodations,” we also find Jankey, supra, 14 F.Supp.2d 1174, to be instructive. In Jankey, the court granted summary judgment to the defendant film studio with regard to plaintiff Jankey’s disability discrimination claim under title III of the ADA; the court dismissed Jankey’s state law claims. (Jankey, at p. 1176.) Jankey, an occasional guest at the studio, alleged the studio’s commissary, studio store, and on-site ATM machine were public accommodations. (Id. at p. 1177.) Defendant argued these facilities (which would obviously be public accommodations in other contexts) were not public accommodations because they were located on the studio lot, which was open only to employees of defendant or its affiliates and their authorized business guests. (Id. at p. 1180.) [1102]
[4] In its analysis, the Jankey court recognized “‘[m]any facilities that are classified as public accommodations are open only to specific invitees.'” (Jankey, supra, 14 F.Supp.2d at p. 1178.) The court then identified several factors to aid its task of identifying whether the studio’s facilities were a “public accommodation.” “Among the factors the court considers in determining whether a facility is genuinely ‘private,’ and therefore exempt, are the following: the use of the facilities by nonmembers (or nonemployees, in the commercial context); the purpose of the facility’s existence; advertisement to the public; and profit or non-profit status. [Citation.] Under the first factor, use by nonmembers (or nonemployees), the court may consider ‘the extent to which [the facility] limits its facilities and services to [employees] and their guests.’ [Citation.] ‘Regular use’ or ‘indiscriminate use’ by nonmembers (or nonemployees) contradicts private status.” (Id. at p. 1179.) Although these factors were identified and applied in a different context, we think the factors also have utility in the context of determining whether common areas in a common interest development are “public accommodations.”
The Department of Justice addressed the general issue before us in a 1992 letter drafted in response to a citizen’s request for information about the ADA’s applicability to a “clubhouse” at his “housing development”: “The ADA does not apply to strictly residential facilities. Assuming your housing complex is strictly residential and would not be considered a social service center establishment, whether the ADA applies to the clubhouse depends on who is entitled to use the clubhouse. If activities in a clubhouse within a residential complex are intended for the exclusive use of residents and their guests, the facility is considered an amenity of the housing development. It would not be considered a public accommodation subject to the accessibility requirements of the ADA. . . . [¶] If the clubhouse facilities and activities are made available to the general public for rental or use, they would be covered by the ADA. Once covered by the ADA, the owners or operators of the clubhouse would be required to remove architectural barriers to accessibility if their removal is readily achievable, that is, without much difficulty or expense.” (Dept. of Justice, Office on the Americans with Disabilities Act, 202-PL-118, Sept. 11, 1992, italics added.)
[5] The Attorney General of California answered a similar question in much the same fashion in 1982: “We are asked whether a recreation building in a mobilehome park is a ‘public accommodation or facility’ within the meaning of [Health and Safety Code section 19955]. We conclude that a recreation building in a mobilehome park is not a ‘public accommodation or facility’ within the meaning of section 19955 so as to be required to be accessible and usable by handicapped persons.” (65 Ops.Cal.Atty.Gen. 72 (1982).) “To be brought within the ambit of section 19955 a facility must be public. . . . [T]he recreation building just does not have the characteristics and incidents of being public that section 19955 not only [1103] contemplates but specifically requires.” (Id. at p. 74.) “Undoubtedly [a recreation building] is open to a more general class than the residents of the park, for surely it is available to their families and invited guests. Use by that expanded group of persons in our view, however, does not reach the use ‘by the general public’ spoken of in section 19955. There are still meaningful restrictions on who may use the facilities, which considerably narrows their [availability] to the general public –[unlike] an auditorium, hospital, theater, restaurant, hotel, motel, stadium, or convention center . . . . Furthermore, unlike those facilities, the purpose for whose creation is based upon their being made continuously available to the general public and whose economic viability cannot survive without their being so available, the recreation center at a mobilehome park is neither so created nor dependent. Rather, it is a secondary appendage to another unit, the park itself which, like it, neither contemplates nor needs accessibility of continuous use by the general public for its sustenance.” (Id. at p. 75.) This opinion letter also indicated the result would be different if the recreation building was used “‘by the general public.'” (Ibid.) The letter did not identify the precise dividing line, however, between use by the “‘general public'” and the uses specified in the letter (use by residents, family, friends, and other invitees).
Several commentators come to much the same conclusion. “The [ADA] applies to ‘public accommodations.’ This may include facilities that are part of a common interest development, such as a sales or rental office receiving public traffic, or commercial facilities that are part of a residential project. A meeting room leased to the public for a fee is subject to the act, but not a room used only by the association members.” (Hanna & Atta, California Common Interest Developments: Law and Practice (2008) § 22.45.) “[I]f a community association or condominium owns, operates, or leases a swimming pool, tennis court, or other recreational facility that is open to members of the general public, then, with respect to the operation of the recreational facility, the community association or condominium would be a place of public accommodation governed by Title III of the ADA.” (Matthew Bender, ADA: Public Accommodations and Commercial Facilities, § 2.04.) “A recreational facility that is open to members of the public (rather than being reserved exclusively for the use of association members and their families and guests) is probably a place of public accommodation. [¶] Other places of public accommodation that are sometimes owned, operated, or leased by associations include: [¶] Day care center; [¶] Senior citizen centers; [¶] Refreshment stands; and [¶] Meeting rooms that are occasionally rented to business or civic groups.” (Ransom, How the Americans with Disabilities Act Affects Residential Community Associations (1993) 9 Practical Real Estate Lawyer 55, 57.) [1104]
The OPCA Trails
[6] After duly considering all of the aforesaid authorities, we conclude OPCA’s trails are not public accommodations under either the ADA or California law. We agree with the premise that recreational common areas within common interest developments can be classified as public accommodations in appropriate circumstances. But we think it clear OPCA’s trails would not be a public accommodation if OPCA actively excluded the general public from using the trails. Moreover, we do not think OPCA’s private trails transform into public accommodations merely because OPCA does not actively exclude members of the public from using the trails. (See Coronado, supra, Cal.App.4th at pp. 836, 845-851.)
OPCA’s trails are not like the zoos, golf courses, health spas, bowling alleys, or amusement parks specifically identified as public accommodations in the ADA. (28 U.S.C. § 12181(7).) Nor are the trails like the auditoriums, hospitals, theatres, restaurants, hotels, motels, stadiums, and convention centers specifically mentioned in Health and Safety Code section 19955, subdivision (a).
Each of the examples listed in the ADA fn. 5 and the Health and Safety Code illustrate the broader concept that places of public accommodation are places designed and intended to provide services, goods, privileges, and advantages to members of the public, usually in exchange for payment (and when not requiring payment, often motivated by some other advantage to the entity providing the accommodation, such as promoting its good will to the community). The specific statutory examples are illustrative of the types of places that constitute public accommodations, not a replacement for the requirement that the alleged public accommodation is actually an accommodation to and for the public. Indeed, even a specifically listed recreational site [1105] (e.g., a bowling alley) would not be a public accommodation if it were built by a private individual on private land solely for the personal enjoyment of the individual and not opened to the public.
There is no evidence in the record suggesting OPCA’s trails were built for anyone other than its own members. There is no evidence in the record suggesting OPCA encourages public use of its trails, through advertising or otherwise. Nor is there evidence in the record suggesting OPCA charges fees to members of the public for using the trails or benefits in other ways from the public’s use of the trails. The OPCA trails are an “amenity” provided to OPCA’s members in exchange for their membership and association dues, not a public accommodation. OPCA “neither contemplates nor needs accessibility or continuous use [of the trails] by the general public for its sustenance.” (65 Ops.Cal.Atty.Gen. 72, supra, at p. 75.)
[7] In coming to this conclusion, we are mindful of “the hardships suffered by individuals who have disabilities . . . .” (Coronado, supra, 163 Cal.App.4th at p. 851.) We do not think the result in this case, though, will have negative wide ranging consequences to disabled individuals seeking equal access to recreational opportunities. Our holding is consistent with applying the structural access standards mandated by state and federal disability law to homeowners’ associations if such associations create public accommodations within the common areas of the common interest development. For instance, a pool, park, or trail open to the public for a fee would be a public accommodation, regardless of the recreational facility’s location in a common interest development. We disagree with the reasoning of the majority opinion in Birke, supra, 169 Cal.App.4th at page 1553, to the extent it suggests there is a bright line rule protecting residential complexes from all liability for structural access deficiencies under the ADA. We hold only that a private property owner (here, a homeowners’ association) does not convert private recreational property into a public accommodation by failing to actively deny the public access to the recreational property.
We also note homeowners’ associations do not necessarily escape application of laws protecting disabled individuals even if its common areas are not deemed to constitute a public accommodation. Residential areas, including homeowners’ associations, can be (in appropriate circumstances) subject to federal and state fair housing law restrictions, which are not dependent upon a “public accommodation” finding. (See 42 U.S.C. § 3601 et seq.; Gov. Code, § 12900 et seq. (FEHA); Civ. Code, § 1352.5 [prohibiting restrictive covenants in common interest development declarations that violate Gov. Code, § 12955]; Cal. Code Regs., tit. 24, § 1101A.1 et seq. [housing accessibility standards applicable to multifamily dwelling units and the common areas associated therewith]; Auburn Woods I[1106]Homeowners Assn. v. Fair Employment & Housing Com. (2004) 121 Cal.App.4th 1578, 1584, 1598-1599 [under FEHA, Fair Employment and Housing Commission entitled to conclude permitting severely depressed individuals to own dog was reasonable accommodation required of association, which banned dogs in its CC&R’s]; Southern California Housing Rights Center v. Los Feliz Towers Homeowners Assn. Bd. (C.D.Cal. 2005) 426 F.Supp.2d 1061, 1066-1068 [disabled condominium resident requested special parking accommodation; court granted summary judgment to association on ADA claim because association is not “public accommodation,” but found material issue of fact with regard to state and federal fair housing claims].) But Carolyn is not a member of OPCA, a resident of the grounds controlled by OPCA, or someone who has unsuccessfully attempted to procure residency within OPCA. Carolyn thus did not (and could not) bring a claim under state or federal fair housing law.
Finally, we note that classifying OPCA’s trails as a public accommodation subject to the access standards of the ADA and California law could have perverse consequences for the disabled and able-bodied alike. Members of the public, including disabled individuals, currently enjoy the use of OPCA’s trails without charge. fn. 6 Non-members of OPCA who use the trails are free riders — those on horseback quite literally so. Although there is no evidence in the record to support this observation, there are undoubtedly other owners of private property in California who tolerate trespasses upon their private recreational property. (See Civ. Code, § 1009, subd. (a)(1) [“It is in the best interests of the state to encourage owners of private real property to continue to make their lands available for public recreational use”].) It would be unfortunate if property owners (including but not limited to homeowners’ associations) presently inclined toward nonenforcement of their right to exclude the public from recreational areas changed their outlook because of fears of civil litigation conducted by individuals without an ownership stake in the recreational area at issue. Indeed, the most likely explanation for OPCA’s neglect of its members’ property rights is the cost and hassle associated with excluding nonmembers and including members. It is possible a decision contrary to that reached here could lead a previously apathetic association (or individual landowner) to invest in fences, security, access technology, and other means of excluding the public from privately owned recreational areas. [1107]
DISPOSITION
For the foregoing reasons, we affirm the judgment. OPCA shall recover its costs on appeal.
O’Leary, Acting P. J., and Moore, J., concurred.
FN 1. OPCA is a “[c]ommon interest development” (Civ. Code, § 1351, subd. (c)) under the Davis-Stirling Common Interest Development Act (Civ. Code, § 1350 et seq.).
FN 2. While the larger trail system to which OPCA’s trails connect is owned in part by Orange County and in part by other associations and municipalities, the OPCA trails over which OPCA exercises control are owned by OPCA.
FN 3. Carolyn raised a triable issue of fact with regard to the extent of OPCA’s investigation of safety issues and damage to the trail fences, as well as “whether or not dangerous conditions existed, and if so, what means” were reasonable to remedy such conditions. But it is undisputed that OPCA implemented the written recommendations of its Arena and Trails Committee by installing posts in the ground on the trails.
FN 4. “[S]tate courts have concurrent jurisdiction of ADA claims.” (Black v. Department of Mental Health (2000) 83 Cal.App.4th 739, 744, fn. 4.)
FN 5. The complete list of “entities” comprising “public accommodations” under the ADA is as follows: “(A) an inn, hotel, motel, or other place of lodging, . . .; [¶] (B) a restaurant, bar, or other establishment serving food or drink; [¶] (C) a motion picture house, theatre, concert hall, stadium, or other place of exhibition or entertainment; [¶] (D) an auditorium, convention center, lecture hall, or other place of public gathering; [¶] (E) a bakery, grocery store, clothing store, hardware store, shopping center, or other sales or rental establishment; [¶] (F) a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment; [¶] (G) a terminal, depot, or other station used for specified public transportation; [¶] (H) a museum, library, gallery, or other place of public display or collection; [¶] . . . [¶] (J) a nursery, elementary, secondary, undergraduate, or postgraduate private school, or other place of education; [¶] (K) a day care center, senior citizen center, homeless shelter, food bank, adoption agency, or other social service center establishment; and [¶] (L) a gymnasium, health spa, bowling alley, golf course, or other place of exercise or recreation.” (42 U.S.C. § 2181(7).)
FN 6. It is unclear precisely how much benefit the OPCA trails offer to the public, in light of the nearby availability of trails owned by public entities and the limited number of individuals with the inclination and financial ability to ride horses as a means of recreation. Nevertheless, the record suggests there is some benefit to the general public in being able to access OPCA’s trails.
