Would require an association to provide a Restrictive Covenant Modification form with the governing documents.
Current Status: Chaptered
FindHOALaw Quick Summary:
Existing law requires a county recorder, title insurance company, escrow company, real estate broker, real estate agent, or association that delivers a copy of a declaration, governing document, or deed, to place a cover page or stamp on the first page of the previously recorded document stating that if the document contains any restriction that unlawfully discriminates based on any of the characteristics specified above, that document is void.
This bill would amend Government Code Section 12956.1 to require a county recorder, title insurance company, escrow company, real estate broker, real estate agent, or association that delivers a copy of a declaration, governing document, or deed to a person who holds an ownership interest of record in property to also provide a Restrictive Covenant Modification form with specified procedural information.
**UPDATE: AB 1466 was signed by the Governor on September 28, 2021. Its changes to the law take effect January 1, 2022.
[Amendments to CC&Rs; Court Petition] Voter apathy not a required showing in a petition to reduce approval requirements of CC&R amendment.
Parlow Law Office, Daniel M. Parlow; Slovack Baron Empey Murphy & Pickney LLP and Wendy S. Dowse for Objector and Appellant.
Green Bryant & French LLP, Jeffrey A. French; Berding & Weil LLP and Timothy P. Flanagan for Petitioner and Respondent.
OPINION
RAMIREZ, P.J.
Orchard Estate Homes, Inc., is a 93-unit planned residential development, governed by covenants, conditions, and restrictions (CC&R’s), supplemented by rules and regulations prohibiting short term rentals of units for durations of less than 30 days. When Orchard’s homeowners association attempted to enforce this rule against an owner who used a unit for such purpose, a lower court ruled the rule was unenforceable because it was not contained in the CC&R’s. Orchard put the issue to a vote to amend the CC&R’s. After balloting was completed, approximately 62 percent of the owner-members of the homeowners association voted to prohibit short term rentals, but the percentage was less than the super-majority required to accomplish the amendment.
Orchard then filed a petition pursuant to Civil Code section 4275 seeking authorization to reduce the percentage of affirmative votes to adopt the amendment, which was opposed by the Orchard Homeowner Alliance (Alliance), an unincorporated association of owner members, who purchased units for short term rental purposes. The trial court granted the petition and the Alliance appeals, arguing that the trial court erred in ruling that voter apathy was not an element of Civil Code section 4275. We affirm.
BACKGROUND
Orchard Estate Homes, Inc., (Orchard) is a homeowners association established in 2004 to manage a 93-unit development located east of Indio, California. The homeowners association and all member-owned lots are encumbered by CC&R’s, which may be amended by approval of owners representing 67 percent of the total members and 51 percent of eligible first mortgagees of the association.
In 2011, Orchard adopted rules and regulations prohibiting short term rentals, to supplement the CC&R’s. However, a vacation rental provider that owned one unit, successfully defended against enforcement of the rules, by arguing that the rules, adopted by Orchard’s Board of Directors and not by a vote of the owners, were not a valid amendment to the CCRs. Orchard therefore conducted an election to adopt an amendment to the CC&R’s to prohibit short term rentals of less than 30 days.
On November 10, 2016, Orchard sent notices of the election, along with ballots and other materials, to all owner-members of the homeowners association, and on December 13, 2016, when balloting was closed, 85 of the 93 members had cast votes, with the proposed amendment garnering 58 votes in favor, or 62 percent. On February 2, 2017, Orchard filed a petition pursuant to Civil Code section 4275, seeking judicial approval to reduce the percentage of affirmative votes required to amend the CC&R’s. The Alliance, a group of owners who purchased units for short term vacation rentals, opposed the petition, arguing that voter apathy had not been alleged or proven, precluding relief. After a hearing, the trial court granted Orchard’s petition. The Alliance appeals.
DISCUSSION
The Alliance argues that the trial court abused its discretion in granting Orchard’s petition by ruling that voter apathy was not a prerequisite to an order authorizing relief under Civil Code section 4275. We disagree.
Civil Code section 4275 (formerly section 1356) provides in pertinent part: “If in order to amend a declaration, the declaration requires members having more than 50 percent of the votes in the association, [. . .] to vote in favor of the amendment, the association, or any member, may petition the superior court of the county in which the common interest development is located for an order reducing the percentage of the affirmative votes necessary for such an amendment.” (Civ. Code § 4275, subd. (a).) “The purpose of [the statute] is to provide homeowners associations with the `ability to amend [their] governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] . . .’ [Citation.]” (Mission Shores Assn. v. Pheil (2008) 166 Cal.App.4th 789, 794-795.)
The statute gives the trial court broad discretion in ruling on such a petition. (Mission Shores, supra, 166 Cal.App.4th at p. 795.) Accordingly, we review for abuse of discretion. (Quail Lakes Owners Assn. v. Kozina (2012) 204 Cal.App.4th 1132, 1139, citing Mission Shores, supra, 166 Cal.App.4th 789; Fourth La Costa Condominium Owners Assn. v. Seith (2008) 159 Cal.App.4th 563, 570.) The trial court is not required to make any particular findings when considering such a petition; instead, it is sufficient if the record shows that the court considered the requisite factors in making its ruling. (Quail Lakes Owners Assn., supra, 204 Cal.App.4th at p. 1140.)
The court may grant the petition if it finds all of the following: “`Notice was properly given; the balloting was properly conducted; reasonable efforts were made to permit eligible members to vote; “[o]wners having more than 50 percent of the votes . . . voted in favor of the amendment”; and “[t]he amendment is reasonable.”‘” (Quail Lakes Owners Assn. v. Kozina, supra, 204 Cal.App.4th at p. 1135, quoting Peak Investments v. South Peak Homeowners Assn., Inc. (2006) 140 Cal.App.4th 1363, 1366-1367; see also Civ. Code, § 4275, subd. (c).)
The Alliance does not complain that the evidence presented to the trial court fails to satisfy the above-described elements of subdivision (c) of Civil Code section 4275, nor does it claim the amendment would be improper for any of the reasons set forth in Civil Code section 4275, subdivision (e). Instead, the Alliance argues that voter apathy is an element of Civil Code section 4275, and that relief is not proper unless voter apathy has been established.
After reviewing the decisions on which Alliance relies for the assertion that voter apathy is an element of a Civil Code section 4275 petition, we conclude Alliance has incorrectly construed statements made in dicta in some authorities regarding the purpose of the statutory procedure. In Blue Lagoon Cmty. Ass’n v. Mitchell, the court stated, “Viewed objectively, the purpose of [former] Civil Code section 1356 [now 4275] is to give a property owners’ association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration.” (Blue Lagoon Cmty. Ass’n v. Mitchell, supra, 55 Cal.App.4th at p. 477; see also, Quail Lakes Owners Assn., supra, 204 Cal.App.4th at pp. 1134-1135.)
Similar statements of legislative purpose are found in Fourth La Costa Condominium Owners Assn. v. Seith and Peak Investments v. South Peak Homeowners Assn., Inc. However, none of the cases hold that voter apathy is an element that must be alleged or proven. It is well settled that an appellate decision is not authority for everything said in the opinion, but only for points actually involved and decided. (People v. Knoller (2007) 41 Cal.4th 139, 154-155; Santisas v. Goodin (1998) 17 Cal.4th 599, 620, citing Childers v. Childers (1946) 74 Cal.App.2d 56, 61.)
The doctrine of precedent, or stare decisis, extends only to the ratio decidendi of a decision, not to supplementary or explanatory comments which might be included in an opinion. (People v. Superior Court (2016) 1 Cal.App.5th 892, 903, citing Gogri v. Jack in the Box, Inc. (2008) 166 Cal.App.4th 255, 272.) Only the ratio decidendi of an appellate opinion has precedential effect. (Trope v. Katz (1995) 11 Cal.4th 274, 287.) The decisions relied upon by the Alliance refer to a supposed legislative purpose, but none of these authorities held that voter apathy is a requisite element of the statutory procedure, nor do any of them require proof of voter apathy as a precondition to relief from the supermajority provisions of the CCRs.
Looking at the statutory language of Civil Code section 4275, we observe five elements required to be established to authorize a reduction in the required voting percentage to amend a provision of the governing CCRs. Those elements require the trial court to find that adequate notice was given; that balloting on the proposed amendment was conducted in accordance with the governing documents as well as the provisions of the Davis-Stirling Common Interest Development Act; a reasonably diligent effort was made to permit all eligible members to vote on the proposed amendment; members having more than 50 percent of the votes voted in favor of the amendment; the amendment is reasonable; and granting the petition is not improper. (Civ. Code, § 4275, subd. (c).) The statute does not include voter apathy among the list of elements that must be established.
Applying the rules of statutory construction, in the absence of an ambiguity, the plain meaning of the statute controls. (Tract 19051 Homeowners Assn. v. Kemp(2015) 60 Cal.4th 1135, 1143; Anderson Union High School Dist. v. Shasta Secondary Home School (2016) 4 Cal.App.5th 262, 283.) Orchard was not required to plead and prove voter apathy under the plain language of Civil Code section 4275, and we are not empowered to insert what a legislative body has omitted from its enactments. (Williams v. Superior Court (1993) 5 Cal.4th 337, 357; Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1099.) We therefore decline to imply an element that was not expressed by the Legislature.
The trial court did not abuse its discretion in granting the petition.
Disposition
The judgment is affirmed. Respondent is entitled to costs on appeal.
[Amendments to CC&Rs; Rent Restriction] An amendment to the CC&Rs which empowered the HOA to evict tenants who violate the CC&Rs was held to be reasonable.
Law Firm of Kaiser & Swindells, Raymond T. Kaiser and J. Rodney DeBiaso for Defendant and Appellant.
Peters & Freedman and Laurie S. Poole for Plaintiff and Respondent.
OPINION
HOLLENHORST, J. —
David Pheil (Pheil) appeals a trial court order that reduced the percentage of votes necessary to amend the Mission Shores Association’s (the Association) declaration of covenants, conditions and restrictions (CC&R’s). (Civ. Code, § 1356.)[FN.1] Pheil challenges the order on the grounds the trial court erred in finding that (1) the amendment was reasonable (§ 1356, subd. (c)(5)); (2) the balloting conformed to the CC&R’s (§ 1356, subd. (c)(2)); and (3) there was no impairment to the security interest of mortgagees (§ 1356, subd. (e)(3)). We affirm the order.
I. PROCEDURAL BACKGROUND AND FACTS
The Association is the homeowners association which governs the Mission Shores common interest development (Mission Shores) located in Rancho Mirage and consisting of 168 separate interests (Homes), in addition to common areas and facilities. On May 12, 2004, the CC&R’s were recorded for the development.
In 2004, Pheil and his wife decided to purchase a vacation home in Rancho Mirage. At Mission Shores, the developer’s agent represented to Pheil and his wife that they would be allowed to rent or lease a home without restriction. According to the applicable CC&R’s, an owner may rent to a single family where the rental agreement is in writing and subject to the CC&R’s. In reliance on the agent’s representation, Pheil and his wife purchased a Home, which they rented, on occasion, to others. As a homeowner, Pheil is a member of the Association.
The board of directors for the Association (Board) is composed of five members, three of which were appointed by the developer. The developer owns 11 of the 168 Homes in the development. Concerned with how some homeowners were renting their Homes, on May 19, 2005, the Board [793] unanimously voted to accept proposed rule 2.10.2 of the CC&R’s (Rule 2.10.2), which provided, “No short-term rentals or leases of less than 30 days are allowed.” Pheil challenged the rule. This dispute came before Mediator Peter J. Lesser. A July 31, 2006, mediation did not resolve the dispute. On August 23, Pheil, through his attorney, mailed a “Demand for Internal Dispute Resolution” to Attorney James R. McCormick, Jr., an attorney for the Association, with respect to Rule 2.10.2.
In response to the dispute over Rule 2.10.2, the Board decided to amend the CC&R’s to provide the same temporal limitation on rentals. Additionally, the proposed amendment granted the Association the right to evict a tenant for breach of the governing documents and to impose the related attorney fees and court costs on the homeowner. On September 28, 2006, the Association mailed a cover letter, voting instructions, official ballot, the proposed amendment to the CC&R’s (Amendment), and two envelopes to all members of record of the Association. It presented a “redlined” version of article II, section 2.1 of the CC&R’s, showing precisely the language to be added and to be deleted. A deadline of November 13, 2006, was set to return the ballots. The owners were further informed the ballots would be tabulated at the Board meeting on November 15.
Article IV, section 4.4.3 of the CC&R’s sets forth the different types of voting “classes.” “Class A” consists of members of the Association who own a Home. Of the 168 Homes, 157 had been sold such that there were 157 owner votes. The remaining 11 Homes were still owned by the developer, who was entitled to three “Class B” votes per Home, or a total of 33 developer votes. In order for the Amendment to pass, the Association had to obtain at least 67 percent of the voting power of both classes. Thus, passage of the Amendment required 105 owner votes and 22 developer votes. On November 13, 2006, 132 of the 168 ballots were received. The inspectors of the election opened the ballots and tabulated the results. In the “Class A” category, 93 owner votes were in favor of the Amendment, 28 owner votes were against the Amendment, and 36 owner votes abstained. In the “Class B” category, all 33 developer votes were cast in favor of the Amendment. Because the Amendment garnered only 59 percent of the owner vote, it failed.
On March 8, 2007, pursuant to section 1356, the Association petitioned the trial court for an order reducing the percentage of affirmative votes required for passage of the Amendment and approving the Amendment based upon the number of affirmative votes actually cast constituting at least a majority of each voting class. A hearing date was set for April 9, 2007. The Association filed a notice of hearing, memorandum of points and authorities, [794] and supporting declarations. Notice of the hearing was mailed to each homeowner of record on March 23, 2007.
Pheil opposed the petition, objecting to the imposition of a 30-day minimum for leases on the grounds that this violated an alleged representation made by the developers of the project when he purchased his Home. In reply, the Association stated the reason for the minimum lease term was to prevent use of any Home as a hotel. The Association provided a declaration from its counsel regarding the prevalence of CC&R restrictions containing a 30-day minimum provision.
At the initial hearing on April 9, 2007, the trial court continued the matter to allow Pheil’s counsel to obtain copies of the supporting declarations. The second hearing was continued to allow the Association to hold its election of directors to see if the new Board would want to continue pursuing the petition. During the final hearing on May 25, 2007, the trial court indicated its intent to grant the petition.
By order dated June 12, 2007, the trial court found that the Association had complied with the requirements of section 1356, subdivision (c)(1) through (6) and that granting the petition was “not improper” under section 1356, subdivision (e)(1) through (3). Thus, the trial court granted the petition, which reduced the percentage required to amend the CC&R’s. Pheil filed the instant appeal.
II. STANDARD OF REVIEW
(1) “[S]ection 1356, part of the Davis-Stirling Common Interest Development Act (the Act), provides that a homeowners association, or any member, may petition the superior court for a reduction in the percentage of affirmative votes required to amend the CC&R’s if they require approval by `owners having more than 50 percent of the votes in the association….’ [Citation.] The court may, but need not, grant the petition if it finds all of the following: Notice was properly given; the balloting was properly conducted; reasonable efforts were made to permit eligible members to vote; `[o]wners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment’; and `[t]he amendment is reasonable.’ [Citation.]” (Peak Investments v. South Peak Homeowners Assn., Inc. (2006) 140 Cal.App.4th 1363, 1366-1367 [44 Cal.Rptr.3d 892], fn. omitted.)
The purpose of section 1356 is to provide homeowners associations with the “ability to amend [their] governing documents when, because of voter [795] apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides [an] association with a safety valve for those situations where the need for a supermajority vote would hamstring the association.” (Blue Lagoon Community Assn. v. Mitchell (1997) 55 Cal.App.4th 472, 477 [64 Cal.Rptr.2d 81].)
Section 1356, subdivision (c), gives the trial court broad discretion in ruling on such petition. Accordingly, on appeal, we review the trial court’s ruling for abuse of discretion. (Fourth La Costa Condominium Owners Assn. v. Seith (2008) 159 Cal.App.4th 563, 570 [71 Cal.Rptr.3d 299].)
III. WAS THE AMENDMENT REASONABLE?
Pheil contends that because three of the five seats on the Board were held by representatives of the developer, the developer “in fostering the petition was clearly acting for its own purposes and not [those] of the owners.” Specifically, Pheil claims there is no evidence that any individual homeowner complained about the rental of a home without temporal restriction. Instead, Pheil notes the evidence is limited to the vague determination by the Board and the self-serving declaration of the Association’s attorney. Given the facts that (1) the Board was controlled by the developer who was behind the petition; (2) this was not a case of homeowner apathy; and (3) the trial court’s words suggest that it thought the owners were entitled to a representative board, Pheil argues the trial court abused its discretion in finding the Amendment to be reasonable.
(2) Clearly, the Association was charged with the burden of proving the Amendment was reasonable. (Fourth La Costa Condominium Owners Assn. v. Seith, supra, 159 Cal.App.4th at p. 577.) “The term `reasonable’ in the context of use restrictions has been variously defined as `not arbitrary or capricious’ [citations], `rationally related to the protection, preservation and proper operation of the property and the purposes of the Association as set forth in its governing instruments,’ and `fair and nondiscriminatory.’ [Citation.]” (Ibid.)
Here, the Association argued that the need to restrict rentals to 30 days or more was to ensure the property would not become akin to a hotel. Mission Shores is a residential community. According to the Association’s attorney, “The overwhelming majority of the [CC&R’s] that [she] review[s], both in preparing restated [CC&R’s] and reviewing existing [CC&R’s], contain[s] provisions regarding minimum lease terms of thirty (30) days or longer….” As the trial court noted, “these kinds of restrictions are very common. And … many counties and cities have these restrictions that essentially when [796] you rent for less than 30 days, you’re essentially operating a hotel in a residential district.” Furthermore, the court observed, “there is a movement afoot to restrict homes from being on vacation rentals. It is not just in this project. It is throughout California. [¶] So for example … I have a home in San Luis Obispo County and they have a very strict rule about vacation rentals. I was just reading in the paper in Palm Springs they’re talking about passing a law restricting rentals to only 30 days or more.”
“A CC&R is unreasonable if it is arbitrary and capricious, violates the law or a fundamental public policy or imposes an undue burden on property, and it is reasonable unless it meets those criteria. [Citation.]” (Fourth La Costa Condominium Owners Assn. v. Seith, supra, 159 Cal.App.4th at pp. 577-578.) On the record before this court, we cannot find that the imposition of a 30-day minimum lease term is unreasonable. The provision applies to all owners who rent their Homes, the restriction does not violate public policy (see, e.g., City of Oceanside v. McKenna(1989) 215 Cal.App.3d 1420, 1426-1427 [264 Cal.Rptr. 275] [restrictions requiring owner occupancy and forbidding the leasing of units were reasonable in view of the city’s redevelopment goals of providing a stabilized community of owner-occupied units for low- and moderate-income persons]), and any burden to enforce the minimum lease term is outweighed by its beneficial value in preserving the residential character of the development.
With cursory argument and no citation to any legal authority, Pheil contends the Amendment is unreasonable because it grants the Association the right to evict tenants for breach of the CC&R’s and to impose attorney fees and costs on the owner. “[E]very brief should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration. [Citations.]” (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 594, p. 627.) Although we may deem this point waived, we note the Association addressed it on the merits.[FN.2]
(3) The Association argues this provision is reasonable. First, the Association notes that associations have been analogized to landlords for purposes of determining tort liability. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 499-501 [229 Cal.Rptr. 456, 723 P.2d 573].) As such, if an association is held to a landlord’s obligations, it should equally benefit from any rights attributed to the landlord. We agree. Second, the Association argues that any tenant should be bound by the CC&R’s to the same extent that the homeowner is bound. In the event the homeowner fails [797] or refuses to take effective measures to assure his or her tenant is complying with the CC&R’s, the Association needs some means to assure compliance. We agree. Third, according to the Association, the enforcement remedies apply to any and all tenants in breach of the CC&R’s, and providing the Association with the right to enforce any breach of the CC&R’s does not violate public policy. (See, e.g., 1 Sproul & Rosenberry, Advising Cal. Common Interest Communities (Cont.Ed.Bar 2007 supp.) § 6.45, pp. 423-424.) Again, we agree. Nonetheless, in his reply brief, Pheil claims that commentators have criticized provisions allowing associations the right to enforce the CC&R’s against tenants as being “unlawful.” Reviewing the practice tip referenced by Pheil, we note the commentators merely caution practitioners to consider the risks involved. Specifically, an association may be liable for wrongful eviction given the fact that the association does not have possession of the property, and thus, is not the rightful party to bring the action. (Id. at pp. 424-425.)
(4) For the above reasons, we find that the trial court did not abuse its discretion in finding the Amendment to be reasonable.
IV. DID THE BALLOTING CONFORM WITH THE CC&R’S?
(5) According to Pheil, subdivision (c)(2) of section 1356 was not complied with because the letter that accompanied the ballot inaccurately portrayed the context of the Amendment and made improper reference to the ineffective rule. In response, the Association argues it complied with the procedures for amending the CC&R’s as governed by section 1363.03. According to that section, a secret ballot procedure must be used with a double envelope system, inspectors of the election must be appointed, and the results must be tabulated at a board meeting. (§ 1363.03, subds. (c), (e).) Here, the Association maintains it mailed the Amendment, the ballot, voting instructions, and two envelopes to each of its members. Furthermore, the results were tabulated at the Board meeting.
The Amendment clearly indicated the language to be added and the language to be deleted. Presenting the owners with a redlined version of the proposed Amendment constituted the reasonably detailed form the CC&R’s require. While Pheil claims the cover letter accompanying the ballot and other documents misled the owners, we note there is no evidence in the record that supports this claim. Not one owner submitted a declaration claiming he or she voted in a particular way solely due to the information contained in the cover letter. Moreover, as the Association points out, the [798] cover letter highlighted the fact that the Amendment would provide for a 30-day minimum leasing requirement and the ability of the Association to evict tenants.[FN.3]
Notwithstanding the above, Pheil claims the Association failed to give notice of the election results pursuant to section 1363.03, subdivision (g). That section provides, “The tabulated results of the election shall be promptly reported to the board of directors of the association and shall be recorded in the minutes of the next meeting of the board of directors and shall be available for review by members of the association. Within 15 days of the election, the board shall publicize the tabulated results of the election in a communication directed to all members.” The Association does not claim that it gave notice of the election results; however, it does claim the results were reported at the Board meeting on November 15, 2006, and recorded in the minutes of the Board meeting (which are available to each member). Thus, the Association argues that it provided the required notice to its members, but even if it had not, the petition was not precluded. We agree with the Association.
Pheil does not oppose the results of the election. Rather, he opposes the Amendment itself. Pheil does not provide any argument or legal citation to any authority as to the consequences which the Association should suffer given its failure to comply with section 1363.03, subdivision (g). Under the circumstances of this case, we find such failure to be trivial. Accordingly, we cannot agree that such failure should result in precluding the Association from proceeding with its petition. Moreover, we cannot find that the trial court abused its discretion in failing to find that the balloting did not comply with the CC&R’s.
V. DOES THE AMENDMENT IMPAIR THE SECURITY INTEREST OF MORTGAGEES?
In his final contention, Pheil argues that the CC&R’s require approval of 51 percent of first mortgagees who have previously requested notification [799] under two stated circumstances, namely, where any amendment affects the rights or protection granted to mortgagees and where any amendment could result in a mortgage being canceled by forfeiture. He claims the Association failed to give such notice and to obtain such approval. Again, we note that Pheil fails to support his claim with any legal argument with citation of authorities on the points made. His brief reference to section 1356, subdivision (e)(3), is insufficient. Nonetheless, given the fact that the Association addressed the merits of the issue, so will we.
(6) Section 1356, subdivision (e)(3), forbids the court from approving any amendment to CC&R’s that impairs the security interest of a mortgagee, if approval of a specified percentage of the mortgagees is required under the CC&R’s. According to article XIII, section 13.2.2 of the CC&R’s, the following amendments require 51 percent approval of the first mortgagees: “(a) Any amendment which affects or purports to affect the validity or priority of Mortgages or the rights or protection granted to Mortgagees, insurers or guarantors of first Mortgages. [¶] (b) Any amendment which would require a Mortgagee after it has acquired a Lot through foreclosure to pay more than its proportionate share of any unpaid Assessment or Assessments accruing before such foreclosure. [¶] (c) Any amendment which would or could result in a Mortgage being canceled by forfeiture, or in a Lot not being separately assessed for tax purposes. [¶] (d) Any amendment relating to (i) the insurance provisions in Article VIII, (ii) the application of insurance proceeds in Article IX, or (iii) the disposition of any money received in any taking under condemnation proceedings. [¶] (e) Any amendment which would subject any Owner to a right of first refusal or other such restriction, if such Lot is proposed to be transferred.” The Amendment does not fall under any item in this list.
In his reply brief, Pheil claims the temporal restriction on renting “clearly impacts the ability of owners to pay their mortgages.” However, Mission Shores is a residential development. Pheil has not provided any evidence to the contrary. Other than his claim that he was told he could lease or rent his home and that he thereafter on occasion rented it to others, there is no evidence that he needed to borrow money to purchase his home, that he obtained a non-owner-occupied loan, or that he purchased his home with the sole purpose of renting it out to pay the mortgage.
Accordingly, we conclude the trial court did not abuse its discretion in finding that there was no impairment to the security interests of mortgagees.
[800] VI. DISPOSITION
The order is affirmed. The Association is entitled to its costs on appeal.
Ramirez, P. J., and King J., concurred.
[FN.1] All further statutory references are to the Civil Code unless otherwise indicated.
[FN.2] The Association argues that this issue is waived because Pheil failed to raise it in his written opposition. While the Association discounts the fact that Pheil did raise the issue during oral argument before the trial court, we do not.
[FN.3] The cover letter provided, in part, the following: “The Association’s [CC&R’s] currently discuss[] rental of residences in a very broad manner. There are few protections afforded to the Owners against tenants who treat the Association not as their personal home, but instead as a weekend party place…. [¶] Enclosed is a proposed amendment of Article II, Section 2.1…. The purpose of the proposed amendment is to further define the rights and obligations of Owners who rent or lease their residences. Among other things and consistent with the current Rules and Regulations, the proposed amendment places a thirty (30) day minimum on any lease and provides the Association with the right, but not the obligation, to evict problem tenants on an Owner’s behalf if the Owner refuses to take corrective action.”
[CC&R Amendments; Court Petition] Proposed HOA CC&R amendments must be approved by at least a simple majority of the total votes in a HOA before a trial court may reduce the approval requirement set in the CC&Rs.
Borton, Petrini & Conron, Matthew J. Trostler, Casandra P. Cushman, Hickey & Petchul, and Dirk Petchul for Appellant.
Garrison & McInnis, Gregory M. Garrison, Amelia A. McDermott, and Andrew R. Chivinski for Respondent.
OPINION
SILLS, P. J.-
South Peak Homeowners Association (the Association) appeals from the trial court’s order granting a homeowner’s petition to reduce the percentage of homeowner votes needed to approve an amendment to the declaration of covenants, conditions, and restrictions (CC&Rs). The Association claims the trial court improperly reduced the percentage to less than a simple majority of the homeowner votes. We find the Davis-Stirling Common Interest Development Act (Civ. Code, § 1350 et seq.) requires that a proposed amendment to the CC&Rs be approved by at least a simple majority of the total votes in the homeowners association before the trial court can reduce the percentage of votes set by the CC&Rs. Accordingly, we reverse.
FACTS
Peak Investments and Norman and Rita Lesman (the Lesmans) own lot 43 in South Peak, a planned community of custom homes in Laguna Niguel comprising 63 lots. The Association is governed by CC&Rs recorded in April 1984. In 1986, the Association amended the CC&Rs to change the building heights for each lot (CC&Rs, section 6.7.1) and the setback provisions for each lot (CC&Rs, section 6.7.2). These changes were reflected on Exhibit 1 to the amendment, entitled “Height and Setback Limitations,” which listed on a chart each lot number, its maximum height, its minimum setback from front lot line, its minimum setback from side lot lines, and its minimum setback from rear lot lines. The setback limit for lot 43’s side lot lines was listed as “20-7,” meaning the limit was 20 feet total minimum setback distance for both sides of the lot and 7 feet minimum setback distance for each side of the lot. The second page of Exhibit 1 started with listing lot 31; all the lots from lot 31 through 55 had sideline setbacks of 25-7 except lot 43.
The CC&Rs were amended again in 1990 to modify the building height limitations by removing the 35 foot cap (CC&Rs, section 6.7.1). The amended section refers to Attachment 2, which appears to be a retyped version of Exhibit 1 to the 1986 amendment. The only difference in the two is the minimum sideline setback for lot 43; that number was changed from 20-7 to 25-7.
The Lesmans purchased lot 43 in June 2001 and apparently wanted to build a larger structure than the 20-7 setback allowed. They contacted the lawyer who prepared the 1990 amendment, Edward Coss, who wrote to the Association’s Board of Directors in May 2002, opining that the change in the sideline setback on lot 43 was “an inadvertent typographical error.” Coss explained, “I can find no record or other communication to support the change in the side lot lines; in fact, the purpose of Amendment Number Three [1366] was limited to building height alterations.” Coss enclosed a proposed amendment to the CC&Rs to correct the error for the Association’s approval.
For whatever reason, the Board declined to effect the execution of the amendment. In July 2004, the Lesmans proposed an amendment to change the setback for their lot. In accordance with the bylaws, they caused a special meeting of the homeowners to be called to vote on the proposed amendment. The homeowners received a copy of the proposed amendment, which explained the requested change from 25-7 to 20-7; they also received a ballot allowing them to approve or disapprove the amendment or abstain from voting. The ballot noted, “[A]t least 25 percent (25%) of the voting power of the membership (16/63) must be present in person or by proxy in order to achieve a quorum. The written approval of at least 2/3rds of the Members (42 of 63) must be received for the proposed amendment to be approved.”
The meeting was held on July 29, 2004, with seventeen homeowners physically present. Thirty-two ballots were cast: Twenty-one voted in favor of the amendment, and eleven voted against it. Because an amendment to the CC&Rs requires the votes of two-thirds of the lot owners (CC&Rs, section 14.2), the proposed amendment failed.
The Lesmans petitioned the superior court to reduce the percentage necessary to amend the CC&Rs because the CC&Rs required a “supermajority” to amend and not enough members attended the special meeting, and to confirm the amendment as validly approved. (Civ. Code, § 1356.) The trial court granted the petition, finding that more than 50 percent of the voters voted in favor of the amendment, as required by the statute. “”[I]t seems to me . . . that this is what [section] 1356 was meant to apply to, the situation where you can’t get enough people interested to be there to provide for super majority. [¶] It isn’t like enough people came and voted against it. There just isn’t [sic] that many votes. . . . [T]he only question here is whether 50 percent of the voters voted in favor of the amendment. It appears to me they did, 21 out of 32 or 33.” The court also found the amendment was reasonable, another statutory requirement. The Association appeals from the order granting the petition.
DISCUSSION
[1] Civil Code section 1356, part of the Davis-Stirling Common Interest Development Act (the Act), provides that a homeowners’ association, or any member, may petition the superior court for a reduction in the percentage of affirmative votes required to amend the CC&Rs if they require approval by “owners having more than 50 percent of the votes in the association . . . .” [1367] (Civ. Code, § 1356, subd. (a).) fn. 1 The court may, but need not, grant the petition if it finds all of the following: Notice was properly given; the balloting was properly conducted; reasonable efforts were made to permit eligible members to vote; “[o]wners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment”; and “the amendment is reasonable.” (Civ. Code, § 1356, subd. (c)(1)-(5).)
On appeal, the Association contends the trial court erred in making an affirmative finding that more than 50 percent of the owners voted in favor of the amendment. It argues the statute requires an affirmative vote by more than 50 percent of all owners, whether or not they attended the meeting (i.e., 32 out of 63), while the trial court mistakenly construed the requirement to be merely more than 50 percent of the owners who attended the meeting (i.e., 17 out of 32).
[2] In construing a statute, we must ascertain the intent of the Legislature. The first step in the process is to look at the plain meaning of the words used. (Villa de las Palmas Homeowners Assoc. (2004) 33 Cal.4th 73, 82.) “If there is no ambiguity in the language of the statute, ‘then the Legislature is presumed to have meant what it said.'” (Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 358.)
The phrase in question here is “owners having more than 50 percent of the votes,” appearing in section 1356, subdivision (c)(4). The phrase is unqualified by language indicating “the votes” are those cast at a meeting; in the absence of such qualification, it must mean total votes in the Association.
Our interpretation is buttressed by language in other sections of the Act that carefully define votes cast at a meeting. For example, section 1355.5 allows the board of directors of an association to adopt an amendment to the governing documents deleting “any provision which is unequivocally designed and intended, or which by its nature can only have been designed or intended, to facilitate the developer in completing the construction or marketing of the development.” (§ 1355.5, subd. (a).) However, the board may not adopt such an amendment “without the approval of the owners, casting a majority of the votes at a meeting or election of the association constituting a quorum . . . . For the purposes of this section, “quorum” means more than 50 percent of the owners who own no more than two separate interests in the development.” (§ 1355.5, subd. (d).) Likewise, a rule change by the board of directors of an association may be reversed “by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which [1368] a quorum is present (which affirmative votes also constitute a majority of the required quorum) . . . .” (§ 1357.140, subd. (c).) And absent statutory notice (§ 1365), the board of directors of an association cannot levy assessment increases without the “approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association . . . .” (§ 1366, subds. (a) & (b).)
If a declaration fails to include provisions permitting its amendment, the Act provides that it may be amended after, inter alia, “the approval of owners representing more than 50 percent . . . of the separate interests in the common interest development has been given . . . .” (§ 1355, subd. (b).) Thus, it appears the Legislature made a conscious decision to provide that a bare majority of all the members would be the minimum required to amend the declaration. The comments to the Restatement of Property explain, “The declaration for a common-interest community functions like a constitution for the community. Like a constitution, the declaration should not be subject to change upon temporary impulse. Unlike rules, which can be adopted with a simple majority of votes cast, amendments require at least a majority of all votes that could be cast, and many types of amendment require substantially more.” (Rest.3d, Property, Servitudes (2000) § 6.10, com. a.)
The Restatement includes a section entitled “Judicial Power to Excuse Compliance with Requirements of the Governing Documents.” The section provides that “[a] court may excuse compliance with any of the following provisions in a governing document if it finds that the provision unreasonably interferes with the community’s ability to manage the common property, administer the servitude regime, or carry out any other function set forth in the declaration, and that compliance is not necessary to protect the legitimate interests of the members or lenders holding security interests: [¶] (4) a provision requiring approval of more than two-thirds of the voting power to adopt an amendment . . . .” (Rest.3d, Property, Servitudes, supra, § 6.12.) The section’s notes state, “The rule that quorum and supermajority requirements may be waived if necessary to permit adoption of amendments necessary to continued existence and proper functioning of the association is based on California Civil Code §§ 1356 and 1357, although it differs in some particulars.” (Id., reporter’s notes.) Notably, the Restatement section does not require the court to make threshold findings before it can exercise its discretion, as does section 1356.
There is no case law directly on point. The closest is Blue Lagoon Community Assoc. v. Mitchell (1997) 55 Cal.App.4th 472, in which this court held that a proceeding pursuant to section 1356 was not “adversarial” so as to entitle the party successfully opposing the petition to attorney fees as the prevailing party in an action to enforce the governing [1369] documents of a common interest development. (§ 1354, subd. (c).) In so holding, this court commented: “[T]he purpose of Civil Code section 1356 is to give a property owners’ association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association.” (Id. at p. 477.)
[3] It appears the legislative intent is to require at least a simple majority of all members of an association to amend the CC&Rs. Accordingly, the trial court erred in finding that the affirmative votes of 21 out of 63 owners met the statutory prerequisite that owners having more than 50 percent of the vote voted in favor of the amendment. Because we reach this conclusion, we need not discuss the Association’s contention that the amendment was not reasonable. We observe, however, that it appears the Lesmans may be merely attempting to correct a scrivener’s error. Nothing in this opinion shall be construed to hamper their ongoing efforts in that regard.
DISPOSITION
The order granting the petition is reversed. In the interest of justice, each party shall bear its own costs.
Rylaarsdam, J., and Fybel, J., concurred.
FN 1. All statutory references are to the Civil Code
The Housing Omnibus bill provides annual “clean up” legislation to make mostly non-substantive changes to the law.
Current Status: Chaptered
FindHOALaw Quick Summary:
Under existing law, an amendment to the CC&Rs is generally effective after certain requirements are met, except as provided. This bill would amend Civil Code § 4270 to clarify that the exceptions for approving, certifying, or recording an amendment includes alternative procedures established in Sections 4225, 4230, 4235, and 4275. This bill would also renumber Civil Code § 4750.10, pertaining to clotheslines and drying racks, to 4753. Existing law also requires the association distribute to its members an Assessment and Reserve Funding Disclosure Summary form containing specific information regarding funding for the repair and replacement of major components during the next 30 years. This bill would amend Civil Code § 5570 to correct a typo in the reference to the statutory definition of “major component” from § 55530 to § 5550.
**UPDATE: SB 944 was signed by the Governor on September 27, 2016. It’s changes to the law will become operative on January 1, 2017.
[CC&R Enforcement; Renter Standing; Attorney’s Fees] The right to enforce CC&Rs is tied to ownership in a property; renters do not have standing to sue a HOA for a violation of its CC&Rs. Plantiff’s lack of standing does not preclude Defendant’s recovery of attorney’s fees under the Davis-Stirling Act.
OPINION
JACKSON, J.—
Plaintiffs James A. Martin and his wife, RaeAnn, appeal from a judgment against them, including the award of attorney’s fees and costs, entered after the trial court sustained a demurrer in favor of defendant Bridgeport Community Association. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND [1]
Richard and Rachel Peterson (the Petersons) purchased a home constructed by Richmond American Homes (Richmond) in a planned development community named Bridgeport in Santa Clarita at 23944 Windward Lane, lot 33 (the Property). The Bridgeport Community Association (BCA) was the homeowners association responsible for managing the common areas and enforcing the Master Declaration of Covenants, Conditions, and Restrictions for Bridgeport (the CC&Rs) and Rules and Regulations (the R&Rs) for the community.
Pursuant to an arrangement with the Petersons, James Martin and his wife, RaeAnn (the Martins), agreed that the Martins would live at the Property and [1028] pay all the costs involved with the Property, including the mortgage payments. RaeAnn Martin is the Petersons’ daughter. They also agreed that the Martins would deal directly with BCA on any issues regarding the Property. The Petersons executed a power of attorney to that effect, which was accepted by BCA. The Petersons agreed to assign all their rights, title, and interest in their causes of action stated in the FAC to the Martins.
During construction of the home on the Property, the Petersons and the Martins observed that the size of lot 33 where the construction was occurring was smaller than represented in the purchase transaction. Richmond agreed to move the northern property line 10 feet to include approximately 5593 square feet within the lot 33 lot lines (Adjustment Area). This required two separate lot line adjustments (Lot Line Adjustment #1 and Lot Line Adjustment #2). Before either adjustment could be completed, Richmond transferred the Adjustment Area to BCA as part of the common area.
As the result of negotiations with BCA by the Martins on behalf of the Petersons, BCA agreed to deed the Adjustment Area to the Petersons under certain terms and conditions (BCA Lot Line Agreement), as shown by a May 8, 2004 letter from Nancy O’Neil on behalf of the BCA Board of Directors and an August 10, 2004 letter from the attorney for BCA. [2] Both letters were addressed to the Martins. The Martins accepted the terms of the agreement proposed by BCA on behalf of themselves and the Petersons. Both letters represented that the BCA board had agreed to completing the Lot Line Adjustment #2 and the transfer of land, subject to the conditions that the homeowners would pay BCA’s attorney’s fees to prepare and execute the necessary documents and the homeowners would pay for the relocation of the common area sprinklers from the Adjustment Area.
After receiving notice of BCA’s agreement, the Martins invested money for fencing, landscaping and the importation of dirt on the Adjustment Area. The Martins also represented that the Petersons were not able to landscape and hardscape their front yard because they did not yet have ownership of the Adjustment Area and thus lost use of the yard for more than four years.
After lengthy delays, the City of Santa Clarita (City) approved Lot Line Adjustment #1. When BCA did not thereafter cooperate in order to begin [1029] the required City-approval process for Lot Line Adjustment #2, the Martins sought specific performance of the BCA Lot Line Agreement by filing the instant lawsuit on October 20, 2006. The original complaint named the Petersons and the Martins as the plaintiffs and BCA as the defendant. BCA filed a demurrer to the complaint, in part on the ground that the Martins lacked standing.
Then the Martins filed the FAC, the operative complaint in this action. The FAC named only the Martins as the plaintiffs. The first cause of action was for damages for breach of, and the second cause of action was for specific performance of, the BCA Lot Line Agreement. As a part of the allegations, the Martins requested that the court order BCA “to transfer title and cooperate in the approval and transfer of title to the property regarding Lot Line Adjustment #2 to Plaintiffs [the Martins].”
The third cause of action was for breach of the R&Rs of, and the fourth cause of action was for breach of the CC&Rs of, the Bridgeport Community. The fifth cause of action was for violation of Civil Code section 1363 et seq. [3]
The sixth cause of action was for intentional infliction of emotional distress. In part, the Martins alleged BCA took certain actions “in order to punish, and retaliate against, the Plaintiffs [the Martins] for enforcing their rights with respect to the Property.”
The seventh cause of action was for negligence arising from the duty of BCA to the Martins, “as residents and members of the BCA,” to use reasonable care in maintaining the common areas. The eighth cause of action was for negligence per se for violation of sections 1363 and 1364.
At the hearing on July 16, 2007, the trial court ruled that the demurrer to the FAC was sustained with leave to amend as to the first through the fifth, and the seventh and eighth causes of action, on the ground that the Martins lacked standing. With regard to the scope of the leave to amend, the trial court stated: “I am going to allow [plaintiffs’ counsel] leave to amend to bring in the Petersons, and I will give [counsel] one last shot at seeing if there’s any other claims the Martins have that can be pled.” As to the sixth cause of action, the trial court sustained the demurrer without leave to amend, on the ground that the facts did not support a finding of sufficiently outrageous conduct as is necessary for recovery based upon intentional infliction of emotional distress. [4][1030]
The second amended complaint (SAC) was filed on August 6, 2007. The Petersons were the only named plaintiffs. They alleged only four causes of action: first cause for breach of the R&Rs, second cause for breach of the CC&Rs, third cause for violation of sections 1363 and 1364, and fourth cause for negligence per se based on the violation of the same statutes.
BCA filed a demurrer to the SAC. After hearing on December 10, 2007, the trial court sustained the demurrer with leave to amend as to the first, second and third causes of action on the ground of failure to allege sufficient facts to support the causes of action. The court sustained the demurrer to the SAC without leave to amend as to the fourth cause of action.
The Petersons filed the third amended complaint on January 4, 2008. Only the Petersons were named as plaintiffs.
Also on January 4, 2008, BCA filed a request that the court enter judgment against the Martins in favor of BCA. The request represented that on July 16, 2007, the trial court granted BCA’s demurrer to the FAC “without leave to amend,” except leave to amend to substitute the Petersons, as the real parties in interest, for the Martins as plaintiffs, and the Petersons filed the SAC.
BCA also filed a motion for an award of attorney’s fees pursuant to sections 1354, subdivision (c), and 1717, subdivision (a). The trial court granted BCA’s motion for award of attorney’s fees in the amount of $29,371.39 for defense against the Martins. The trial court entered judgment in favor of BCA against the Martins and included the award of attorney’s fees and costs to BCA. [5]
DISCUSSION
The Martins contend that trial court erred in sustaining BCA’s demurrer on the ground that they lacked standing to assert the first through fifth, seventh and eighth causes of action. They claim they had standing as to all the causes of action, in that the Petersons assigned “all of their rights, title, and interest in their causes of action stated in the First Amended Complaint . . . to the Martins.” As to individual causes of action, the Martins also [1031] present other grounds upon which they contend they have standing. The Martins further claim that the trial court erred in including in the judgment an award of attorney’s fees and costs pursuant to section 1354. We disagree and affirm the judgment.
I. Standard of Review
When a demurrer is sustained by the trial court, we review the complaint de novo to determine whether, as a matter of law, the complaint states facts sufficient to constitute a cause of action. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) Reading the complaint as a whole and giving it a reasonable interpretation, we treat all material facts properly pleaded as true. (Ibid.) The plaintiff has the burden of showing that the facts pleaded are sufficient to establish every element of the cause of action and overcoming all of the legal grounds on which the trial court sustained the demurrer, and if the defendant negates any essential element, we will affirm the order sustaining the demurrer as to the cause of action. (Cantu v. Resolution Trust Corp.(1992) 4 Cal.App.4th 857, 879-880.) We will affirm if there is any ground on which the demurrer can properly be sustained, whether or not the trial court relied on proper grounds or the defendant asserted a proper ground in the trial court proceedings. (Id. at p. 880, fn. 10.)
A trial court has discretion to sustain a demurrer with or without leave to amend. (Zelig v. County of Los Angeles, supra, 27 Cal.4th at p. 1126.) If we determine that the plaintiff has met its burden to demonstrate that a reasonable possibility exists that the defect can be cured by amendment of the pleading, then the trial court has abused its discretion in denying leave to amend and we reverse the denial. (Ibid.) Otherwise, we affirm the judgment on the basis that the trial court has not abused its discretion. (Ibid.)
[1] Standing is the threshold element required to state a cause of action and, thus, lack of standing may be raised by demurrer. (Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 813; Blumhorst v. Jewish Family Services of Los Angeles (2005) 126 Cal.App.4th 993, 1000.) To have standing to sue, a person, or those whom he properly represents, must “‘have a real interest in the ultimate adjudication because [he] has [either] suffered [or] is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented.’ [Citation.]” (Schmier v. Supreme Court (2000) 78 Cal.App.4th 703, 707.) Code of Civil Procedure section 367 establishes the rule that “[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute.” [2] A real party in interest is one who has “an actual [1032] and substantial interest in the subject matter of the action and who would be benefited or injured by the judgment in the action.” (Friendly Village Community Assn., Inc. v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 225.) Upon review of action on a demurrer, we review the determination of standing de novo.
II. Standing
The Martins’ causes of action relate to BCA’s actions with regard to, or duties with respect to, the Property, that is, lot 33 owned by the Petersons, as part of a planned development subject to the Davis-Stirling Act. The causes of action other than the first and second seek either the enforcement of governing documents of the development, including its CC&Rs and R&Rs, or redress for violations of the Davis-Stirling Act. The Martins did not claim to have, and the record does not show that the Martins ever had, any ownership interest in the Property. As we explain below, ownership in the Property is a prerequisite to standing to assert each of the causes of action as each seeks redress for violations of rights of the owners of the Property, for which the causes of action are not assignable to the Martins.
[3] The Martins contend they have standing on the basis that the Petersons assigned to them all the Petersons’ interests in the causes of action pursuant to section 954, [6] which permits an owner of a chose in action to assign it to another person where it arises “out of the violation of a right of property, or out of an obligation.” Such types of choses in action include, for example, breach of contract or damage to personal or real property. (Curtis v. Kellogg & Andelson (1999) 73 Cal.App.4th 492, 504; 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 720, p. 805.) Exceptions to the general rule of assignability under section 954 are choses in action for wrongs done to the person, the reputation or the feelings of the injured party, and to contracts of a purely personal nature, like promises of marriage. (Fireman’s Fund Ins. Co. v. McDonald, Hecht & Solberg (1994) 30 Cal.App.4th 1373, 1381.)
Assignability under section 954 is limited to “a thing of action,” a term defined in section 953 as “a right to recover money or other personal property by a judicial proceeding.” By definition, “[t]he words ‘personal property’ include money, goods, chattels, things in action, and evidences of debt,” and do not include “lands, tenements, and hereditaments,” which instead are “real property.” (§ 14.) [1033]
A. First and Second Causes of Action
The first cause of action for breach of the BCA Lot Line Agreement and the second cause of action for specific performance of the Agreement involve a right to recover an ownership interest in real property and not “a right to recover money or other personal property.” (§ 953.) Thus, contrary to the Martins’ contentions, the first and second causes of action were not choses of action assignable under section 954. They could be brought only by the real parties in interest, the Petersons. (Code Civ. Proc., § 367.)
The Martins also claim they had standing as parties to, or third party beneficiaries of, the BCA Lot Line Agreement. [7] They rely on the facts that they negotiated the agreement and lived on the property which was affected, and “accepted the terms of the agreement . . . on behalf of themselves and the Petersons.” Also, they claim that the letters from the BCA board of directors’ representative and BCA’s attorney show they were parties, in that the letters were addressed to them and phrased as if they were parties.
In the FAC, however, the Martins admitted that the Petersons were the owners of the Property and the parties to be bound by the Agreement, and that the Martins’ related actions were “on behalf of the Petersons.” In the first cause of action, the Martins state that BCA “agreed in writing to accept the offer made by the [Martins] on behalf of the Petersons at a board meeting[] . . . , to have [BCA] deed the property contained in Lot Line Adjustment #1 and Lot Line Adjustment #2, to the Petersons (collectively, the ‘BCA Lot Line Agreement’) under certain terms and conditions. . . . The Martins accepted the terms of the agreement . . . on behalf of themselves and the Petersons.” As a result of BCA’s actions, “the Petersons were not able to landscape and hardscape their front yard . . . and side yard because they do not yet have their ownership of” the Adjustment Area. “As a result they have lost usage of their usable yard for more than four years . . . .”
As the quoted material from the FAC shows, the Martins also admitted that specific performance would require BCA to deed the Adjustment Area to the Petersons, not to the Martins. Thus, they had no standing to assert a cause of action, as they did, seeking specific performance of the Agreement “to transfer title and cooperate in the approval and transfer of title to the property . . . to Plaintiffs [i.e., the Martins].” [1034]
[4] The same facts that show that the Martins were not parties to the Agreement also show that the Martins were not intended to be third party beneficiaries of the Agreement. In order to qualify as third party beneficiaries, the Martins were required to plead and prove that the Agreement was made for their benefit. (Schonfeld v. City of Vallejo (1975) 50 Cal.App.3d 401, 420.) “‘The test in deciding whether a contract inures to the benefit of a third person is whether an intent to so benefit the third person appears from the terms of the agreement . . . .’ [Citation.]” (Ibid.) The fact that a third party is incidentally named in the contract, or that the contract, if carried out according to its terms, would inure to his benefit, is not sufficient to entitle him to enforce it. (Jones v. Aetna Casualty & Surety Co. (1994) 26 Cal.App.4th 1717, 1724-1725.) Reading the agreement as a whole in light of the circumstances under which it was made, the terms of the agreement must clearly manifest an intent to make the obligation inure to the benefit of the third party. (Id. at p. 1725; Schonfeld, supra, at p. 421.)
The Martins did not attach a signed written Agreement to the FAC. Neither did they quote the terms of the Agreement in the body of the FAC. Even if we assume that the facts pleaded were sufficient to allege an enforceable contract, as we previously discussed, the facts pleaded by the Martins were that the BCA Lot Line Agreement was made in order to require the BCA to deed the Adjustment Area to the Petersons, and the Martins’ role was to negotiate the Agreement on behalf of the Petersons. Given their role, there is no significance to the fact that the letters from BCA’s board and attorney were addressed to the Martins. (See Jones v. Aetna Casualty & Surety Co.,supra, 26 Cal.App.4th at pp. 1724-1725.) The letter from BCA’s board stated that the board approved the request for the “corner of your lot to be deeded over to you [i.e., the Petersons]” on the condition that the “homeowners” would bear the financial responsibility for costs of legal fees and moving the common area sprinklers from the lot to the common area. The references to “your lot,” “deeded over to you,” and the “homeowners” could only be intended to be to the Petersons, in that the Martins owned no lot and were not homeowners in the Bridgeport Community. Assuming that the letter correctly reflects the content of the Agreement, there is nothing in its terms that clearly manifests an intent by BCA or the Petersons to make the obligation inure to the benefit of the Martins. We conclude that the facts pleaded do not support a determination that the Martins are third party beneficiaries of the BCA Lot Line Agreement. (Id. at p. 1725; Schonfeld v. City of Vallejo, supra, 50 Cal.App.3d at p. 421.)
[5] The Martins further contend that “[w]hether or not the property of [Lot Line Adjustment] #2 could be deeded to the Martins, they were entitled to at least receive an assignment of the damages.” As the Martins assert, a [1035] claim for damages to real property may be assigned without transferring title or possession of the damaged property. (Stapp v. Madera Canal & Irr. Co. (1917) 34 Cal.App. 41, 46.) In their prayer for relief, the Martins included a general request for damages as to all causes of action, but in the first and second cause of action, however, the Martins did not allege that the Petersons suffered monetary damages. [8]
B. Third Through Fifth, Seventh and Eighth Causes of Action
The third through fifth, seventh and eighth causes of action are premised on duties BCA owed to the Petersons under the Bridgeport governing documents or the Davis-Stirling Act pertaining to rights and restrictions incident to ownership of real property. These are mutual among all of the lot owners in Bridgeport. (Werner v. Graham (1919) 181 Cal. 174, 183-184.) What is at issue is the right of enforcement of the governing documents and the Davis-Stirling Act.
The Martins contend that, under the CC&Rs and sections 1351, 1354 and 1363 et seq., they are “bound parties” and, as such, have standing to enforce the CC&Rs and R&Rs. [9] They argue that, under the CC&Rs definitions, “bound parties” include “all occupants, guests and invitees of any Unit,” and therefore, the CC&Rs allow enforcement by them in their capacity as occupants. (See CC&Rs, art. III, § 3.1(e).) They assert that their standing to enforce the CC&Rs is also shown by the fact that the CC&Rs require the owner of a Unit to provide his or her lessee with copies of the governing documents. (See CC&Rs, art. III, § 3.1(c).) In support of their contention, they cite legal authority only for the proposition that CC&Rs are interpreted like a contract. (Cebular v. Cooper Arms Homeowners Assn. (2006) 142 Cal.App.4th 106, 119.)
We agree that the Martins are “bound parties” as defined in the CC&Rs. They are subject to compliance with the restrictions in the governing documents. That status is different from being an owner of a separate interest who, by virtue of his ownership, is also a BCA member. Section 1354 provides that CC&Rs “in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all [1036] owners of separate interests in the development. Unless the declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both.” (Id., subd. (a).) Subdivision (b) of section 1354 provides that “[a] governing document other than the declaration may be enforced by the association against an owner of a separate interest or by an owner of a separate interest against the association.” Section 1351, subdivision (l)(3) provides that “[i]n a planned development, ‘separate interest’ means a separately owned lot . . . .”
[6]In the instant case, as owners of lot 33, the Petersons qualify as “an owner of a separate interest” entitled to enforce the CC&Rs, the R&Rs and other governing documents of Bridgeport. (§§ 1351, subd. (l)(3), 1354, subds. (a), (b).) The Martins do not qualify. What is bound by an equitable servitude enforceable under CC&Rs is a parcel, a lot, in a subdivided tract, not an individual who has no ownership interest in the lot. (See § 1354, subd. (a).) “‘[W]hen the owner of a subdivided tract conveys the various parcels in the tract by deeds containing appropriate language imposing restrictions on each parcel as part of a general plan of restrictions common to all the parcels and designed for their mutual benefit, mutual equitable servitudes are thereby created in favor of each parcel as against all the others.’ [Citation.]” (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 379-380.) Accordingly, the right of enforcement is inextricable from ownership of real property–a parcel, a lot–in a planned development such as Bridgeport and, thus, cannot be assigned absent a transfer of ownership of the parcel to which it applies.
[7] The Petersons’ Property and their membership in BCA, and consequently the rights of enforcement and duties they are owed, are indivisible interests under applicable law and Bridgeport governing documents. Section 1358, subdivision (c), provides that, in a planned development, any transfer of a separate interest includes the undivided interest in the common areas and any transfer of the separate interest owner’s lot also includes membership in the association. Under the CC&Rs, an owner is not allowed to subdivide a Unit or change its boundary lines. (CC&Rs, art. III, § 3.1(d).) The CC&Rs state that “[e]very Owner shall be a Member of [BCA]. There shall be only one membership per Unit,” regardless of the number of co-owners of the Unit. (CC&Rs, art. VI, § 6.2; see also Corp. Code, § 7312.)
[8] The fifth and eighth causes of action are for relief based upon the violation of provisions of the Davis-Stirling Act, sections 1363 and 1364. Section 1363 provides that a common interest development such as Bridgeport must be managed by an association such as BCA and sets forth duties and powers of the association. As previously explained, membership in the association is limited to owners of separate interests. Section 1364 [1037] apportions responsibilities for maintenance of the common interest development between the association and owners of separate interests. As we previously concluded, the Petersons’ rights, including membership in BCA, and the duties of BCA to the Petersons as owners of a separate interest, lot 33, are not assignable, whether set forth in the Bridgeport governing documents or in the Davis-Stirling Act.
The Martins cite no provision in the Davis-Stirling Act that authorizes an owner or a member to assign any right or obligation to any third party. The Martins mistakenly argue that section 1351 does not specifically define the term “owner,” which is used in section 1363 et seq., and, therefore, they have standing to seek redress for violations of sections 1363 and 1364. The references in section 1364, subdivisions (a) through (c), however, are to an owner of a “separate interest,” which is defined as noted in section 1351. Section 1364 clearly differentiates between an owner and residents such as the Martins. Section 1364, subdivision (e), states: “For purposes of this section, ‘occupant’ means an owner, resident, guest, invitee, tenant, lessee, sublessee, or other person in possession on the separate interest.” Section 1364 primarily deals with the association’s rights and responsibilities, including notifying “occupants,” with respect to the presence of wood-destroying pests or organisms. (§ 1364, subds. (b), (d).)
In the seventh cause of action for negligence, the Martins claimed that BCA had a duty to them, “as residents and members,” which BCA breached by improper use and maintenance of the watering system, which caused water damage to the Property. As previously discussed, they are not and do not qualify as members of the BCA. By law under the Davis-Stirling Act and equitable servitude principles applicable to the CC&Rs, only owners are members of the BCA.
Citing Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, the Martins contend that BCA had a common law duty “to exercise due care for the residents’ safety in those areas under [the association’s] control,” similar to a duty a landlord owes to his tenants. (Id. at p. 499.) The duty they pleaded as being breached, however, was BCA’s duty to maintain the common grounds. That duty arises out of the Davis-Stirling Act and the CC&Rs, not out of common law principles of negligence. Thus, as we previously concluded, it is a duty owed only to members of BCA, i.e., the owners.
The Martins argue that they suffered damages to their vehicle, personal injury, loss of work, clean up due to the excess water, interference with their peaceful enjoyment of the Property and loss of use and enjoyment of the Property, and, therefore, have standing to bring negligence claims against [1038] BCA on the basis of nuisance and trespass under section 3479, the statutory definition of nuisance, and related law. [10] These were not the elements the Martins pleaded as negligence, however. The damage they asserted was to the Property owned by the Petersons due to breach of a duty BCA owed to the Petersons.
Not being owners and, therefore, having no authority to enforce the CC&Rs as equitable servitudes arising under the CC&Rs, the Martins are not the real parties in interest for the seventh cause of action and do not have standing to maintain the cause of action. (§ 1354, subd. (a); Code Civ. Proc., § 367.)
[9] In summary, the causes of action are not assignable and the Petersons, as owners of the Property, are the real parties in interest. The Martins failed to establish standing under any of the other arguments they advanced. Given that the causes of action are incidents of the Petersons’ ownership of the Property, and the Martins have no ownership in the Property, we conclude that none of the causes of action can be reasonably amended to give the Martins standing. Accordingly, the court’s action in sustaining the demurrer was proper.
The Martins were given leave to amend the complaint to state some other cause of action for which the Martins may have had standing and to substitute the Petersons as real parties in interest for the causes of action at issue in this appeal. The SAC was filed, but the Martins did not take the opportunity to state any such causes of action. Thus they forfeited the right to do so and remain a part of the action. (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1091.) Accordingly, the trial court properly entered judgment against the Martins in favor of BCA.
III. Attorney’s Fees and Costs
[10] The Martins contend that the trial court erred in awarding attorney’s fees and costs to BCA. Section 1354, subdivision (c), states: “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” The Martins contend that, nevertheless, if the trial court’s finding that they did not have standing was based on the fact that they had no ownership in the Property and the CC&Rs as well as the R&Rs are enforceable only by the Property’s owners under section 1354, [1039] then there was no basis for the fees and costs award. The mandatory attorney’s fees and costs award under section 1354, subdivision (c), applies when a plaintiff brings an action to enforce such governing documents, but is unsuccessful because he or she does not have standing to do so. (Farber v. Bay View Terrace Homeowners Assn. (2006) 141 Cal.App.4th 1007, 1014.) Accordingly, we conclude that the trial court properly awarded attorney’s fees and costs to BCA for defense against the complaints in which the Martins were named plaintiffs. (Ibid.)
DISPOSITION
The judgment, including the award of attorney’s fees, is affirmed. BCA is to recover its costs on appeal.
[1]. In reviewing the propriety of sustaining a demurrer, we “‘treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.'” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Accordingly, the statement of facts is based on the factual allegations in the first amended complaint (FAC), which was the subject of the demurrer at issue here.
[2]. The letter from the BCA board’s representative stated: “The Board considered your request for the additional parcel of land that includes the triangle-shaped piece of land on the northwest corner of your lot to be deeded over to you. The Board granted your request with the following conditions: [¶] 1. The homeowners will be financially responsible for the legal fees of [BCA’s] attorney to prepare and execute the necessary documents. [¶] 2. The homeowners will be financially responsible for the cost of moving the common area sprinklers to the common area by [BCA’s] landscape maintenance company.”
[3]. Section 1363 et seq. is a part of the Davis-Stirling Common Interest Development Act (Davis-Stirling Act) codified in the Civil Code beginning at section 1350. Further statutory references are to the Civil Code, unless otherwise identified.
[4]. The Martins do not challenge the trial court’s ruling as to the sixth cause of action.
[5]. We deny the Martins’ request for judicial notice of “the fact that [BCA] filed an action on November 27, 2007, after the demurrer on the FAC was decided by the Trial Court finding that the Martins lacked standing. [Citation.] [¶] The new action is against the Martins as well as the Petersons to enforce the Governing Documents (Los Angeles [County] Superior Court Case No. PC 041756, Bridgeport Community Association, Inc. v. James A. Martin et al.).” A copy of the then-current civil case summary for the lawsuit was attached as an exhibit to the request. Our review is limited to the trial court’s judgment against the Martins in the instant action. We will not consider evidence offered on appeal which was not before the trial court in connection with the judgment. (In re Zeth S. (2003) 31 Cal.4th 396, 405.)
[6]. Section 954 states: “A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner.”
[7]. We render no opinion as to the existence or terms and conditions of the alleged BCA Lot Line Agreement. For the purposes of reviewing the trial court’s action on the demurrer only, for which we are required to assume the material facts pleaded to be true, we assume the Agreement existed.
[8]. In the first cause of action, the Martins allege that the Petersons lost the use of part of their yard due to BCA’s breach, but they do not allege that the Petersons incurred monetary damages.
[9]. With no legal authority cited, the Martins mistakenly assert that, given that the FAC states that BCA engaged in improper enforcement against the Martins, “this must be accepted as true.” We must accept as true only the material facts alleged in the FAC for the purpose of reviewing the trial court’s demurrer ruling. (Zelig v. County of Los Angeles, supra, 27 Cal.4th at p. 1126.) “Improper enforcement” is an alleged conclusion of law, however, and we are not required to accept such conclusions as true. (Ibid.)
[CC&R Amendments; Binding Effect] CC&R amendments enacted by homeowners are accorded the same presumption of reasonableness as those imposed by developer; CC&R amendments are binding against both current and future homeowners.
Law Office of Russell P. Nowell and Russell P. Nowell for Defendant and Appellant. Jeff Thom for California Council of the Blind as Amicus Curiae on behalf of Defendant and Appellant.
Fiore, Racobs & Powers, Peter E. Racobs and Margaret G. Wangler for Plaintiff and Respondent.
OPINION MORENO, J.-
Civil Code section 1354, subdivision (a), [FN. 1] provides that covenants and restrictions in the declaration of a common interest development “shall be enforceable equitable servitudes, unless unreasonable.” Section 1355, subdivision (b), in turn, provides that the declaration may be amended if certain procedures are followed. In Nahrstedt v. Lakeside Village Condominium Association (1994) 8 Cal.4th 361 (Nahrstedt), we construed subdivision (a) of section 1354 and held that covenants and restrictions in the declaration are enforceable “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, supra, at p. 382.) The use restriction in that case, a no-pet restriction, was included in a condominium development’s originating declaration and recorded prior to the conveyance of any of the units.
The questions we confront in this case are whether use restrictions added to a declaration through an amendment and recorded after a homeowner has purchased an individual unit bind such an owner, and whether the rule of Nahrstedt— that restrictions in a development’s declaration are presumed to [79] be reasonable and are enforceable unless they are arbitrary, impose an undue burden on the property or violate fundamental public policy (Nahrstedt, supra, 8 Cal.4th 361, 386) — applies to subsequently enacted restrictions. We are also called upon to decide whether the trial court abused its discretion in awarding attorney fees to the homeowners association.
[1] We conclude that under the plain and unambiguous language of sections 1354, subdivision (a), and 1355, subdivision (b), use restrictions in amended declarations recorded subsequent to a challenging homeowner’s purchase of a condominium unit are binding on that homeowner, are enforceable via injunctive relief under section 1354, subdivision (a), and are entitled to the same judicial deference given use restrictions recorded prior to the homeowner’s purchase. We also conclude the trial court did not abuse its discretion in awarding attorney fees to the homeowners association as the prevailing party.
I. FACTS AND PROCEDURAL HISTORY
Villa De Las Palmas is a relatively small condominium development consisting of 24 units located in a single L-shaped building. There are 12 units each on the top and bottom levels, and all units have either a small patio or a deck, with common walls separating them. The walls, described as “pony walls,” initially extend from the unit at full height, and then slope down. Many owners, including defendant Paula Terifaj, do not make Villa De Las Palmas, which is located in Palm Springs, their primary residence, but visit only periodically or seasonally.
The individual condominium units were conveyed to the original grantees in 1962 by recorded grant deeds that contained the development’s covenants, conditions, and restrictions, also commonly known as CC & R’s. Pursuant to the 1962 deed (Declaration), all grantees were required to execute a management agreement and “covenant and agree to observe, perform and abide by any and all lawful by-laws, rules, regulations and conditions with respect to the use and occupancy of said premises which may from time to time be adopted or prescribed by the Board of Governors constituted in said Management Agreement.” Failure to abide by any covenant or restriction in the Declaration could result in forfeiture, and “any owner or occupant of any apartment upon said premises may bring legal action for injunction and/or damages against said defaulting owner . . . .” The Declaration further provided that “[t]he benefits and obligations of this deed shall inure to and be binding upon the heirs . . . and assigns of the respective parties hereto.”
Pursuant to the authority granted in the Declaration, the Villa De Las Palmas Homeowners Association (the Association) adopted a rule prohibiting [80] pets. The unrecorded rule provided: “Pets of any kind are forbidden to be kept in the apartment building or on the grounds at any time.” While the exact date of the adoption of the no-pet rule is unknown, it is undisputed that it was in existence when Terifaj purchased her unit. Terifaj, a veterinarian who purchased her unit in 1995, did not receive a written copy of the rule prohibiting pets, but she admitted at trial that she was aware of the no-pet rule when she purchased her unit.
Despite the prohibition on pets, from the time Terifaj purchased her unit until 1998, she visited her unit with her dog Lucy. When Lucy died in 1998, Terifaj acquired another dog, a female boxer, and brought her to the property. Terifaj attempted to have the Association amend the no-pet rule at the Association’s 1996 and 2000 general meetings, but was unsuccessful.
The Association repeatedly warned Terifaj that she was violating the rule prohibiting pets on the property and fined her accordingly. Terifaj, however, was undeterred and continued to bring her dog to the development. In response, in August 1999, the Association filed a complaint for injunctive and declaratory relief and nuisance, along with a motion for preliminary injunction, to compel Terifaj to abide by the no-pet rule. The trial court denied the motion for preliminary injunction in October 1999, ruling that it was not convinced the Association would prevail on the merits and that irreparable injury was not evident. The court ordered the case to nonbinding arbitration with a March 8, 2000, completion date.
In the interim between the denial of the preliminary injunction and the completion of arbitration, the members of the Association voted to amend the Declaration. In January 2000, the Association adopted and recorded the Amended and Restated Declaration of Covenants, Conditions and Restrictions (Amended Declaration), which added a no-pet restriction, providing: “No pets or animals of any kind, including without limitation, dogs, cats, birds, livestock, reptiles or poultry, may be kept or permitted in any Apartment or anywhere on the Property.” The Amended Declaration further provides that violations of the covenants and restrictions contained in the Amended Declaration are nuisances, and that such violations may be enjoined.
Based on the recorded Amended Declaration, the Association filed an amended complaint alleging the same causes of action and seeking the same relief as the original complaint. Following a bench trial, the trial court ruled in favor of the Association on all causes of action. It found the covenants and restrictions in the Amended Declaration to be enforceable equitable servitudes, granted a permanent injunction against any further violation of the no-pet restriction, and found the violation to be a nuisance. The court awarded the Association $15,000 in attorney fees. [81]
The Court of Appeal affirmed. It concluded that section 1354 “[o]n its face . . . applies to any declaration, regardless of when it is adopted and recorded.” Because the no-pet restriction was in the recorded Amended Declaration, it therefore constituted an equitable servitude under section 1354, subdivision (a). Relying on Nahrstedt, which the Court of Appeal found governed review of the pet restriction, the court held the restriction was not unreasonable.
We granted Terifaj’s petition for review.
II. DISCUSSION
As a condominium project, Villa De Las Palmas is a common interest development subject to the provisions of the Davis-Stirling Common Interest Development Act (the Davis-Stirling Act or the Act). (§ 1350 et seq.) The Davis-Stirling Act, enacted in 1985 (Stats. 1985, ch. 874, § 14, pp. 2774-2786), consolidated the statutory law governing condominiums and other common interest developments. [2] Under the Act, a common interest development is created “whenever a separate interest coupled with an interest in the common area or membership in [an] association is, or has been, conveyed” and a declaration, a condominium plan, if one exists, and a final or parcel map are recorded. [FN. 2] (§ 1352.) Common interest developments are required to be managed by a homeowners association (§ 1363, subd. (a)), defined as “a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development” (§ 1351, subd. (a)), which homeowners are generally mandated to join (Nahrstedt, supra, 8 Cal.4th at p. 373).
The Act contains a fairly extensive definitions section, defining as relevant here “governing documents” and “declaration.” The declaration is defined as “the document, however denominated, which contains the information required by section 1353.” (§ 1351, subd. (h).) Section 1353 requires that declarations recorded on or after January 1, 1986, contain certain information, including the development’s covenants and restrictions. The governing documents encompass a broader category of documents, including “the declaration and any other documents, such as bylaws, operating rules of the association, articles of incorporation, or articles of association, which govern the operation of the common interest development or association.” (§ 1351, subd. (j).)
[3] The declaration is often referred to as the development’s constitution (see Rest.3d Property, Servitudes, § 6.10, com. a, p. 196; 1 Hanna & Van [82] Atta, Cal. Common Interest Developments: Law and Practice (2003) § 22:2, p. 1325) and “establish[es] a system of governance.” (Villa Milano Homeowners Association v. Il Davorge (2000) 84 Cal.App.4th 819, 827.) Importantly, it contains the development’s covenants and restrictions, which are “enforceable equitable servitudes, unless unreasonable.” (§ 1354, subd. (a).) Several provisions of the Act allow for the amendment of the declaration. Of particular relevance here is section 1355, subdivision (b) (hereafter section 1355(b)), which provides in relevant part: “Except to the extent that a declaration provides by its express terms that it is not amendable, in whole or in part, a declaration which fails to include provisions permitting its amendment at all times during its existence may be amended at any time.” [FN. 3]
Terifaj’s argument is somewhat ambiguous with respect to enforcement of restrictions contained in amended declarations. She appears to argue that such restrictions are entirely unenforceable in any manner, but also maintains that such restrictions are not enforceable pursuant to section 1354, subdivision (a), because they do not meet the requirements of equitable servitudes. Since her argument is vague, we address both contentions.
Because we are construing provisions in the Davis-Stirling Act, we briefly recite the rules of statutory construction that will guide our decision. [4] Our primary task in construing a statute is to ascertain the intent of the Legislature. (Peracchi v. Superior Court (2003) 30 Cal.4th 1245, 1253.) We make this determination by looking to the words used in the statute and giving them their plain meaning. (Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 358.) ” ‘. . . “If there is no ambiguity in the language of the statute, ‘then the Legislature in presumed to have meant what it said.’ ” ‘ ” (Ibid.)
A.
We must first decide whether a use restriction contained in an amended declaration is enforceable against a homeowner who acquired his or her separate interest before the challenged amendment was adopted and recorded. [5] As noted above, under the Davis-Stirling Act, a common interest [83] development may amend its declaration pursuant to the provisions of the declaration itself or under the provisions of the Act. When a declaration is silent on whether it may be amended, section 1355(b) provides that it may be amended at any time. For the following reasons, we conclude that use restrictions added to a declaration by amendment bind not only subsequent purchasers, but current homeowners as well.
This conclusion follows from the plain language of section 1355(b), which provides in part: “For purposes of this subdivision, an amendment is only effective after (1) the proposed amendment has been distributed to all of the owners of separate interests in the common interest development by first-class mail postage prepaid or personal delivery not less than 15 days and not more than 60 days prior to any approval being solicited; (2) the approval of owners representing more than 50 percent . . . of the separate interests in the common interest development has been given, and that fact has been certified in a writing, executed and acknowledged by an officer of the association; and (3) the amendment has been recorded in each county in which a portion of the common interest development is located.” (Italics added.) Additionally, a copy of the recorded amendment must immediately be mailed or delivered to all homeowners. [FN. 4] [6] In short, the statute provides that an amendment is effective after notice of the proposed amendment is given to the homeowners, a majority of the homeowners approve the amendment, and the amendment is recorded. (1 Hanna & Van Atta, Cal Common Interest Developments: Law and Practice, supra, § 22:119, p. 1439; 9 Miller & Starr, Cal. Real Estate (3d ed. 2001) § 25:133, pp. 302-303.)
[7] Plainly read, any amendment duly adopted under this subdivision is effective against all homeowners, irrespective of when the owner acquired title to the separate interest or whether the homeowner voted for the [84] amendment. (See, e.g., 1 Hanna & Van Atta, Cal Common Interest Developments: Law and Practice, supra, § 22:119, p. 1439; 9 Miller & Starr, Cal. Real Estate, supra, § 25:133, p. 308.) Terifaj’s argument that subsequently enacted amendments are not binding on current homeowners runs counter to section 1355(b)’s express language that an amendment is effective upon the satisfaction of the requirements enumerated in that provision. Neither section 1355(b) nor any other provision in the Davis-Stirling Act exempts from compliance with amendments to the declaration homeowners who purchased their individual units prior to the amendment.
That is not surprising. To allow a declaration to be amended but limit its applicability to subsequent purchasers would make little sense. [8] A requirement for upholding covenants and restrictions in common interest developments is that they be uniformly applied and burden or benefit all interests evenly.(See, e.g., Nahrstedt, supra, 8 Cal.4th at p. 368 [restrictions must be “uniformly enforced”]; Rest.3d Property, Servitudes, § 6.10, com. f, p. 200.)This requirement would be severely undermined if only one segment of the condominium development were bound by the restriction. It would also, in effect, delay the benefit of the restriction or the amelioration of the harm addressed by the restriction until every current homeowner opposed to the restriction sold his or her interest. This would undermine the stability of the community, rather than promote stability as covenants and restrictions are intended to do.
Terifaj’s position would also, essentially, render meaningless the simple majority vote required for amendments to take effect under section 1355(b). Instead, unanimous consent would be needed, which would often be unattainable. [9] The language of section 1355(b), however, makes clear that a simple majority is all that is required before an amendment becomes effective. One reason for this is because amendment provisions are designed to “prevent[] a small number of holdouts from blocking changes regarded by the majority to be necessary to adapt to changing circumstances and thereby permit the community to retain its vitality over time.” (Rest.3d Property, Servitudes, § 6.10, com. a, p. 196.)
Subjecting owners to use restrictions in amended declarations promotes stability within common interest developments. As we observed in Nahrstedt, “[u]se restrictions are an inherent part of any common interest development and are crucial to the stable, planned environment of any shared ownership arrangement.”(Nahrstedt, supra, 8 Cal.4th at p. 372.) Such restrictions may “preclude alteration of building exteriors, limit the number of persons that [85]can occupy each unit, and place limitations on — or prohibit altogether — the keeping of pets. [Citations.]” (Id. at p. 373.) We explained that a homeowners association, “through an elected board of directors, is empowered . . . to enact new rules governing the use and occupancy of property within the [development].” (Ibid.) We further observed that “anyone who buys a unit in a common interest development with knowledge of its owners association’s discretionary power accepts ‘the risk that the power may be used in a way that benefits the commonality but harms the individual.’ ” (Id., at p. 374, quoting Natelson, Consent, Coercion, and “Reasonableness” in Private Law: The Special Case of the Property Owners Association(1990) 51 Ohio State L.J. 41, 67.) A prospective homeowner who purchases property in a common interest development should be aware that new rules and regulations may be adopted by the homeowners association either through the board’s rulemaking power or through the association’s amendment powers. (See, e.g., Randolph, Changing the Rules: Should Courts Limit the Power of Common Interest Communities to Alter Unit Owners’ Privileges in the Face of Vested Expectations?(1998) 38 Santa Clara L. Rev. 1081, 1126 [“There is no basis to argue that purchasers of units within common interest communities have an expectation that there will be no changes at all.”].)
Finally, section 1355(b)’s legislative history supports the conclusion that all homeowners are bound by amendments adopted and recorded subsequent to purchase. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 736 [court “may observe that available legislative history buttresses a plain language construction”].) Subdivision (b) of section 1355 was not part of the bill enacting the Davis-Stirling Act, but was added three years later in 1988. (Stats. 1988, ch. 1409, § 1, p. 4776 [Assem. Bill No. 4426].)[FN. 5] An enrolled bill report from the Department of Real Estate states that “[m]embers of a homeowners’ association . . . should not forever be saddled with provisions they desire to change.” (Cal. Dept. of Real Estate, Enrolled Bill Rep. on Assem. Bill No. 4426 (1987-1988 Reg. Sess.) Aug. 29, 1988, p. 1.) Significantly, the report recommended approval of Assembly Bill No. 4426, despite acknowledging that current homeowners may have relied on the restrictions in place at the time they made their purchase, stating: “The failure to include a provision for amendment may indicate an intentional omission. Additionally, some changes may provide for inconsistent uses which were not previously permissible. Many owners may have acquired [86] their interest in the subdivision because of such a restriction limiting use. To permit an amendment would affect their reasonable expectations.” (Enrolled Bill Rep. on Assem. Bill No. 4426, supra, p. 2.) The Legislature was thus aware that amendments could affect settled or reasonable expectations of some homeowners, but it did not limit the language of section 1355(b) to exempt those homeowners from subdivision (b)’s operation. Tellingly, nothing in the text of section 1355(b) indicates the Legislature intended only subsequent purchasers or homeowners who voted for an amendment to be bound by a use restriction so enacted.
[10] Section 1355(b)’s express language and the limited legislative history compel the conclusion that all homeowners are bound by amendments made to a declaration pursuant to that section. Accordingly, we conclude that all homeowners are subject to use restrictions contained in amended declarations irrespective of when the amendment was passed.
B.
To enforce the no-pet restriction in the Amended Declaration, the Association sought injunctive relief under section 1354, subdivision (a) (hereafter section 1354(a)), which provides in relevant part: “The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable.” [FN. 6] Terifaj contends that even if subsequently enacted use restrictions promulgated pursuant to section 1355(b) and recorded after a homeowner has purchased property in the development are binding on those homeowners, equitable relief under section 1354(a) is nonetheless unavailable to the homeowners association to enforce such restrictions.
Equitable relief, maintains Terifaj, may not be granted under section 1354(a) in this case because that section requires that a use restriction constitute an equitable servitude in order to be enforceable through injunctive relief. [FN. 7] She cites our decision in Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345 for the applicable California law on equitable servitudes, which she contends is [87] incorporated in section 1354(a). She maintains the no-pet restriction in this case did not meet the requirements of equitable servitudes, in part, because it was not contained in a document recorded prior to her purchase of a unit in the development, and she did not have notice of the restriction when she purchased the property.
The Association counters that section 1354(a) applies to all restrictions and covenants in the development’s recorded declaration, original or amended, and relies primarily on the Court of Appeal’s conclusion that section 1354(a) facially applies to any declaration. The Association contends, and the Court of Appeal concluded, that use restrictions in amended declarations are equitable servitudes because section 1354(a) makes no distinction between restrictions contained in the original declaration and those added to the declaration through amendment. [11] We agree with the Association that section 1354(a) facially applies to all covenants and restrictions in the declaration, irrespective of when such covenants and restrictions were incorporated into the declaration.
The text of section 1354(a) belies Terifaj’s contention that covenants and restrictions must meet the common law requirements of equitable servitudes before they may be enforced against a current homeowner. [12] That section does not provide that covenants and restrictions are enforceable only if they meet the common law requirements of equitable servitudes, but clearly provides that covenants and restrictions in the declaration “shall be enforceable equitable servitudes, unless unreasonable” and shall bind all owners. (§ 1354(a), italics added.) This language could mean one of two things, both of which undermine Terifaj’s contention. Such restrictions are deemed to be equitable servitudes notwithstanding their failure to meet the technical requirements of equitable servitudes; that is, the Legislature has made such restrictions enforceable equitable servitudes by virtue of their inclusion in the declaration. Or, such restrictions may simply be enforceable in the same manner as equitable servitudes, with equitable remedies available to the Association, including injunctive relief. Either reading precludes the conclusion that the Legislature intended to incorporate the technical requirements of equitable servitudes into the statute. This interpretation appears compelled by the observation that accepting Terifaj’s position would, in effect, nullify the amendment provisions in the Davis-Stirling Act because homeowners could argue, as does Terifaj here, that they did not have notice of the particular use restriction enacted pursuant to those provisions. A homeowners association, thus, would be unable to seek injunctive relief to compel a complaining homeowner to comply with duly promulgated restrictions pursuant to section 1355(b). We do not think the Legislature intended such an anomalous result.
[13] We therefore agree with the Court of Appeal that section 1354(a) governs enforcement of an amendment to a declaration because that section [88] does not distinguish between an original and an amended declaration. The Legislature, by using expansive language in section 1354(a), intended all covenants and restrictions in the declaration to be enforceable against all homeowners under that provision. Only if the covenant or restriction in question is unreasonable will it be unenforceable under section 1354(a).
Accordingly, we conclude that section 1354(a) applies to enforcement actions relating not only to the covenants and restrictions in the original declaration, but also covenants and restrictions in any declaration. [FN. 8] We are left then with the issue whether the deferential Nahrstedt standard of presumptive reasonableness applies to use restrictions adopted and recorded after a challenging homeowner has purchased his or her individual interest.
C.
[14] We interpreted section 1354(a) in Nahrstedt, supra, 8 Cal.4th 361, and held, pursuant to principles distilled from various authorities and the text of section 1354(a), that covenants and restrictions in recorded declarations of common interest developments are presumptively reasonable (Nahrstedt, supra, at p. 380), and are enforceable “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” (id. at p. 382).
In articulating the judicial standard of review to be applied to such restrictions, we relied on the language of section 1354(a) and noted that the prior version of section 1354(a) provided that covenants and restrictions in recorded declarations ” ‘shall be enforceable equitable servitudes where reasonable‘ ” (Nahrstedt, supra, 8 Cal.4th at p. 380; former § 1355, Stats. 1963, ch. 860, § 3, p. 2092), and that the Legislature’s use of the double negative “unless unreasonable” in the current version of the statute “cloaked use restrictions contained in a condominium development’s recorded declaration with a presumption of reasonableness by shifting the burden of proving otherwise to the party challenging the use restriction.” (Nahrstedt, supra, 8 Cal.4th at p. 380.)[89]
The Association contends Nahrstedt’s deferential standard applies to subsequently adopted and recorded use restrictions incorporated into a development’s declaration. Terifaj disagrees, emphasizing that our conclusion in Nahrstedt was based on the fact that the use restriction in that case was contained in a declaration recorded prior to the homeowner’s purchase, and relies on our reasoning that “giving deference to use restrictions contained in a condominium project’s originating documents protects the general expectations of condominium owners ‘that restrictions in place at the time they purchase their units will be enforceable.’ (Note, Judicial Review of Condominium Rulemaking [(1981)] 94 Harv. L. Rev. 647, 653; Ellickson, Cities and Homeowners’ Associations(1982) 130 U.Pa. L.Rev. 1519, 1526-1527 [stating that association members ‘unanimously consent to the provisions in the association’s original documents’ and courts therefore should not scrutinize such documents for ‘reasonableness.’].)” (Nahrstedt, supra, 8 Cal.4th at p. 377.)
In Nahrstedt, supra, 8 Cal.4th 361, the homeowner, who had three indoor cats, sought to prevent the condominium homeowners association from enforcing a no-pet restriction against her because, she contended, her cats did not make noise and were not a nuisance (Id. at p. 367), and she had been unaware of the restriction when she purchased her unit (Id. at p. 369). Applying the deferential standard, we held the no-pet restriction was enforceable because the homeowner failed to meet the burden placed on her, as the party challenging the restriction, to show that the restriction was “unreasonable.” (Id. at p. 389.)
Unlike in this case, Nahrstedt involved a pet restriction contained in a development’s originating declaration that was recorded prior to the challenging homeowner’s purchase, a fact we emphasized throughout our discussion. Because of that factual difference, much of reasoning in that decision is not necessarily relevant to the resolution of this case. However, Nahrstedt does contain reasoning that arguably supports the conclusion that subsequently enacted and recorded use restrictions should receive greater judicial scrutiny. We observed in Nahrstedt that other jurisdictions, “lacking . . . legislative guidance,” applied some form of reasonableness analysis to use restrictions in common interest developments. Significantly, we noted that some courts applied “the ‘reasonableness’ standard only to those restrictions adopted by majority vote of the homeowners or enacted under the rulemaking power of an association’s governing board, and would not apply this test to restrictions included in a planned development project’s recorded declaration or master deed.” (Nahrstedt, supra, 8 Cal.4th at p. 376.)[90]
We discussed, in particular, Hidden Harbour Estates v. Basso (Fla.Dist.Ct.App. 1981) 393 So.2d 637 (Basso), in which a Florida appellate court delineated two categories of restrictions — those found in the development’s declaration and those later promulgated by an association’s board of directors. Restrictions found in the development’s declaration are “clothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed,” while restrictions in the second category are subjected to a reasonableness analysis. (Id. at pp. 639-640; Nahrstedt, supra, at pp. 376-377.)Basso imposed a reasonableness analysis to rules promulgated by a board of directors or decisions by the board denying a certain use when the decision falls within the board’s authority, explaining the reason for the more stringent standard is “to somewhat fetter the discretion of the board of directors.” (Basso, supra, at p. 640.) While the Basso court spoke of restrictions in the declaration, without distinguishing the original declaration from restrictions subsequently adopted through amendment, the reference to “each individual unit owner” purchasing with knowledge “of and accepting the restrictions to be imposed” (Id. at p. 639), makes clear that the court was referring to the founding declaration or one in existence at the time of purchase.
We also discussed Noble v. Murphy (Mass.App.Ct. 1993) 612 N.E.2d 266. In that case, the original recorded bylaws of a condominium development incorporated the development’s rules and regulations, which included a no-pet rule. (Id. at p. 270.) In the course of upholding the pet restriction, which had been added to the recorded bylaws prior to the challenging homeowner’s purchase of a unit, the court stated that “[a] condominium use restriction appearing in originating documents which predate the purchase of individual units may be subject to even more liberal review than if promulgated after units have been individually acquired.” (Ibid.; Nahrstedt, supra,8 Cal.4th at p. 377.)
Based on this discussion and because we explained that our interpretation of section 1354(a) was consistent with “judicial decisions in other jurisdictions that have applied a presumption of validity to the recorded land use restrictions of a common interest development” (Nahrstedt, supra, 8 Cal.4th at p. 382, citing Noble and Basso), we have acknowledged that “some of our reasoning arguably suggested a distinction between originating [covenants and restrictions] and subsequently promulgated use restrictions.” (Lamden v. La Jolla Shores Clubdominium Homeowners Association (1999) 21 Cal.4th 249, 264.) Our discussion of Basso and [91] Noble suggests that we would not necessarily apply the same deferential standard to subsequently enacted use restrictions. [15] For the reasons that follow, however, we conclude that subsequently promulgated and recorded use restrictions are entitled to the same judicial deference accorded covenants and restrictions in original declarations, that is, they are presumptively valid, and the burden of proving otherwise rests upon the challenging homeowner.
Although we discussed and seemingly approved of the distinction drawn in Basso between restrictions in the original declaration and those subsequently adopted, we did not hold or state in Nahrstedt that we were adopting such an approach. Instead we prefaced our discussion of Bassoand Noble with the caveat that those decisions were from “states lacking . . . legislative guidance.” (Nahrstedt, supra, 8 Cal.4th at p. 376.) We, however, have been provided guidance by our Legislature through the Davis-Stirling Act, and as the Court of Appeal observed, the statutory language is “controlling.” Section 1354(a) unambiguously refers to the “declaration” and provides that the covenants and restrictions in the declaration are equitable servitudes that are enforceable unless unreasonable. It further provides that the covenants and restrictions shall bind all owners of separate interests. (§ 1354(a).) We have previously construed the phrase “unless unreasonable” in section 1354(a) to mean that restrictions in a declaration are enforceable unless they are arbitrary, violate public policy, or impose a burden on the land that outweighs any benefits. (Nahrstedt, supra, 8 Cal.4th at p. 389.) This interpretation was governed by the Legislature’s use of the double negative “unless unreasonable” in place of the previous phrase “where reasonable.” (Id. at p. 380.)
While our interpretation was consistent with Basso, Basso was not the primary basis for our holding — the statutory language was. As we concluded, “[i]n section 1354, the Legislature has specifically addressed the subject of the enforcement of use restrictions that, like the one in this case prohibiting the keeping of certain animals, are recorded in the declaration of a condominium or other common interest development. The Legislature has mandated judicial enforcement of those restrictions unless they are shown to be unreasonable when applied to the development as a whole.” (Nahrstedt, supra, 8 Cal.4th at pp. 388-389, italics added.)
Nor did Nahrstedt imply that we would apply a more stringent standard, such as objective reasonableness, to restrictions in recorded amended declarations, as opposed to unrecorded use restrictions promulgated by a board of directors of a homeowners association or other unrecorded rules and regulations. (E.g.,Lamden v. La Jolla Shores Clubdominium Homeowners Association, supra, 21 Cal.4th at p. 264; Rancho Santa Fe Association v. Dolan-King(2004) 115 Cal.App.4th 28, 38 & fn. 2.)[92]
Moreover, there is no language in section 1355(b) that indicates a different standard for enforcing its provisions should, or may, apply. (California Fed. Savings & Loan Assn. v. City of Los Angeles (1995) 11 Cal.4th 342, 349 [“It is our task to construe, not to amend, the statute.”].) Once the declaration is amended and recorded, section 1354(a) governs its enforcement, and hence, amendments are enforceable unless unreasonable. Had the Legislature intended a different standard to apply to subsequently adopted and recorded use restrictions than apply to restrictions in the original declaration, it would have so provided.
The language of another amendment provision in the Davis-Stirling Act — section 1356, subdivision (c)(5) — demonstrates that the Legislature, if it wished, could have provided that an amendment must be reasonable to be enforceable against a current homeowner under section 1354(a). When the declaration itself provides that it may be amended only with a supermajority vote, section 1356 allows a homeowners association or any homeowner in a common interest development to petition the court for a reduction of the required percentage of votes necessary for the passage of an amendment. (§ 1356, subd. (a).) Pursuant to section 1356, the court may reduce the required minimum percentage of votes needed to amend the declaration, provided a majority of the homeowners approve the amendment and the petition complies with the requirements set out in subdivision (a)(1) through (5). (§ 1356, subd. (a).) Under section 1356, subdivision (c), it is within the court’s discretion to approve or deny such a petition, but in order to grant the petition, the court must find, inter alia, that “[t]he amendment is reasonable.” (§ 1356, subd. (c)(5).) [FN. 9]
No similar limitation was inserted in the text of section 1355(b). Section 1355(b) enumerates the criteria necessary for the amendment of a declaration when the declaration is silent on whether it may be amended, and once the [93] requirements are met, including recordation, the amendment becomes effective and binds all homeowners. Given that section 1356 was added to the Davis-Stirling Act before section 1355(b), it is unlikely the omission of a reasonableness standard was an oversight. This point is buttressed by the fact that section 1355, subdivision (a), which provides for amendment of the declaration pursuant to either the amendment provisions in the declaration itself, or pursuant to other amendment provisions in the Davis-Stirling Act, was enacted as part of the original Act, yet it also does not contain a reasonableness element as does section 1356.
D.
[16] Applying the deferential Nahrstedt standard of review to the Amended Declaration in this case, we hold, as we did in Nahrstedt, that the recorded restriction prohibiting pets is not unreasonable as a matter of law. [FN. 10] Terifaj, however, contends that a subsequent amendment to the Davis-Stirling Act, providing in relevant part that “no governing documents shall prohibit the owner of a separate interest . . . from keeping at least one pet” (§ 1360.5, added by Stats. 2000, ch. 551, § 2 [Assem. Bill No. 860]), calls into question Nahrstedt‘s ultimate holding that the no-pet restriction in that case was not unreasonable. Section 1360.5, however, does not aid Terifaj. As the Court of Appeal observed, subdivision (e) of section 1360.5 clearly provides that its provisions “shall only apply to governing documents entered into, amended, or otherwise modified on or after [January 1, 2001].” The Declaration in this case was amended and recorded in January 2000, a year prior to section 1360.5’s operative date. To allow section 1360.5 to undermine Nahrstedt‘s holding in this case would essentially render section 1360.5’s operative date meaningless. Any homeowner could challenge a recorded no-pet restriction on the basis of section 1360.5 without regard to its effective date.
Moreover, the fact that the Legislature has passed section 1360.5 does not undermine our conclusion in Nahrstedt that a restriction prohibiting pets may be reasonable. [17] By enacting section 1360.5, the Legislature did not declare that prohibiting pets is unreasonable, but merely demonstrated a legislative preference for allowing homeowners in common interest developments to keep at least one pet. As we observed in Nahrstedt, prohibiting pets is “rationally related to health, sanitation and noise concerns legitimately held by residents” of common interest developments. (Nahrstedt, supra, 8 Cal.4th at p. 386.) While Nahrstedt involved a “high-density” project, the concerns expressed in that case apply equally to the present case, which involves a [94] smaller development. Therefore, nothing in section 1360.5 undermines Nahrstedt‘s holding that a no-pet restriction may be reasonable given the characteristics of common interest developments such as condominium projects. [FN. 11]
E.
Terifaj contends that even if the recorded no-pet restriction is an enforceable equitable servitude, the trial court erred in awarding the Association attorney fees for prosecuting the original complaint, which was based, according to Terifaj, on the unrecorded and unenforceable no-pet rule. With respect to the original complaint, she contends she was the prevailing party. We conclude the trial court did not abuse its discretion in determining that the Association was the prevailing party (Heather Farms Homeowners Association v. Robinson (1994) 21 Cal.App.4th 1568, 1574) and awarding the Association $15,000 in attorney fees. On a “practical level” (ibid.), the Association “achieved its main litigation objective” (Castro v. Superior Court (2004) 116 Cal.App.4th 1010, 1020) in ultimately securing an injunction to enjoin Terifaj from bringing her dog onto the development. Moreover, Terifaj fails to provide evidence that the trial court actually awarded the Association attorney fees for prosecuting the original complaint. The record discloses the Association sought $19,787 in attorney fees, more than the trial court awarded. Presumably, the court took into account Terifaj’s argument regarding the original complaint. In any event, Terifaj fails to establish that the trial court abused its discretion in awarding the Association $15,000 in attorney fees. (See Rancho Santa Fe Association v. Dolan-King, supra, 115 Cal.App.4th at p. 46.)[95]
III. DISPOSITION
For the foregoing reasons, we affirm the judgment of the Court of Appeal.
George, C. J., Kennard, J., Baxter, J., Werdegar, J., Chin, J., and Brown, J., concurred.
FN 1. All further statutory references are to the Civil Code.
FN 2. Although Villa De Las Palmas was created prior to the enactment of the Davis-Stirling Act, the Act applies to common interest developments in existence prior to its enactment.(§ 1352;Nahrstedt, supra, 8 Cal.4th at p. 378, fn. 8.)
FN 3. In addition to section 1355(b), the Davis-Stirling Act provides several methods for amending the declaration. Section 1355, subdivision (a), provides that a declaration may be amended pursuant to its own amendment provisions or pursuant to other provisions of the Act; section 1356 allows a homeowners association to petition the court for approval of an amendment if the declaration provides for a larger majority than the association is able to muster, provided at least 50 percent of the owners vote in favor of the proposed amendment; section 1355.5 provides for the deletion of certain developer-oriented provisions; section 1357 provides for the extension of a termination date set forth in a declaration.
FN 4. Section 1355(b) provides in full: “Except to the extent that a declaration provides by its express terms that it is not amendable, in whole or in part, a declaration which fails to include provisions permitting its amendment at all times during its existence may be amended at any time. For purposes of this subdivision, an amendment is only effective after (1) the proposed amendment has been distributed to all of the owners of separate interests in the common interest development by first-class mail postage prepaid or personal delivery not less than 15 days and not more than 60 days prior to any approval being solicited; (2) the approval of owners representing more than 50 percent, or any higher percentage required by the declaration for the approval of an amendment to the declaration, of the separate interests in the common interest development has been given, and that fact has been certified in a writing, executed and acknowledged by an officer of the association; and (3) the amendment has been recorded in each county in which a portion of the common interest development is located. A copy of any amendment adopted pursuant to this subdivision shall be distributed by first-class mail postage prepaid or personal delivery to all of the owners of separate interest immediately upon its recordation.”
FN 5. Section 1355(b) initially contained a sunset provision with a termination date of January 1, 1990. In 1993, the Legislature amended the subdivision by deleting the sunset provision. (§ 1355(b), as amended by Stats. 1993, ch. 21, § 1, pp. 134-135.) Section 1355(b), therefore, was inoperative between January 1, 1990 and January 1, 1994.
FN 6. In full, section 1354(a), provides: “The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both.”
FN 7. Section 1354(a) is found in article 2 of the Davis-Stirling Act, which is entitled “Enforcement.”
FN 8. Because the Association amended the Declaration pursuant to section 1355(b) and filed an amended complaint based on the newly enacted and recorded no-pet restriction, we need not decide in this case whether the Association would have been entitled to equitable relief based on Terifaj’s violation of the unrecorded no-pet rule passed pursuant to the 1962 Declaration.
FN 9. Section 1356, subdivision (c), provides in full: “The court may, but shall not be required to, grant the petition if it finds all of the following: [] (1) The petitioner has given not less than 15 days written notice of the court hearing to all members of the association, to any mortgagee of a mortgage or beneficiary of a deed of trust who is entitled to notice under the terms of the declaration, and to the city, county, or city and county in which the common interest development is located that is entitled to notice under the terms of the declaration. [] (2) Balloting on the proposed amendment was conducted in accordance with all applicable provisions of the governing documents. [] (3) A reasonably diligent effort was made to permit all eligible members to vote on the proposed amendment. [] (4) Owners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment. In a voting structure with more than one class, where the declaration requires a majority of more than one class to vote in favor of the amendment, owners having more than 50 percent of the votes of each class required by the declaration to vote in favor of the amendment voted in favor of the amendment. [] (5) The amendment is reasonable. [] (6) Granting the petition is not improper for any reason stated in subdivision (e).”
FN 10. We do not quarrel with Terifaj about the benefits of pet ownership, but that is not the issue in this case.The primary issue in this case is whether subsequently enacted and recorded use restrictions may be enforced against a current homeowner.
FN 11. Terifaj, supported by the California Council of the Blind as amicus curiae, contends that the injunction issued in this case is overbroad and infringes on her civil rights because she is prohibited from inviting to her unit guests who require guide dogs or leasing her unit to an individual requiring a guide dog. This contention is hypothetical since there is no indication the Association will not permit blind persons to use guide dogs on the property. Furthermore, despite Terifaj’s implication to the contrary (“the Court of Appeal reasons that the issue of overbreadth does not apply”), the Court of Appeal did not mention, much less address this issue, and Terifaj did not seek rehearing in the Court of Appeal to address this alleged omission. We, therefore, decline to address her contention here. (Cal. Rules of Court, rule 28(c)(2).
[CC&R Amendments; Real Estate Signs] Court upheld lender consent requirement for CC&R amendment, rather than lender vote; Real estate signs may be regulated for aesthetic purposes and may be prohibited from being posted in HOA common areas.
OPINION
MCCONNELL, P. J.-
Barbara Seith appeals an order the trial court entered that reduced the percentage of votes necessary to amend the Fourth La Costa Condominium Owners Association’s (Owners Association) Declaration of Covenants, Conditions and Restrictions (CC&R’s) (Civ. Code, [1] 1356) and Bylaws (Corp. Code, 7515). Seith challenges the order on the grounds the underlying vote was invalid because it was by mail ballot, the ballot was not secret, the Owners Association made an insufficient effort to permit all owners to vote, and there was insufficient evidence of lender acquiescence; the court exceeded its statutory authority and implied an improper standard; certain provisions of the amendment are unreasonable; and Civil Code section 1356 is unconstitutional as it impairs the obligation of contracts. We affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
The 48-unit Fourth La Costa condominium development was governed by CC&R’s and Bylaws recorded in 1969. Both documents provided they may be amended only by an affirmative vote of not less than 75 percent of the owners.
In 2004 the Owners Association decided the CC&R’s and Bylaws should be amended because some provisions were superseded by changes in the law, other provisions were ambiguous and had caused confusion, and provisions pertaining to developer rights and obligations no longer applied. In an August 29, 2005 letter to owners, the Owners Association asked for an affirmative vote on the First Restated CC&R’s, which contain dozens of new provisions and the amendment of numerous original provisions, and on amended Bylaws. The letter notified owners of the 75 percent vote requirement, and of an October 1 informational meeting. It requested the return of ballots by October 7.
In a September 2005 newsletter, the Owners Association reminded owners to vote. Many owners did not return their ballots, and on October 11 the Owners Association sent a memorandum and another ballot to each owner who had not voted, and it extended the deadline for voting to October 21.
In February 2006 the Owners Association filed a petition in the superior court for an order under section 1356 to reduce the percentage of affirmative [569] votes needed to amend the CC&R’s. The petition stated 25 owners voted in favor of the amendment, 11 owners voted against it, and 12 owners did not return their ballots. The petition prayed that the First Restated CC&R’s “be ordered approved based upon the number of affirmative votes actually cast constituting at least a majority of owners.”
In July 2006 the Owners Association filed a supplemental petition under Corporations Code section 7515 to reduce the percentage of affirmative votes necessary to approve the Bylaws.
Seith owns and leases out two condominiums at Fourth La Costa. She filed a written objection to the petitions on various grounds, including that the proposed amendments imposed “onerous terms and burdens on the leasing of units.”
In a tentative ruling, the court granted the petitions. After an August 16, 2006 hearing, the court took the matter under submission. On August 21 it confirmed its tentative ruling.
DISCUSSION[2]
I. Validity of Vote
A1
[1] “[S]ection 1356, part of the Davis-Stirling Common Interest Development Act [Davis-Stirling Act] . . . , provides that a homeowners association, or any member, may petition the superior court for a reduction in the percentage of affirmative votes required to amend the CC&R’s if they require approval by ‘owners having more than 50 percent of the votes in the association . . . .’ [Citation.] The court may, but need not, grant the petition if it finds all of the following: [570] Notice was properly given; the balloting was properly conducted [in accordance with all applicable provisions of the governing documents]; reasonable efforts were made to permit eligible members to vote; ‘[o]wners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment’; and ‘[t]he amendment is reasonable.’ ” (Peak Investments v. South Peak Homeowners Assn., Inc. (2006) 140 Cal.App.4th 1363, 1366-1367, fn. omitted.)
“Viewed objectively, the purpose of . . . section 1356 is to give a property owners’ association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association.” (Blue Lagoon Community Assn. v. Mitchell (1997) 55 Cal.App.4th 472, 477.)
Because section 1356 gives the trial court broad discretion in ruling on a petition ( 1356, subd. (c)), we review its ruling for abuse of discretion. “Discretion is abused whenever, in its exercise, the court exceeds the bounds of reason, all of the circumstances before it being considered.” (Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)
2
Seith contends the vote here was not “conducted in accordance with all applicable provisions of the governing documents,” as required by section 1356, subdivision (c)(2), because it was by mail ballots. She concedes, however, that there is statutory authority for mail ballots. Corporations Code section 7513, subdivision (a) provides that “unless prohibited in the articles or bylaws, any action which may be taken at any regular or special meeting of members may be taken without a meeting if the corporation distributes a written ballot to every member entitled to vote on the matter.”
Seith cites the Bylaws as stating they “may only be amended ‘at a regular or special meeting of members.’ ” The Bylaws, however, actually provide they “may be amended, at a regular or special meeting of the members.” [3] (Italics added.) Seith also cites the CC&R’s requirement there must be an affirmative “vote” of at least 75 percent of owners. A vote, however, may be made at a meeting or by mail ballots. [571]
Seith ultimately acknowledges the governing documents did not prohibit mail ballots. She asserts, however, that since the governing documents did not expressly authorize mail ballots, and the authority for their use was purely statutory, the vote was not in accordance with the governing documents and the Owners Association was thus precluded from obtaining relief from the supermajority vote requirement under section 1356.
[2] The interpretation of statutes presents questions of law we review independently. (Board of Retirement v. Lewis (1990) 217 Cal.App.3d 956, 964.) Seith cites no authority that supports her position, and we find it unpersuasive. The Legislature intends to allow mail ballots unless they are expressly prohibited by the governing documents, and their use would run afoul of section 1356, subdivision (c)(2) only if the governing documents prohibited their use.
3
Additionally, Seith cites Corporations Code section 7513, subdivision (b), which provides that “[a]pproval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot . . . equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.”
Seith asserts Corporations Code section 7513, subdivision (b) and Civil Code section 1356 have “equal legislative dignity, and neither prevails over the other.” She asserts section 1356 “permits the court to ignore supermajority requirements of the association’s CC&R’s, but it does [not] permit the court to ignore express provisions of other statutes. By granting the petition under [section] 1356 where the vote was only valid because of the provisions of [Corporations Code section 7513, subdivision (a)], the court disregarded the express language of [Corporations Code section 7513, subdivision (b)], which here mandates 75 [percent] owner approval.” In other words, Seith again takes the position that when mail ballots are used an association may never petition under Civil Code section 1356 for relief from a supermajority vote requirement.
[3] We disagree. As the court explained in its order, “the relief requested in the petition is exactly the type for which judicial intervention under Civil Code [section] 1356 is deemed proper as only 69 [percent] of the owners have responded despite the efforts of the [Owners] Association to increase participation.” There is no suggestion the Legislature intended to limit the reach of section 1356 to votes taken at a regular or special meeting, and we [572] see no reason for such a distinction. If an election is held at a meeting, the governing documents may be amended only if the percentage of affirmative votes required by the governing documents is cast, or the association obtains relief under section 1356. As there is no evidence of legislative intent to the contrary, the same rule should apply to votes by mail ballot.
B
Alternatively, Seith contends the vote violated section 1355, subdivision (b), under which an amendment to CC&R’s is effective only after “the proposed amendment has been distributed to all of the owners of separate interests in the common interest development by first-class mail postage prepaid or personal delivery not less than 15 days and not more than 60 days prior to any approval being solicited.” Seith complains that the Owners Association distributed the proposed amendment and ballots at the same time, and thus gave owners an unreasonably short time within which to evaluate the issues and mount an opposition.
Subdivision (b) of section 1355, however, is inapplicable. Subdivision (a) of section 1355 provides the “declaration may be amended pursuant to the governing documents or this title [title 6 of the Civil Code, “Common Interest Developments”]. Except as provided in Section 1356, an amendment is effective after . . . the approval of the percentage of owners required by the governing documents has been given.” (Italics added.) The Owners Association proceeded under its governing documents, not section 1355, and when a supermajority affirmative vote was not cast, it proceeded under section 1356.
Seith asserts the vote here was pursuant to title 6 of the Civil Code, and not the governing documents, because the vote was by mail ballots instead and a supermajority affirmative vote was not cast. As discussed, however, Corporations Code section 7513, subdivision (a) authorized the mail ballots. Further, the lack of a supermajority affirmative vote does not mean the vote was not conducted under the governing documents within the meaning of Civil Code section 1356, subdivision (c)(2). Rather, the lack of a supermajority affirmative vote made a petition for relief under section 1356 appropriate.
C
Further, Seith contends the vote was invalid because it was not by secret ballot. She cites Civil Code section 1363.03, subdivision (b), which provides that “[n]otwithstanding any other law or provision of the governing documents, elections regarding . . . amendments to the governing documents . . . shall be held [573] by secret ballot in accordance with the procedures set forth in this section.” The statute is inapplicable, however, because it was not effective until July 1, 2006, nearly nine months after the vote here. Contrary to Seith’s view, the dates of filing of the Owners Association’s petitions and the trial court’s order are immaterial. At the relevant time, the Owners Association was not required to conduct the vote by secret ballot. Indeed, Seith concedes the legislative history shows that before the enactment of section 1363.03, ballots in common interest developments were not required by law to be secret.
D
Seith also contends the vote is invalid because there is insufficient evidence of acquiescence by lenders. The original CC&R’s provided that in addition to a supermajority vote of owners, they may be amended “provided written notice of the proposed amendment is sent to all lenders and a written consent is obtained of seventy-five percent . . . of the lenders holding the beneficial interests in any Mortgages or Trust Deeds of record as valid liens against said project or any portion thereof, provided, however, that the lender shall not unreasonably withhold their consents.”
The Owners Association’s original petition averred that through its legal counsel it “mailed letters and ballots to the holders of the Mortgages as required [by] . . . the CC&Rs. These letters were sent via Certified Mail, Return Receipt Requested (‘RRR’) and the letter informed the Mortgagees that the signature on the RRR would be deemed consent of the proposed [amended] CC&Rs, unless a ballot was returned within thirty . . . days. . . . As of February 8, 2006, over 75 [percent] of the Mortgagees had signed the RRR. One . . . lender indicated that it could not consent because it did not have a copy of the original CC&Rs.” The petition included a copy of the letter and the ballot sent the lenders.
As the court noted, the CC&R’s required an affirmative vote of owners, but only written consent by lenders. The court explained “[t]his would tend to indicate that the CC&R’s, as originally drafted, contemplated a distinction between the forms of approval required from each group, with the approval from the latter group being more relaxed in form. The CC[&]R’s did not specify the method by which the consent may be obtained. [The Owners Association’s] method of assuring receipt of the proposed changes by the lenders and thereafter providing them with 30 days within which to reject the changes is as good as any.” We agree with the court’s assessment. [574]
E
[4] Seith also contends the Owners Association violated section 1356, subdivision (c)(3), which requires an association to make a “reasonably diligent effort . . . to permit all eligible members to vote on the proposed amendment.”
In support of its petitions, the Owners Association submitted the declaration of Ashley Rosas, a management consultant who oversees its day-to-day operations. The declaration stated the Owners Association maintains a list of all current record owners, and Rosas’s staff used the list to mail the proposed CC&R’s and ballots to owners on August 29, 2005. The declaration also stated that in mid-September a reminder memorandum was sent to owners who did not respond, another reminder was included in the Owner Association’s September newsletter, on October 1 it conducted a special meeting regarding the proposed amendment, and on October 11 another reminder and ballots were sent to owners who had still not responded.
Seith submits that “further solicitation [of owners who did not vote] was likely [to lead] to outright defeat,” and thus the Owners Association had “no incentive to seek more votes.” Seith submitted no evidence pertaining to the Owners Association’s motives, and her position is mere speculation. Perhaps, as Seith asserts, it would not have been onerous for the Owners Association to try to reach by telephone the 12 owners who did not vote. We conclude, however, that its efforts were sufficient to satisfy section 1356, subdivision (c)(3). The vote was valid.
II. Trial Court’s Statutory Authority
A
Next, Seith contends the trial court exceeded the authority of section 1356, subdivision (d), which provides: “If the court makes the findings required by subdivision (c), any order issued pursuant to this section may confirm the amendment as being validly approved on the basis of the affirmative votes actually received during the balloting period or the order may dispense with any requirement relating to quorums or to the number or percentage of votes needed for approval of the amendment that would otherwise exist under the governing documents.”
The proposed amendment to the CC&R’s changes the supermajority vote for their amendment to a majority vote. The original CC&R’s, however, [575] provided they “shall not be amended to allow amendments by vote of less than seventy-five percent . . . of the Owners.” Seith asserts the original CC&R’s may never be amended to allow a majority vote.
[5] The issue is one of contract interpretation. “The same rules that apply to interpretation of contracts apply to the interpretation of CC&R’s.” (Chee v. Amanda Goldt Property Management (2006) 143 Cal.App.4th 1360, 1377.) ” ‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ [Citation.] ‘Where the language of a contract is clear and not absurd, it will be followed.’ ” (Templeton Development Corp. v. Superior Court (2006) 144 Cal.App.4th 1073, 1085; Civ. Code, 1638 [ “The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity]”.)
At the trial court, the Owners Association argued the original CC&R’s unreasonably restricted it from amending the document, and requiring it to obtain the approval of 75 percent of owners “for each and every amendment, stagnates [it] from being able to update the CC&Rs and to reflect the desires of the community. The fact that the CC&Rs have not been amended since 1969 is proof of the unreasonable hold the current amendment provision has on this community.”
The court found reasonable the provision of the First Restated CC&R’s to allow a majority vote to amend the document, and we agree. It would be rather absurd to allow the governing documents to restrict an association’s ability to amend the document in perpetuity, even if, for instance, 100 percent of the owners preferred a majority vote rather than a supermajority vote. Accordingly, the court did not exceed its authority under section 1356 by approving the majority vote amendment.
B
Seith also contends the court exceeded its authority under section 1357. Under subdivision (a) of section 1357, the Legislature “finds and declares that it is in the public interest to provide a vehicle for extending the term of the declaration if owners having more than 50 percent of [576] the votes in the association choose to do so.” Subdivision (b) of section 1357 provides that a “declaration which specifies a termination date, but which contains no provision for extension of the termination date, may be extended by the approval of owners having more than 50 percent of the votes in the association or any greater percentage specified in the declaration for an amendment thereto. If the approval of owners having more than 50 percent of the votes in the association is required to amend the declaration, the term of the declaration may be extended in accordance with Section 1356.” (Italics added.)
Under subdivision (d) of section 1357, “[n]o single extension of the terms of the declaration made pursuant to this section shall exceed the initial term of the declaration of 20 years, whichever is less. However, more than one extension may occur pursuant to this section.” Here, the original CC&R’s provided for a term of 40 years from the date of recordation, December 9, 1969, but they also provided that after the 40-year period they shall be automatically extended for successive ten-year periods. The First Restated CC&R’s provide they are in effect until December 31, 2055, after which they shall be automatically extended for successive 10-year periods. Seith asserts the extension to 2055 violates subdivision (d) of section 1357.
[6] Section 1357, however, is inapplicable here because the original CC&R’s had an automatic renewal provision, and the statute plainly applies only to CC&R’s that have a termination date and do not provide for an extension. In enacting the statute, the Legislature was concerned that “there are common interest developments that have been created with deed restrictions which do not provide a means for the property owners to extend the term of the declaration. . . . [C]ovenants and restrictions, contained in the declaration, are an appropriate method for protecting the common plan of developments and to provide for a mechanism for financial support for the upkeep of common areas. . . . If declarations terminate prematurely, common interest developments may deteriorate and the housing supply of affordable units could be impacted adversely.” ( 1357, subd. (a).) Had the Legislature intended to limit the extension of any CC&R’s to 20-year periods it could easily have said so.
III. Section 1356’s Reasonableness Standard
Seith contends the trial court violated section 1356, subdivision (c)(5) by not applying a reasonableness standard, and instead applying a deferential standard under Nahrstedt v. Lakeside Village Condominium Assn., Inc. (1994) 8 Cal.4th 361 (Nahrstedt).
In Nahrstedt, our high court interpreted section 1354, subdivision (a), under which recorded CC&R’s are enforceable equitable servitudes “unless unreasonable.” The court held CC&R’s are unreasonable if 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, supra, 8 Cal.4th at p. 382.) [577] The prior version of the statutory provision (former 1355) stated ” ‘restrictions shall be enforceable equitable servitudes where reasonable,’ ” and the court concluded the shift from “where reasonable” to the double negative “unless unreasonable” signaled the Legislature’s intent to “cloak[] use restrictions contained in a condominium development’s recorded declaration with a presumption of reasonableness by shifting the burden of proving otherwise to the party challenging the use restrictions.” (Nahrstedt, at p. 380, italics added by court; see also Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 79.)
[7] We agree with Seith that since section 1356 pertains to proposed amendments to CC&R’s, rather than recorded CC&R’s, and it does not contain the “unless unreasonable” language of section 1354, there is no presumption of reasonableness under section 1356 and the party petitioning for relief from a supermajority vote requirement has the burden of proving reasonableness. The term “reasonable” in the context of use restrictions has been variously defined as “not arbitrary or capricious” (Ironwood Owners Assn. IX v. Solomon (1986) 178 Cal.App.3d 766, 772; Lamden v. La Jolla Shores Condominium Homeowners Assn. (1999) 21 Cal.4th 249, 266), “rationally related to the protection, preservation or proper operation of the property and the purposes of the Association as set forth in its governing instruments,” and “fair and nondiscriminatory.” (Laguna Royale Owners Assn. v. Darger (1981) 119 Cal.App.3d 670, 680.)
Here, in discussing 11 specific issues Seith raised, on three instances the court found provisions of the First Restated CC&R’s not “unreasonable.” The order, however, also expressly acknowledges section 1356 imposes a reasonableness requirement, and it states the “[p]etitioner has satisfied the elements of . . . section 1356,” and the court “finds that all of the proposed changes with which the objecting party takes issue are indeed reasonable and that it does not appear that the amendments are for an improper purpose.” (Italics added.) Accordingly, the order establishes the court applied the correct burden of proof and a standard of reasonableness.
[8] Further, when the court properly places the burden of proof on the party petitioning under section 1356, its finding that a proposed amendment is not unreasonable, as opposed to reasonable, is of no real import. As the court explained in Nahrstedt, the differences between the terms “where reasonable” and “unless unreasonable” under section 1354 and its predecessor were germane to the issue of whether there is a presumption of validity and the allocation of burden of proof. A CC&R is unreasonable if it is arbitrary and capricious, violates the law or a fundamental public policy or imposes an [578] undue burden on property, and it is reasonable unless it meets those criteria. (See Miller & Starr, 9 Cal. Real Estate (3d ed. 2007) 25B:13, pp. 25B-42 to 25B-43.) We find no error.
IV. Objections to Specific Provisions
A
Seith complains that Article IV, Section 2(K) of the First Restated CC&R’s eliminates an owner’s right to an assigned parking space in the common area. The original CC&R’s provided that the Owners Association “shall” “assign to each Unit . . . the right to use one . . . parking space contained within the Common Area. . . . The [Owners] Association, however, reserves the right to re-assign and re-allocate said parking spaces in such manner and at such time as it may deem reasonably necessary for the benefit of all of the Owners of all of the Units.” The First Restated CC&R’s have the same language, but use the term “may” instead of “shall” with regard to the assignment of common area parking spaces to units.
At the trial court, the Owners Association explained that when the CC&R’s were originally adopted in 1969, common area parking spaces had not been assigned to the units, but shortly after their adoption parking spaces were assigned to the units and the assignments continue. The Owners Association argued the previous version was outdated because it no longer has any affirmative duty to assign spaces to the units since that task has been completed.
We disagree with Seith’s speculation that under the amendment the Owners Association may take assigned spaces away from units, as it cannot reassign spaces under the First Restated CC&R’s unless reassignment is necessary for the benefit of all owners. Taking spaces away from owners would not benefit them. Although the amended provision could have been drafted more clearly, under the circumstances we find it reasonable.
B1
Article VI, Section 3(A) of the First Restated CC&R’s states: “Except as may be required by legal proceedings or authorized by the Association’s Rules, no commercial signs, billboards, real estate flags or advertising of any [579] kind shall be maintained or permitted on any portion of the Development except for one ‘For Sale’ or ‘For Rent’ sign per Unit, not larger than 18 [inches] by 24 [inches]. The sign must be professionally printed, be maintained in good condition, and may only be posted in the window and may not be posted on the railings of balconies or locations on the buildings. . . . All signs must be removed within three . . . days of close of escrow or lease of the Unit.”
Seith contends the provision violates section 1353.6, which as of January 1, 2004, limits an association’s restrictions on noncommercial signs. The statute provides: “(a) The governing documents . . . may not prohibit posting or displaying of noncommercial signs, posters, flags, or banners on or in an owner’s separate interest, except as required for the protection of public health or safety or if the posting or display would violate a local, state, or federal law. [] (b) For the purposes of this section, a noncommercial sign, poster, flag, or banner may be made of paper, cardboard, cloth, plastic, or fabric, and may be posted or displayed from the yard, window, door, balcony, or outside wall of the separate interest. . . . [] (c) An association may prohibit noncommercial signs and posters that are more than 9 square feet in size and noncommercial flags or banners that are more than 15 square feet in size.”
In enacting the statute, the Legislature intended to provide: ” ‘(a) That homeowners throughout the state shall be able to engage in constitutionally protected free speech traditionally associated with private residential property. [] (b) That owners of a separate interest in a common interest development shall be specifically protected from unreasonable restrictions on this right in the governing documents.’ ” (Historical and Statutory Notes, 8 West’s Ann. Civ. Code (2007 ed.) foll. 1353.6, p. 184.)
In accordance with section 1353.6, Article VI, Section 3(B) of the First Restated CC&R’s does allow the display of noncommercial signs not exceeding nine square feet “from the yard, window, door, balcony, or outside walls of the Units and must be, made of paper, cardboard, cloth, plastic, or fabric.” Seith essentially asserts that for sale and for lease signs should be included within that provision because they are noncommercial, based on a dictionary definition of “commercial” as “engaged in commerce or work intended for commerce.” (Merriam-Webster’s Collegiate Dict. (11th ed. 2006) p. 249, col. 2.) She asserts that a typical owner is not engaged in buying and selling units, and is thus not engaged in commerce.
[9] It is established, however, that signs advertising property for sale or for lease constitute commercial speech as the advertiser’s interest is purely economical. (Linmark Associates, Inc. v. Township of Willingboro (1977) 431 U.S. 85, 92, 98; [580] Kennedy v. Avondale Estates, Ga. (N.D.Ga. 2005) 414 F.Supp.2d 1184, 1198-1199.) “[C]ommercial speech is that which ‘propose[s] a commercial transaction.’ ” (Kennedy v. Avondale, at p. 1198, citing Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc. (1976) 425 U.S. 748, 762.) As section 1353.6 pertains only to noncommercial speech it is inapplicable here.
2
[10] Alternatively, Seith contends that even if for sale and for lease signs are commercial, the restrictions on their size and placement violate section 712, subdivision (a), which provides: “Every provision contained in or otherwise affecting a grant or a fee interest in . . . real property in this state . . . , which purports to prohibit or restrict the right of the property owner . . . to display . . . on the real property, or on real property owned by others with their consent, or both, signs which are reasonably located, in plain view of the public, are of reasonable dimensions and design, and do not adversely affect public safety, . . . and which advertise the property for sale, lease, or exchange, or advertise directions to the property, by the property owner or his or her agent is void as an unreasonable restraint upon the power of alienation.” (Italics added.) A sign may include directions to the property, the owners’ or the agent’s name, address and telephone number, and it is deemed to be of reasonable dimension and design if it complies with a local sign ordinance. ( 712, subd. (c), 713, subd. (a).)
Section 712 applies to the placement of signs on an owner’s “real property.” In a condominium project, however, unit owners ordinarily have no separate interest in the real property. Subdivision (f) of section 1351 provides: “A condominium consists of an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map, or condominium plan . . . . The area within these boundaries may be filled with air, earth, or water, or any combination thereof, and need not be physically attached to land except by easements for access and, if necessary, support. . . . The portion or portions of real property held in undivided interest may be all of the real property, except for the separate interests. . . . An individual condominium within a condominium project may include, in addition, a separate interest in other portions of the real property.”
Further, the balconies, exterior doors and walls of units are also common areas. Section 1351, subdivision (i) provides: “(i) ‘Exclusive use common area’ means a portion of the common areas designated by the declaration for the exclusive use of one or more, but fewer than all, of the owners of the separate interests and which is or will be appurtenant to the separate interest [581] or interests. [] (1) Unless the declaration otherwise provides [as here] any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patios, exterior doors, doorframes, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest, are exclusive use common areas allocated exclusively to that separate interest.”
Here, the original CC&R’s defined a “Unit” as “any portion of a building located on The Properties designed and intended for use and occupancy as a residence . . . , the boundaries of each unit are the interior surfaces of the ceiling, floors, perimeter walls, windows and doors thereof; which . . . boundaries include the air space so encompassed and the portions of the building located within [the] air space.” The CC&R’s defined “Common area” as “all land and improvements, and all portions of the divided property not located with any unit.”
[11] We conclude that under the plain language of section 712, subdivision (a), a condominium owner in a project such as Fourth La Costa has no right to post for sale and for lease advertisements in the common areas. Had the Legislature intended to extend such a right it could have expressly stated so. [4] While an association may not ban such advertisements entirely (see Linmark Associates, Inc. v. Township of Willingboro, supra, 431 U.S. 85, 92, 98), to protect all owners it may impose reasonable restrictions for aesthetic purposes (id. at p. 93). Here, the amendment allows an owner to post a sign in the window of his or her unit, and it is undisputed that such a sign would be viewable to the public. Seith claims the size restriction of 18 inches by 24 inches “would prohibit the typical professional real estate broker sign,” but she did not provide the trial court with any supporting evidence. Moreover, we see no problem with allowing only one sign per unit, or requiring that signs be removed within three days of a lease or sale. Article IV, Section 3(A) of the First Restated CC&R’s is reasonable. [582]
C
Further, Seith contends Article VI, section 1(B) of the First Restated CC&R’s increases the costs and burdens of owners who lease their units, because it requires leases to be in writing and to state the tenant is bound by the provisions of the CC&R’s. At the trial court, the Owners Association explained “there are many situations where a tenant is in violation of the governing documents and notice to the Owner regarding the tenant’s violations have gone unheeded.” The Owners Association sought written leases to ensure that provisions of the CC&R’s are contained in the lease, as lessees would not otherwise be bound to follow them. “When the declaration permits leasing, a community association faces enforcement problems if an owner’s tenant engages in conduct that violates other declaration provisions.” (1 Sproul & Rosenberry, supra, 6.45, p. 423.) Article VI, Section 1(B) is reasonable.
Seith claims the provision makes tenants responsible for assessments and maintenance costs and “[n]o tenant in their right mind would agree to undertake that liability.” The First Restated CC&R’s, however, specifies that assessments are the personal obligations of owners. The CC&R’s pertain to a tenant’s conduct insofar as permitted uses are concerned. For instance, with limited exception each residence may be used only for residential purposes, each residence may have only a reasonable number of pets, and no temporary structures are allowed. Potential tenants should not be concerned about any liability for assessments against an owner. [5]
V. Amendment of Bylaws
The original Bylaws, adopted in 1969, provided they could be amended by a vote of not less than 75 percent of all votes entitled to be cast. In its supplemental petition, the Owners Association sought a reduction in the percentage of required votes. It cited Corporations Code section 7515, [ 583] subdivision (a) which provides: “If for any reason it is impractical or unduly difficult for any corporation to call or conduct a meeting of its members, . . . or otherwise obtain their consent, in the manner prescribed by its articles or bylaws, or this part, then the superior court . . . , upon petition . . . may order that such a meeting be called or that a written ballot or other form of obtaining the vote of members . . . be authorized, in such a manner as the court finds fair and equitable under the circumstances.”
The statute further provides: “The order issued pursuant to this section may dispense with any requirement relating to the holding of and voting at meetings or obtaining of votes, including any requirement as to quorums or as to the number or percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or this part.” (Corp. Code, subd. (c).) As with Civil Code section 1356, Corporations Code section 7515 is intended to “overcome membership voting apathy.” (Greenback Townhomes Homeowners Assn. v. Rizan (1985) 166 Cal.App.3d 843, 849.)
[12] Seith asserts Corporations Code section 7515 authorizes the court to order only a prospective vote, and it erred by approving a vote retrospectively. In rejecting that interpretation, commentators have explained: “Corporations Code[, section] 7515 [subdivision] (a) seems prospective in permitting the court to order ‘that such a meeting be called or that a written ballot . . . be authorized in such a manner as the court finds fair and equitable.’ Under this interpretation the court could act prospectively to relax voting or meeting requirements only as they apply to meetings or requests for member approvals that occur after the association has failed in its efforts to obtain member approvals or to conduct meetings in accordance with applicable bylaw, article, or statutory requirements. Corporations Code[, section] 7515 [subdivision] (c), however, permits the order to ‘dispense with any requirement relating to the holding of and voting at meetings or obtaining of votes.’ Thus, a more reasonable interpretation of [section] 7515 would be that the court may, as empowered under [Civil Code, section] 1356 with regard to the declaration, retroactively approve amendments to the articles and bylaws.” (2 Sproul & Rosenberry, supra, 9.44, pp. 682-683.)
We agree with that assessment, particularly since Civil Code section 1356, which applies to the amendment of CC&R’s, was patterned after Corporations Code section 7515. (2 Sproul & Rosenberry, supra, at 9.30, p. 660.) The Owners Association established the apathy of a substantial percentage of owners and that the supermajority requirement precluded it from amending the Bylaws as well as the CC&R’s. We are unaware of any reason to allow relief from the supermajority vote requirement after a vote has already been taken in the context of CC&R’s — which are central to the establishment, [ 584] operation and maintenance of a common interest development and ordinarily control in the event of a conflict with the bylaws (Hanna & Van Atta, supra, 1.30, pp. 28-29; 18:19, pp. 1103-1104) — but only allow prospective relief in the context of bylaws. We find no error.
VI. Constitutionality of Section 1356
A
Seith contends that as applied retroactively to the original CC&R’s, section 1356 is an unconstitutional impairment of the obligation of contracts. [6] Article I, section 10 of the United States Constitution states: “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.” Article I, section 9 of the California Constitution provides: “A . . . law impairing the obligation of contracts may not be passed.”
[13] “The language of these constitutional provisions ‘appears unambiguously absolute . . . .’ [Citation.] However, the provisions have not been so treated by the courts. ‘Read literally, these provisions appear to proscribe any impairment. However, it has long been settled that the proscription is “not an absolute one and is not to be read with literal exactness like a mathematical formula.” [Citation.]’ ” (Hall v. Butte Home Health, Inc. (1997) 60 Cal.App.4th 308, 318.)
“As the United States Supreme Court has interpreted the federal contracts clause, contracts clause questions turn on a three-step analysis. [Citation.] The first and threshold step is to ask whether there is any impairment at all, and, if there is, how substantial it is. [Citation.] If there is no ‘substantial impairment, that ends the inquiry. If there is substantial impairment, the court must next ask whether there is a ‘significant and legitimate public purpose’ behind the state regulation at issue. [Citation.] If the state regulation passes that test, the final inquiry is whether means by which the regulation acts are of a ‘character appropriate’ to the public purpose identified in step two.” (Barrett v. Dawson (1998) 61 Cal.App.4th 1048, 1055.) The same analysis is applicable to the state constitution’s contract clause. (Id. at p. 1056.)
“The obligations of a contract are impaired by a law which renders them invalid, or releases or extinguishes them.” (Home Building & Loan Assn. v. Blaisdell (1934) [585] 290 U.S. 398, 431.) For instance, a law that discharged a debtor from liability was held invalid as applied to contracts in existence when the law was passed. (Ibid.)
[14] The Legislature has applied the Davis-Stirling Act ( 1350 et seq.) “both prospectively and to existing documents.” (2 Sproul and Rosenberry, supra, 9.47, p. 693.) To any extent the reduction in the percentage of affirmative votes required to amend CC&R’s may be said to substantially impair preexisting contract rights, there is no unconstitutionality because the statutes have a significant and legitimate public purpose and act by appropriate means. (Barrett v. Dawson, supra, 61 Cal.App.4th at p. 1055.) [15] ” ‘ “[A]s is customary in reviewing economic and social regulation, . . . courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure.” ‘ ” (Hall v. Butte Home Health, Inc., supra, 60 Cal.App.4th at p. 322.)
Section 1356 is intended “to give a property owners’ association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association.” (Blue Lagoon Community Assn. v. Mitchell, supra, 55 Cal.App.4th at p. 477.) Owners have a substantial interest in the long-term viability of a condominium project, and that interest is not served when a supermajority vote requirement and voter disinterest combine to preclude or unduly hinder an association’s efforts to amend outdated governing documents. (See Rest. 3d Property, Servitude, 6.12, com. a., p. 226.)
B
Additionally, Seith claims section 1356 is unconstitutional because it violates owners’ procedural due process rights and equal protection rights. The record, however, does not show that Seith raised these issues at the trial court. “Typically, constitutional issues not raised in earlier civil proceedings are waived on appeal.” (Bettencourt v. City and County of San Francisco (2007) 146 Cal.App.4th 1090, 1101.) We decline to reach the issues. [586]
DISPOSITION
The order is affirmed. The Owners Association is entitled to costs on appeal.
Huffman, J., and Nares, J., concurred.
[1]. Undesignated statutory references are to the Civil Code.
[2]. The Owners Association did not file a respondent’s brief, and thus we decide the appeal based on the record, the opening brief and any oral argument by Seith. (Cal. Rules of Court, rule 8.220(a)(2).)
[3]. Technically, the Bylaws were amended under Corporations Code section 7515 rather than Civil Code section 1356, as discussed below.
[4]. Commentators on common interest developments indicate that sections 712 and 713 apply to common interest developments, but they do not discuss any right of owners to place for sale or for lease signs in common areas. (See, e.g., 1 Sproul & Rosenberry, Advising Cal. Common Interest Communities (Cont.Ed.Bar. 2007) 6.7, pp. 389-391 (hereafter Sproul & Rosenberry); Hanna & Van Atta, Cal. Common Interest Developments (2007) 22.61, pp. 1675-1678 (hereafter Hanna & Van Atta).) Sproul and Rosenberry explain that “[l]ike so many other Davis-Stirling Act statutory provisions that seek to regulate a subject matter addressed in other California statutes that are applicable to common interest communities, no effort is made to clearly integrate the new statutory rules with pre-existing laws pertaining to the same subject. For example, new [Civil Code section] 1353.6 suggests that governing documents could prohibit any form of commercial expression by signs, banners and the like, and yet [Civil Code sections] 712 and 713 have for many years prohibited private covenants from prohibiting or restricting the right of owners to display signs of reasonable dimension, design, and location that advertise the owner’s property for sale, lease, or exchange.” (1 Sproul & Rosenberry, supra, 6.7, pp. 390-391.)
[5]. Seith also challenges the reasonableness of Article V, Section 8 of the First Restated CC&R’s, which authorizes the collection of interest on unpaid assessments; and Article V, Section 9, which pertains to the recordation of liens for delinquent assessments. She did not, however, address those provisions at the trial court. “As a general rule, failure to raise a point in the trial court constitutes . . . waiver and appellant is estopped to raise that objection on appeal.” (Redevelopment Agency v. City of Berkeley (1978) 80 Cal.App.3d 158, 167.) The First Restated CC&R’s contain dozens of new provisions and amended provisions, and the trial court could not be expected to comb through them and independently research each one to determine its reasonableness. It was incumbent on Seith to raise all objections she had.
[6]. Seith also contends Corporations Code section 7515 impairs the obligations of contracts, but she did not preserve the issue for appellate review by raising it at the trial court. (Hale v. Morgan (1978) 22 Cal.3d 388, 394.)
[Amendments to CC&Rs; Court Petition] Objectors to a petition brought pursuant to Civ. Code § 1356 (§ 4275) are not entitled to costs and attorney’s fees when the petition is denied.
Jeffrey S. Mintz, in pro. per., and for Objectors and Appellants.
Neuland & Nordberg, Hickey & Neuland, William P. Hickey, David E. Hickey and Robert J. Legate for Petitioner and Respondent.
OPINION
SILLS, P. J.
Blue Lagoon Community Association (the Association) petitioned the superior court pursuant to Civil Code section 1356 for an [474] order approving two amendments to the Association’s declaration of covenants, conditions and restrictions (CC&R’s) that had received approval from a majority of the members, but had not received the supermajority vote required by the declaration.[1] Section 1356 permits the superior court to reduce the percentage of affirmative votes necessary to amend a declaration where the property owners’ association is unable to obtain approval of the proposed amendments by the percentage of votes required by the declaration.
The amendments proposed by the Association were controversial and had been the subject of an intense political battle within the Association. Therefore, when the petition was filed several members of the Association (the objectors) hired an attorney and filed opposition to it.[2] Other members opposed to the proposed amendments also appeared and filed papers in opposition to the request. Following a contested hearing, the court denied the petition. The objectors then requested an award of attorney fees but the court ordered each side “to bear its own fees and costs.”
Only the objectors appeal. The sole issue they raise is whether objectors to a petition brought pursuant to Civil Code section 1356 are entitled to costs and attorney fees when the petition is denied. We answer that question in the negative.
I
Built in 1963, Blue Lagoon is a common interest development in Laguna Beach that comprises 119 condominium units in 14 separate buildings. Five of the buildings, which include thirty-six units, are located on the beach behind a common area seawall which protects the units from the ocean. The remaining buildings are situated for the most part on the slopes which [475] overlook, but are not directly threatened by, the ocean. CC&R’s were recorded against the subdivision in 1964 designating certain property, such as the seawall, common area which must be maintained by the Association. The covenants run with the land until July 1, 2014.
Over the years, the maintenance and repair of the seawall has been one of the largest recurring expenses for the Association. There was evidence that it had cost the Association around $1.5 million to keep it in place and operating. Maintenance and repair of the seawall had also been the focal point of an acrimonious dispute between the members. Owners whose properties are protected by the seawall want each unit to pay an equal share of its maintenance and repair costs because it is part of the common area. On the other hand, owners whose properties are not directly benefited by the seawall want each unit to pay only a pro rata share of the costs equal to the benefit each unit receives, if any.
This dispute is fueled by a weighted voting system, designed by the developer of the subdivision, which many members feel is unfair. When the development was built each unit was assigned an undivided percentage interest in the common area which ranged from a low of .56 percent to a high of 1.42 percent. The units with the higher percentage interest are generally located near the seawall. The percentage interest assigned to each unit determines the unit’s voting power, both in terms of whether a quorum is present and whether action proposed by the Association is adopted. However, expenses approved by the Association are shared equally by the units, regardless of the unit’s percentage interest in the common area. Thus, situations can arise where a minority of the members can force a majority of the members to pay for common area maintenance and repairs which the majority opposes-which is precisely what the Association and many of its members claim is happening here and why they believe the proposed amendments are so important.
At the urging of several members, the Association proposed two amendments to the CC&R’s. The first one provided for equal voting rights, i.e., “one unit, one vote.” The second one provided the governing documents could be amended by majority, as opposed to the then required 75 percent supermajority, vote. The proposed amendments were submitted to the property owners for a vote, and despite extensive efforts by all sides, not everyone voted. Tallying the votes of those who participated in the election, the amendments failed to receive sufficient affirmative votes. The first proposal received 71 percent of the vote, and the second one received 69 percent of the vote.
The Association then filed a petition pursuant to Civil Code section 1356, which was denied. Although the court expressed concern about the validity [476] of the unequal voting arrangement, and thought that amendment perhaps could be approved, it denied the petition as a whole on the basis that the proposed amendments were “unreasonable.”[3] The court’s apparent fear was the proposed amendments, as drafted, would allow the Association to cease maintaining the seawall.
II
[1] Having successfully fended off the petition, the objectors claim they are entitled to costs and attorney fees as the “prevailing party” because the petition was denied. They claim costs as a matter of right under Code of Civil Procedure section 1032, subdivision (b), and attorney fees under Civil Code section 1354 (because there is no provision for attorney fees in section 1356) and other equitable principles.
The objectors’ argument begins with an assertion that the petition was an “action” which proposed the dilution of their voting rights, and thus their opposition to the petition was necessary to “enforce” the equitable servitudes and contractual provisions of the CC&R’s. As they view it, their enforcement of the CC&R’s gives them a right to exact a pound of flesh (in the form of fees and costs) from the Association for putting them through the ordeal of defending against the petition. But their characterization of the scope of the statute and the nature of the proceedings is misinformed.
Civil Code section 1356 provides that, “If in order to amend a declaration, the declaration requires owners having more than 50 percent of the votes in the association … to vote in favor of the amendment, the association, or any owner of a separate interest, may petition the superior court … for an order reducing the percentage of the affirmative votes necessary for such amendment. The petition shall describe the effort that has been made to solicit approval of the association members in the manner provided in the declaration, the number of affirmative and negative votes actually received, the number or percentage of affirmative votes required to effect the amendment in accordance with the existing declaration, and other matters the petitioner considers relevant to the court’s determination.” (§ 1356, subd. (a).) The petitioner is required to attach copies of the governing documents, the text of the proposed amendment, any notice and materials used to solicit voter approval, and a short explanation of the reason for the amendment. (§ 1356, subd. (a)(1)-(5).) In addition, the petitioner is required to give the [477] members of the Association and any holders of a security interest notice of the hearing. (§ 1356, subd. (c).) If the court finds the balloting “was conducted in accordance with the applicable provisions” of the governing documents, a “reasonably diligent effort” was made to permit members to vote, owners having “more than 50 percent of the votes … voted in favor of the amendment,” and the “amendment is reasonable” (§ 1356, subd. (c) (1)-(6)), the court may, in its discretion, “dispense with any requirement relating to … the number or percentage of votes needed for approval of the amendment that would otherwise exist under the governing documents.” (§ 1356, subd. (d).)
Viewed objectively, the purpose of Civil Code section 1356 is to give a property owners’ association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration.(Sproul & Rosenberry, Advising Cal. Condominium and Homeowners Associations (Cont.Ed.Bar 1991) § 10.25, p. 459.)In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association. When the limited purpose of section 1356 is fully understood it is obvious a petition brought under this section is not an adversarial proceeding. No defendants are named. No rights are sought to be protected. No wrongs are sought to be redressed. As such, it cannot be said that by opposing the petition the objectors were enforcing the governing documents and thus entitled to attorney fees and costs.[4]
The objectors then argue that “equitable principles” support a statutory award of attorney fees because the Association’s petition violated its fiduciary duty to the minority members of the Association. This argument is premised on the notion the present weighted voting system is fair because it protects the minority’s rights from the tyranny of the majority, and the Association’s decision to file the petition represents a decision by the Association to “side” with the majority in violation of its fiduciary duties to the minority members. The theory seems to be that unless the objectors can claim fees and costs when they win, the Association will financially overwhelm them through the continuous filing of frivolous petitions under Civil Code section 1356.
This argument is shortsighted. In this case, the objectors “won.” But what if the Association had “won” and the petition had been granted? If we were to hold, as the objectors urge, that they are the prevailing party and thus entitled to attorney fees because they successfully beat back the majority’s efforts to amend the declaration, then is the Association entitled to its costs [478] and fees against the objectors when they successfully bring a petition under Civil Code section 1356? If the objectors’ analysis were correct, the answer would have to be yes. Further, the objectors’ position would have the undesirable effect of discouraging fair comment by members who are opposed, or at least do not fully support, an association’s effort to amend the declaration through this statutory procedure. No member of an association would dare appear or file opposition to a petition under section 1356 if the potential downside was having to bear the association’s entire costs for pursuing the petition. This was clearly not the intent of this section. The posttrial order is affirmed. The Association shall recover its costs on appeal.
Crosby, J., and Rylaarsdam, J., concurred.
FN 1. Enacted in 1985, section 1356 is part of the Davis-Stirling Common Interest Development Act (Civ. Code, §§ 1350-1373) and is patterned after Corporations Code section 7515. It replaces the commonly used terms “covenants, conditions, and restrictions” and “CC&R’s” with the term “declaration.” (Civ. Code, § 1351, subd. (h).)
FN 2. Objectors are Gwendolyn V. Mitchell, Elbert Davis, E. Cardon Walker, William Caldwell, Joseph T. Broderick, and Jeffrey S. Mintz. After the notice of appeal was filed, the Supreme Court held in Trope v. Katz (1995) 11 Cal.4th 274 , 292 [45 Cal.Rptr.2d 241, 902 P.2d 259] that an attorney who litigates in propria persona cannot recover reasonable attorney fees under Civil Code section 1717. Because the objectors’ attorney, Jeffrey S. Mintz, had also appeared as a party he was concerned that Trope might bar his attorney fee claim even though he had substituted in as the attorney of record only at the appellate level. Consequently, he filed a “motion to correct erroneous designation of party” with this court claiming he was not a proper party because title to the property was held in trust and he was only acting in his capacity as a trustee of the family trust. We do not decide that motion because, as we hold below, the objectors do not have any right to recover attorney fees in this case in any event. (Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608 , 629 [55 Cal.Rptr.2d 818].)
FN 3. A court cannot grant the petition unless it finds, among other things, that the proposed “amendment is reasonable.” (Civ. Code, § 1356, subd. (c)(5).)
