CHAMPIR LLC V. FAIRBANKS RANCH ASSOCIATION. (2021) 66 Cal.App.5th 583. [PREVAILING PARTY IN LITIGATION]

Plaintiff owners sued the association over a dispute arising from the association's plan to install traffic signals at the entrance gates of the Association, one of which would be directly outside Plaintiffs' home. Plaintiffs contended that the association breached the CC&Rs by failing to obtain a vote of the members prior to installing the traffic signal. Plaintiffs successfully obtained a temporary restraining order and preliminary injunction stopping the construction. After the TRO and preliminary injunction was issued, the association then obtained approval from a majority of the membership to install the traffic signal, and the court then dissolved the preliminary injunction upon the association’s request. Once the preliminary injunction was dissolved, plaintiffs dismissed the remaining causes of action. Plaintiffs and the association filed motions seeking reimbursement of their attorney’s fees and costs as both parties claimed they were the prevailing party in the lawsuit and sought their respective attorneys fees from the other. The court deemed Plaintiffs to be the prevailing party because they achieved their litigation objection, which was to have the association hold a vote of the members to approve the traffic signal installation pursuant to the CC&Rs, and not block the traffic signal. The Court of Appeal concurred with the trial court that plaintiffs were the "prevailing party."

CLAYTON V. BIGELO (2021 US DC). [ENFORCEMENT AND CC&R INTERPRETATION]

The court in this case denied Plaintiff’s application for a temporary restraining order seeking to stop defendant’s construction of a two-story home within the La Jolla Foothills Community and subject to a recorded Declaration of Restrictions. The CC&RS contained a provision stating that no buildings could be erected on the lots until plans and specifications were approved by an Architectural Committee. The provision further stated that if there was no Committee then approval is not required so long as any structure is in harmony with similar structures in the tract. The provision further provided that no structure or building of more than one story in height could be erected without the prior approval of the Committee. At the time defendant began building the two-story home, there was no Committee. The community had 37 homes and 9 of them were two-story. Plaintiff argued that defendant was prevented from building a two-story home based on the language of the CC&Rs stating "[n]o structure or building of more than one story in height shall be erected without the prior approval of said Committee" to support his argument that the Restrictions clearly limit homes to a single-story residence in the Community. He further claims that even though no Committee exists to oversee the approvals, the Restrictions run with the land and must be followed by owners and subsequent owners absent a Committee or association to enforce them. Defendant responds that since no Committee was ever created, the CC&Rs state if “there is no such Committee appointed or elected, then such approval will not be required provided that any dwelling and out-building to be erected, and the grading and landscaping conform to and are in harmony with similar structures in said tract.”  It contends its structure conforms with other structure in the Community. The court agreed with the defendant, finding that the CC&R provision did not preclude constructing a two-story home even though there was no Committee. Rather, the court interpreted the provision to say in the absence of a Committee, a two-story home could be built if it was in harmony with similar structures in the tract. The court further held that the CC&Rs did expressly protect views or the right to air and light. Finding that plaintiff had a low likelihood of prevailing on the merits of their lawsuit, the ex parte application for a temporary restraining order was denied.

COUNTRY GLEN OAK PARK HOMEOWNERS ASSOCIATION V. GARRETT (2021) [ARCHITECTURAL VIOLATIONS]

In this case, the homeowners submitted an architectural application to construct a pool in their backyard, and the application was approved by the association’s architectural committee. However, it was soon discovered that, as part of the construction, the Garretts had moved a common area fence, altered a slope, and installed some of the pool equipment in the association’s common area beyond the Garretts’ property line. The association sent a cease and desist notice and other communications to the Garretts, and the board met with the Garretts on several occasions. The association then sued, seeking an injunction to have the Garrets remove the pool equipment and pad from the common area. The trial court  issued an injunction requiring the Garretts to remove the encroaching pool equipment from the common area; awarded the association $820 in compensatory damages for the damage the Garretts caused to the common area fence; issued a restraining order  against Mr. Garrett prohibiting him from confronting, intimidating, annoying,  harassing, threatening, challenging, provoking, or assaulting any member of the association or its managing agent; and (4) awarded the association $318,426 in attorney fees as the prevailing party.  The Garretts claimed the injunction was void under Civil Code section 5855, arguing that the board’s efforts to get them to comply with the CC&Rs was “discipline” within the meaning of section 5855(a). The court of appeal rejected this argument, stating that discipline involves the imposition of a punishment or sanction. The court also found that the association substantially complied with section 5855’s notice requirements because the Garretts had significant opportunities to meet with the board and had revoked agreements they had with the board to allow an expert onto their property. The court upheld the restraining order, finding that “Mr. Garrett engaged in a calculated campaign of intimidation of all whom he perceived to be obstacles to him getting what he wanted.” The court also rejected the argument that the association was not entitled to attorneys fees since it had refused to mediate before commencing litigation.  Apparently, the parties agreed on mediation but could not agree on a mediator and the court stated the association was not required to accept the free mediation service the Garretts proposed. The court further upheld the attorneys fees award, finding the principal issue was the pool equipment encroachment onto the common area.

CRUZ V. VALERIO TOWNHOMES HOMEOWNERS ASSOCIATION (2022)

A lender held a nonjudicial foreclosure sale on an owner’s townhouse. The sales proceeds were more than owed to the lender, so the trustee gave notice of the surplus to all parties with a recorded interest in the townhouse. The HOA had recorded a lien on the townhouse for delinquent assessments and made a claim for its portion of the surplus funds. Because  the homeowner disputed the HOA’s claim, the trustee deposited the surplus proceeds with the clerk of the Superior Court and the trial court conducted a bench trial on the HOA’s claim. The owner asserted the lien was invalid because the association had violated the Davis-Stirling Act when it recorded the lien. The association claimed  the owner’s failure to object to a proof of claim that the association filed in the owner’s prior Chapter 13 bankruptcy case prevented the owner from challenging the validity of the lien. The trial and appellate courts  agreed, pointing out that a claim in bankruptcy is deemed allowed unless a party in interest objects. The allowance of the claim in bankruptcy is binding and conclusive on all parties and is a final judgment. Since the owner had not objected to the proof of claim, it was a final order of the bankruptcy court and could not be re-litigated in the petition proceeding. The association was awarded the monies owed out of the surplus funds of the nonjudicial foreclosure sale.

DAVIS V. IRVINE TERRACE COMMUNITY ASSN. (2021)[ VIEW RESTRICTIONS]

Plaintiffs sued the Association for breach of the CC&Rs for allowing a neighbor to rebuild or modify their existing home in a manner that blocked plaintiffs’ views. While the CC&Rs protect views as to landscape, fences, and walls, it contained no similar protection as to houses. Plaintiff argued that such protection existed because of the CC&Rs recital that the Association’s obligation to enhance and protect “the value, desirability and attractiveness of”  the tracts. The section on architectural control states that alterations to lots must be in harmony with surrounding structures. In rejecting the Plaintiff’s argument, the Court noted that the CC&Rs included no view protection as to structures such as houses; the Court was unwilling to read into the CC&Rs additional view protections based on the impact architectural modifications would have on the value, desirability, and attractiveness of the Owner’s property. Moreover, the Court pointed out that neither the CC&Rs nor the Architectural Guidelines were “intended to protect individual homeowners’ interests. They are intended to protect the community as a whole.”  The court noted that architectural guidelines are "guidelines" and have a subjective component to them and ARCs/DRCs have discretion to decide what designs are in harmony with the community.