Windham at Carmel Mountain Ranch Assn. v. The Presley Companies
(2003)
109 Cal.App.4th 1162
The Windham at Carmel Mountain Homeowners Association filed a lawsuit against the developer Presley for Breach of Implied Warranty concerning defective construction of the common areas. Presley argued that because Breach of Implied Warranty is a claim that arises from a contract and the Association was not a party to the purchase contracts between Presley and the individual homeowners, it follows that the Association had no legal right to bring the cause of action against Presley. Holding in favor of Presley, the trial court concluded that the Association did not allege facts showing it had the necessary legal right to bring a Breach of Implied Warranty cause of action. The Court of Appeal overturned the decision.
The Court of Appeal, relied on Civil Code section 383, and held that the Association may maintain a cause of action against Presley for Breach of Implied Warranty. Section 383 states: “An association established to manage a common interest development shall have standing to institute…litigation…in its own name as the real party in interest and without joining with it the individual owners of the common interest development, in matters pertaining to…damage to the common areas.” The court interpreted section 383 and found that in granting an association a legal right to sue as a real party in interest for damage to a common interest development’s common areas, it additionally grants an association a legal right to bring a cause of action for Breach of Implied Warranty. Accordingly, because one must be a party to a contract to maintain a cause of action for Breach of Implied Warranty the court held that section 383 grants associations status to be deemed a party to a contract.
Summary: A homeowner association has standing to sue a developer for breach of implied warranty under Civil Code § 383.
Cabrini Villas Homeowners Association v. Haghverdian
(2nd District, August 4, 2003)
111 Cal.App.4th 683
This case raised the issues of the adequacy of ADR demands and the enforceability of architectural control provisions in governing documents. Here, a homeowner cut through a wall of her unit in order to install an air conditioner. Being that the homeowner never had the Association’s approval to install the air conditioner, the Association served the homeowner with a demand for ADR by certified mail. The homeowner appealed, claiming that the service of the ADR demand by certified mail was inadequate, and the architectural provisions of the governing documents were unenforceable. The Court of Appeal agreed with the trial court and held that (1) an ADR demand may be served by certified mail; and (2) the architectural provisions were enforceable. The court further stated that the Association was entitled to an injunction to remove the air conditioner because a fine would be inadequate relief.
Summary: This case is significant because it confirms that an ADR (i.e., a Request for Resolution under Civil Code § 1354) demand can be served via certified mail, and confirms the enforceability of architectural restrictions.
Saz v. Independence Gardens Townhomes Homeowners Association
(2003)
2003 WL 21733744
Saz, the owner of a condominium within the Independence Garden Townhomes (the “Association”) complex was robbed and assaulted within the common area of the complex. Saz brought suit against Independence Garden Townhomes Homeowners Association alleging liability for the attack based on the Association’s failure to fix a security fence with a missing bar. The Association argued that Saz’s cause of action had no merit because it owed Saz no duty to fix the security fence with the missing bar. The Trial Court granted summary judgment in favor of the Association finding that there was no triable issue of fact as to whether the Association was responsible for the third party criminal conduct. The Court of Appeal affirmed the trial court’s judgment.
The Court of Appeal extended the holding of Ann M. v. Pacific Shopping Center, which established that an Association only has the duty to protect against third party criminal conduct when such conduct is foreseeable. The Court in Saz held that the Association did not have a duty to take action to protect against such third party criminal conduct because there were no prior, similar criminal acts committed on the premises, and, therefore, the criminal conduct was unforeseeable and could not have been anticipated by the Association.
Summary: Saz limits an Association’s exposure for damage or injury caused by the criminal acts of a third party. There must be knowledge of prior and similar acts of third parties before such acts become foreseeable and subject the Association to liability.
Lantzy v. Centex Homes et al.
(2003)
2003 WL 21782274
Subdivision homeowners brought an action against the developer for breach of implied warranty, strict liability and negligence arising out of subsequently discovered defects which were hidden from the homeowners. Plaintiffs brought the action three years after the defects were discovered and ten years and nine months after the completion of their homes, exceeding the 10-year limitation period by nine months. Plaintiffs argued that because the Defendant repeatedly promised to repair the defects, and because the homeowners relied on such promises, they postponed filing the suit. The homeowners also argued that the Equitable Tolling Doctrine should be applied so that they may maintain their causes of action. The Court of Appeal applied the doctrine allowing the Plaintiffs to go forward with the lawsuit despite the expiration of the statute of limitations. The Supreme Court reversed the decision.
Equitable tolling is a principle applied by judges “to suspend or extend a statute of limitations as necessary to ensure fundamental practicality and fairness.” This court generally held that equitable tolling does not apply to the 10-year statute of limitations set forth in Civil Code section 337.15, which applies to actions brought against “those involved in the design, supervision, or construction of an improvement to real property, or their sureties, for latent defects in the design or construction, or for injury to property caused by such defects” and begins to run no later than the date of recordation of a valid notice of completion. Looking to the legislative purpose of section 337.15, the court found that this section was enacted to “protect contractors and other professionals and tradespeople in the construction industry from perpetual exposure to liability for their work” and applying the Equitable Tolling Doctrine to section 337.15 would be contrary to legislative intent. Therefore, since the subject matter of the Plaintiffs’ lawsuit was governed by section 337.15, the court refused to apply the doctrine.
Summary: The ten year statute of limitations will not be equitably tolled where a homeowner association postpones filing a lawsuit as a result of a developer’s promises to fix certain construction defects. Homeowners must take active steps before the expiration of the ten-year statute to preserve and protect their ability to sue a developer.
Ostayan v. Nordhoff Townhomes Homeowners Association
(2003)
2003 DJDAR 7431
A previous HOA member brought a cause of action against Nordhoff Homeowners Association alleging it was negligent and breached its fiduciary duty to him by not informing him of the filing of litigation with the Association’s insurance carrier. Plaintiff owned a condominium that he purchased after the Northridge 1994 earthquake. Due to earthquake damage the condominium was uninhabitable, plaintiff never lived in it, and he eventually sold the property. After selling the condominium, the Association notified its members of the filing of litigation with its insurance carrier regarding several earthquake related claims within the Association. The lawsuit eventually settled for $20 million and was distributed to the then-present members of the Association, which included the new owners of the Plaintiff’s previous property who received $180,000.00. Plaintiff argued that the Association had a duty to notify its members within a reasonable time that it had filed a suit against the insurance carrier and by not notifying him within a reasonable time, they were negligent and breached their duty. The trial court granted summary judgment in favor of the Association finding that it had no duty to notify its members of the filing of litigation. The Court of Appeal affirmed the decision.
The Court of Appeal held that absent any provision in the Association’s CC&Rs imposing a duty on the Association to give notice to members regarding such matters, the Association had no such duty. The court stated that the only time that the Association has a duty to notify members of litigation is either when the Association transfers reserve funds to pay for litigation or when the suit concerns construction defects, neither of which applied to the Plaintiff’s case. The court further reasoned that the duties and powers of an HOA are controlled by the Association’s governing documents. In this case, the only governing document for the Association was the CC&Rs , which provide the Association with “all rights and powers necessary to carry out its responsibilities,” giving the Association discretion whether or not to notify its members of the suit. Therefore, since there was no provision in the CC&Rs requiring the Association to notify its members of the filing of litigation, the court ruled in favor of the Association.
Summary: Absent a provision in the Association’s governing documents, the Association does not have a duty to inform homeowners of litigation, unless the Association transfers reserve funds to pay for litigation, or the lawsuit concerns construction defects. However, as a general rule, it would be prudent for an Association to disclose lawsuits to the general membership that impact upon the fundamental rights of owners.
Parrot v. The Mooring Townhomes Association, Inc.
(2nd District, September 23, 2003)
112 Cal.App.4th 873
This case raised the issue of whether a Court has jurisdiction to award attorney fees in a circumstance where a case is dismissed. Here, a homeowner brought suit against his Association challenging a vote which approved a special assessment. The homeowner sought a preliminary injunction which the Superior Court denied.
The homeowner dismissed the case and then the Association filed a motion for attorneys fees. The homeowner argued that the trial court could not award attorneys fees because the lawsuit was already dismissed. The Court of Appeal disagreed with homeowner and reasoned that pursuant to the Davis-Sterling Act, the prevailing party in an action for the enforcement of CC&Rs is entitled to recover attorneys fees. The Court held that the dismissal of a case does not remove the Court’s jurisdiction to make such an award.
Summary: A Court will maintain jurisdiction to award attorneys’ fees in an action for the enforcement of CC&Rs where an injunction is sought, denied, and the Plaintiff dismisses the case after the Court denies the injunction.