Lushmeadows Assn. v. Taggs



Lushmeadows Assn
















Lushmeadows Assn. v. Taggs





























Filed 8/3/10 Lushmeadows Assn.
v. Taggs CA5





















NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

>

California Rules of Court, rule 8.1115(a), prohibits
courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115.





IN THE COURT OF APPEAL
OF THE STATE OF CALIFORNIA



FIFTH APPELLATE
DISTRICT


>






LUSHMEADOWS ASSOCIATION, INC.,



Plaintiff and
Respondent,



v.



EUGENE TAGGS et al.,



Defendants and
Appellants.






F056967
and F057815





(Super.
Ct. Nos. 9018 and 9070)





>OPINION


APPEAL from
judgments of the Superior Court of Mariposa
County. Terry K. Cole, Judge. (Retired judge of the Stanislaus Sup. Ct.
assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)

Jamison
& Chappel, Gregory M. Chappel, and Nanette Beaumont for Defendants and
Appellants.

Law Offices
of Ann Rankin and Ann Rankin for Plaintiff and Respondent.

-ooOoo-

INTRODUCTION

Developer Decker Enterprises
(Decker) created Lushmeadows Mountain Estates (LME) in four phases between 1962
and 1964. All LME lots were encumbered
with recorded covenants, conditions, and restrictions (CC&Rs). Those CC&Rs primarily consisted of use
restrictions and architectural covenants and provided that the CC&Rs could
be amended by a vote of the majority of the then-owners of the lots. The original CC&Rs did not create a
homeowners association or establish assessments for maintenance of common
areas.

In 1963, Decker incorporated the
nonprofit Lushmeadows Association (LMA) and charged the corporation with
acquiring, improving, and maintaining common areas of real property for park,
playground, recreational, and club house purposes. In 1966, Decker deeded the common areas of
LME, approximately 15 acres, to LMA. LMA
membership was voluntary between 1963 and 1990 and the LMA had a right to levy
assessments against owner-members but not LME property owners who were
non-members.

Appellants purchased their LME lots
before 1990 and were not members of LMA.
In 1990, the LME owners amended the CC&Rs by a majority vote of lot
owners. The amendments made LMA
membership mandatory for persons acquiring LME lots after July 1, 1990. In 2003, the LME owners again amended the
CC&Rs by majority vote and made LMA membership mandatory for all owners,
regardless of the date of acquisition of their lots. The 2003 amendments also required all lot
owners to pay annual assessments.
Appellants unsuccessfully challenged the amended CC&Rs in superior
court. They now appeal on a variety of
grounds, essentially maintaining the LMA could not amend and expand the
CC&Rs to provide for mandatory membership in LMA and to transform the LME
subdivision into a common interest development under California law. We affirm.

STATEMENT OF
THE CASE
[1] >

On November 29, 2006, respondent
Lushmeadows Association, Inc. (LMA), a California nonprofit mutual benefit
corporation, filed a complaint for declaratory relief (No. 9018) in Mariposa
County Superior Court. LMA named
appellant Eugene Taggs and 200 Does as defendants, alleged the defendants were
obligated to pay assessments as property owners within the Lushmeadows Mountain
Estates planned development (LME), and prayed for a judicial determination of
the rights and duties of the parties, including a declaration as to the
membership responsibilities of the appellants and the right of LMA to levy
assessments.

On January 22, 2007, appellant
Taggs filed an answer generally denying the material allegations of the
complaint (Code Civ. Proc., § 431.30) and a cross-complaint for
declaratory relief. The cross-complaint
alleged LMA was not a legally valid homeowners’ association for the underlying
properties and had no right to create, enforce, or collect property assessments. On January 30, 2007, LMA filed an answer
generally denying the material allegations of the cross-complaint and setting
forth 11 affirmative defenses.

On March
20, 2007, appellants Cecilia Wray, Jeffrey Whalley, and Mary Whalley filed a
verified complaint (No. 9070) against LMA for declaratory relief, slander of title,
and cancellation of cloud on title. Wray
and the Whalleys alleged they were property owners in LME and prayed for a
declaration, among other things, that LMA was not a validly-created homeowners’
association for their properties and had no authority to impose
assessments.

On March
27, 2007, the court filed an order on stipulation to consolidate case Nos. 9018
and 9070, with all subsequent papers, orders, and judgments to be filed under
the latter docket number.

On April
23, 2007, LMA filed an answer generally denying the material allegations of the
Wray/Whalley complaint and a cross-complaint against Wray and the Whalleys for
declaratory relief and monetary damages.

On June 27,
2008, counsel for appellants advised the superior court of the passing of
Cecilia Wray and substituted “NORMAN WRAY as Successor Trustee of The Robert H.
Wray and Cecilia K. Wray Trust Dated September 5, 1995” in her place and stead
in the first amended complaint and in the answer to LMA’s first amended
cross-complaint.

On
September 8, 2008, bench trial commenced.

On October
17, 2008, Judge Cole filed a written decision in favor of respondent. The court specifically: (1) issued a
declaratory judgment that the amended CC&Rs of LME, recorded on December
10, 2003, constituted valid and binding equitable servitudes running in the
chain of title and binding the subject real property; (2) held all LME property
owners belong to LMA and are required to pay dues, assessments, and other legal
obligations to the LMA; (3) held appellant Taggs owed $814.38 in delinquent
assessments and late charges as of May 1, 2008; (4) held appellant Wray owed
$532.50 in delinquent assessments and late charges as of May 1, 2008; and (5)
held appellants Whalley owed delinquent assessments and late charges of $945.53
as of May 1, 2008.

On December
22, 2008, the court filed a statement of decision (Code Civ. Proc. § 632)
and formal judgment.

On December
24, 2008, respondent LMA moved for attorney fees after judgment (Civ. Code, § 1354) and filed a memorandum of costs.

On January
9, 2009, appellants moved to strike or, in the alternative, tax respondent
LMA’s costs.

On January 27, 2009, appellants
filed a timely notice of appeal from
the judgment after court trial (Case No. F056967).[2]

On March 9,
2009, the court conducted a contested hearing on the motion to strike costs.

On March
11, 2009, the court filed an order awarding respondent LMA $85,000 in attorney
fees and $4,821.92 in costs and directed that appellants were jointly and
severally liable for these sums.

On May 11,
2009, appellants filed a timely notice of appeal from the March 11, 2009 order
after judgment (case No. F057815).[3]

On
September 23, 2009, this court granted appellants’ motion and consolidated Case
Nos. F056967 and F057815.

STATEMENT OF
FACTS


Development
of Lushmeadows Estates


1962-1964

In the
early 1960s, Decker Enterprises, Inc. (Decker), a Nebraska corporation that
operated as developer/subdivider of real property, created LME in four phases
known as Units 1 through 4. LME
consisted of 321 lots of Mariposa County land located in Sections 7, 17, 18,
19, and 20 of Township 5 South Range 20 East, M.D.B.B.&M.[4] As each unit was completed, Decker
established and recorded a declaration of CC&Rs for that unit. Each set of CC&Rs consisted primarily of
use restrictions and architectural covenants.


The original CC&Rs provided
that they would run with the land for a period of ten years from the date of
adoption. The CC&Rs further provided
they would “be automatically extended for successive periods of 10 years,
unless by a vote of the majority of the then owners of said lots, it is agreed
to change the said covenants and conditions in whole or in part.” The original CC&Rs did not create a
homeowners association or impose assessments to create an income stream for
maintenance of common areas. The
original CC&Rs further provided that individual owners were responsible for
enforcing the CC&Rs.

1963

Decker
incorporated LMA, a nonprofit corporation, to enforce the architectural
covenants in the original CC&Rs and to “hold, maintain and improve real
property for the use as a park, playground, recreational areas and club
house.”

1965-1966

Decker deeded to LMA the common
areas of the subdivision, including two lakes (Mallard Lake and Dawn Lake),
surrounding acreage, a clubhouse, a campground, and a playground. The deeds made these common areas available
to the lot owners of LME for recreational purposes. The LMA articles of incorporation charged LMA
with maintenance of the common areas.

The 1990
CC&Rs


In April
1990, the LMA Board of Directors advised LME property owners that the CC&Rs
had become outmoded and needed to be changed “to reflect present day conditions
and to protect your property values.”
The directors proposed, among other things, to (a) combine the lot
definition provisions of the four separate sets of CC&Rs; (b) make LMA
membership mandatory for property owners who acquired title on or after July 1,
1990 and voluntary for those who acquired property prior to that date; and (c)
allow a property owner or the Board of Directors to initiate enforcement action
of CC&Rs.

On July 1,
1990, the LMA Board of Directors held a special meeting to review the results
of balloting for the amended declaration of CC&Rs. The recording secretary reported there were
305 owners of the LME lots and parcels because some of the owners had title to
more than one parcel. The directors
received a total of 212 official signed ballots, 165 approvals and 47
disapprovals. The 165 “yes” votes
represented 12 more than the majority needed to approve the amended CC&Rs
and the board recorded the amended CC&Rs on July 2, 1990 (Document No.
904235, Mariposa County Official Records).
According to an election talley sheet, appellant Taggs and the
appellants Whalley voted to adopt the 1990 CC&Rs. The Board transmitted copies of the recorded
CC&Rs to LME property owners. In a
cover letter dated August 1, 1990, the Board called attention to Paragraph 4
“which in essence provides that if title to a given lot changes and is recorded
July 2, 1990, or thereafter, the new owner is required to become a
member of the Lushmeadows Association and maintain membership thereafter.”[5]

On October
4, 1990, a group of seven LME property owners wrote fellow property owners to
announce a community meeting, the retention of legal counsel, and an effort to
challenge the new CC&Rs. Sometime
later, several of those property owners sent another letter announcing the
formation of P.O.O.L.E. (Property Owners of Lushmeadows Mountain Estates). The organizers of P.O.O.L.E. maintained the
new CC&Rs were invalid and constituted a cloud on title to all parcels
within LME. In December 1990 and January
1991, counsel for P.O.O.L.E. and the directors of LMA exchanged letters
regarding the validity of the new CC&Rs.
According to Lowell J. Young, a onetime member of the LMA Board of
Directors, P.O.O.L.E. never filed an action to challenge the propriety of the
new CC&Rs.

The 2003
CC&Rs


In
September 2003, the LMA directors wrote to LME property owners to propose new
CC&Rs. In the letter, LMA President
Ed Drechsler explained that existing CC&Rs did not comply with “current
California State requirements.” He
attached a copy of proposed new CC&Rs (entitled “Amended and Restated
Declaration of Covenants, Conditions and Restrictions for Lushmeadows Mountain
Estate”) for review by LME property owners.
According to a summary of major changes, upon adoption of the new
CC&Rs, every LME property owner would be a member of LMA but multiple lot
owners would hold no more than one membership (Section 6.1). Moreover, all LME property owners would be
required to pay LMA any dues or special assessments levied by the LMA board of
directors (Section 7.1). Dreschler
explained at trial that mandatory LMA membership for those who bought property
after 1990 gave the LMA “a solid number that we could build our budget
on.” In 2003, the LMA Board proposed to
make all property owners mandatory members of the LMA because “we had a very
poor participation with voluntary” membership.

The LMA issued printed ballots
bearing two boxes, one for approval of the proposal to amend the LMA CC&Rs
and one to reject the proposal to amend the LMA CC&Rs. The face of each ballot bore a boxed message
instructing property owners on the voting process and further instructing them
to mail ballots as soon as possible “but in no case later than Sept 20th
2003.” According to the boxed message,
any ballots not received by September 30, 2003 would be counted as a voted for
rejection of the amended CC&Rs.

The LMA
CC&R Review Committee and Ballot Counting Team issued a report on October
8, 2003. The committee and team reported
that there were 305 LME property owners at the time of the election. All 305 owners were sent a document package
that included a copy of the proposed CC&Rs.
The ballots from the election were counted on October 4, 2003. The team reported that 156 property owners
voted to accept the proposed CC&Rs, 31 voted to reject the proposed
CC&Rs, and 118 did not vote. The
committee and team concluded: “The ‘yes’ votes resulted in an approval rate of
51.1%. Therefore the proposed CC&Rs
shall be enacted at a date to be determined by the Board of Directors.” On the same date, the Board of Directors met,
reviewed and confirmed the findings of the committee. The Board recorded the amended and restated
CC&Rs on December 10, 2003 (Document No. 2038701, Mariposa County Official
Records). On August 11, 2004, five
members of the LMA Board participated in a ballot recount of the votes for the
amended and restated CC&Rs. The
recount was conducted at the request of appellant Taggs, who counted and marked
each ballot. LMA Director Mary Lee Moore
confirmed Taggs’s count of the ballots.
The five board members who participated in the recount certified: “There
were 156 yes votes and 31 no votes. This
recount confirmed the original ballot count conducted on October 4, 2003.”

Statement of
Decision


On December
22, 2008, the trial court adopted, signed, and filed the statement of decision
prepared by counsel for LMA. The court
found, among other things: (1) the 1990 CC&Rs were valid because they
complied with the amendment procedure of the original CC&Rs and the voting
methods used were appropriate under the original CC&Rs; (2) the vote for
the 1990 CC&Rs was a vote of the LME lot owners and not a vote of LMA members;
(3) once the 1990 CC&Rs were approved and recorded, LME met the legal
definition of a “common interest development” as set forth in Civil Code
section 1352, a portion of the Davis-Stirling Common Interest Development Act;
(4) the 1990 and 2003 CC&Rs satisfied the requirements of Civil Code
section 1355 [amendment of declaration of common interest development]; (5) the
2003 CC&Rs were valid because they complied with the amendment process set
forth in the 1990 CC&Rs; (6) no legal challenge to the 2003 CC&Rs was
ever posed until January 2007, when appellant Taggs cross-complained against
LMA in response to LMA’s efforts to collect assessments from him; (7) Code of
Civil Procedure section 1363.03, subdivision (h) provides that the nine-month
statute of limitations in Corporations Code section 7527 now applies to all
voting in common interest developments on the amendment of governing documents;
(8) appellants’ cause of action for slander of title was barred by a three-year
statute of limitations (Code Civ. Proc., § 338g) and cause of action to
rescind a void instrument was barred by a four year statute of limitations
(Code Civ. Proc., § 343); (9) both the 1990 and 2003 CC&Rs were
“reasonable” within the meaning of California law; (10) all subdivision
owners-including appellants-are subject to the provisions of the 2003
CC&Rs; and (11) LMA is entitled to attorney fees and reasonable attorney
fees under Civil Code section 1354, subdivision (c).

DISCUSSION

I.
THE DOCTRINE
OF LACHES AND THE STATUTE OF LIMITATIONS BAR APPELLANTS’ OBJECTIONS TO THE 1990
AND 2003 AMENDMENTS


Appellants raise a host of
questions relating to the status of the 1990 and 2003 CC&Rs as equitable
servitudes, the voting process for the 2003 CC&Rs, and the award of
attorney fees, among other things. Nevertheless,
we consider the affirmative defenses of the statute of limitations and laches
at the threshold of the appeal. Nothing
more than the mere passage of time is required for the statute of limitations
to bar an action at law. ( >In re Marriage of Dancy (2000) 82
Cal.App.4th 1142, 1150.) A trial
court’s finding of laches, if affirmed, is dispositive of equitable causes of
action. (Bono v. Clark (2002) 103 Cal.App.4th 1409, 1416.) Appellants contend the trial court
erroneously held the doctrine of laches and the statute of limitations precluded
appellants’ challenge to the 1990 and 2003 CC&Rs.

>A.
Statutes
of Limitations


The
trial court held in pertinent part in its statement of decision:

“Moreover, although the 2003
vote was a vote of the Lot Owners and not a vote of the corporation, the State
Legislature’s decisions regarding the length of time available in which an
election within a common interest development association may be challenged is
persuasive to this court. The state
legislature allows a time period of only nine months to challenge such a
vote. [¶] . . . [¶]

“. . . It would be
extraordinarily disruptive to the reasonable expectations of property owners if
an election to amend the governing documents could be set aside years after
recordation of the amendment for some technicality. In the case at bar, Requesting Parties tried
to set aside the 1990 CC&Rs nearly seventeen years after they were
recorded, and tried to set aside the 2003 CC&Rs more than three years after
they were recorded. The absurdity of
this position and its prejudicial effect on property owners is obvious. [¶] . . . [¶]

“Among other things, the 1990
amendment made two important changes within the subdivision: the amendment
required some members to join the LMA and pay assessments and it directed LMA to enforce all of the provisions of the
CC&Rs.
. . .

“The 1990 CC&Rs provided
that from 1990 forward, the LMA could enforce all the provisions of the
CC&Rs. . . . If lot owners believed that this new enforcement power was
improper for any reason, they were
required to challenge the 1990 amendment.
They failed to mount any challenge to the 1990 amendment, even
though some of the dissident owners, making the same claims now advanced by Taggs,
Wray and Whalleys, alerted all property owners to these issues by circulating
letters about these issues and by engaging legal counsel. . . . Taggs, Wray and
Whalleys are barred by applicable limitation periods from challenging the 1990
CC&Rs now. Moreover, Taggs and the
Whalleys are estopped from challenging the 1990 C&Rs; the Tally Sheet,
Exhibit N, showed that Taggs and Whalleys voted in favor of the 1990 CC&Rs.
. . .

“Defendants’ cause of action
for slander of title is likewise time-barred and should have been brought by
1993 for the 1990 CC&Rs and by December, 2006 for the 2003 CC&Rs. Code of Civil Procedure § 338G. Moreover,
the statute of limitations for rescinding a void instrument is four years.
Requesting Parties’ efforts to rescind
the 1990 CC&Rs are also barred by this statute. (Code of Civil Procedure § 343; >Robertson v.
Superior Court (2001) 90 Cal.App.4th 1319 . . ..)”

On appeal,
appellants contend a four-year statute of limitations (Code Civ. Proc.,
§ 343) applies to CC&R amendments and a three-year statute of
limitations (Code Civ. Proc., § 338, subd. (g) applies to an action for
slander of title of real property.
Appellants further contend the “discovery rule” postpones the accrual of
a cause of action until the party discovers, or has reason to discover the
cause of action. Appellants maintain
they are subject to the “discovery rule” because they did not discover “the
improper voting schemes” leading to the 1990 and 2003 CC&Rs until after
respondent LMA filed suit. They maintain
they did not discover the 2003 CC&Rs were in place until they attended
their first LMA meeting and received a bill for assessments.

“[T]he
legislative goal underlying limitations statutes is to require diligent
prosecution of known claims so that legal affairs can have their necessary
finality and predictability and that claims can be resolved while evidence
remains reasonably available and fresh.”
(Jordache Enterprises, Inc. v.
Brobeck, Phleger & Harrison
(1998) 18 Cal.4th 739, 756.) With a few unrelated exceptions, the running
of the statute of limitations does not extinguish a cause of action, but merely
bars a remedy. (In re Marriage of Klug (2005) 130 Cal.App.4th 1389, 1399.) “While the bar of the statute of limitations
may be considered a harsh result … as a matter of policy, this defense
‘operates conclusively across-the-board.
It does so with respect to all causes
of action, both those that do not have merit and also those that do. That it may bar meritorious causes of action
as well as unmeritorious ones is the “price of the orderly and timely
processing of litigation” [citation]-a price that may be high, but one that
must nevertheless be paid.’
[Citation.]” ( >Quiroz v. Seventh Ave. Center (2006) 140
Cal.App.4th 1256, 1282; State of California
ex rel. Metz v. CCC Information Services, Inc.
(2007) 149 Cal.App.4th 402,
413.)

The 1990
CC&Rs were recorded July 2, 1990.
The 2003 CC&Rs were recorded December 10, 2003. Respondent LMA filed its initial complaint
for declaratory relief on November 29, 2006.
Appellant Taggs filed his initial cross-complaint for declaratory relief
on January 22, 2007. Wray and the
Whalleys filed their initial complaint for declaratory relief, slander of
title, and cancellation of cloud on title on March 20, 2007.

Subsequently promulgated and
recorded use restrictions are presumptively valid, entitled to the same
judicial deference accorded covenants and restrictions in original
declarations, and the burden of proving otherwise rests upon the challenging
homeowner. (Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th
73, 90-91.) The effect of execution and
recordation of amended CC&Rs is that any person having title to or
interested in acquiring title to an affected property has, at a minimum,
constructive notice that the property continues to be governed by the
CC&Rs. (Costa Serena Owners Coalition v. Costa Serena Architectural Com. (2009)
175 Cal.App.4th 1175, 1200-1201.)

Recordation
of the 1990 and 2003 CC&Rs gave appellants constructive notice that their
parcels were subject to the amended CC&Rs.
Their causes of action to challenge the 1990 CC&Rs and to assert
slander of title are time barred under the four-year statute of limitations
(Code Civ. Proc., § 343) and three-year statute of limitations (Code Civ.
Proc. § 338, subd. (g)), respectively.[6] Assuming appellants’ challenge to the 2003
CC&Rs is somehow subject to the four-year statute of limitations, we
consider that challenge in light of the equitable doctrine of laches.

B. Laches

The trial
court provided in pertinent part in its statement of decision:

“The existence of laches is
generally a factual question, and the Court has great discretion to determine
whether to apply laches to bar relief.
The key question is whether defendants have demonstrated prejudice,
making it unjust to grant relief to plaintiffs.

“Here, the prejudice is
clear. LMA sent out explanations of the
changes by the 2003 CC&Rs to all the Lot Owners, and conducted the voting
by secret ballot. . . . Requesting Party
Eugene Taggs counted the votes in 2004 and got the same total that LMA’s
committee that counted the votes had obtained.
. . . He took no action to challenge the vote, and, as a result,
numerous Lot Owners purchased properties in reliance on the 2003 CC&Rs. In was only in January, 2007 that Taggs
challenged the 2003 CC&Rs, and this was only after LMA had filed its action
for declaratory relief. Wray and the
Whalleys did not challenge the 2003 CC&Rs until March 20, 2007, when they
filed their action for declaratory relief.
. . . A delay of more than three years in challenging the 2003 CC&Rs
clearly caused prejudice to LMA and to the Lot Owners who purchased their
properties in reliance on the 2003 CC&Rs; Requesting Parties’ claims are
barred by the doctrines of laches, waiver and estoppel.”

The
doctrine of laches is based on knowledge of the facts and an acquiescence in
them to the damage of the other party. ( >Weadon v. Shahen (1942) 50 Cal.App.2d
254, 262.) “‘Laches implies that the
plaintiff should have done something earlier.’”
(Bono v. Clark, supra, 103
Cal.App.4th at p. 1418.) Whether or not
laches occurred in a particular case primarily presents a question for the
trial court. When there are facts from
which the trial court may infer that there has been an unreasonable delay, that
finding will not be disturbed on appeal.
A defendant asserting laches on plaintiff’s part must show that
plaintiff has acquiesced in defendant’s wrongful acts and has unduly delayed
seeking equitable relief to the prejudice of defendant. Mere lapse of time, other than that
prescribed by statutes of limitations, does not bar relief. (Gerhard
v. Stephens
(1968) 68 Cal.2d 864, 904.)
The fact that determination of a controversy involves an investigation
of rights originating many years past does not render a claim stale. (Maguire
v. Hibernia S. & L. Soc.
(1944) 23 Cal.2d 719, 736-737.)

Acquiescence
must be with knowledge of the wrongful acts themselves and of their injurious
consequences. Acquiescence must be
voluntary and not the result of accident or of causes rendering it a physical,
legal, or moral necessity. Acquiescence
must last for an unreasonable length of time so that it will be inequitable
even to the wrongdoer to enforce the peculiar remedies of equity against
him. What will amount to a sufficient
acquiescence in a particular case must largely depend upon its own special
circumstances. (Alexander v. State Capital Co. (1937) 9 Cal.2d 304, 313, citing >Chamberlain v. Chamberlain (1908) 7
Cal.App. 634, 641.)

Generally,
the existence of laches is a question of fact to be determined by the trial
court in light of all of the applicable circumstances.[7] In the absence of manifest injustice or a
lack of substantial support in the evidence, the determination of the trial
court will be sustained. Where the
finding of laches is made after trial, the proper appellate focus is the
evidence in support of the finding. We
therefore examine the trial record for evidence in support of the trial court’s
finding of laches. A trial court’s
laches ruling will be sustained on appeal if there is substantial evidence to
support the ruling. ( >Womack v. San Francisco Community College
Dist. (2007) 147 Cal.App.4th 854, 858-859.)


In the
instant case, Gail Spilos testified she was a real estate licensee who had
helped at least 45 buyers and sellers in LME between 1989 and 2008. Spilos said she was familiar with the
original, 1990, and 2003 CC&Rs of LMA.
Spilos said it was her custom and practice to furnish recorded CC&Rs
to potential buyers in LME. According to
Spilos, the 1990 and 2003 CC&Rs were not a detriment to selling LME real
property. In her view, the mandatory fee
structure of the 2003 CC&Rs was an asset in her efforts to sell properties
because most buyers prefer to pay money to handle maintenance of common
areas. Spilos said at the time of trial,
LME property owners each paid $120 a year for the use and maintenance of
Mallard and Dawn Lakes, a club house, and other features on the 16-acre common
area. Spilos said there was a difference
between LME and other Mariposa County subdivisions, noting “Lushmeadows is so
attractive.” In her experience, buyers
in LME have relied on the 2003 CC&Rs.
She explained that when the original CC&Rs were in effect, “To
enforce anything there, really you had to do the rule of law and prosecute your
neighbor to do something very simple.”

Appellants acknowledge that LMA did
provide testimony that numerous people relied upon the CC&Rs when they
purchased their lots within the LME subdivision. Appellants nevertheless submit this was
inadequate because “[s]uch testimony does not establish with any detail the
nature of the prejudice, nor does it establish any prejudice to the Association
itself.” Where, as here, a statement of
decision sets forth the factual and legal basis for the decision, any conflict
in the evidence or reasonable inferences to be drawn from the facts will be
resolved in support of the determination of the trial court decision. (In re
Marriage of Hoffmeister
(1987) 191 Cal.App.3d 351, 358.) The trial court in the instant case
reasonably inferred from the testimony that a delay of more than three years in
challenging the 2003 CC&Rs was prejudicial to the LMA and to lot owners who
purchased their properties in reliance on the 2003 CC&Rs.

The trial court correctly held the
doctrine of laches and the statute of limitations precluded appellants’
challenge to the 1990 and 2003 CC&Rs.
Reversal is not required.[8]

II.
THE TRIAL
COURT PROPERLY AWARDED ATTORNEY FEES UNDER THE DAVIS-STERLING ACT (CIV. CODE,
§ 1350 ET SEQ.)


Appellants contend the trial court
erroneously awarded attorney fees and costs to respondent based upon Civil Code
section 1354, part of the Davis-Stirling Act, was erroneous because the Act
“does not apply to a subdivision which is not a common interest development and
has no common area.”

In its statement of decision, the
trial court held LMA was entitled to its costs of suit and reasonable attorney
fees under Civil Code section 1354, subdivision (c). The court noted that LMA had successfully
enforced the covenants set forth in the valid 2003 CC&Rs, including the
covenant requiring appellants to belong to LMA and to pay assessments.

In 1985,
the Legislature enacted the Davis-Stirling Common Interest Development Act
(Davis-Stirling Act) as title 6 of the Civil Code, “Common Interest
Developments” (Civ. Code, §§ 1350-1376; Stats. 1985, ch. 874, § 14, pp.
2774-2787), which encompasses community apartment projects, condominium
projects, planned developments and stock cooperatives (Civ. Code, § 1351, subd.
(c)). (Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21
Cal.4th 249, 264.) A “planned
development” means a development having either or both of the following
features: (1) the common area is owned either by an association or in common by
the owners of the separate interests who possess appurtenant rights to the
beneficial use and enjoyment of the common area; (2) A power exists in the
association to enforce an obligation of an owner of a separate interest with
respect to the beneficial use and enjoyment of the common area by means of an
assessment which may become a lien upon the separate interests in accordance
with Civil Code sections 1367 or 1367.1
(Civ. Code, § 1351, subd. (k).)


“A common interest development
shall be managed by an association which may be incorporated or
unincorporated. The association may be
referred to as a community association.”
(Civ. Code, § 1363, subd. (a).)
The Davis-Stirling Act permits the association or any owner of a
separate interest to enforce the covenants and restrictions set forth in the
declaration. Civil Code section 1354,
subdivision (c) entitles any prevailing party, in an action under subdivision
(a) to enforce the governing documents, to an award of reasonable attorney
fees. (Mount Olympus Property Owners Assn. v. Shpirt (1997) 59 Cal.App.4th
885, 893, fn. 6.) 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. (Martin
v. Bridgeport Community Assn., Inc.
(2009) 173 Cal.App.4th 1024,
1038-1039.)

Appellants contend the
Davis-Stirling Act is inapplicable to the 1990 and 2003 CC&Rs because there
were no intended common areas within the LME subdivisions. They maintain LMA’s claimed common areas
consist of “specific areas which were only available to members of the
Association and access was only intended for those members.” They further argue that membership within LMA
was voluntary for pre-1990 lot owners until 2003 and such areas were
inaccessible to non-members until the latter date:

“Pre-1990 lot owners had no
obligation to join the Association and received no conveyance of a separate
interest coupled with an interest in the common area or membership in the
association. Membership within the
Association was voluntary for pre-1990 lot owners up until 2003 and such areas
were locked to non-members, hence there was no intended common ownership within
the Subdivision. Therefore, the
Davis-St[i]rling Act’s statutory scheme does not apply to the Original
C&R’s and the 1990 CC&R Amendment.
Consequently, the court erred in awarding attorney’s fees under >Civil Code Section 1354(c).”

Although
appellants focus on the original, 1990, and 2003 CC&Rs, they do not
consider whether LME was a common interest development at the time of the 2008
judgment. Civil Code section 1354,
subdivision (c) provides that in an action to enforce the governing documents
of a common interest development, the prevailing party shall be awarded
reasonable attorney fees and costs. The
issue of a party’s entitlement to attorney fees is a legal issue which an
appellate court reviews de novo. ( >Garcia v. Santana (2009) 174 Cal.App.4th
464, 458.) Although the trial court’s
decision is reviewed independently, the scope of review is limited to issues
that have been adequately raised and supported in the appellant’s brief. (Reyes
v. Kosha
(1998) 65 Cal.App.4th
451, 466, fn. 6; 1 Eisenberg et al., Cal Practice Guide: Civil Writs and
Appeals (2009) ¶ 8:17.2, p. 8-6.)

Appellants
ignore the status of the LME as a common interest development at the time of
rendition of the judgment. Rather,
appellants devote their limited discussion to the reasons why LME was not a
common interest development under the original and 1990 CC&Rs. To the extent appellants are addressing the
2003 CC&Rs, their challenge to the award of attorney fees and costs must be
deemed waived.[9] The trial court correctly concluded in its
statement of decision: “Because the 2003 Amended and Restated Declaration was
properly adopted by a majority of the subdivision owners and was properly
recorded, its provisions are binding and enforceable against all Lot owners,
including Taggs, Wray and Whalleys. . . . [¶] . . . [¶] LMA is entitled to its
costs of suit and reasonable attorneys’ fees, as provided by Civil Code
§ 1354(c), which provides that in an action to enforce recorded
declarations of covenants, conditions and restrictions, the prevailing party >shall recover its attorneys’ fees. The language in the statute is mandatory and
not permissive.”




DISPOSITION

The
judgment is affirmed. Costs to
respondent.





Poochigian,
J.



WE CONCUR:





Wiseman, Acting P.J.





Hill, J.





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San Diego Case Information
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id=ftn1>

[1] > The
record on appeal is replete with pleadings and responsive pleadings filed by
the parties. In the interest of brevity,
we will only cite to the initial pleadings and then the operative pleadings at
the time of trial. Readers are referred
to the record on appeal for intermediate pleadings.

id=ftn2>

[2] A declaratory judgment (Code Civ. Proc., §
1060) is appealable where the trial court fixes the rights and liabilities of
the parties and does not contemplate further judicial proceedings to determine
the issues raised in the action. ( >Erickson v. Boothe (1950) 35 Cal.2d 108,
109; Western Gulf Oil Co. v. Title Ins.
Etc. Co.
(1946) 77 Cal.App.2d 217, 330 .)


id=ftn3>

[3] An order determining attorney fees and costs
is appealable as an order entered after judgment (Code Civ. Proc.,
§ 904.1, subd. (a)(2)). ( >People v. Bhakta (2008) 162 Cal.App.4th
973, 981.)

id=ftn4>

[4] Unit 1 consisted of Lots 1 through 84,
inclusive; Unit 2 consisted of Lots 85-202, inclusive; Unit 3 consisted of Lots
203-263, and Unit 4 consisted of Lots 264-321, inclusive.

id=ftn5>

[5] On September 21, 1990, LMA President Peggy
Kain wrote Rick Lobaugh, Vice President of Inter-County Title Company in
Mariposa, and explained the process used in amending the CC&RS in July,
1990. Kain noted: “Our dues are $73.00
per year which translates to about $6.08 per month. The Association has the responsibility of
maintaining the common grounds (two lakes and a clubhouse, etc.) and to respond
to the changing requirements of doing business today.

id=ftn6>

[6] Although our discussion focuses on the three-
and four-year statutes of limitation, we note the trial court’s observation in
its statement of decision:

“Civil Code § 1363.03
[elections; rules and procedures] was added by statutes and became operative
July 1, 2006. It was not in force at the
time of the 2003 election, but it was in force by the time the instant lawsuit
and related cross-complaints were filed. . . .

“. . . [Civil] Code . .
.§ 1363.03(h) provides that the nine month statute of limitations set
forth in Corp. Code § 7527 now applies to all voting in common interest
developments on issues of election of directors, amendment of governing documents,
enactment of special assessments in excess of the dollar amount that can been
approved by the board minutes, and changing of common areas to exclusive use
common areas.”



id=ftn7>

[7] The equitable defense of laches may be decided
as a matter of law where the relevant facts are undisputed. (Bakersfield
Elementary Teachers Assn. v. Bakersfield City School Dist.
(2006) 145
Cal.App.4th 1260, 1274.)

id=ftn8>

[8] In reaching this conclusion, we note that
Decker Enterprises, Inc. developed LME and incorporated LMA prior to the enactment
of the Davis-Stirling Common Interest Development Act (Civ. Code
§§ 1350-1376). The purpose of the
Davis-Stirling Act was to: (1) consolidate statutory provisions governing
common interest developments; (2) standardize treatment of different types of
common interest developments; (3) validate existing practices of developers and
community associations; and (4) resolve problems faced by homeowners and
associations in the operation of common interest developments, particularly the
collection of assessments and amendment of governing documents. (1 Sproul & Rosenberry, Advising Common
Interest Developments (Cont.Ed.Bar 2009) § 1.4, pp. 5-6.) In view of our holding in Issue I, we do not
address the applicability of the Davis-Stirling Act to a subdivision formed
prior to the effective date of that Act or the procedures to be followed to
convert such a subdivision into a common interest development subject to the
Davis-Stirling Act. Nor do we express an
opinion about the enforceability of CC&Rs against property owners in a
subdivision predating the Davis-Stirling Act where membership in a community
association is voluntary or is converted from voluntary to mandatory
status.

id=ftn9>

[9] In their opening brief, appellants summarily
contend the 1990 and 2003 CC&Rs were not validly adopted or, if valid, do
not come within the purview of the Davis-Stirling Act. Therefore, they maintain attorney fees under
Civil Code section 1354, subdivision (c) may not be claimed. Appellants further summarily contend that
they are entitled to attorney fees and costs “because the 1990 and 2003
CC&R Amendments were not validly created and did present a cloud on title
to Taggs, Wray, and the Whalleys’ properties.”
California follows the “American rule,” under which each party to a
lawsuit ordinarily must pay his or her own attorney fees. Code of Civil Procedure section 1021 codifies
that rule and provides that the measure and mode of attorney compensation are
left to the agreement of the parties “[e]xcept as attorney’s fees are
specifically provided for by statute.” ( >Musaelian v. Adams (2009) 45 Cal.4th
512, 516.) Appellants do not set forth a
statutory or contractual basis for attorney fees and their summary contention
must be rejected.






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