Curtlett v. San Lorenzo Village Homes Assn.

Filed 9/24/07 Curtlett v. San Lorenzo Village Homes Assn. CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION TWO

Plaintiffs below, Harry J. Curlett, Rhoda E. Curlett, Edward Gomes and Alice K. Gomes, appeal on a variety of grounds from the trial courts judgment regarding their fourth cause of action, in which they sought certain declaratory relief. Defendant below, San Lorenzo Village Homes Association, opposes plaintiffs appeal, and also appeals from the trial courts denial of its motion for attorney fees, which plaintiffs oppose. We previously ordered these appeals consolidated. We affirm the trial courts judgment and attorney fee ruling in their entirety.

BACKGROUND

Defendant San Lorenzo Village Homes Association (Association) manages over 5,600 homes in a common interest development known as San Lorenzo Village (Village), where plaintiffs own homes. Harry and Rhoda Curlett purchased their home in the Village in 1947, and Edward and Alice Gomes purchased homes in 1959 and 1992. The declaration of covenants, conditions, and restrictions in effect at the time plaintiffs purchased their homes was filed in 1945 (1945 CC&Rs). The Association filed a set of CC&Rs in 2000 (2000 CC&Rs), which plaintiffs contend superseded the 1945 CC&Rs and defendant contends merely restated them without substantive change, other than removal of a restrictive covenant as required.

Plaintiffs sued defendant on a variety of grounds, but only the fourth cause of action in their first amended complaint, for declaratory relief, is the subject of this appeal. Plaintiffs sought the following declaration in that cause of action:

A. That the amended CC&Rs do not apply,

B. That the Davis Sterling Common Interest Development Act, Sections 1350 et seq. of the California Civil Code, does not apply to the [Association], and that therefore the California Nonprofit Mutual Benefit Corporation Law (California Corporations Code Section 7110 et seq.) does apply to said [Association],

C. That the court declare that the membership of said non-profit corporation consists of the lots in Tracts 688, 689, 690, 691 and 697[.]

A bench trial was conducted, the parties submitted briefs on specified issues at the courts request, and the Association was permitted to submit additional evidence. The trial court issued a written judgment, which stated in relevant part:

A. The [2000 CC&Rs] are valid, effective and govern Tract Nos. 688, 689, 690, 691 and 697, and, in particular, apply to plaintiffs Harry J. Curlett, Rhoda E. Curlett, Edward Gomes and Alice K. Gomes and their properties in Tract Nos. 689 and 691; the court further finds, based on the evidence adduced at trial that the following clerical errors exist in the 2000 CC&Rs:

The height limitation stated in Clause IV, paragraph 3 of the 2000 CC&Rs should read two stories rather than one and one-half stories;

The 2000 CC&Rs inadvertently fail to contain a reciprocal attorneys fees clause as set forth in Judge Byers order and plaintiffs Exhibit 11, herein;

And the word supersedes in the second paragraph of the Certificate of Amendment, dated December 21, 2001 . . . shall be deleted and replaced with the word restates.

B. Defendant [Association] is within the purview of, and governed by, the Davis-Stirling Common Interest Development Act (Act), California Civil Code sections 1350 et seq. The court expressly declares that [Association] has common area, as defined in the Act. The [Association] is an association as defined in Civil Code section 1351, subdivision (a). [Association], its members as defined in Article II, Section I of the By-laws of [Association], adopted November 18, 1999 . . . and said property, as defined in Article I, Section 1 of the By-laws of [Association], are subject to and governed by the provision of the Davis-Stirling Common Interest Development Act, California Civil Code sections 1350 et seq. The court also declares that the Non-Profit Mutual Benefit Corporation Law, Corporations Code sections 7110 et seq. also apply to [Association] to the extent that the Non-Profit Mutual Benefit Corporation Law is not superseded by the Davis-Stirling Common Interest Development Act and other later-enacted statutes.

C. As of the date of the Judgment, [Association] consists of the lots in the Tracts listed in plaintiffs Exhibit 26 in this litigation; those lots are [53 tracts listed]. . . . The By-laws of the [Association] currently and validly in effect are those adopted November 18, 1999 and received into evidence in this litigation as plaintiffs Exhibit 24. The term said property as used in Article I, Section 1 of the November 18, 1999 By-laws refers to the properties in the Tracts listed above.

Plaintiffs subsequently filed a timely appeal. They state that [t]wo of the plaintiffs-appellants have deceased since this action,[1] and the appeal were filed. Accordingly, some of the issues appealed from are now moot, and this brief is limited to the remaining issues:

1. [Do] the [2000 CC&Rs] bind the first ten (10) tracts and does it eliminate the race restrictions of 1944-45? (The Order of Reformation of the 2000 CC&Rs is appealed from.)

2. By some form of legal osmosis, has the Non-Profit Mutual Benefit Corporation formed in 1945, the By-Laws of which were amended in 1947 to contain ten (10) tracts, the purpose of which was to provide services to the ten (10) tracts, morphed into a management corporation to provide management to fifty-eight (58) tracts, or is the management company an unincorporated association managing fifty-eight (58) tracts, including the original incorporated ten (10) tracts? (The trial court did not rule on this issue.)[2]

3. Does the Davis-Stirling Act apply to the defendant/respondent [Association], or to the first ten (10) tracts? (Appeal is taken from the trial courts ruling that Davis-Stirling applies to both.) (Fn. added.)

The trial court also denied defendants request for attorney fees. Defendant appeals this ruling, which we discuss further, post.

DISCUSSION

I. Legal Standards

A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) We review the trial courts interpretation of the law de novo. (City and County of San Francisco v. Ballard (2006) 136 Cal.App.4th 381, 396.)

We review factual issues under a standard of substantial evidence. (City and County of San Francisco v. Ballard, supra, 136 Cal.App.4th at p. 396.) When a finding of fact is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the finding of fact. [Citations.] [] When two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court. [Citations.] The testimony of a single credible witness may constitute substantial evidence. (Ibid.) When we are asked to review the sufficiency of the evidence presented at a bench trial, [t]he trial court was the trier of fact and the sole judge of the credibility of witnesses. We are not in a position to weigh any conflicts or disputes in the evidence. . . . Therefore, we must consider all of the evidence in the light most favorable to the prevailing party, giving that party the benefit of every reasonable inference from the evidence tending to establish the correctness of the trial courts decision, and resolving conflicts in support of the trial courts decision. [Citations.] (Estate of Beard (1999) 71 Cal.App.4th 753, 778.)

Furthermore, [a]ppellant bears the burden of showing on appeal that the . . . evidence was demonstrably false, inherently improbable, or for some other reason incontestably of insufficient substantiality to support the trial courts orders . . . . (Estate of Beard, supra, 71 Cal.App.4th at p. 779.) Although defendant does not raise the issue, we refer repeatedly herein to the basic principle that appellants burden begins with the obligation to properly brief and argue issues presented. We have the discretion to disregard issues not properly addressed in the briefs, and may treat them as waived. (See, e.g., People v. Stanley (1995) 10 Cal.4th 764, 793; People v. Hardy (1992) 2 Cal.4th 86, 150.) It is the duty of a party to support the arguments in its briefs by appropriate reference to the record, which includes providing exact page citations. [Citation.] Because [t]here is no duty on this court to search the record for evidence [citation], an appellate court may disregard any factual contention not supported by a proper citation to the record [citation]. (Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 1361, 1379.) An appellate court is not required to consider alleged errors where the appellant merely complains of them without pertinent argument. (Strutt v. Ontario Sav. & Loan Assn. (1972) 28 Cal.App.3d 866, 873.) An appellate court also is not required to discuss or consider points which are not argued or which are not supported by citation to authorities or the record, including when the relevance of the cited authority is not discussed or points are argued in conclusory form. (Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.)

II. The 2000 CC&Rs

A. The Changes in the 2000 CC&Rs

Plaintiffs first contend that the Association made changes in the 2000 CC&Rs so

as to render them invalid because they do not comply with Civil Code section 1352.5.[3] This argument lacks merit.

Section 1352.5 states in relevant part that no declaration or other governing document shall include a restrictive covenant in violation of section 12955 of the Government Code. ( 1352.5, subd. (a).) The section further states:

Notwithstanding any other provision of law or provision of the governing documents, the board of directors of an association, without approval of the owners, shall amend any declaration or other governing document that includes a restrictive covenant prohibited by this section to delete the restrictive covenant, and shall restate the declaration or other governing document without the restrictive covenant but with no other change to the declaration or governing document. ( 1352.5, subd. (b), italics added.)

The 1945 CC&Rs contained the following restrictive covenant in clause XI:

Limitations of Use and Occupancy. [] No part of said property or any buildings erected, constructed or maintained thereon shall be occupied or resided upon by any person not wholly of the white or Caucasian race. Domestic servants who are members of a race other than the white or Caucasian race may live on or occupy the premises where their employer resides.

In the 2000 CC&Rs, defendant deleted the restrictive covenant, clause XI. Defendant also reorganized a number of provisions, changed or added numbering, lettering, and captions in many instances, and included certain new italicized commentary about the present state of the law for various clauses. For example, under clause XIII, regarding provision for upkeep, a new paragraph was inserted:

1. Outdated Assessment Provisions. (The California Legislature has adopted a comprehensive scheme for the levy and collection of Association assessments. Virtually all of the following provisions are outdated and have been preempted by Civil Code Sections 1366 and 1367. For convenient reference, the most relevant provisions of these statutes are summarized in italics.)

In a provision on assessment level increases, the 2000 CC&R states:

The Board may impose a regular Assessment up to and including a twenty percent (20%) increase over the aggregate regular Assessment levied in the Associations preceding fiscal year. In order to exercise this discretionary power to increase regular Assessments, the Association must have complied with Civil Code Section 1365(a). The Board may impose special Assessments which in the aggregate do not exceed five percent (5%) of the budgeted gross expenses of the Association for that fiscal year. The Board also has the power to levy an Emergency Assessment pursuant to Civil Code Section 1366(a).

The preamble to the 2000 CC&Rs[4] states that [e]xcept for the removal of discriminatory provisions, no part of the changes are substantive and they are not to be construed or interpreted as part of the effective Covenant provisions. . . . These non-substantive changes should make the Covenants easier to navigate, read and understand, even if in so doing outdated provisions become all the more apparent. The preamble also states that [t]his [CC&R] is a restated and reorganized version of the original [CC&R] which was recorded in the office of the Alameda County Recorder on June 1, 1945 . . . .

The Certificate of Amendment to the 2000 CC&Rs states that, [p]ursuant to the authority of 1352.5(b), the Association has authorized removal of discriminatory provisions from the foregoing Declaration. . . . In so reorganizing and restating the Declaration, except for the removal of the discriminatory provision, the Former Declaration has been restated without substantive changes.

Plaintiffs argue that the 2000 CC&Rs are not binding on them because the Associations changes were beyond that authorized by section 1352.5. They contend section 1352.5 does not provide for editorial comments, which can mislead and confuse a homebuyer or lay homeowner. Plaintiffs further argue that defendant summarized only portions of changes in the law stated in the Davis-Stirling Common Interest Development Act (Davis-Stirling Act) ( 1350 et seq.), making the editorial comments slanted and incomplete.

Defendant responds that the 2000 CC&Rs, by their own terms, are the restated 1945 CC&Rs with references to the Davis-Stirling Act added for convenience and the racial restriction deleted pursuant to section 1352.5. Defendant also argues that if plaintiffs had a grievance about the 1945 CC&Rs, any action was long ago barred by the statutes of limitations; that plaintiffs failed to show how they were harmed in any way by the 2000 restatement, thus failing to present a justiciable controversy required for a declaratory relief action; and that, insofar as plaintiffs contend that the 2000 CC&Rs do not apply to other Association homeowners, their request for a declaration could not be decided in this litigation because these indispensable parties are absent.

The preamble and certificate of amendment to the 2000 CC&Rs make clear the CC&Rs are a restatement of the 1945 CC&Rs without the restrictive covenant, and without any other substantive changes. Thus, the parties arguments raise the question of whether the Legislature intended to prohibit nonsubstantive changes to CC&Rs filed pursuant to section 1352.5. The statutes language is not clear on the point. On the one hand, it states that there shall be no other change besides the removal of the restrictive covenant. On the other hand, this reference, with its reference to other, is obviously linked to the removal of the restrictive covenant, which is a substantive change.

Therefore, we turn to section 1352.5s legislative history. (Halberts Lumber, Inc. v. Lucky Stores, Inc. (1992) 6 Cal.App.4th 1233, 1239-1240 [if the meaning of the words is not clear, courts must take the second step and refer to the legislative history].) Neither side discusses it; our own review of the legislative counsels digest and committee analyses do not shed further light on the question. A letter from Senator John L. Burton, President Pro Tempore of the Senate, to the Secretary of State, states:

It is the Legislatures intent that a County Recorder shall provide a certified copy of a recorded document having discriminatory language at the normal cost of copies. The person requesting such copy may only delete such discriminatory language from the certified copy and, with an attached statement identifying the purpose of the recording, request that the modified copy be recorded upon payment of all recording fees.

(Historical and Statutory Notes, 8 Wests Ann. Civ. Code (2007 ed.) foll. 1352.5, p. 179.)

Senator Burtons reference to an attached document identifying the purpose of the recording indicates a legislative intent to allow at least some commentary to accompany the filing of restated CC&Rs, but he also states that the person restating the document may only delete such discriminatory language from the certified copy. Thus, the letter does not reveal the legislative intention about nonsubstantive changes.

The final stepand one which we believe should only be taken when the first two steps have failed to reveal clear meaningis to apply reason, practicality, and common sense to the language at hand. If possible, the words should be interpreted to make them workable and reasonable [citations], practical [citations], in accord with common sense and justice, and to avoid an absurd result [citations]. (Halberts Lumber, Inc. v. Lucky Stores, Inc.,supra, (1992) 6 Cal.App.4th at p. 1239.) Applying this rule, we find it would be contrary to common sense to conclude that the Legislature intended to prohibit nonsubstantive changes like the editorial comments and reformatting that plaintiffs complain of here because such changes have no legal consequence. We do not agree with plaintiffs argument that they create confusion, because they are identified as nonsubstantive changes.[5] Therefore, we reject plaintiffs argument.

B. The Supersedes Reference

The Certificate of Amendment for the 2000 CC&Rs states that [t]his [CC&R] incorporates the Amendments, together with preexisting language and supersedes the former Declaration.[6] (Italics added.) The court found that this was a clerical error, and that the word restates should replace it. Plaintiffs appear to argue that this ruling was in error (without expressly saying so), and ask that we remand the case to the trial court to declare the 2000 CC&Rs invalid, and the 1945 CC&Rs in effect with the restrictive covenant language struck. However, the trial courts determination is supported by substantial evidence. As we have already stated, another paragraph of the Certificate of Amendment, in fact one which immediately precedes that which contains this supersedes reference, states that [p]ursuant to the authority of Civil Code  1352.5(b), . . . except for the removal of the discriminatory provision, the Former Declaration has been restated without any substantive changes.[7] (Italics added.) The preamble contains a similar statement. Plaintiffs do not challenge this substantial evidence. Accordingly, their argument lacks merit.

III. The Tracts in the Association

Plaintiffs also present a series of confused and fragmented arguments for reversal, supported by few, if any, citations to legal authority or the record, because the trial court purportedly erred about the Associations membership. Plaintiffs initially sought a declaration from the trial court that the Associations membership consisted of five tracts included in the Association in 1945, but have since argued that membership was limited to 10 tracts, all added to the Association by 1947. In their appellate papers, plaintiffs argue that the Association improperly morphed into a management corporation to provide management to fifty-eight (58) tracts, and argue that it should be viewed instead as an unincorporated association managing these 58 tracts.

Plaintiffs contend in one part of their opening appellate brief that the trial court did not decide this issue, but argue elsewhere that the Judgment of the trial court that the Corporation has validly expanded to 5,685 members and that all are voting members, is improper. As we have already discussed, the trial court did address the issue, as it found that the Association consists of the 53 tracts referred to in the November 1999 By-laws. Plaintiffs appear to be challenging this finding (without expressly saying so in the argument). This challenge fails.

A. Changes in the By-Laws

Plaintiffs first argue that the Association never properly amended its by-laws to include additional tracts beyond the initial 10 tracts because it failed to obtain the approval of the membership. Plaintiffs contend that plaintiff Curlett and witness Van Huffel testified that no elections have been held on the addition of numerous tracts, and that [i]t is conceded that no additional elections have been held nor consents obtained, for the adoption of amended By-Laws, and that no subsequent By-Laws were adopted as required by the resolution of the meeting of November 15, 1945. However, plaintiffs provide no citations to the record for, or further explanations regarding, these factual contentions. Accordingly, we disregard them as waived. (People v. Stanley, supra,10 Cal.4th at p. 793; People v. Hardy, supra, 2 Cal.4th at p. 150; Grant-Burton v. Covenant Care, Inc., supra, 99 Cal.App.4th at p. 1379; Kim v. Sumitomo Bank, supra, 17 Cal.App.4th at p. 978; Strutt v. Ontario Sav. & Loan Assn., supra, 28 Cal.App.3d at p. 873.)

Plaintiffs also contend that in 1945 the Associations board amended its by-laws to require that amendments be made only by a vote of the membership, rendering any subsequent amendments adding tracts to the Association invalid to the extent membership approval was not obtained. They offer as proof the minutes of a November 15, 1945 meeting, admitted into evidence as exhibit 15 at trial, which indicates approval at the board meeting of such an amendment.

Plaintiffs contention is contradicted by substantial evidence. As defendant pointed out to the trial court (although not in its appellate papers), by-laws subsequent to this 1945 board meeting did not require such a vote. Defendants exhibit N consists of Association by-laws from 1949. Article XIX, section 1 of those 1949 by-laws states that, along with a vote of a majority of quorum at a duly called meeting of the members, By-laws may be adopted, amended or repealed [b]y the Board of Directors, subject always to the power of the members to change or repeal such By-Laws[.] Plaintiffs exhibit 26 also admitted into evidence before the trial court, indicates that all of the tract annexations other than the first five tracts occurred after 1949.

Plaintiffs argued to the trial court that the 1949 by-laws were the result of an improper amendment because there was no indication in the record of an election to delete the requirement of member consent that is indicated by the minutes contained in exhibit 15. However, as defendant points out below, the November 15, 1945 board meeting minutes are not by-laws and plaintiffs do not point to any by-laws in the record evidencing this member approval requirement.[8] Therefore, we conclude plaintiffs exhibit 15 is not a basis for reversal of the trial courts judgment.

B. Plaintiffs Other Arguments

Plaintiffs make a number of other arguments for why the by-laws were not properly amended to add tracts beyond the initial 10 tracts, but fail in each case to provide sufficient argument, legal authority, and/or citations to the record. Therefore, we disregard each of these arguments as waived. (People v. Stanley, supra,10 Cal.4th at p. 793; People v. Hardy, supra, 2 Cal.4th at p. 150; Grant-Burton v. Covenant Care, Inc., supra, 99 Cal.App.4th at p. 1379; Kim v. Sumitomo Bank, supra, 17 Cal.App.4th at p. 978; Strutt v. Ontario Sav. & Loan Assn., supra, 28 Cal.App.3d at p. 873.)

Plaintiffs cite a portion of Corporations Code section 5056s definition of a member, but fail to explain its significance to their argument.

Plaintiffs next note that Corporations Code section 5331 provides in relevant part that [e]xcept as provided in or authorized by the Articles or By-Laws, all members shall have the same rights, privileges, preferences, restrictions and conditions. They then state, without any citation to the record, [w]ith regard to the management association, this is clearly not the case.

Plaintiffs next cite Corporation Code sections 5332 and 5056 and, relying on these provisions, state that the court could well construe the tracts added by amendments of the By-Laws nonetheless are contracts adding those persons as associate members for purposes of receiving services[.] Plaintiffs argue this would seem an equitable solution. Regardless of the equity of such a proposal, we fail to see its relevance to an appellate determination about the propriety of the trial courts ruling on the issue presented.

Plaintiffs next quote from Corporations Code section 7150, subdivision (a), which provides, with certain exceptions, that by-laws of a non-profit mutual benefit corporation may be adopted, amended or repealed by its board unless the action would, among other things, materially and adversely affect the rights of members as to voting, dissolution, redemption, or transfer, or increase or decrease the number of members authorized in total or for a class. (Corp. Code, 7150, subd. (a)(1) and (2).) Plaintiffs then state, [c]learly doubling the total number of votes materially affects the rights of members as to voting. There are several problems with plaintiffs argument.

First, plaintiffs again fail to cite to the record in support of their factual contentions. Second, Corporations Code section 7150 became operative in 1980.[9] According to plaintiffs exhibit 26, only 137 out of 5,685 Association homes were added after this time. Therefore, plaintiffs argument relates only to the addition of these 137 homes, hardly a doubling of the total number of votes. Furthermore, plaintiffs do not provide any record citations in support of their factual contentions, including how these 137 homes were added to the Association. Therefore, to the extent a very small portion of their argument might maintain some undetermined relevance in light of Corporations Code section 7150s enactment, we disregard it is waived.[10]

Plaintiffs next argue that even without Section 7150, and even prior to its adoption, the contract (1945 CC&Rs and Board Resolution of Meeting No.: 15) between the Association and its original ten (10) tract owners would still apply. Although plaintiffs provide certain legal citations in support of their argument, we nonetheless reject it because it relies on plaintiffs factual contention that exhibit 15, the November 1945 board meeting minutes, establishes that the Associations by-laws could not be amended without the vote of the membership, an argument we have already rejected. Plaintiffs also make certain factual contentions about the lack of notice of proposed amendments, and the failure of a majority to approve these amendments. However, these contentions also are not supported by any record citations[11] and, therefore, are waived.

Plaintiffs also argue that [t]he net effect of allegedly adding additional members without a membership vote, and to agree to manage them, is either to create an unincorporated management company, which manages the new sub-associations, or to add associate (non-voting) members to the corporation. They contend that when the Association board petitioned the superior court in 1991 to amend the CC&Rs, it caused each of its associations to vote separately and to amend its declaration, thus recognizing that the sub-associations are separate organizations with different rules. Plaintiffs then provide a two-page quotation from the American Law Institute regarding governance structures for large communities, apparently contending that the Association, rather than having expanded into a management company for all the tracts, should be seen as an umbrella and subassociation model. Plaintiffs also cite to Corporations Code sections 8011.5 and 7817 and make certain inadequately supported arguments about the Associations articles of incorporation. Plaintiffs fail to sufficiently explain the relevance of their legal arguments in establishing the trial court erred (versus discussing some alternative view of governance structure that they favor), and fail to provide sufficient record citations for their factual contentions.[12] Therefore, these arguments are waived.

In a separate section of their opening brief, plaintiffs also quote from Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345, which states that, if the restrictions are recorded before the sale, the later purchaser is deemed to agree to them. The purchase of property knowing of the restrictions evinces the buyers intent to accept their burdens and benefits. Thus, the mutual servitudes are created at the time of the conveyance even if there is no additional reference to them in the deed. (Id. at p. 363.) Plaintiffs argue that it would appear that the rule of Citizens squarely applies in the present case. Since one-third of the lots had been sold prior to April 5, 1945, . . . the 1945 CC&Rs do not bind subsequent purchasers. Plaintiffs fail to sufficiently explain this argument, or its relevance. Therefore, we disregard it as waived as well.

In short, plaintiffs, ignoring the appellate standard of review and the record itself, present a fog of fragmented, abstract arguments which largely obscure what they might be attempting to challenge about the trial courts determinations. We will not guess at their relevance, and will not comb the record or legal authorities in search of their support, if any. These insufficiently supported legal arguments and contentions are not a basis for reversing any aspect of the trial courts judgment.

IV. Application of the Davis-Stirling Act

Plaintiffs argue the Davis-Stirling Act does not apply to the first 10 tracts of the Association, or to the Association itself, because of a purported lack of an Association common area and a complete lack of uniformity among the Tracts.

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. 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. ( 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 [citation]. (Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 81, fn. omitted.)

Although plaintiffs do not expressly state so, they appear to be offering these arguments to challenge the trial courts ruling that [Association] is within the purview of, and governed by, the Davis-Stirling Common Interest Development Act (Act), California Civil Code sections 1350 et seq. The court expressly declares that [Association] has common area, as defined in the Act. The [Association] is an association as defined in Civil Code section 1351, subdivision (a). [Association], its members as defined in Article II, Section 1 of the By-laws of [Association], adopted November 18, 1999 . . . and said property, as defined in Article I, Section 1 of the By-laws of [Association], are subject to and governed by the provision of the Davis-Stirling Common Interest Development Act, California Civil Code sections 1350 et seq. We find plaintiffs arguments provide no basis for reversal of this ruling.

Plaintiffs lack of a common area argument is based upon Committee to Save the Beverly Highlands Homes Assn. v. Beverly Highlands Homes Assn. (2001) 92 Cal.App.4th 1247. Plaintiffs argue the case holds that the Declaration of CC&Rs must give the owners of the lots an interest in the common area and the right to use the common area for their own enjoyment. Without this, there can be no creation of mutual or reciprocal easement rights appurtenant to the separate interests. In the event such interest in the common area is not created, then the CC&Rs do not run with the land, or create equitable servitudes. Plaintiffs then state that [i]n the instant case, lot 1 of Block 1 Tract 688, was sold on May 13, 1944 and excluded from any operation of the CC&Rs recorded on that day, and from the Declaration of the other four Tracts recorded at the same time, as well. Also, a great many (construction loan) Deeds of Trust were recorded prior to the CC&Rs (Exhibit 7, Recorders Index). After again quoting at some length from Committee to Save theBeverly Highlands Homes Assn. v. Beverly Highlands Homes Assn., supra, 92 Cal.App.4th 1247, plaintiffs merely assert that, [t]hus, the Davis-Stirling Act does not apply to the first ten (10) Tracts.

Plaintiffs also argue that the Davis-Stirling Act does not apply to the Association because of a lack of uniformity among the tracts, relying principally on the statement in Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 368, that [a] requirement for upholding covenants and restrictions in common interest developments is that they be uniformly applied and burden or benefit all interests evenly. According to plaintiffs, [i]n the instant case, the addition of various tracts with differing restrictions and some without lien enforcement, and some with voluntary membership, certainly cannot be held to be uniform in their application, or to benefit or burden all interests evenly. However, plaintiffs cite to only two places in the record in support of their argument, plaintiffs exhibit 14, which apparently is a 14-page CC&R regarding three parcels recorded in 1955, and lines 10 to 15 on page 211 of the reporters transcript, which consists of a fragment of an exchange in the course of Van Huffels testimony. Neither of these references is further explained.

Once more, we are faced with insufficient arguments largely unsupported by record citations which, therefore, are waived. (People v. Stanley, supra,10 Cal.4th at p. 793; People v. Hardy, supra, 2 Cal.4th at p. 150; Grant-Burton v. Covenant Care, Inc., supra, 99 Cal.App.4th at p. 1379; Kim v. Sumitomo Bank, supra, 17 Cal.App.4th at p. 978; Strutt v. Ontario Sav. & Loan Assn., supra, 28 Cal.App.3d at p. 873.)

Furthermore, even if we were to consider plaintiffs common area argument on its merits, plaintiffs have failed to directly address the trial courts express finding that [Association] has common area, as defined in the Act.[13] Substantial evidence supports the courts conclusion. For example, trial testimony by Nancy Van Huffel, the Associations administrator, and documents introduced into evidence during her testimony, indicate that the Association maintained common areas, including such areas as a library and baseball field.[14]

V. Defendants Appeal Regarding Attorney Fees

Defendant argues that the trial court erred when it concluded that the Association was not the prevailing party and denied the Associations motion for prevailing party

attorney fees.[15] We affirm the trial courts ruling.

Both plaintiff and defendants sought prevailing party attorney fees in the trial court pursuant to, among other things, the 2000 CC&Rs,[16] Civil Code section 1354, and Code of Civil Procedure section 1032. Both the 2000 CC&Rs and Civil Code section 1354, subdivision (c), provide for the prevailing party to receive reasonable attorney fees in an action such as that litigated below, but without defining the term. The prevailing party under a CC&R provision is determined pursuant to section 1717 (Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1572, fn. 3, and cases cited; Arias v. Katella Townhouse Homeowners Assn., Inc. (2005) 127 Cal.App.4th 847, 852), which states in relevant part:

The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section. ( 1717, subd. (b)(1).)

Furthermore, Code of Civil Procedure section 1032 states in relevant part that [w]hen any party recovers other than monetary relief and in situations other than as specified, the prevailing party shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not[.] (Code Civ. Proc.,  1032, subd. (a)(4).)[17] However, a litigant who prevails under this cost statute is not necessarily the prevailing party for purposes of attorney fees. (Heather Farms Homeowners Assn. v. Robinson, supra,21 Cal.App.4th at p. 1572.) Furthermore, courts determining whether to award attorney fees under section 1354 and similar statutes have declined to adopt a rigid interpretation of the term prevailing party and, instead, analyzed which party had prevailed on a practical level. (Id. at p. 1574.)

A trial courts determination that one party in litigation was the prevailing party is reviewed for abuse of discretion. (See Villa De Las Palmas Homeowners Assn. v. Terifaj, supra, 33 Cal.4th at p. 94; Arias v. Katella Townhouse Homeowners Assn., Inc.,supra, 127 Cal.App.4th at p. 852.) While the concept abuse of discretion is not easily susceptible to precise definition, the appropriate test has been enunciated in terms of whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered. . . . [Citations.] [Citation.] A decision will not be reversed merely because reasonable people might disagree. An appellate tribunal is neither authorized nor warranted in substituting its judgment for the judgment of the trial judge. [Citations.] In the absence of a clear showing that its decision was arbitrary or irrational, a trial court should be presumed to have acted to achieve legitimate objectives and, accordingly, its discretionary determinations ought not be set aside on review. [Citation.] [Citation.] Accordingly, an abuse of discretion transpires if the trial court exceeded the bounds of reason in making its award of attorney fees. (Maughan v. Google Technology, Inc. (2007) 143 Cal.App.4th 1242, 1249-1250.)

We have no reason to disturb the trial courts ruling that defendant was not the prevailing party. It is obvious that the fourth cause of action for declaratory relief was the principle focus of the litigation, as the trial court characterized it in its order denying either party attorney fees. As we have discussed, plaintiffs pled for declaratory relief in three respects. The court afforded significant relief to plaintiffs in two of three. Among other things, plaintiffs argued to the trial court that the 2000 CC&Rs superseded, rather than restated, the 1945 CC&Rs, by making numerous changes, and excluding certain amendments to those CC&Rs. Although the trial court ultimately ruled that the 2000 CC&Rs did apply, the court also found they contained clerical errors, in that they referred to superseding the 1945 CC&Rs and left out certain 1992 amendments as indicated by plaintiffs exhibit 11. The courts finding of clerical errors indicates that it found some merit in some of plaintiffs arguments about problems with the 2000 CC&Rs as they were filed.

Second, plaintiffs sought a declaration that the Non-Profit Mutual Benefit Corporation Law, rather than the Davis-Stirling Act, applied to defendant. The court ruled the Non-Profit Mutual Benefit Corporation Law applied to the extent that it was not superseded by the Davis-Stirling Common Interest Development Act and other later-enacted statutes. Defendant does not cite a particular instance when the Davis-Stirling Act supersedes the Non-Profit Mutual Benefit Corporation Law. Again, the courts ruling demonstrates that it found some merit in plaintiffs arguments.

Defendant contends that it was unquestionably the prevailing party. It points out that the court granted the Associations motion for judgment on the first cause of action for slander of title, that the Gomes plaintiffs dismissed their second cause of action for damages after trial commenced, resulting in a judgment for defendant, and that the court granted defendants demurrer without leave to amend to the third cause of action, brought by the Curlett plaintiffs for violation of due process. This recitation, however, does nothing to challenge the accuracy of the courts conclusion that the fourth cause of action was the principle focus of the litigation.

Regarding the fourth cause of action, defendant contends that it prevailed with regard to each of the three requested declarations. It contends the courts finding that there were clerical errors in the 2000 CC&Rs was not a victory for plaintiffs because the attorney fee provision had been recorded in the 1992 amendment (plaintiffs exhibit 11), making it a part of the 2000 CC&Rs regardless, because plaintiffs did not raise the issue in their complaint, but only at trial, and because there was no genuine controversy about the building height limitation error found by the court.

Defendants arguments are unpersuasive. In its closing trial brief, it argued to the trial court that [p]laintiffs no longer have any substantive claim based on any alleged impropriety in the 2000 CC&Rs. While plaintiffs failed to point specifically to exhibit 11 in their closing trial brief, they did argue that two court ordered amendments to the CC&Rs were entirely excluded; defendant opposed this contention, arguing it should be disregarded because plaintiffs failed to cite any evidence to support it. Whether or not plaintiffs pled about particular errors in their complaint, errors were considered, debated, and ruled upon by the trial court.

The second declaration request involved the Non-Profit Mutual Benefit Corporation Law and Davis-Stirling Act. Defendant argues that the courts holding that the former applied unless superseded by the latter also was not a plaintiffs victory, because plaintiffs argued defendant was governed solely by the former. However, the record indicates defendant resisted conceding that the Non-Profit Mutual Benefit Corporate Law applied to it. As plaintiffs point out in their reply brief, early in the case defendant argued plaintiffs did not state a cause of action for declaratory relief as follows:

In other words, you dont devolve into a corporation thats subject to the nonprofit mutual benefit law. Someone has to actively take steps to become such an organization and be governed by those rules. And apparently in their fourth cause of action, thats what plaintiffs want this court to declare. And Im not so sure the court can declare that. Because its almost as if a portion oftheyre asking a portion of the association to be carved out, set aside and then forced to become this kind of organization that they have not chosen to become so far. [] On that ground, we dont think they have stated a cause of action for declaratory relief.

Thus, defendants claim that it never questioned the applicability of the Nonprofit Mutual Benefit Corporation Law to it is not accurate.

Defendant also argues the trial courts ruling that the Davis-Stirling Act applied to many more than the first 10 tracts was a particularly significant holding. While defendant unquestionably prevailed on this issue, the record does not indicate the issue dominated the proceedings so as to mandate reversal of the trial courts decision.

Finally, defendant argues it prevailed on numerous unpleaded issues; that the issues were identical to those raised in the previous Bachelder litigation; and that plaintiff Curlett has repeatedly litigated and lost on minutiae. Defendant does not identify these unpleaded issues; the court did refer in its judgment to defendants Bachelder litigation argument, which case, in any event, was not argued to apply to the Gomes plaintiffs; and plaintiff Curlett was only one of four plaintiffs in this matter. Accordingly, we find none of these arguments persuasive.

In short, defendant does not establish that the trial court exceeded the bounds of reason (Maughan v. Google Technology, Inc., supra, 143 Cal.App.4th at pp. 1249-1250) in denying defendants motion for attorney fees. Therefore, we have no cause to disturb the trial courts denial of defendants motion for attorney fees.

DISPOSITION

The trial courts judgment and its denial of defendants motion for attorney fees are affirmed. The parties are to bear their own appellate costs.

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Lambden, J.

We concur:

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Kline, P.J.

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Richman, J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line attorney.

[1] Plaintiffs appellate counsel does not identify the deceased, and respondent does not pursue any appellate issues that might arise as a result of their passing.

[2] In their reply brief, plaintiffs also state that [t]his case is apparently one of first impression: Where the association has violated several of the provisions of the California Non-Profit Mutual Benefit Corporations Act for many years, does the mere passage of time preclude members from obtaining a remedy for past violations, and is their sole remedy enjoining future violations? Plaintiffs also ask, [w]here later tracts were added in violation of the California Non-Profit Mutual Benefit Corporation law, can the trial court, as here, order the Association to follow the Non-Profit Mutual Benefit Corporation law prospectively, but avoid making an Order as to the past violations? They contend the trial court was silent as to past violations and that the case must be remanded for determination of these issues. We fail to see how this issue is properly presented in this appeal, given the declaratory nature of the relief sought below (see Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 898 [a declaratory judgment merely declares the legal relationship between the parties]), plaintiffs pleadings and their arguments below (which included their closing trial brief statement, in response to defendants statute of limitations and laches arguments, that [t]he relief sought is as to the present conduct, and present policies, of the Board of Directors of the defendant Association); the trial courts judgment, and plaintiffs statement of the issues in their opening appellate brief. Obvious reasons of fairness militate against consideration of an issue raised initially in the reply brief of an appellant. (Varjabedian v. City of Madera(1977) 20 Cal.3d 285, 295, fn. 11.) Of course, it may be that plaintiffs merely intend by these questions to restate the second of the issues stated in their opening brief, which we address herein.

[3] All further unspecified code sections refer to the Civil Code.

[4] Although plaintiffs did not include the preamble in the 2000 CC&Rs attached as their trial exhibit 12, it was included in the 2000 CC&Rs attached as exhibit A to plaintiffs first amended complaint, and defendant referred to them in its briefing to the trial court.

[5] Having resolved the matter, we need not address the remainder of the parties arguments. Plaintiffs also argue that the 2000 CC&Rs are invalid because they were approved by a board of directors that did not legally exist, given that the Association was improperly expanded beyond 10 tracts. We address this further, post.

[6] As we have already indicated, the trial court found certain other clerical errors. However plaintiffs only challenge the determination that supersedes was a clerical error.

[7] Plaintiffs further argue that because the 2000 CC&Rs superseded the 1945 CC&Rs, the 2000 CC&Rs must comply with section 1353, but do not, because they do not contain certain information required by that statute. We need not further address this issue because we affirm the trial courts determination that the 2000 CC&Rs restated, rather than superseded, the 1945 CC&Rs.

[8] Plaintiffs also argued below that the Corporations Code in effect at the time should be construed as prohibiting the addition of tracts to the Association without member approval, an argument plaintiffs did not support with citations to any legal authority beyond the statutes themselves, and which we find unpersuasive.

[9] Plaintiffs do not cite to any statutes similar to Corporations Code section 7150, which may have preceded it.

[10] Plaintiffs also cite California Code of Regulations, title 10, sections 2792.74, 2792.27, and 2792.17, as well as Lake Arrowhead Chalets Timeshare Owners Assn. v. Lake Arrowhead Chalets Owners Assn. (1996) 51 Cal.App.4th 1403. However, they fail to explain their relevance. Having examined them (except for Cal. Code Regs., tit. 10,  2792.74, which does not exist), we find they do not alter our analysis here.

[11] Elsewhere in their opening appellate brief, plaintiffs cite to the trial testimony of plaintiff Harry J. Curlett for the contention that the voting, and other corporate rights of the original members of the first ten Tracts . . . have disappeared. However, Curletts cited testimony is decidedly uncertain and of questionable relevance overall. In response to a question about the last election of the board of directors of the Association, II dont think there was a last election. Im not sure. But I think there was no competitionnobody applied, so theI think the existing director was continued as a director. He then added, Im not sure, though.

[12] Plaintiffs do cite to exhibit 25, which is a petition to reduce the percentage of votes to amend the declaration filed by the Association in 1991, pursuant to section 1356. However, plaintiffs fail to explain the document further, such as how it establishes that the Association recogniz[ed] that the sub-associations are separate organizations with different rules. To the contrary, the petition itself states that [t]he Association consists of 5,612 homes in 52 tracts.

[13] Our focus on this particular aspect of the trial courts ruling is not intended to suggest that we agree, or disagree, with plaintiffs interpretation of Committee to Save the Beverly Highlands Homes Assn. v. Beverly Highlands Homes Assn., supra, 92 Cal.App.4th 1247, or any other aspect of their presentation to this court or the trial court.

[14] Defendant also argues that plaintiffs Davis-Stirling Act arguments must be rejected because an appellate court previously ruled that the Act applied to the Association in the Bachelder suit, which was purportedly controlled by the Curletts, and because the Curletts raised the applicability issue in prior small claims lawsuits. Although defendant argued this to the trial court, the trial court did not address the matter in its judgment, and we do not have any need to address it in light of our determinations herein.

[15] Defendant contends on appeal that it incurred attorney fees in excess of $150,000.

[16] As a part of its judgment, the trial court held that [t]he 2000 CC&Rs inadvertently fail to contain a reciprocal attorneys fees clause as set forth in the Amendment to the Declaration of Covenants, Restrictions and Reservations recorded on January 2, 1992, which was plaintiffs exhibit 11 at trial.

[17] Code of Civil Procedure section 1033.5, subdivisions (a)(10)(A) and (B) allow for recovery of attorney fees as costs under Code of Civil Procedure section 1032 when authorized by contract or statute.