Pope v. Oaks of Calabasas
Filed 2/13/13
Pope v. Oaks of Calabasas HOA CA2/5
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
SECOND
APPELLATE DISTRICT
DIVISION
FIVE
ROBERT POPE et al.,
Plaintiffs and Appellants,
v.
THE OAKS OF CALABASAS
HOMEOWNERS ASSOCIATION,
Defendant and Respondent.
B237442
(Los Angeles County Super. Ct.
No. LC088601)
APPEAL from
a judgment of the Superior Court of
County, James A. Kaddo, Judge.
Affirmed.
Garfield
& Tepper and Scott J. Tepper for Plaintiffs and Appellants Robert Pope,
Michelle Agul, David L. Cherin, Mojgan V. Cherin and Ravi Sawhney.
Freedman
Weisz and Mitchell B. Stein for Plaintiff and Appellant Myer Solovy.
Wolf,
Rifkin, Shapiro, Schulman & Rabkin, Marc E. Rohatiner and Stephen M. Levine
for Defendant and Respondent.
______________________________
Plaintiffs and appellants Robert
Pope, Michelle Agul, Ravi Sawhney, Myer Solovy, and David L. Cherin and Mojgan
V. Cherin as trustees of the David and Mojgan Cherin Family Trust filed a first
amended complaint for declaratory relief
against defendant and respondent The Oaks of Calabasas Homeowners Association
challenging the amount of a monthly assessment.
declaratory relief, indemnification, and damages. Following a court trial, judgment was entered
declaring the appropriate assessment was $163.98. The cross-complaint was dismissed as moot. Respondent was found to be the prevailing
party.
This appeal is from the judgment and
postjudgment order.
name="_ftnref2" title="">[2] Appellants contend the ruling on the
assessment was erroneous as a matter of
law and not supported by substantial evidence. They further contend the prevailing party
ruling was an abuse of discretion. We
conclude the trial court did not err or abuse its discretion, and substantial
evidence supports the judgment.
FACTS
Background
Appellants were homeowners in The
Oaks of Calabasas, a planned community of 557 residential lots (the
“developmentâ€). Respondent operated the
development. Appellants owned homes on
Lots 21, 22, 23, and 24, located at the top of a long, steep roadway named
Prado de Los Ciervos (“Lot 29â€).
When appellants or their
predecessors
title="">[4] purchased their lots from the builder or developer,
they believed Lot 29 would be a private driveway owned by them. The top of the hill afforded exceptional
views, and if they owned Lot 29, would afford appellants privacy. However, Lot 29 was conveyed to
respondent.
In 2003, Pope asked the developer to
install a gate at the bottom of Lot 29 to restrict access. In 2004, a neighbor sued to stop installation
of the gate. Appellants were not parties
in that litigation. Appellants brought
suit against respondent, and others, to have the gate installed and title to
Lot 29 conveyed to appellants. The
neighbor’s litigation was settled by a monetary settlement. In July 2006, appellants’ lawsuit was settled
by the parties’ “Mutual Release†and “Declaration of Phase of Development and
Declaration of Covenants, Conditions and Restrictions†(“Phase
Declarationâ€). Pursuant to the
settlement, a gate limiting access to Lot 29 would be installed, but ownership
of Lot 29 would remain with respondent and appellants would pay an assessment
relating to Lot 29. Access through the
entry gate and upon Lot 29 would be limited to appellants and respondent and to
government entities, utility providers, and Lot 20, which possessed an
easement.
The
Assessment
The
gate and phone intercom system were installed in May 2007. Initially, respondent’s property manager
issued a monthly assessment of $11, which was not approved by respondent’s
board of directors and was unauthorized.
The $11 included a cost for the asphalt roadway. Appellants paid this amount without protest
until September 2009. Beginning in
October 2009, a board-approved monthly amount of $176.05 was assessed and back
assessments were demanded.
name="_ftnref5" title="">[5]
Trial Court’s Ruling
The court made oral findings that
there was “no ambiguity [in the Phase Declaration] and if there was an
ambiguity, it was resolved in favor of . . . defendant and against . . .
plaintiffs[.]†Appellants “received a
non-exclusive use and enjoyment in and to Lot 29. [¶]
Now we should not be fooled by the use of the word non-exclusive. That is non-exclusive vis-Ã -vis the four
plaintiffs. However, it was exclusive as
far as the other homeowners of the Calabasas Homeowners Association. There was a gate that could be operated
remotely; it had an electric connection.
I called it they had a de facto right to the roadway. [¶]
Also the document is further very clear, that they are responsible for
the expenses. It said and even in
parenthesis, included the word reserves.
And this is what the plaintiffs were trying to get away from.â€
In the written statement of
decision, the court found that, pursuant to the settlement of the prior action,
Lot 29 “became a de facto private roadway with a private gate and private
access. [¶] Section 3 of [the Phase Declaration]
provides: ‘every owner shall have a
non-exclusive easement for use and enjoyment in and to Lot 29.’ [¶]
Section 2 of that document provides that the owners irrevocably and
unconditionally consent to the establishment and operation of the Phase
Development created by [the Phase Declaration] and provides that the ‘full
costs and expenses (including reserves) of any additional service or facility
shall be fully paid by all the owners.’
[¶] Based on the language of the
[Phase Declaration], the surrounding circumstances when that document was
signed and the subsequent conduct of the parties, it is clear that the full
costs and expenses include electricity for the operation of the gate and
intercom system, telephone service for the intercom, street cleaning,
electricity for the lights on the streets, and a reserve allocation for
replacement of gate, fencing, intercom/phone, gate operators, guardrails and
asphalt.â€
The court found that respondent
board’s assessment of $176.05 was based in part on a May 2009 study by
Association Reserves, Inc., a specialist in setting reserves for community
associations such as respondent. The
board later determined the correct amount was $163.98, after concluding one of
the components should not have been included in the assessment. The collective monthly amount $531.12
calculated by Association Reserves, Inc., for reserves “is an appropriate and
reasonable amount.†“The additional
non-reserve costs . . . that form the basis of the . . . [a]ssessment are
appropriate and reasonable. On the basis
of the reserve and non-reserve elements, the appropriate and reasonable initial
. . . [a]ssessment effective October 1, 2007 is $163.98 per month per
residence.â€
In a judgment filed September 27,
2007, the court declared that, effective October 1, 2007, the correct
monthly assessment was $163.98. The
court decreed appellants take nothing by their complaint and the
cross-complaint is moot. Respondent was
found to be the prevailing party, entitled to recover costs and attorney
fees. The court awarded costs of
$15,244.19 and attorney fees of $137,000.00.
DISCUSSION
I. The Trial Court Correctly Interpreted The
Phase Declaration
Appellants contend that, pursuant to
the plain meaning of section 2.2 of the Phase Declaration, they are not
required to pay for anything but the entry gate/intercom. Appellants contend that if the contract is
ambiguous, extrinsic evidence does not support the trial court’s interpretation
that appellants are responsible for all costs associated with the private
roadway.
Interpretation of a contract
is reviewed de novo. (See City of El
Cajon v. El Cajon Police Officers’ Assn. (1996) 49 Cal.App.4th 64,
70-71.) The rules of contract interpretation “‘require us
to look first to the language of the contract in order to ascertain its plain meaning or the meaning a
layperson would ordinarily attach to it.
[Citations.]’ [Citation.] It is the mutual intention of the parties at
the time the contract is formed
that governs interpretation.†(American Internat. Underwriters Ins. Co.
v. American Guarantee & Liability Ins. Co. (2010) 181 Cal.App.4th 616, 622.) “The whole of a contract is to be taken
together, so as to give effect to every part, if reasonably practicable, each
clause helping to interpret the other.â€
(Civ. Code, § 1641.) “The
language of a contract is to govern its interpretation, if the language is
clear and explicit, and does not involve an absurdity.†(Civ. Code, § 1638.)
“In the absence of conflicting parol
evidence, the interpretation of a written contract is essentially a judicial
function subject to independent review on appeal. [Citation.]
A trial court’s threshold determination as to whether there is an
ambiguity permitting the admission of parol evidence is also a question of law
subject to independent review. [Citation.]
If parol evidence is admissible, and the competent parol evidence is in
conflict, the construction of the contract becomes a question of fact. However, if the parol evidence is not
conflicting, the appellate court will independently construe the writing.†(Fischer v. First Internat. Bank (2003) 109 Cal.App.4th 1433, 1443.)
II. Plain Meaning
Recital D of the Phase Declaration
states: “The Property consists of Lots
21, 22, 23, 24, and 29 and a gated entryway which presently restricts access
from the Development to the Property.
Lots 21, 22, 23, and 24 are improved with single-family residences and
Lot 29 consists of a paved interior roadway for vehicular traffic, landscaping
and irrigation devices and an electronically-controlled entry gate. It is the express mutual intent of each of
Declarant [respondent] and the Owners [of Lots 21 through 24] that all access
to the Property through such gated entryway will be restricted to Declarant,
the Owners, public agencies requiring access for public safety purposes or due
to existing access rights and, for the limited purposes expressly set forth
herein, the record and beneficial owner of Lot 20 of Tract 35596-05.â€
Recital E of the Phase Declaration
states: “Pursuant to and in strict
accordance with Section 6.10 of the Master Declaration, [Declaration of
Covenants, Conditions and Restrictions (The Oaks of Calabasas)], each of
Declarant and the Owners desire to establish and impose a Phase of Development
upon and consisting of the Property and each and every portion thereof and all
amenities located thereon and establish covenants, conditions and restrictions
upon the Property and each and every portion thereof, which will constitute a
general scheme for the management of the Property.â€
Section 2.1 of the Phase Declaration
provides: “Pursuant to and in strict
accordance with Section 6.10 of the Master Declaration, Declarant and each of
the Owners do hereby irrevocably and unconditionally elect to constitute and
establish the Property[
name="_ftnref7" title="">[7]] as a Phase of Development
for the purpose of providing for the delivery of additional services to the
Owners to operate and maintain the gated entryway which presently restricts
access from the Development to the Property and operate and maintain all
improvements on Lot 29[.]â€
Section 2.2 of the Phase Declaration
provides: “Each and all of the Owners .
. . irrevocably and unconditionally consent to the establishment and operation
of the Phase of Development created hereby.
The full cost and expense (including reserves) of any additional service
or facility for this Phase of Development shall be fully paid by all of the
Owners in such Phase of Development pursuant to the Phase of Development
Assessments to be levied and collected by [respondent] pursuant to and in
accordance with the Master Declaration.â€
The Phase Declaration defines “Phase
of Development Assessments†as “those [a]ssessments charged to and collected
from the Owners in accordance with Sections 3.11[
and 6.10[
the Master Declaration and the provisions of this Declaration, for the purpose
of financing the expenses incurred or to be incurred in connection with this
Phase of Development.â€
Section 4.7 of the Phase Declaration
provides: “The provisions of this
Declaration shall be liberally construed to effectuate its purpose of imposing
and establishing a Phase of Development for the Property.â€
We conclude the trial court
correctly found no ambiguity and correctly declared the plain meaning of the
Phase Declaration. The language is clear
and explicit that appellants must pay all costs associated with the private
roadway. As the language is not
ambiguous, parol evidence will not be considered.
The assessment is defined as the
charge to satisfy the expenses incurred in connection with the Phase of
Development. As set forth in recital D,
the Phase of Development was impressed on Lot 29 and appellants’ lots to
provide the owners of Lots 21, 22, 23, and 24 [Lots 21 through 24 and Lot
29 are hereinafter referred to collectively as the “Propertyâ€] with restricted
access to and through the Property from the development. Under section 2.1, this would be done by
providing services to operate a restricted, gated entryway and to maintain all
improvements on Lot 29. The asphalt road
is an improvement on Lot 29. Plainly,
the Phase of Development expenses include the expenses of the gated entryway
and the expenses of the road. Under
section 2.2, appellants are responsible for the full operating and reserve
costs of the Phase of Development services.
Appellants contend the term
“additional service†in sections 2.1 and 2.2 means “new†service, and, they
argue, since the only new service is the gate, their responsibility is limited
to the costs associated with the gate.
This interpretation is contrary to the language and meaning of the
contract. The purpose of the Phase of
Development is to provide appellants with a service that is additional to
services that were previously provided to them as homeowners in the
Development: restricted access to their
lots by means of a private roadway. The
gate provides the restriction, and the roadway provides the access. Moreover, this interpretation is required by
the language of section 2.2, which provides that the additional services are to
operate and maintain both the gate and the roadway of Lot 29. This interpretation is fully consistent with
the use of the term “additional service†in sections 3.11 and 6.10 of the
Master Plan. The additional services (“security
guards, manned security entrance, custodianâ€) or facilities (“entry driveway security
mechanismâ€) described
in section 6.10 are examples, not an exhaustive list. A phase of development establishing an area
that the membership at large is excluded from would involve other services and
facilities.
III. Substantial Extrinsic Evidence Supports
The Trial Court’s Interpretation
Even
if there is ambiguity in the Phase Declaration, the extrinsic evidence was not
in conflict and it supports the court’s interpretation. If there is conflicting extrinsic evidence,
substantial evidence supports the trial court’s ruling construing the
contract. (See Fischer v. First Internat. Bank, supra,
109 Cal.App.4th at p. 1443.)
There was evidence that, at the time
the Phase Declaration was negotiated, respondent’s board of directors
understood that the owners of Lots 21, 22, 23, and 24 would be fully
responsible for all costs that otherwise would have been costs payable by all
homeowners in the development. Then-board member Brian Cameron testified “the
Ciervos Street and the areas around it were going to be treated [in the
following way:] in exchange for the
exclusivity whereby other Oaks residents are not going to be allowed access to
it, in exchange for that exclusivity the Ciervos homeowners would assume
responsibility for all of the expenses including reserves . . . from the gate
on up or actually from the sidewalk on up.â€
No appellant took the position that the asphalt repair and maintenance
was not part of the obligations under the Phase Declaration, until they disputed
the amount of the assessment by filing suit.
trial court’s ruling.
IV. The $163.98 Assessment Was Appropriate
Appellants contend the assessment
violated Civil Code section 1366.1 because some of the costs in the assessment
were still being charged to the community as a whole and several of the costs
were inflated. We conclude Civil Code
section 1366.1 is inapplicable. In
any event, the assessment amount is supported by substantial evidence.
A. Civil Code
Section 1366.1 Does Not Apply
Civil Code section 1366.1
provides: “An association shall not
impose or collect an assessment or fee that exceeds the amount necessary to
defray the costs for which it is levied.â€
In section 2.4 of the Phase Declaration,
appellants “irrevocably and unconditionally consent[ed] to the initial budget
and the initial Phase of Development Assessment for this Phase of Development
as established by the [Board of Directors of respondent].â€
The trial court found Civil Code
section 1366.1 is inapplicable.
applies, [appellants] ignore that the amount they agreed to pay was the
consideration for the Association to allow [appellants] to have what the other
557 homeowners do not have; a de facto private roadway. The section . . . has no application to a
group of owners accepting responsibility for certain categories of expenses in
return for valuable consideration.†The
court stated, “[t]o provide otherwise, the Court would be creating an
injustice. [Appellants], having obtained
a substantial financial benefit in the enhancement of the value of their homes,
want the other 557 owners of [the development] to share in their costs. This is manifestly unfair.â€
We agree with the trial court that
this statute is inapplicable. It does
not apply to a homeowner’s agreement to pay particular costs, including
unconditionally consenting to the assessment established by the board of
directors, in exchange for valuable consideration to the homeowner, and
appellants cite no case to support a contrary proposition.
As Civil Code section 1366.1 does
not apply and appellants consented to the assessment, the amount of the
assessment must be upheld.
B. Substantial
Evidence Supports $163.98 Was An Appropriate Assessment
In any event, substantial evidence
supports the conclusion the amount of $163.98 is appropriate.
1. The
Decision to Not Reduce the General Assessment Does Not
Render
the $163.98 Assessment Excessive
Appellants contend the $163.98
assessment exceeds the amount necessary to pay the costs of Lot 29, in
violation of Civil Code section 1366.1, in that, when Lot 29 was open to the
whole community, the whole community paid Lot 29’s costs, but now those costs
are also included in the Phase Declaration assessment payable by
appellants. The contention has no
merit. Excluding the duplicate amounts
from the community’s assessment would save each of the 557 homeowners in the
development less than $1.25 per month.
Respondent’s failure to back out $1.25 from the general assessment does
not indicate the Phase Declaration assessment of $163.98 exceeds the costs of
Lot 29. Moreover, the $1.25 was
allocated to the operating account for respondent’s day-to-day expenses, which
benefited all homeowners, including appellants.
Appellants do not claim the community’s general assessment is excessive
and should be reduced by $1.25.
2. The
Component Costs Are Supported by Substantial Evidence
Appellants contend the costs
attributable to reserves for the phone/intercom, asphalt, guard rails, and gate
operators are inflated. We disagree with
the contention, because substantial
evidence supports the costs assessed for these components.
“When considering a claim of
insufficient evidence on appeal, we do not reweigh the evidence, but rather
determine whether, after resolving all conflicts favorably to the prevailing
party, and according the prevailing party the benefit of all reasonable inferences,
there is substantial evidence to support the judgment.†(Scott v. Pacific Gas & Electric Co. (1995) 11 Cal.4th 454, 465.) “It is an elementary, but often overlooked
principle of law, that when a verdict is attacked as being unsupported, the
power of the appellate court begins and ends with a determination as to whether
there is any substantial evidence, contradicted or uncontradicted, which will
support the conclusion reached by the [trier of fact]. When two or more
inferences can be reasonably deduced from the facts, the reviewing court is
without power to substitute its deductions for those of the trial court.†(Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429)
The reserves component of the
$163.98 assessment was based on the evidence of respondent’s common interest
development reserve study specialist, Robert Nordlund. He testified at length concerning the basis
for his opinion that the correct assessment was $163.98, including describing
the methodology and database he used to arrive at his estimates. The trial court found Nordlund’s evidence
credible and adopted his findings.
Appellants’ contention is nothing more than a request that we reweigh
the evidence. That is not our role. Substantial evidence supports the finding.
V. Refund
Appellants
contend they are entitled to a judgment in the amount of $2,027.76, consisting
of the amount of reduction of the assessment from $176.05 to $163.98. After trial, appellants asked the trial court
for a judgment based on the difference between $163.98 and their payment of
$176.05 per month so that they would be the prevailing parties. Respondent does not now, and did not in the
trial court, dispute appellants are entitled to a refund or credit for the excess
payments, and notes there is no evidence appellants have not received a refund
or credit. In the reply brief,
appellants did not address the refund issue further. Whether a $2,027.76 award to appellants is
included or not in the judgment does nothing to change our view below, that the
trial court did not abuse its discretion in concluding respondent, alone, is
the prevailing party. We conclude the
trial court’s omission to include a $2,027.76 refund in the judgment does not
require reversal or remand of the judgment.
VI. Appellants Are Not the Prevailing Party
Appellants contend they are the
prevailing party on the complaint because they are entitled to a refund of
$2,027.76 and Pope is the prevailing party on the cross-complaint because the
cross-complaint against him was dismissed.
We disagree with the contentions.
The Phase Declaration contains an
attorney fees provision: “In the event
action is instituted to enforce any of the provisions contained in this
Declaration, the party prevailing in such action shall be entitled to recover
from the other party thereto as part of the judgment, reasonable attorneys’
fees and costs of such suit.â€
“[Code of Civil Procedure s]ection 1032 is the
fundamental authority for awarding costs in civil actions. It establishes the general rule that ‘except
as otherwise expressly provided by statute, a prevailing party
is entitled as a matter of right to recover costs in any action or
proceeding.’ [Citation.] . . . [¶]
Section 1033.5 of the Code of Civil Procedure . . . specifies the ‘items
. . . allowable as costs under Section 1032.â€
It lists as one category of costs ‘[a]ttorney fees, when authorized by .
. . [¶] (A) Contract.’ [Citation.]â€
(Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1108.) “When any party recovers other than monetary
relief[,] 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).)
Civil Code section 1717 provides, in
pertinent part: “(a) In any action on a contract,
where the contract specifically provides that
attorney’s fees and costs, which are incurred to enforce that contract,
shall be awarded . . . to the prevailing party, then
the party who is determined to be the party prevailing on the contract
. . . shall be entitled to reasonable attorney’s fees in addition to other
costs. [¶] . . .
[¶] Reasonable attorney’s fees
shall be fixed by the court, and shall be an element of the costs of suit. [¶] . . . [¶]
(b)(1) The court . . . 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.â€
The prevailing party is the
party that achieved its litigation objective.
(Santisas v. Goodin (1998) 17 Cal.4th 599, 609; Hsu v. Abbara
(1995) 9 Cal.4th 863, 876.) “‘The
court’s determination a party prevailed on a contract
action is an exercise of discretion which should not be disturbed on appeal
absent a clear showing of abuse.
[Citation.]’ [Citations.]†(Jackson v. Homeowners Assn. Monte Vista
Estates-East (2001) 93 Cal.App.4th 773, 789; see also Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, 1153 [a
trial court’s determination of the prevailing party is reviewed for abuse of discretion
and will not be disturbed absent a “clear showing of abuseâ€].)
The trial court’s determination that
respondent was the prevailing party on the complaint was not an abuse of
discretion. Appellant sued for a
declaration that $11 was the maximum amount they could be assessed and that
only the costs relating to their use of the gate could be imposed. Appellants did not achieve their litigation
objection, as the court ruled that the $11 assessment was incorrect and not
binding and all costs associated with the phase development, including
operating costs for the gate, intercom, street cleaning, and street lighting,
and a reserve for replacement of gate, fencing, intercom/phone, gate operators,
guardrails, and asphalt, were recoverable.
The cross-complaint against Pope was
based on the contingent claim that, if the trial court determined respondent
was bound by the $11 assessment, the reason $11 was the binding assessment was
Pope’s actions in breach of his fiduciary duty and in excess of his authority. The court’s ruling the $11 assessment was not
binding rendered the cross-complaint moot.
The court ruled, “[t]he cross-complaint is moot by virtue of the
decision on the complaint and neither party is the prevailing party.†This ruling is not an abuse of
discretion. The cross-complaint was
dismissed because the contingency it was based on did not arise, not because
Pope demonstrated the cross-complaint lacked merit.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondent.
KRIEGLER,
J.
We concur:
TURNER,
P. J.
MOSK,
J.
assessment amount when the complaint was filed was $176.05. It was reduced by respondent during the trial
to $163.98.
a postjudgment order, the trial court ordered the judgment to reflect an award
of costs and attorney fees.
