Patterson v. Arrowhead Country Club

Filed 5/22/07 Patterson v. Arrowhead Country Club CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of San Bernardino County. Frank Gafkowski, Jr., Judge. (Retired judge of the former Mun. Ct. for the Southeast Jud. Dist. of L.A., assigned by the Chief Justice pursuant to art. VI, 6 of the Cal. Const.) Reversed.

Tharpe & Howell, Stephen G. Scherzer, and Paul W. Burke, for Defendant and Appellant.

Fiore, Racobs & Powers, Peter E. Racobs, and Jesse W.J. Male, for Plaintiff and Respondent.

Arrowhead Country Club (ACC) appeals after the trial court granted summary judgment in favor of Kenneth Patterson in Pattersons lawsuit for breach of contract and related causes of action.^[1]We agree with ACC that a triable issue of material fact exists so as to preclude summary judgment and therefore reverse the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

ACC is a nonprofit mutual benefit corporation which governs and administers a private country club (the Club) situated in San Bernardino. Patterson joined the Club in 1972 as a Social Member, and in 1974 became a Golf Member. Under the Clubs bylaws, a Golf Member is entitled to use all of the Clubs facilities, including the golf course, without payment of green fees. In addition, Golf Members have voting rights and, in case of the Clubs dissolution, shall share equally in the remaining assets, after debts and obligations of the Club have been paid or provided for. As of October 29, 2002, other classifications of membership included Associate, Non-Golf Associate, Junior, Honorary, and Junior Executive.

In December 2002, the Clubs bylaws were amended to add a new membership classification for Senior Member. As amended, the bylaws provided: Any present Golf Member with at least 30 years as a Member and at least 70 years old is eligible for a Senior Membership. To become a Senior Member, the present Golf Member must

request a change to Senior Membership [i]n writing and dispose of the Golf membership by direct sale to a buyer that is [s]ubject to approval for a Golf Membership in Arrowhead Country Club by Clubs Board of Directors. Further, Senior Members shall have no voting rights, or any interest in the assets or property of the Club, but each member, together with the members of his immediate family, shall be entitled to the use of all the club facilities, including the golf course, without payment of green fees. A dues payment of $50.00 per month is required.

On December 31, 2002, Patterson executed a document indicating he was selling his Golf Membership in the Club to a named individual and that, when the sale became final, wished to transfer his membership to a Senior Membership. He asserted he qualified for Senior Membership in accordance with the bylaws.

Along with Patterson, approximately 45 other former Golf Members became Senior Members. A significant number of the new Senior Members ended up giving away their Golf Member memberships in order to take advantage of the new classification, and a short time later a number of new Golf Members went into default and allowed their memberships to be taken back by the Club. This in turn eventually caused the Club to experience a significant financial downturn.

In 2004, the bylaws were again amended. The monthly dues were to be increased for Senior Members to fifty percent of the standard dues charged to Golf Members. Further, as an independent issue, the Board determined that it had been inappropriate to designate an amount for dues in the bylaw amendment (as none was provided in the bylaws with regard to any other class of members) which created the Senior Member class, and that regardless of any dues increase for Senior Members, a further amendment was needed to remove the inappropriate reference.

Patterson and other Senior Members voiced their displeasure with the increase, complaining that they expected their monthly dues to be $50 for the rest of their lives. The Club acknowledged there had been a misunderstanding, and offered to reinstate any Senior Member, including Patterson, as a full Golf Member with all rights, privileges and obligations, and for no cost. Patterson rejected the offer.

In December 2004, Patterson filed the underlying lawsuit. Alleging causes of action for breach of contract, injunctive relief, declaratory relief, promissory estoppel, and unfair competition, he complained that [a]fter inducing [him] and similarly situated members to become Senior Members and agreeing in exchange to provide them with lifetime use of the facilities for a cost of $50.00 a month, the ACC, by vote of the Golf Members only, purported to amend the Bylaws to strip the Senior Members of the right and entitlement to lifetime use of the ACC facilities at $50.00 a month. This amendment to the Bylaws was not voted on or approved by [himself] or by a majority of the class of Senior Members. The complaint sought monetary damages, and declaratory and injunctive relief.

ACC answered the complaint, asserting numerous affirmative defenses, including, among others, lack of standing, estoppel, excuse and waiver, business judgment, and mistake.

Four months later, Patterson filed a motion for summary judgment or, in the alternative, summary adjudication.^[2] In essence, he argued a contract had been formed between ACC and himself to become a Senior Member and that ACC breached that contract by amending the bylaws to modify the $50 for life rate. According to Patterson, the contract consisted of a cover letter from Richard Williams, ACCs president, indicating that a new classification of senior membership was being considered and urging the members to give their approval; the accompanying writing which spelled out the nature of the proposed bylaw amendment; and the document Patterson had executed after the amendment was approved, whereby he set forth his desire to sell his Golf Membership. Patterson insisted there was no triable issue of material fact and that he was entitled to summary judgment as a matter of law because ACC had no defense.

Patterson alleged that in electing to convert his membership, he had relied on a statement in the cover letter indicating that the $50 per month due would be for life. He acknowledged that only the cover letter included the for life language, but argued it was reasonable to infer that the monthly fee was for life because (1) there were no terms which indicated the dues could be raised to an amount higher than $50.00 or indicating the ACC had any discretion regarding the future amount of the dues, (2) the First Amendment made the $50.00 monthly dues part of the By-laws when no other membership fee was made a part of the ACC governing documents, and (3) the proposed First Amendment was sent out with an explanatory letter expressly stating the dues for Senior Members would be $50.00 for life. Patterson also referred in his motion to a letter/memorandum from Williams, undated but apparently written at the time the Board was considering an increase in the Senior Membership dues, wherein Williams asserted: The original intent was for the dues charged the Senior Members to remain the same for their tenure ($50 in this case). We represented the Senior Membership to them in this manner and now to increase the dues after they committed and sold is not very ethical. Patterson further asserted that when the bylaws were amended in 2004 to increase the dues, he had no voting rights and thus was not permitted to vote to reject the proposal.

In opposing the motion, ACC objected to virtually all of Pattersons supporting evidence, including Williams cover letter and his subsequent correspondence, on grounds they were inadmissible hearsay, parol evidence, and lacked foundation. ACC argued there was a triable issue of material fact as to whether there was a binding agreement between Patterson and the Club so as to prohibit the Club from amending the bylaws and/or increasing the dues for Senior Members. In support of its position, ACC submitted declarations of Robert Shorter, its general manager since 2000, and Larry Taylor, a current member of its Board, indicating there was no intent to amend the bylaws to fix Senior Membership dues at $50 per month for life.

Shorter recalled that ACC had no intent to fix the senior membership dues at $50 per month for life. The purpose of the new classification, he said, was to honor and give special benefit upon long-standing, continuous members. It was determined that a reduced fee structure would be the primary reward for their participation in the newly-created class. Because an amendment to the bylaws would be required, it was decided that a general referendum vote by general members would be taken. With regard to the $50 fee, he indicated that although there was mention of a fixed due structure for life, when the matter was submitted to the general membership that condition was not to be a direct benefit. Instead, it was determined that the dues would initially be $50 per month, but could be modified or adjusted by a unilateral Board action. He further alleged that subsequent to the filing of the lawsuit, [t]he Board has voiced opinion . . . that in the event the legal outcome would somehow grant senior members a fixed $50 per month for life privilege, that the Board, in discharge of its fiduciary obligations to the club as a whole would have no real alternative other than to create a further referendum initiative in order to entirely disband the class of senior members. Based upon an informal canvassing of all members, even if senior members were permitted to vote on this referendum, he suspected that it would pass and that the class would be disbanded.

Taylor, who was in his third year on the Board and had been a member since 1988, alleged that during his association as a member it ha[d] been within the exclusive province of the Board of Directors to set monthly dues for various membership classifications. He was not on the Board at the time of the 2002 amendment creating the Senior Member classification. However, he did receive circulars and a referendum ballot for the approval or disapproval of the proposal to amend the bylaws to include the new classification. He indicated that [a]lthough the Bylaw changes were provided with a referendum vote indicat[ing] that dues will be fixed at the rate of $50 per month, at no time did [he] believe that was a lifetime entitlement, but rather that adjustment or modifications to the senior member dues structure could be made if appropriate. Over the course of the year after the Senior Member class was created, there were discussions among Board members and club members as to the fairness and appropriateness of the initial $50 per month dues and the appropriateness of actually having a set dues amount in the bylaws. As for the March 2004 amendment, the Board had determined that an appropriate amount for Senior Member dues would be one-half of the base amount for Golf Members. Notices were sent out to the membership, and objections were received from various Senior Members, including Patterson. Taylor explained that [a]t this time, it became clear that there was at least a misunderstanding on behalf of a number of senior members as to whether their $50 per month dues initially set when the classification was formulated, was a for life vested privilege. The Board then determined that any Senior Member who did not wish to remain a Senior Member would be offered a full (free) general membership as a substitute. Taylor further alleged that Patterson was not even eligible to be a Senior Member because he had not been a member for 30 years.^[3]

At the hearing on September 15, 2005, the court, having overruled all of ACCs objections, stated: Getting to the merits of the motion itself, I would like to tentatively indicate that there appears to have been a contract entered into between the plaintiff and the Club fusing together the presidents offer, Mr. Pattersons or the plaintiffs application and the Board of Directors [sic] acceptance. It appears that all these documents together make the contract which cannot be altered by the Board of Directors. It is the Courts intention to grant the motion for summary judgment as to the entire complaint. The Court doesnt find that there exists any material facts or triable issues of material fact . . . . The court explained it had based its ruling on its observation that Patterson had a contract with ACC for a senior membership at the rate of $50 per month for life, which was predicated on the cover letter; a subsequent report from Williams, indicating, among other things, that he believed it would not be ethical to increase the dues after representing that the amount would be $50 for their tenure; and the minutes of the June 24, 2004 meeting,^[4]at which one Senior Member addressed the Board, stating that he had relied upon paying $50 a month for life when he sold his membership and became a Senior Member.

After hearing argument, the court granted the motion. It found that a contract had been entered into between Patterson and ACC fusing together Williams cover letter, Pattersons request to transfer his golf membership to a senior membership; and the amended bylaws, which cannot be altered by the Board of Directors. And, having found that a contract had been created entitling Patterson to a senior membership at a cost of $50 per month for life, the court ordered ACC to refund any dues paid by Patterson in excess of that amount. Further, the court enjoined ACC from charging Patterson more than $50 a month for life and from changing the bylaws to adversely affect Pattersons rights as a senior member, finding that any amendment affecting his status was void and unenforceable. Lastly, the court ordered that ACC be prohibited from negatively affecting the rights of other similarly situated senior members.

ACC thereafter moved for reconsideration, arguing that the judgment exceeded the scope of relief Patterson could or actually did seek. When the hearing on the motion got under way, the court stated that in thinking about its earlier decision it realized it had granted relief which was not requested. Although it was not going to change its order insofar as concerned Patterson, it admitted that it had to pull back [its] jurisdiction as to how it affects the group that he is associated with, the other people who took advantage with him of the senior membership. And, after acknowledging that it did not have jurisdiction to affect the rights of other Senior Members as it did with respect to Patterson, the court found that ACCs request for clarification was well taken. Nonetheless, after hearing argument from counsel and having requested each to submit a proposed order, the court adopted the proposal offered on Pattersons behalf and entered a revised judgment which was virtually the same as its original one.

First, the court granted declaratory relief based upon the cover letter, which it found to be unequivocal, and upon the senior membership subscription form, all of which set $50 per month senior dues without any provision for increase. The court found all these documents together make the contract which, once accepted by Senior Members, cannot be unilaterally altered by the Club. The court found that the 2004 bylaw amendments had not been submitted to or approved by the Senior Members and thus could not lawfully alter the terms of senior membership. Thus, the change of its bylaws to affect the rights and privileges of Senior Members was void and unenforceable.

Second, the court ordered that Patterson recover the excess payments made, i.e., $125 per month for 16 months, for a total of $2,000.

Third, the court issued a permanent injunction enjoining ACC from charging Patterson more than $50 a month for the rest of his life; enjoining ACC from changing the bylaws in any manner adversely affecting Pattersons rights under his senior membership status or charging more than $50 a month. Patterson was to continue to have full use and enjoyment of the facilities which attach to a senior membership.

Finally, the court prohibited ACC from enforcing its 2004 bylaw amendments regarding Senior Members rights and privileges to those members who became Senior Members prior to the enactment of the 2004 bylaw amendments.

DISCUSSION

A. Applicable law and standard of review.

The purpose of summary judgment is to provide courts with a mechanism to cut through the parties pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute. [Citations.] (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 844 (Aguilar).) The evidence of the moving party should be strictly construed, and that of the opponent liberally construed, and any doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.)

On appeal from a summary judgment, our review is de novo, which means that we independently review the evidence submitted. (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.) In so doing, we determine from the submitted evidence whether there is a triable issue as to any material fact [citation], and to be material a fact must relate to some claim or defense in issue under the pleadings [citation]. (Zavala v. Arce (1997) 58 Cal.App.4th 915, 925.) In other words, [t]here is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar, supra, 25 Cal.4th at p. 850, fn. omitted.)

B. There exists a triable issue of material fact as to whether a binding contract was formed between ACC and Patterson to provide a senior membership at $50 per month for life.

In challenging summary judgment, ACC raises a variety of issues, several of which need not be addressed in order to resolve this appeal. For example, it contends the cover letter was inadmissible as lacking foundation and/or authentication, the court improperly admitted extrinsic evidence to add terms to the bylaws and/or create an integrated contract, and the court failed to determine if the bylaws themselves were an integrated agreement.^[5] Suffice it to state, whether we view the cover letter as one of three writings comprising a contract between ACC and Patterson, as did the trial court, or as extrinsic evidence offered to explain (or as ACC argues, to vary) the terms of the

amended bylaws and Pattersons subsequent application, the result is the same. There is a dispute as to whether ACC intended to offer senior membership status at a fixed cost of $50 per month for life.

As indicated hereinabove, Pattersons cause of action for breach of contract alleged that Patterson and ACC entered into a written contract whereby Patterson agreed to give up his interest in ACCs assets as well as his voting rights in exchange for and in consideration of the right and entitlement to a senior membership at a cost of $50 a month for life. The cause of action further alleged that ACC breached that contract when it amended the bylaws to increase the membership dues. In his motion for summary judgment, Patterson asserted his contract with ACC consisted of the cover letter from Williams accompanying ACCs proposal to amend the bylaws, the proposed amendment, and Pattersons signed application to essentially transfer his golf membership to a senior membership. In granting summary judgment, the trial court found that a contract had been created which fused together the cover letter, the amended bylaws, and the signed application. However, because the cover letter is the only one of the three writings which includes the for life language, and because declarations offered on ACCs behalf indicate that in amending the bylaws to provide for a senior membership class the Board of Directors did not intend to set a for life fee structure, the letters impact, if any, on the contractual relationship between ACC and Patterson as modified by the amended bylaws presented a triable issue of material fact precluding summary judgment.

Evidence was offered to the trial court from both parties with regard to the intent of the amendment. Patterson presented the cover letter; ACC presented the declarations of Shorter and Taylor. Pattersons evidence showed the intent to fix the dues at $50 per month for life; ACCs evidence showed that the notion of fixing dues for life had been considered by the Board, but rejected.

According to Shorter, ACC had no intention of fixing the dues for senior members at $50 per month for life. Although there had been mention of a fixed structure for life, by the time the matter was submitted to the general membership for approval, the notion of having a fixed amount had been rejected and it was determined that the dues would initially be $50 per month, but could be modified or adjusted by a unilateral Board action.

The essence of Taylors declaration was that, after the bylaws were amended in 2002 to expressly provide for senior members to pay dues of $50.00 per month, some Board members found it objectionable. As a result, the Board decided to increase the dues to one-half of those paid by regular golf members. Said Taylor: It was the feeling and intent of the Board as discussed, and certainly my intent, to grant that senior members class considerable financial advantage as a gratis for their long-term association with the club, however not to do so in a manner that was financially irresponsible, or to create undue burden on other club members as well as club services. After the bylaws were again amended, it became clear that there was some misunderstanding on the part of some of the Senior Members as to whether the $50 monthly dues had been set as a for life privilege; thus, the Board determined that any Senior Member who did not wish to remain a Senior Member would be offered a full (free) general membership as a substitute. Thus, the change of status was initially done for financial reasons, to provide assistance to the seniors. However, the second amendment became necessary because of financial difficulties faced by the Club. And while ACC offered the seniors a chance to resume their golf membership at no additional cost, not a single person chose to do so.

In granting summary judgment, the court viewed all three writings together as forming a binding contract between ACC and Patterson. As Patterson points out, the court apparently took this step pursuant to Civil Code section 1642, which provides, several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.

The applicability of section 1642 is a question of fact for the trier of fact. (Cadigan v. American Trust Co. (1955) 131 Cal.App.2d 780, 786.) Moreover, where three writings are taken together to constitute a single contract, [t]he terms of the contract are established by [the] three instruments, not by one to the exclusion of either of the others. (Id. at p. 787.) Here, in viewing the three writings as part of the same transaction and concluding that what was said in the cover letter was controlling, the trial court took it upon itself to decide a disputed issue of material fact. Summary judgment was therefore improper.

DISPOSITION

The judgment is reversed and the matter is remanded to the trial court with directions to enter a new order denying appellants motion for summary judgment. Appellant is entitled to costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

/s/ MILLER

J.

We concur:

/s/ McKINSTER

Acting P. J.

/s/ RICHLI

J.

Publication Courtesy of California attorney referral.

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^[1] The Clubs appeal is from the order granting summary judgment, which is not an appealable order. However, we treat the appeal as being taken from the judgment which was ultimately entered. (Richards v. Department of Alcoholic Beverage Control (2006) 139 Cal.App.4th 304, 311.)

^[2] Patterson sought, in the alternative, summary adjudication as to his causes of action for breach of contract, promissory estoppel, and unfair competition, as well as eight independent issues related to the causes of action upon which he sought summary judgment.

Patterson also sought attorneys fees pursuant to Code of Civil Procedure section 1021.5. In its judgment filed November 9, 2005, the court reserved ruling on Pattersons application for attorneys fees pending the filing by Patterson of a separate motion for same. In its revised judgment filed January 24, 2006, the court awarded attorneys fees in an undisclosed amount after motion and costs in the amount of $507.80 pursuant to Pattersons memorandum of costs. The register of actions included in the appendix indicates that Patterson filed a motion for order awarding attorneys fees on December 7, 2005, with opposition filed on January 10, 2006, and a reply filed on January 13, 2006. The register of actions also indicates that hearing on the motion was scheduled for January 23, 2006. It appears that because the appeal was from the November 9, 2005 judgment, the register of actions included in the record ends at January 23, 2006. If an attorney fee award was in fact made, it is not challenged in this appeal.

^[3] On appeal ACC does not renew its contention that, because Patterson did not actually qualify for senior membership status, he lacked standing to complain about ACCs actions.

^[4] The minutes of June 24, 2004, further provided: The Board also noted that the letter sent to the voting members urging establishment of the Senior class stated that there would be no adverse fiscal impact to the Club. Board members noted that there had been an adverse fiscal impact and that the $50 monthly dues paid by Senior Members was out of balance with the dues paid by Golf Members.

^[5] Nor do we address ACCs contentions the trial court erred in exercising its jurisdiction over a private voluntary association and in providing relief to members of ACC other than Patterson.We choose not to usurp the role of the trial court in resolving these issues should they be renewed on remand. And, because the trial court did not rule on Pattersons alternative requests for summary adjudication (nor has Patterson, in his respondents brief, made any reference at all to those requests), we need not address them here.