Noxsel v. Boquet Estates Owners Assn.
Filed 3/8/13 Noxsel v. Boquet Estates Owners Assn. CA4/2
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opinion has not been certified for publication or ordered published for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.
THE COURT OF APPEAL OF THE STATE OF
APPELLATE DISTRICT
TWO
E. RAY NOXSEL, as Trustee etc.,
Plaintiff,
Cross-defendant and Appellant,
v.
BOQUET ESTATES OWNERS ASSOCIATION,
Defendant,
Cross-complainant and Respondent.
E053305
(Super.Ct.Nos.
CIVRS704624 &
CIVRS809589)
OPINION
APPEAL from the Superior Court of
Bernardino County.
David A. Williams, Judge.
Affirmed.
Ward & Ward and Alexandra S. Ward for Plaintiff,
Cross-defendant and Appellant.
Law Offices of Edward W. Hess, Jr., Edward W. Hess, Jr.;
Slaughter & Regan, Barry J. Reagan and Gabriele M. Lashly for Defendant,
Cross-Complainant and Respondent.
I
INTRODUCTION
Plaintiff and appellant E.
Ray Noxsel
title="">[1] and respondent Boquet
one another in a dispute involving 59 garages, owned by Noxsel as part of a
condominium development. Noxsel contends
that the garages can be rented or sold to anyone, including members of the
general public. In contrast, the HOA
contends that Noxsel can rent or sell the garages only to HOA members and not
to members of the general public. With
regard to HOA assessments, the parties disagree on how much the assessments may
be increased each year.
On appeal, Noxsel contends
the trial court misinterpreted the covenants, conditions and restrictions
(CC&Rs) for the Boquet Estates development (Boquet), as well as the 1977
conditional use permit (CUP) issued by the City of Upland (Upland). Noxsel also argues the court misapplied Civil
Code section 1366. Noxsel seeks a
reversal of the judgment and the award of attorney’s fees to the HOA.
The fundamental contention
advanced by Noxsel is that the CUP and the CC&Rs should be interpreted to
allow sale or rental of the garages to anyone, not limited to owners of the
Boquet condominiums. As the reviewing
court, we have thoroughly examined the trial record and the appellate briefs
submitted by the parties.
name="_ftnref3" title="">[3] Like the trial court, we disagree with
Noxsel’s proposed interpretation of the written documents. We conclude the CUP and the CC&Rs
unambiguously prohibit Noxsel from selling or renting the garages to the
general public.
We conduct a combined
review, engaging in independent contractual and statutory interpretation, and
find the trial court did not abuse its discretion in enjoining Noxsel from
selling or renting the 59 garages to the general public. Additionally, we affirm the trial court’s
rulings on the amount and allocation of the HOA assessment fees and the trial
court’s grant of attorney’s fees to the HOA.
II
STATEMENT OF FACTS
A. The CUP and the History of the Boquet Estates
Development
In
1977, Noxsel began to develop Boquet, a planned residential development
consisting of 64 condominium lots and 60 separate garage lots in Upland. Each condominium lot included an attached
two-car garage; each garage lot was improved with a single-car garage. The single-car garage lots are located in a
separate row and are not attached to the condominiums.
In January 1977, Noxsel
obtained a CUP from Upland. The CUP included a condition of approval,
requiring the Boquet CC&Rs to “include a provision that all one-car garages
shall be under Homeowner’s Association control and no ownership of any such
garage shall be transferred to any non-member of said Association.â€
B. The CC&Rs
The recorded CC&Rs
contain the following relevant provisions, which define many of the terms to be
discussed. According to article I,
Definitions:
“7. A ‘lot’ shall mean any numbered plot of land,
together with the residential and other improvements thereon, . . .
“8. A ‘member’ shall mean every person or entity
who holds a membership in the Association.
[¶] . . . [¶]
“10. An ‘owner’ shall mean each person and entity
holding a record ownership interest in a lot, . . .â€
According to article III,
Use Restrictions:
“1. Residential, Garage and Land Use. Lots shall be used for residential purposes
only, . . . Nothing herein shall prevent
an owner from leasing or renting his lot, . . .†provided the lessee or renter
is subject to HOA regulation as discussed in Article XIV.
“2. Commercial Use. . . . no part of the development shall ever
be used or caused, allowed or authorized to be used in any way, directly or
indirectly, for any business, commercial, manufacturing, mercantile, storing,
vending, or other such non-residential purpose, . . .â€
“4. Offensive Conduct; Nuisances. No noxious or offensive activities shall be
carried on upon, or within the development, nor shall anything be done thereon
which may be or become an annoyance or nuisance to the residents of the
development, or which shall in any way interfere with the quiet enjoyment of
owners or occupants of lots.â€
“5. Parking Restrictions; Use of Garages. . . . Garages shall be used for parking and
storage only and shall not be converted for living or recreational activities.
. . .â€
“12. Compliance with Laws, Etc. . . . No owner shall permit anything to be
done or kept on his lot which is in violation of any law, ordinance, statute, rule
or regulation of any local, county, state or federal body.â€
According
to article V, Membership and Voting Rights, “[e]ach owner of a lot, or interest
therein, shall be a member of the Association.
Ownership of a lot or interest therein shall be the sole qualification
for and entitlement to membership in the Association†until ownership or
interest ceases. The CC&Rs define a
member’s rights, duties, and obligations.
Any transfer of ownership or interest transfers the membership rights
automatically to the new owner.
At trial, Noxsel asserted that, according to Article
VI, anyone can become an HOA member by buying a garage, thereby satisfying the
condition of the CUP that no ownership of a garage shall be transferred to a
nonmember of the HOA. Noxsel testified
that a buyer of a garage becomes an HOA member “during the sale.†Noxsel elaborated further “that if a person
bought a single-car garage, they automatically become a member†of the HOA and
under its control.
name="_ftnref4" title="">[4]
Regarding
Assessments, article VI provides that total assessments should be allocated
90/10 between the condominium lots and the garage lots. Any increase in the total assessment is
limited to 20 per cent annually.
Finally,
article XIV governs the rental or leasing of lots, including making the renter
or lessor subject to HOA regulation.
C. Noxsel’s Ownership and Rental of the Garage
Lots
The 64 condominium lots were
sold but the garage lots were not sold.
Ultimately Noxsel retained ownership of 59 garage lots.
garage lots for sale to the public and also began renting the lots.
In 1982, Upland notified Noxsel that he was
violating the city’s zoning laws by selling or renting the garage lots to
anyone except an owner or purchaser of a condominium lot. The Upland city attorney strongly emphasized: “It is the clear intent of [the CUP] that the
owners of any one car garages . . . should also be homeowners. . . . It is clear . . . that the City contemplated
only that homeowners within the tract would be owners of the garages and that
we could not spew [sic] the ownership
of garages out to people who . . . did not own homes in the tract itself. The city attorney explained, “The ownership
of a garage on a separate parcel of land . . . would be clearly in violation of
our zoning ordinance,†allowing only residential and incidental uses: “[E]ven if you allow someone to come into
your homeowners association as a member, you still have the basic problem of having
a use which is not incidental to the dwelling use as far as the owner is
concerned. . . . This is nothing more
than a storage and lock facility. I
assumed that your interpretation [c]ould allow one man to join your homeowners
association and own all 60 garages if he wanted to buy them. He would then rent all 60 garages as a store
and lock concession using one of your tenants as the storekeeper. [¶]
The City could not[,] under any circumstances, permit the independent
sale of your one car garages. . . .â€
The city attorney’s
reasoning is consistent with the 2010 version of the Upland Municipal Code,
Chapter 17.54.030, providing: “The
following accessory structures and land uses may be permitted in the RM
[Multiple Family Residential] zones, only where clearly incidental to a
permitted primary use of structures:
[¶] A. Accessory buildings and uses including, but
not limited to: [¶] . . . [¶] 2.
Noninhabitable accessory buildings and structures, including garages,
carports, storage areas, and tool sheds.â€
In a second 1982 letter, the
city attorney continued: “Under no
circumstances and I repeat, under no circumstances, could the City permit 60
garages to be sold in a residential zone to people who do not live in a
residential structure to which the garages are appurtenant. This is definitely a requirement in a
residential zone.†In 1986, Upland reiterated its position
that renting the garage lots was a prohibited commercial use, violating the CUP
and the city’s zoning law. Between 1978
and 2002, Noxsel discussed Upland’s concerns on several
occasions. In 2004, the city attorney
again notified Noxsel that “third party rental†of the garage lots was never
intended and suggested Noxsel seek to amend the existing CUP. Apparently, Upland never pursued any legal
action against Noxsel for renting or selling the garage lots.
In 2002, Noxsel sold all 60
garage lots to Jamie Naranjo. After
Naranjo sued Noxsel, Noxsel took back ownership of 59 lots in December
2006. After reacquiring title, Noxsel
again began renting the garage lots to nonowners.
Noxsel advertised the
garages for rent as storage units. All
potential renters were screened by Noxsel’s property manager. The garages rented for $100 a month. Approved renters signed a written rental
agreement and were required to comply with the HOA’s regulations. No renter was permitted to have keys to use
the Boquet common area facilities, other than the alley driveway which is
accessible by the general public. The complaints
received about the garage renters involved minor issues–such as missing locks
or garages that were not properly secured after being vacated–and more serious
complaints–such as claims of people purportedly living in or running businesses
out of the garage lots.
D. Assessments
During the time Noxsel
served on the HOA Board, the 90/10 allocation of the total assessment was never
made. Instead, the respective
assessments imposed on the condominium lots and garage lots were recommended to
the board by a hired consultant. Between
1978 and 2003, the regular monthly assessments on the garage lots ranged from a
low of $1.27 to a high of $3.40. When
Noxsel sold the garage lots to Naranjo, the monthly regular assessments were $2
per lot.
In late 2003, based on the
CC&Rs’s 90/10 split requirement, the HOA board voted to increase the total
assessment from $70,560 to $82,416—less than 20 percent. According to the 90/10 allocation, the
condominium assessment increased from $90 to $97 per month and the garage
assessment increased from $2 to $11 per month.
Since 2003, the 90/10 assessment allocation has been used by the HOA
board when setting the amount of the monthly regular assessments, resulting in
an $11 per month regular assessment on each garage lot from 2004 through
2010. Noxsel tried to pay an assessment
of $2 monthly on the garage lots but the HOA refused to accept his tender and
he stopped trying to pay. The HOA billed
Noxsel for assessments at the higher rate of $11 per month per garage lot. When those amounts were not paid, the HOA
placed liens on the 59 garage lots.
E. The Pleadings
In
September 2007, Noxsel filed a complaint for
injunction, seeking a determination about the assessments and enjoining the
assessments, as well as related damages.
In
November 2007, the HOA filed a cross-complaint for foreclosure of its
assessment liens and for a judicial declaration prohibiting the sale or lease
of the garage lots to the public.
F. The Trial and Statement of Decision
A
two-day court trial was conducted in October 2010. The court filed a statement of decision. It found that the letters by the Upland city
attorney notified Noxsel that renting the garages to the general public was a
zoning violation and violated the CUP.
It also found that the CC&Rs “clearly state that no one is to own a
garage unless they are a current member of the condominium [
Over the years, Noxsel had succeeded in arguing that “he was free to
rent the garages and sell the garages to outside parties as they would then
become members of the association.â€
Noxsel was also able to block Upland from enforcing its zoning laws.
The court concluded that
Noxsel “is in fact conducting a commercial operation renting out the garages to
the general public as storage units.†The
commercial operation violates the CUP and the Upland Municipal Code. Noxsel has been on notice of his illegal
activities since 1982. Noxsel is also
violating the CC&Rs prohibiting commercial operations. Under the CUP and the CC&Rs, Noxsel
cannot own or rent the garages to anyone except HOA owners and is enjoined from
doing so. The court ordered Noxsel to
desist his storage rental as of January 31, 2011. The amount of the annual assessments and the
90/10 allocation were valid actions by the HOA.
The HOA could not obtain judicial foreclosure of the delinquent
assessment amounts but Noxsel owed past due assessment fees of $25,254.
The
court entered judgment in February 2011.
After the HOA’s motion, the court awarded attorney’s fees of $82,272.21
to the HOA.
III
INJUNCTION AGAINST SALE OR
RENTAL OF GARAGES
A.
Standard of Review
On
the issue involving the sale or rental of the garage lots, Noxsel urges this
court to conduct an independent review of the record, engaging in contractual
interpretation of the CUP and the CC&Rs—which Noxsel contends are clear and
unambiguous–and determining that the trial court committed a plethora of legal
error. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799;
(1965) 62 Cal.2d 861, 865-866; 250 L.L.C.
v. PhotoPoint Corp. (2005) 131 Cal.App.4th 703, 726; Schaefer’s Ambulance Service v. County of San Bernardino (1998) 68
Cal.App.4th 581, 586.)
In contrast, the HOA asserts
the proper standard of review for granting an injunction is abuse of discretion
and substantial evidence. (
132 Cal.App.4th 359, 390; Bowers v.
Bernards (1984) 150 Cal.App.3d 870, 873-874.)
As a preliminary matter, we
agree this court properly conducts an independent review of the CUP and the
CC&Rs and in interpreting the Upland zoning laws. But, after concluding the written documents
and the law favor the HOA, we decide the trial court did not abuse its
discretion in enjoining Noxsel from selling or renting the garages to the
public. As discussed fully below, we
conclude the record does not support Noxsel’s untenable position that the
CC&Rs clearly and unambiguously permitted Noxsel to sell or rent the
garages to the general public in violation of the CUP and Upland zoning
laws. On the other hand, substantial
evidence supports the trial court’s findings in the statement of decision.
B. Interpretation of the CUP and the CC&Rs
Noxsel contends the CUP and the CC&Rs are susceptible to
different interpretations. We do not
agree. The CUP granted by Upland in 1977
expressly required that the garage lots could not be transferred to a
nonmember. At trial, Noxsel testified
that, in order to comply with the CUP, the CC&Rs were drafted to define the
terms lot, owner, and member and to provide that the owner of a lot, including
a garage lot, would automatically become a member. Noxsel further testified to his understanding
that the purchaser of a garage lot becomes a member of the HOA and under the
HOA’s control through the act of purchasing the lot, “during the sale.â€
The CUP, however, prohibits
a nonmember from buying or renting a garage lot.
proposed interpretation, would render the CPU’s restrictions meaningless or
“completely void because you can sell it to anyone because the minute you
transfer, they’re members.†Nor do the
CC&Rs expressly allow a nonmember to buy or rent a garage lot. It is only by applying Noxsel’s convoluted
reasoning that a nonmember buying or renting a garage lot is transformed into a
member. Even if there was confusion on
this point, it was caused by Noxsel, as the developer who created the
CC&Rs, and cannot be used to his advantage in his present capacity as
trustee. (Civ. Code, § 3517;
Assn. (2011) 200 Cal.App.4th 1146, 1156.)
Based on our independent and
de novo review, we hold on appeal that there is no lack of clarity or ambiguity
in the governing documents that would allow the strained interpretation
proposed by Noxsel.
C. Additional Arguments by Noxsel
Our
conclusion about the express, unambiguous meaning of the CUP and the CC&Rs
means that many of the other issues raised by the parties are effectively
resolved without requiring elaborate analysis.
But, in response to Noxsel’s criticisms of the tentative opinion, we
address them summarily here.
the Garages
Although not the basis for
our opinion, the HOA’s position is bolstered by the fact that the CC&Rs
allow lots to be used only for residential purposes. No commercial uses whatsoever are permitted,
especially those which might be deemed an annoyance or nuisance to residents,
including living or recreational activities.
Like the trial court, we agree that Noxsel was operating a commercial
enterprise in which he advertised the garages as storage space, employed a
property manager, and used a commercial lease for garage tenants. Under these circumstances, it is
unsustainable for Noxsel to assert that his activities were not commercial.
2. The CUP Restrictions and Zoning Laws
Again, although not the
basis for our opinion, the CC&Rs prohibit any activities that violate any
laws, like Upland zoning codes. (
(1972) 23 Cal.App.3d 388, 401.)
Beginning in 1982, Upland has continuously warned Noxsel that he was
violating the conditions of the CUP and Upland’s zoning laws. For more than 30 years, Noxsel has violated
Upland’s zoning prohibition against commercial use of residential property and
any use which is not “clearly incidental†to a permitted use. Even without the relevant restriction in the
CUP, Noxsel could not engage in a use contradicting zoning restrictions. (Sports
Arena Properties, Inc. v. City of San Diego (1985) 40 Cal.3d 808, 812.)
For these reasons, Noxsel’s
arguments that the HOA could not present expert testimony about violations of
the present zoning law–which is consistent with the law in 1982 and before that
date–are not compelling. The testimony
of Jeffrey Bloom, an Upland city planner, about the present zoning ordinances
was not necessary to support the trial court’s finding or to our conclusion
that Noxsel was, in fact, violating the CC&Rs and the law by renting or
selling the garages.
3. Restraint on Alienation and Other Arguments
We also reject Noxsel’s
complaint that he will suffer economic loss because he cannot rent or sell the
garages to anyone. In fact, as was
probably contemplated originally, the garages can be sold or rented to the HOA
or to residents of the condominium development for personal use for additional
storage. The CC&Rs however, do not
allow Noxsel to rent or sell the garages to the public at large even if he
managed to do so to his economic benefit for more than 30 years.
All of Noxsel’s additional
arguments depend on the same persistent faulty reading of the CUP and the
CC&Rs. In light of our holding,
Noxsel cannot argue there has been an improper amendment of the CC&Rs. There has been no such modification. We also reject Noxsel’s claims that the
outcome of this case is “unlawful, unreasonable, unjust, unfair, inequitable,
and harsh.†The trial court did not
commit prejudicial error when it found Noxsel could not rent or sell the
garages to the public.
Our decision on how to
interpret the CUP and the CC&Rs resolves the issue about the sale or rental
of the garages to the public. The trial
court did not abuse its discretion in granting the injunction against Noxsel. The injunction is necessary to bar the
commercial use of garages for storage in residential areas, where it is
permissible only when “clearly incidental†to a permitted use, as established
in the CUP, the CC&Rs, and Upland zoning law.
IV
THE INCREASED ASSESSMENT
Civil Code section 1366
requires condominium homeowners associations to assess fees on the individual
owners in order to maintain the complexes.
(Bear Creek Master Assn. v.
Edwards (2005) 130 Cal.App.4th 1470, 1489, citing Park Place Estates Homeowners Assn. v. Naber (1994) 29 Cal.App.4th
427, 431-432.) “‘These statutory
provisions reflect the Legislature’s recognition of the importance of
assessments to the proper functioning of condominiums in this state’†and that
homeowners associations would cease to exist without regular payment of
assessment fees. (Bear Creek, at p. 1489.)
this case, the increase in the garage assessment from $2 to $11–after many
years of assessments that were too low–did not violate Civil Code section 1366,
subdivision (b).
According to the Boquet
CC&Rs, the owners of the 60 garage units were to pay 10 percent while the
owners of the 64 condominiums units were to pay 90 percent of the
assessment. This formula was not
followed during the years in which appellant was an HOA board member, resulting
in the garage units being assessed at a much lower rate than 10 percent. In 2004, the board passed an assessment which
increased the total assessments from $70,560 to $82,416 per year, which is less
than a 20 percent increase. The board
also assessed the garage units at 10 percent, as required under the CC&Rs,
which resulted in an increase of the garage units from about $2 to $11 per
unit. Noxsel objects to this increase of
“550%†in the garage assessment.
The trial court correctly
determined that the board could pass the increase without member approval and
that the increase did not violate article VI, section 8 of the CC&Rs or
Civil Code section 1366, subdivision (b).
Both article VI, section 8 of the CC&Rs and Civil Code section 1366,
subdivision (b), permit a 20 percent annual increase in the assessment.
Noxsel’s argument that the
increase of the assessment for the garage lots violated the CC&Rs and Civil
Code section 1366 fails for various reasons.
First, beginning in 2004, the increases of the total assessment were
less than 20 percent per year. Article
VI, section 5 “Uniform Rate of Assessment†makes it clear that the amount of
the assessment is to be considered in its total, not by class of property
owners, since it refers to “percent of the total assessments.†Nothing in the CC&Rs or Civil Code
section 1366 requires a membership vote for an assessment increase which is
less than 20 percent of the total assessment, even if it results in an
assessment increase greater than 20 percent for certain properties.
Second, even assuming for
the sake of argument, that Civil Code section 1366 or article VI, section 8 of
the CC&Rs could be interpreted to require a vote of the membership for an
increase of more than 20 percent for the garage lots, the requirement only
applies to increases that are “20 percent greater than the regular
assessment.†(Civ. Code, § 1366, subd.
(b).) It is undisputed that the garage
units were not assessed pursuant to a regular assessment of 10 percent as
required under the CC&Rs, and that the owners of the garage units had, for
many years, paid much less than their 10 percent share of the regular
assessment. If the garages had been
properly assessed over the years, the $11 assessment imposed in 2004 and after
would not have been 20 percent greater than the “
V
ATTORNEY’S FEES
Noxsel claims that the
matter should be remanded because the trial court failed to exercise its
discretion in making the award of attorney’s fees when Noxsel had also achieved
some success. This issue was waived
because it was not raised below. (
of Fresno (2007) 150 Cal.App.4th 683, 712.)
Even if the error was not waived, the trial court did not abuse its
discretion in awarding attorney’s fees to the HOA.
The HOA was the prevailing
party under Civil Code sections 1354, subdivision (c), and 1717, by statute and
by contract. The definition of
“prevailing party†for purposes of statutory attorney’s fees is set forth in
Code of Civil Procedure section 1032, subdivision (a)(4), which defines
“prevailing party†as “the party with a net monetary recovery, a defendant in
whose favor a dismissal is entered, a defendant where neither plaintiff nor
defendant obtains any relief, and a defendant as against those plaintiffs who
do not recover any relief against that defendant.†The HOA received a net monetary recovery in
the amount of $25,254. Accordingly, the
HOA was the prevailing party for purposes of statutory attorney’s fees.
The HOA was also the
prevailing party for purposes of contractual attorney’s fees. Civil Code section 1717, subdivision (b)(1),
provides that: “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.â€
The HOA obtained greater
relief on the action on the contract.
The court denied Noxsel’s request to set aside the assessment and
awarded the HOA $25,254 in unpaid assessments.
Even though Noxsel prevailed in having the court set aside the
suspension of appellant’s voting rights, the HOA clearly obtained greater
relief on the contract. The HOA also
prevailed on its cross-complaint since the court permanently enjoined Noxsel
from renting or selling the garage units to the public.
Accordingly, the trial court
did not abuse its discretion when it awarded attorney’s fees to the HOA. (Estate
of Drummond (2007) 149 Cal.App.4th 46, 50, citing Hsu v. Abbara (1995) 9 Cal.4th 863, 871.)
VI
DISPOSITION
The
court did not abuse its discretion in granting an injunction against Noxsel, in
approving the increased assessment, or in awarding attorney’s fees to the
HOA. We affirm the judgment.
The
HOA, the prevailing party, shall recover its
NOT
TO BE PUBLISHED IN OFFICIAL REPORTS
CODRINGTON
J.
We concur:
McKINSTER
Acting P. J.
KING
J.
name="_ftn1" title=""> [1]
Trustee of the E. Ray Noxsel Charitable Remainder Unitrust #21 dated
December 22, 2006 (the Trust), and the Trust (collectively, Noxsel),
name="_ftn2" title=""> [2]
“Boquet†is the spelling used in the covenants, conditions and
restrictions.
