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Brayshaw v. Terraces of Sausalito Homeowner's Association

May 17, 2005

DAVID D. BRAYSHAW, PLAINTIFF,
v.
TERRACES OF SAUSALITO HOMEOWNER'S ASSOCIATION, LYDIA CAMERON, ANNA ROBERTS, RICHARD KERNAN, DAVID FEINGOLD, AND DOES 1-10, DEFENDANTS.



The opinion of the court was delivered by: Claudia Wilken United States District Judge

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

Defendants Terraces of Sausalito Homeowners Association (the Association), Lydia Cameron, Anna Roberts, Richard Kernan and David Feingold (collectively Defendants) move to dismiss Plaintiff David Brayshaw's claims for violation of the Contract Clause of the United States Constitution, Art. I § 10, as well as conspiracy to defraud and violation of fiduciary duty toward Association members. Plaintiff is proceeding pro se; however, he is an attorney. Plaintiff opposes the motion.

The matter was heard by this Court on January 7, 2005. Having considered all the papers filed by the parties and oral argument on the motion, the Court grants Defendants' motion to dismiss.

BACKGROUND

Plaintiff owns a home in the Terraces of Sausalito, a condominium project. Defendant Association is a nonprofit corporation representing the twenty three condominium units in the Terraces. Defendants Cameron and Roberts are Association members, former Terraces Officers and members of the Association's Board of Directors. Defendant Kernan is an Association member who allegedly acted as a "legal liason" for the Board. Defendant Feingold is an attorney who represents the Association.

The rules governing the Association are set forth in the September, 1986 Declaration of Covenants, Conditions and Restrictions for Terraces of Sausalito. Feingold Decl. Ex. A (hereinafter Declaration). The Association is also governed by its Bylaws. Feingold Decl. Ex. B.*fn1

Plaintiff and the Association have a history of State court litigation. On February 3, 1998, Plaintiff filed his first action against the Association in Marin County Superior Court, Brayshaw v. Terraces of Sausalito Homeowners' Assoc. (Brayshaw I), alleging unauthorized special assessments (in this instance, for planting shrubs and for investigating a possible suit against a developer). Feingold Decl. Ex. C. That suit was settled by Association's insurance company for $15,000 according to Plaintiff. In August, 2001, Plaintiff brought a second State court lawsuit against the Association (Brayshaw II), in which he alleged new grievances, including inter alia a failure to maintain the property and breach of fiduciary duty. The Association filed a cross-complaint for an injunction allowing it to enter Plaintiff's unit to conduct repairs, and for breach of the terms of the earlier settlement agreement and the Declaration. Brayshaw II concluded in favor of the Association, and it filed a motion to recover attorneys' fees and costs from Plaintiff. The Association later filed in State court a separate complaint against Plaintiff and his wife, Nora Brayshaw, on November 19, 2003. Feingold Decl. Ex. G, Terraces of Sausalito Homeowners Assoc. v. Brayshaw (Terraces). In Terraces, the Association seeks to set aside what it alleges was a fraudulent conveyance of title to Mrs. Brayshaw for the purpose of avoiding the potential consequences of Association's then-pending motion for attorneys' fees in Brayshaw II. On December 23, 2003, the Marin County court did indeed award the Association $72,504 in attorneys' fees and $5,401 in costs on the Brayshaw II cross-complaint. At the time the matter before this Court was heard, the Association's fraudulent conveyance claim was still pending.

The facts set forth in Plaintiff's federal complaint arose in December, 2002, when the Terraces Board proposed a special assessment for the purpose of paying its litigation costs associated with Plaintiff's lawsuits. The assessment was approved on December 22, 2002, in the amount of $2,239 per Association member. The membership voted on the assessment by a written ballot.

At issue in the instant lawsuit is the Association's authority to levy that special assessment. Plaintiff alleges that the rules governing the Association do not provide for special assessments for the purposes of payment of litigation expenses; for levying such special assessments against all Association members; or for approval of such assessments by a majority of a quorum. Plaintiff further alleges that in the absence of authority under the Declaration and Bylaws, the Association must have relied for its authority on California Civil Code § 1366(a), as amended in 1988, which provides that a condominium association "shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this title." Civil Code § 1366(b) further provides that special assessments may be levied by a majority of a quorum (at least fifty percent) of all members. Plaintiff claims this statute as amended violates the United States Constitution Art. I, § 10, which forbids any State from passing a law "impairing the obligation of contracts." Plaintiff asks for damages on his constitutional claim in the amount of $2,239, his share of the special assessment.

Plaintiff's complaint also alleges two State law claims. He claims that the individual Defendants engaged in fraud and violated their fiduciary duties by falsely telling Association members that the special assessment was necessary to pay costs associated with Terraces' defense against Plaintiff's complaint, when in fact the money raised went to pay for prosecution of the Brayshaw II cross-complaint.

LEGAL STANDARD

Defendants argue that the Court lacks subject matter jurisdiction over the complaint because, although it is framed as stating a constitutional claim, in truth it is a veiled attempt to continue the State court litigation in federal court. Defendants move for dismissal of Plaintiff's constitutional claim under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

Dismissal is appropriate under Rule 12(b)(1) when the district court lacks subject matter jurisdiction over the claim. Fed. R. Civ. P. 12(b)(1). Federal subject matter jurisdiction must exist at the time the action is commenced. Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988), cert. denied, 488 U.S. 1006 (1989). A Rule 12(b)(1) motion may either attack the sufficiency of the pleadings to establish federal jurisdiction, or allege an actual lack of jurisdiction which exists despite the formal sufficiency of the complaint. Thornhill Publ'g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979); Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987).

Subject matter jurisdiction is a threshold issue which goes to the power of the court to hear the case. Therefore, a Rule 12(b)(1) challenge should be decided before other grounds for dismissal, because they will become moot if dismissal is granted. Alvares v. Erickson, 514 F.2d 156, 160 (9th Cir.), cert. denied, 423 U.S. 874 (1975); 5A ...


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