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Chapala Management Corp. v. Stanton

July 29, 2010

CHAPALA MANAGEMENT CORPORATION, PLAINTIFF AND RESPONDENT,
v.
THOMAS STANTON ET AL., DEFENDANTS AND APPELLANTS.



APPEAL from a judgment and postjudgment order of the Superior Court of San Diego County, Steven R. Denton, Judge, and related writ petition. Judgment and postjudgment orders affirmed. Petition for writ of supersedeas granted. (Super. Ct. No. 37-2008-00079704-CU-OR-CTL).

The opinion of the court was delivered by: O'rourke, J.

CERTIFIED FOR PARTIAL PUBLICATION*fn1

Defendants and appellants Thomas Stanton and Donna Stanton replaced two windows in their condominium with "sandtone" colored windows after the condominium association, Chapala Management Corporation (Association), had denied their application for those improvements on grounds they were not an approved color. Association thereafter filed suit and, following a bench trial, obtained a judgment against the Stantons for injunctive and declaratory relief declaring them in violation of Association's amended and restated declaration of covenants, conditions and restrictions (CC&Rs) and requiring them to modify or replace their windows under the approval of Association's architectural review committee (at times hereafter the ARC). The trial court ordered the Stantons to pay attorney fees and thereafter ordered them to post a bond or undertaking to stay the collection of the attorney fee award. The Stantons appealed from the judgment without filing an appeal bond or other undertaking.

On appeal from the judgment, the Stantons contend the trial court erred by (1) granting an injunction when Association had specific and adequate legal remedies under the CC&Rs; (2) ignoring Civil Code requirements granting defendants a hearing before Association's board of directors (the Board); (3) holding that the term "aesthetic" permits the architectural review committee to disregard provisions of the CC&Rs as to window color; and (4) finding that the architectural review committee's actions were not arbitrary, capricious or discriminatory. The Stantons further appeal from the order awarding attorney fees, asking us to vacate the order if they prevail on appeal.

In their subsequently filed writ petition, the Stantons contend an undertaking is not required to stay an award of costs made in connection with a judgment for injunctive relief. They asked for an immediate stay of the order requiring that they post an undertaking. We issued the stay, ordered that the arguments in the petition and response be considered with this appeal, and deferred ruling on the petition until disposition of the appeal.

We affirm the judgment and postjudgment order awarding attorney fees. As we explain below, we dissolve the stay and grant the Stantons' petition for writ of supersedeas.

FACTUAL AND PROCEDURAL BACKGROUND

The factual background is taken from the facts and evidence in the record and the trial court's statement of decision. We view the facts most favorable to the judgment under the principle requiring us to presume the lower court's judgment is correct and draw all inferences and presumptions necessary to support it. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133; Ermoian v. Desert Hosp. (2007) 152 Cal.App.4th 475, 494.) " 'Where [a trial court's] statement of decision sets forth the factual and legal basis for the decision, any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision.' " (In re Marriage of Ruelas (2007) 154 Cal.App.4th 339, 342.) If the statement of decision is ambiguous or omits material factual findings, we will infer any factual findings necessary to support the judgment. (Ermoian v. Desert Hosp., at p.

494.)*fn2 In December 2006, the Stantons, owners of a unit located in the Association, submitted to Association a series of applications seeking the architectural review committee's approval of exterior improvements consisting of the replacement of two casement windows on the south side of their unit, facing the common area. They sought to use windows that were "sandtone" in color.

Association's CC&Rs, recorded in 1996, require that the location and plans and specifications of improvements to any unit's exterior be approved by Association's three-member architectural review committee.*fn3 The CC&Rs state the "ARC shall review and approve or disapprove all plans submitted to it for any proposed improvement, alteration or addition, solely on the basis of aesthetic considerations and the overall benefit or detriment which would result to the immediate vicinity and the Project generally. The ARC shall take into consideration the aesthetic aspects of the architectural designs, placement of buildings, topography, landscaping, color schemes, exterior finishes and materials and similar features...." (CC&Rs, art. XV, § 11.)

Association utilizes a document entitled "Architectural and CC&R Guidelines for Homeowners" (Guidelines) stating that "[a]ll changes or additions either to the exterior of your Living Unit or to your Exclusive Use Area require ARC approval." In part, the Guidelines state: "No building or other structure or improvement, including landscaping, shall be erected, placed or altered upon any Exclusive Use Area or Common Area nor shall the exterior of any Living Unit be changed or altered unless the ARC has reviewed and approved the changes in accordance with the guidelines." (Bold and italics omitted.) The Guidelines contain an "Architectural Concept" section that explains that Association's architecture is a homogenous Spanish style reminiscent of California early days, and minor architectural changes may be considered that maintain the integrity of that architectural style. According to the Guidelines, "[a]reas allowing the largest possibility for individual expression are the Exclusive Use Areas appurtenant to the rear of such Living Unit and intended for the exclusive use of its inhabitants. [¶] These areas are actually Common Areas and shall be landscaped and maintained by the home owner." (Bold and italics omitted.) The CC&Rs define the exclusive use areas.

Before January 2007, Association's architectural review committee had a policy of maintaining a dark shade of brown color for windows that generally faced the street within the community, other than the garage windows. The committee had a different policy with respect to windows that did not face the street. The Stantons were aware of this policy since at least 1999, when the existing architectural review committee denied their application to install sandtone colored windows due to the color variation.

In January 2007, the members of the architectural review committee met with the Stantons at their property and explained that their window color was unacceptable. On January 31, 2007, Association advised the Stantons by letter that their application had been disapproved because, among other deficiencies, the window frame color specified on the application was incorrect. In February 2007, the Stantons submitted two additional applications again requesting approval of sandtone colored windows.

The following month, the Association's manager on the Board's behalf advised the Stantons that the architectural review committee had denied their application "because the casement windows must be brown in color." In April 2007, Thomas Stanton wrote to Association's legal counsel and, among other things, accused the architectural review committee of acting in an arbitrary and capricious manner in its color approvals. At the conclusion of the letter, he wrote, "New non-standard color windows will be installed in our home this week!" The Stantons thereafter installed the sandtone-colored windows.

In May 2007, Association offered to resolve the dispute with the Stantons through mediation in accordance with Civil Code section 1369.520. The Stantons declined mediation.

Association thereafter filed a verified complaint against the Stantons containing causes of action for declaratory and injunctive relief based on the Stantons' violation of the CC&Rs. It sought a permanent injunction requiring the Stantons to modify their windows by painting them a color approved by the architectural review committee, or alternatively requiring them to remove and replace the existing windows with windows in an approved color after submitting plans and specifications under the Guidelines and obtaining the committee's approval. It also sought a judicial declaration of the rights, duties and obligations of the parties under the CC&Rs pertaining to the Stantons' unit and an order directing them to comply with all other provisions of the CC&Rs. Association prayed for costs and attorney fees.

The matter proceeded to a bench trial, after which the trial court issued a written statement of decision determining Association to be the prevailing party. The court made detailed legal and factual findings in part as follows:

"The Association has maintained a color scheme with approved and recommended colors for windows in the community, which is reflected in Exhibit 21.... [T]he Association's Architectural Guidelines... reference[] the general policy with respect to the ARC and the standards to be maintained within the community.... [¶]

... [T]he color to be applied to the exterior surfaces of the building are included and controlled by both the CC&Rs and derivatively by the Architectural Guidelines.... [¶]...

"... The windows on the front of the units in Chapala are generally referred to as 'casement windows,' all of which were stained and varnished a dark shade of brown upon the original construction of the project. The Association has, over the years, consistently required that the casement windows on the front, street-facing side of the units in Chapala be brown in color, ranging from a medium to dark brown depending on whether the windows were varnished wood, painted wood, or vinyl....

"... The color the Defendants installed on the Subject Property was a lighter, gray-based earth-tone color rather than a medium to dark brown that the Association had previously approved. This color is substantially different from the otherwise uniform look of the windows which had been installed in the community. Lighter colored windows have over the years been allowed by the Association for windows located in the rear or side of units. No such window colors have been ARC-approved in areas where the Defendants have installed their windows. On one residence, the Finneran home, there is a slightly lighter shade of brown that was approved. This approval was not so inconsistent with the prior policy to constitute any bar to the Stanton rejection by the ARC. [¶]...

"... [T]he Association may validly permit for color approval differences between the generally front-facing doors and windows and those that generally face the rear and are contained in what has been described in the testimony and exhibits in this matter as the 'exclusive use common area.' These different standards, as applied to those generally-accepted areas, are neither arbitrary nor capricious, in fact or as applied. To the extent that the Finneran windows were approved in a lighter shade than what has been described as 'bison' brown, such prior approval is not such that the Stanton disapproval was arbitrary, capricious or discriminatory....

"A presumption of reasonableness exists as to the enforcement of restrictions in common interest developments such as Chapala Management Corporation.... The provisions in the CC&Rs dealing with architectural approval are presumed reasonable. The Court finds that the architectural provisions included in Article XV, Section 2 of the CC&Rs do not violate any public policy, and are not internally arbitrary. The purpose of the CC&Rs [is] in part for enhancing and perfecting the value, desirability, and attractiveness of the property. The CC&Rs and the requirements contained therein are enforceable as to the residents of the Association, including the Defendants.

"The applicable provisions of the CC&Rs require that Defendants obtain the approval of the ARC before making any architectural modifications to the Subject Property. Defendants in this instance breached the CC&Rs by installing the sandtone windows at the Subject Property after they received express, written disapproval of their application from the ARC. Defendant Thomas Stanton testified that he knew at the time of the installation that he was violating the CC&Rs by what he did, but felt that he was violating them with what he considered to be good cause.

"The ARC acted within the scope and power granted by the CC&Rs in disapproving the Defendants' architectural application for the installation of the sandtone windows. The standard for the ARC's approval or disapproval of architectural application, as set forth in Article XV, Section 11 of the CC&Rs, requires the ARC to make those decisions on the basis of aesthetic considerations and the overall benefit or detriment which would result to the immediate vicinity of the Project, generally taking into consideration the aesthetic aspects of the color schemes. This does not mean, nor should it be interpreted to imply, that each decision of the ARC solely involves the neighbors in the immediate vicinity of the affected property, nor is a plebiscite intended on each and every disputed call that is made by the ARC.

"The disapproval in this instance constituted an extension of a longstanding architectural aesthetic color scheme as applied to the homes in the Association and was not arbitrary or capricious as applied to any portion of the community (including the Stanton home), nor did it violate any public policy....

"Decisions made by an architectural committee to approve or deny architectural applications may be based on the subjective judgment of those entities as reasonably applied and as reviewed from time to time by the board of directors of an association. The ARC in this case was empowered to make decisions on architectural applications on the basis of aesthetic considerations. The ARC acted within its scope of discretion provided under the CC&Rs in disapproving the Defendants' application for sandtone windows based on a longstanding color scheme that has been substantially followed throughout the existence of the Association.

"... [T]he ARC completed a reasonable investigation by meeting with the Defendants to discuss the color of the windows, and by comparing the sandtone windows to the Association's paint standards for similarly situated windows in Chapala.... Exhibit 21... was acknowledged in correspondence by Mr. Stanton to have been the color standards of the Association, of which he was in possession... and [of which he] had knowledge.... [T]he colors set forth in Exhibit 21 represent a reflection of the approved color standard with respect to garage doors, street-facing windows and other applicable structures within the community and served as a guide available to the homeowners for those colors that were considered appropriate for replacement windows, replacement garage doors and/or repainting existing structures in the community as necessary."

The court entered judgment in Association's favor. It ordered the Stantons to modify their sandtone windows by painting them a color approved by the ARC or alternatively remove and replace them with windows of an approved color, after submitting plans and specifications to the ARC under its guidelines and obtaining its approval. It granted Association the right to enter the property to modify the windows if the Stantons failed to comply with specified time deadlines for the above acts. It ordered Association to recover its reasonable attorney fees with interest and costs.

Thereafter, Association moved for an award of $83,027.50 in attorney fees and $4,298.72 in costs as the prevailing party in the matter. In part, it argued its action was one to enforce the CC&Rs and obtain declaratory relief for the Stantons' breach of the CC&Rs, and thus Civil Code section 1354 as well as article XIX, section 5 of the CC&Rs*fn4 entitled it to recover its reasonable attorney fees. The Stantons opposed the motion on grounds Association was not entitled to fees under Civil Code section 1354 because its action was not one to enforce any specific provision of its governing documents. They further argued Association's action was at most a limited civil case because damages were well below $25,000, and thus it was controlled by Code of Civil Procedure section 1033, limiting Association's recovery to its actual cost of the filing fee and service of process. Finally, the Stantons argued Association did not demonstrate its claimed attorney fees were reasonable.

The trial court granted Association's motion in part, awarding it $59,122.50 in attorney fees and $4,298.72 in costs. The court pointed out it had already ruled Association's action was one to enforce express provisions in its CC&Rs, the action was not a limited civil case as it contained a cause of action for injunctive relief, and the hourly rates of Association's counsel were reasonable. Association filed a motion for an undertaking to stay enforcement of the $63,421.22 judgment and the Stantons moved to stay all costs, including attorney fees, pending resolution of the appeal. The trial court tentatively granted the Association's motion, finding attorney fees were not an ordinary or routine cost such that an undertaking is required. It granted the Stantons' motion in part, staying collection of "ordinary" costs only. The Stantons filed a petition for writ of mandate, supersedeas or other appropriate relief, contending no undertaking was required and ...


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