California Court of Appeals, Fourth District, Third Division
HUNTINGTON CONTINENTAL TOWNHOUSE ASSOCIATION, INC., Plaintiff and Respondent,
JOSEPH A. MINER, Individually and as Trustee, etc., Defendant and Appellant.
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Appeal from a judgment of the Superior Court of Orange County, No. 30-2011-00466754 Robert H. Gallivan, Judge. (Retired judge of the Orange Super. Ct. assigned bye the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)
Sam Walker for Defendant and Appellant.
Barbara Jones for AARP as Amicus Curiae on behalf of Defendant and Appellant.
Noah Zinner for Housing and Economic Rights Advocates as Amicus Curiae on behalf of Defendant and Appellant.
Kent Qian for National Housing Law Project as Amicus Curiae on behalf of Defendant and Appellant.
Feldsott & Lee, Stanley Feldsott and Jacqueline Pagano for Plaintiff and Respondent.
Law Offices of Tom Fier and Tom Fier as Amicus Curiae on behalf of Plaintiff and Respondent.
Larry Rothman & Associates and Larry Rothman as Amicus Curiae on behalf of Plaintiff and Respondent.
SwedelsonGottlieb and Joan Lewis Heard for ALS Lien Services as Amicus Curiae on behalf of Plaintiff and Respondent.
The Orange County Superior Court, after a decision by the appellate division (Huntington Continental Town House Assn., Inc. v. Miner (2014) 222 Cal.App.4th Supp. 13 [167 Cal.Rptr.3d 609] (Huntington Continental)), certified this case for transfer to this court pursuant to rule 8.1005(a)(1) of the California Rules of Court to address a single question. The question is whether a homeowners association is required by the Davis Stirling Common Interest Development Act (Civ. Code, § 4000 et seq.) (the Davis Stirling Act) to accept partial payments from an owner of a separate interest, who is delinquent in paying his or her assessments, after a lien has been recorded against the owner’s separate interest to secure payment of delinquent assessments and other charges. We ordered the case transferred to this court for hearing and decision.
We agree with the decision of the appellate division of the superior court in Huntington Continental, and hold that under Civil Code section 5655, subdivision (a) (section 5655(a)), a homeowners association (an association) must accept a partial payment made by an owner of a separate interest in a common interest development and must apply that payment in the order prescribed by statute. The obligation to accept partial payments continues after a lien has been recorded against an owner’s separate interest for collection of delinquent assessments. The remedies available to an association under Civil Code section 5720 depend upon the amount and the age of the balance of delinquent assessments following application of the partial payment.
Facts and Procedural History
Joseph A. Miner, as trustee of The JM Trust, Dated January 1, 2005 (the Trust), owns a separate interest in a common interest development subject to the management of the Huntington Continental Townhouse Association, Inc. (HCTA), which is an association within the meaning of Civil Code section 4080. HCTA charges owners of separate interests regular assessments, which are due on the first day of each month.
For nearly every month from 2003 to the beginning of 2009, Miner timely paid HCTA assessments for the Trust’s separate interest. He failed to pay the assessment due on April 1, 2009, and, thereafter, the Trust was delinquent in paying assessments. On October 13, 2010, HCTA sent a letter to the Trust, notifying it that assessments were delinquent in the amount of $3, 864.96. Receiving no response to the letter, HCTA’s board of directors adopted a resolution to record a lien against the Trust’s separate interest for the delinquent assessments. A lien in the amount of $4, 827.81 was recorded on January 7, 2011. Of that amount, $4, 136 was for unpaid assessments and the rest was for late charges, interest, collection costs, and a returned check fee.
Four days after the lien was recorded, HCTA sent a notice to the Trust that the matter would be forwarded to legal counsel if the entire balance of the account was not paid within 30 days. On January 25, 2011, HCTA’s board of directors adopted a resolution to foreclose the delinquent assessment lien. Two months later, HCTA’s attorneys, Feldsott & Lee (Feldsott), sent a letter to the Trust, notifying it of HCTA’s intent to initiate foreclosure proceedings. The letter stated the total amount of delinquency was $6, 197.11, of which $5, 434.11 was for delinquent assessments and the rest was for attorney fees, costs, release of lien fee, and “file set up” fees.
On April 13, 2011, HCTA filed a limited jurisdiction complaint against the Trust and Miner, as trustee, asserting causes of action for account stated (first cause of action), open book account (second cause of action), and foreclosure of assessment lien (third cause of action). (Later, an amendment to the complaint named Miner as a defendant in his individual capacity.) Soon after the complaint was filed, Miner requested and received from Feldsott an itemized statement of the sums due for delinquent assessments and other fees. According to the itemized statement, the total due as of May 2, 2011 was $8, 012.58, of which $5, 923.58 was for delinquent assessments through May 31, 2011.
On May 6, 2011, Miner sent an e mail to HCTA, proposing a payment plan under which the Trust would make monthly payments of $1, 500 to $2, 000.
He sent a $2, 000 check to HCTA, which accepted it. Feldsott drafted a payment plan agreement calling for an initial payment of $2, 000 followed by monthly payments of $1, 500. The agreement was sent to the Trust, but Miner never signed it. The Trust thereafter made two payments totaling $1, 500.
On October 17, 2011, Feldsott notified Miner that the Trust had failed to make the September and October payments under the payment plan agreement and failure to make those payments or reinstate ...