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Tract 19051 Homeowners Assn. v. Kemp

Supreme Court of California

March 5, 2015

TRACT 19051 HOMEOWNERS ASSOCIATION et al., Plaintiffs and Appellants,
v.
MAURICE KEMP et al., Defendants and Respondents

Superior Court of Los Angeles County, No. BC398978, Richard L. Fruin, Jr., Judge. Court of Appeal, Second Appellate District, Division Four, No. B235015.

Page 1136

[Copyrighted Material Omitted]

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Marcia J. Brewer; Law Office of Mifflin & Associates and Ken Mifflin for Plaintiffs and Appellants.

No appearance for Defendant and Respondent Maurice Kemp.

Page 1138

Turner Law Firm and Keith J. Turner for Defendant and Respondent Eric Yeldell.

Opinion by Cantil-Sakauye, C. J., with Werdegar, J., Chin, Corrigan, Liu, Cuéllar, and Kruger, JJ., concurring.

OPINION

[343 P.3d 884] [184 Cal.Rptr.3d 702] CANTIL-SAKAUYE, C. J.

The issue before us in this case is the validity of an attorney fee award granted in favor of defendant homeowners under former section 1354, subdivision (c), of the Civil Code, a provision of the Davis-Stirling Common Interest Development Act (Civ. Code, § 4000 et seq.; hereafter the CID Act). [1] The CID Act [184 Cal.Rptr.3d 703] applies to various types of development projects, but a common interest development for purposes of the act requires a project with a common area. (See 9 Miller & Starr, Cal. Real Estate (3d ed. 2011) § 25B:1, pp. 25B-6 to 25B-7 (rel. 10/2007).) Former section 1354(c)--the attorney fee statute at issue here--provided in full: " In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney's fees and costs." (Added by Stats. 2004, ch. 754, § 1, p. 5838.) The term " governing documents," in turn, was defined in former section 1351, subdivision (j) (as amended by Stats. 2002, ch. 1111, § 1, pp. 7115, 7117-7118, now § 4150) to mean the official documents governing " the operation of [a] common interest development."

The underlying lawsuit in this matter was filed by the Tract 19051 Homeowners Association and a number of individual members of the association (hereafter plaintiffs) against defendant homeowner Maurice Kemp. Plaintiffs' first amended complaint alleged that their housing development tract No. 19051 (Tract 19051)--which included Kemp's property--is a common interest development within the meaning of the CID Act. It further alleged that, pursuant to that act, there were valid restrictions applicable to defendant Kemp's property that were violated by his ongoing remodeling. The trial court ultimately concluded that plaintiffs failed to establish that Tract 19051 constitutes a common interest development within the meaning of the CID

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Act and rendered judgment in favor of defendant Kemp and defendant Eric Yeldell, a subsequent purchaser of Kemp's property who had been permitted to intervene as a defendant in the action. As part of the judgment, the trial court awarded defendants attorney fees under former section 1354(c).

The Court of Appeal affirmed the trial court's judgment in favor of defendants on the merits, agreeing that plaintiffs had failed to prove that Tract 19051 satisfies the requirements of a common interest development, but the appellate court reversed the trial court's award of attorney fees to defendants. Relying upon the prior Court of Appeal decision in Mount Olympus Property Owners Assn. v. Shpirt (1997) 59 Cal.App.4th 885, 895-896 [69 Cal.Rptr.2d 521] ( Mount Olympus ), the Court of Appeal concluded that because both it and the trial court had found that the CID Act was not applicable, the trial court had erred in awarding attorney fees under former section 1354(c), a provision of that act.

Defendants sought review of the attorney fee issue in this court, contending that the Court of Appeal's conclusion was not supported [343 P.3d 885] by the language of the applicable statute or by the Legislature's intent to adopt a reciprocal attorney fee provision. We granted review to resolve the issue.

For the reasons discussed hereafter, we conclude that the Court of Appeal erred in reversing the attorney fee award in favor of defendants. First, the trial court's award of attorney fees is supported by the language of the statute: Plaintiffs' underlying lawsuit was an action to enforce the governing documents of a common interest development, and defendants were the prevailing party in the action. Second, because plaintiffs clearly would have been entitled to an award under the statute had they prevailed in the action, denying defendants an award under the statute when they were the prevailing party would unquestionably violate the reciprocal nature of the statute and thus defeat the evident legislative intent underlying the statute. As we shall explain, prior California decisions, [184 Cal.Rptr.3d 704] interpreting and applying comparable statutory attorney fee provisions that mandate an award of attorney fees to the prevailing party, directly support this interpretation of former section 1354(c). Finally, the Court of Appeal decision in Mount Olympus, supra, 59 Cal.App.4th 885, upon which the Court of Appeal in this case relied in reaching a contrary result, is clearly distinguishable from the present case.

Accordingly, we reverse the judgment of the Court of Appeal insofar as it reversed the attorney fee award in favor of defendants.

I. Facts and lower court proceedings

Tract 19051 is a housing development comprised of 94 single-family homes in the Baldwin Vista area of Los Angeles. A voluntary homeowners

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association--known variously as the Tract 19051 Homeowners Association or the Cloverdale, Terraza, Stillwater, Weatherford Homeowners Association--is open to homeowners whose homes are within, or in the immediate vicinity of, Tract 19051.

When Tract 19051 was subdivided in 1958, the developer recorded the declaration of restrictions (hereafter referred to as the declaration) that contained the restrictions at issue in the underlying lawsuit. The declaration allowed any homeowner to sue to enforce its restrictions, but the original declaration, by its own terms, expired on January 1, 2000, and contained no provision for extending that date.

In 2006, defendant Maurice Kemp acquired lot No. 22 of Tract 19051, which contained a one-story residence that Kemp substantially demolished in order to build a much larger 7,000 square-foot two-story home. After Kemp began construction, a neighbor's attorney informed Kemp that the remodeling project was in violation of height and setback restrictions contained in the declaration.

In September 2008, plaintiffs filed the underlying lawsuit against Kemp, alleging breach of the declaration and seeking injunctive and declaratory relief; the first amended complaint explicitly alleged that Tract 19051 is a common interest development and claimed that plaintiffs were entitled to an award of attorney fees under former section 1354(c). In response, defendant argued that the declaration had expired by its own terms on January 1, 2000. Plaintiffs rejoined by maintaining that, under the terms of the CID Act, the termination date of the declaration had been extended to December 31, 2010, by a majority vote of the homeowners that occurred in December 1999. (See former § 1357, subd. (b), added by Stats. 1985, ch. 874, § 14, pp. 2774, 2780, now § § 4265, 4270 [when the declaration of a common interest development does not provide a means for the property owners to extend the term of the declaration, the term may be extended by a majority of members].) With regard to a development that does not qualify as a common interest development, a declaration of restrictions may be extended only by the unanimous vote of 100 percent of the property owners or by a vote of a lesser number of owners as provided in the declaration of restrictions. (See 8 Miller & Starr, Cal. Real Estate (3d ed. 2011) § 24:41, pp. 24-137 to 24-138 & fn. 9 (rel. 8/2009) [citing cases].) It is undisputed that neither of the latter two methods was satisfied here.

In denying a preliminary injunction sought by plaintiffs, the trial court found that the [343 P.3d 886] December 1999 vote by a majority of the Tract 19051 homeowners was not effective to extend the date of the declaration because " Tract 19051 ...


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