Opinion
G056111
02-05-2020
PLAZA POINTE OWNERS ASSOCIATION, Plaintiff and Appellant, v. MSS PROPERTIES SPECIAL PURPOSE II, LLC, et al., Defendants and Respondents.
The Perry Law Firm, Michael R. Perry and Larry M. Roberts for Plaintiff and Appellant. Law Offices of Lee E. Burrows and Lee E. Burrows for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2013-00643234) OPINION Appeal from a judgment of the Superior Court of Orange County, Gregory H. Lewis, Judge. Affirmed. The Perry Law Firm, Michael R. Perry and Larry M. Roberts for Plaintiff and Appellant. Law Offices of Lee E. Burrows and Lee E. Burrows for Defendants and Respondents.
INTRODUCTION
Plaza Pointe Owners Association (Plaza Pointe) appeals from a judgment entered upon confirmation of an arbitration award in favor of respondents MSS Properties Special Purpose II, LLC, and Americare Ambulance, LLC (collectively MSS). The parties patterned their binding arbitration agreement after the one in Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334 (Cable Connection), which permits judicial review for legal errors and errors in legal reasoning, provided the arbitration agreement explicitly allows this kind of review.
Most of Plaza Pointe's disagreements with the arbitrator, however, stem from the arbitrator's findings of fact, not from his legal conclusions or legal reasoning. A Cable Connection arbitration agreement does not do away with the usual prohibitions against reviewing the arbitrator's findings of fact, even if they are mistaken.
After reviewing the few legal conclusions Plaza Pointe has singled out as erroneous, we conclude the arbitrator was not in error. Accordingly we affirm the judgment.
FACTS
Plaza Pointe is a mutual benefit corporation established as a commercial common interest development in Laguna Hills. The development is subject to a Declaration of Covenants, Conditions, Restrictions and Reservations of Easements (CC&Rs).
In July 2011, MSS bought one of the Plaza Pointe properties. MSS's principal, Mike Summers, intended to operate an ambulance dispatch service from the site, serving Saddleback Memorial Hospital and south Orange County via the freeway. The building would act as a communications center and would house ambulances and crews, with five vehicles, a light servicing and supply fleet, and sleeping and break areas for the crews. The service would operate around the clock.
The arbitration award occasionally refers to Mike "Summer." Exhibits in the record indicate that the correct spelling is "Summers."
MSS needed approval from the City of Laguna Hills and the Orange County Fire Authority for the service. MSS obtained a conditional use permit from the City; one of the conditions was that MSS had to submit an architectural plan to the OCFA and prepare fire sprinkler system and fire alarm system plans if the OCFA required them. The permit also required MSS to replace fixed windows with windows that would open in case of emergency, since it was anticipated that on-duty ambulance crews would be sleeping in the building. The permit expired on September 8, 2013.
Although we have not been directed to any ruling from the OCFA regarding fire suppression in the record, it is undisputed that MSS was required to install a backflow device outside the building and some other fire-safety-related equipment as well. If MSS did not comply, it could not operate the dispatch service. Installing the backflow device necessitated digging a trench for a water main from the device to MSS's building and installing pipes through an exterior wall.
A backflow device is a piece of equipment, which can be of various sizes, that plays a part in fire suppression and is installed on a concrete pad. The device is definitely utilitarian in appearance. We have attached a picture of the device from the record in Appendix A.
For purposes of this appeal the important features are: (1) the device had to be located at least 40 feet from the building and accessible from the street, (2) it could not be screened by landscaping or anything else, and (3) it had to be painted fire-engine red or some other equally startling color because fire fighters had to be able to find it immediately in case of a major fire.
MSS presented an architectural application for the backflow device to the Plaza Pointe board on May 11, 2012. The board discussed the application and voted to deny it on July 11, 2012. According to the minutes of the meeting, the board discussed the backflow device in connection with altering the windows and installing window screens. Summers, who was a board member, was excluded from the discussion of whether to approve or deny the application. The other four members voted to deny it.
The board issued a letter denying the application on July 18, 2012. The letter gave no reason for the denial. The letter stated, "[P]lease resubmit your application with the appropriate revisions to your plans." The letter did not elaborate on the term "appropriate" revisions.
The board sent another letter on August 28, 2012, exhorting Summers and any "perspective [sic] buyer that is interested in purchasing at Plaza Pointe" to do "due diligence" before buying property at the development. "Your firm has altered the exterior of the building without the required architectural approval and was planning to also change the common area landscape of the business park with your plans to suit the needs of an industrial type of business center that we were led to believe which [sic] is not compatible with the business park. We therefore request that the windows be restored to their original status by September 28, 2012 or the Board will pursue further action." The letter rejected board liability for denying "your back flow and fire suppression system application[.]"
Although Summers requested the board several times in writing to explain what an "appropriate revision" to the application would entail, it did not respond. In early 2013, MSS began installing the backflow device, after the application had been denied and with knowledge it had been denied.
Counsel for Plaza Pointe sent MSS a cease and desist letter on April 3, 2013; Summers told one board member the trench for the water main had been dug and the pipe laid. He stated the job would be finished on April 5.
Plaza Pointe filed suit on April 11. The first amended complaint, the operative pleading, alleged causes of action for breach of the CC&Rs, trespass, and declaratory relief. Neither the cease and desist letter nor the first amended complaint specified the violations of the CC&Rs upon which the lawsuit was based.
In October 2016, MSS resubmitted its application for approval of the backflow device, an application the board summarily denied. At this point, the backflow device and the other fire-safety items had already been installed.
The parties stipulated to binding arbitration in April 2015. The stipulation provided in pertinent part "The Arbitrator shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error. This provision shall not be deemed as superseded by California Code of Civil Procedure § 1286.2, et seq, and such right of appeal shall be construed as the intent of the parties in determining the breadth and jurisdiction of this contractual arbitration pursuant to the court in Cable Connection . . . and Moncharsh v. Heily & Blaise . . . ."
The arbitration was held over four days before retired Judge Robert Polis. Judge Polis listed Plaza Pointe's contentions with respect to changes made without board approval as follows: "(1) destruction of common area landscape with the installation of the backflow device, (2) damage to the parking lot due to faulty work, (3) destruction of common area walls with holes cut through them (for plumbing and electrical connections), (4) installation of fire escape windows without approval, (5) installation of at least 8 antennas on exterior roofs, (6) installed exterior fire alarm bell, (7) installed exterior security cameras, (8) failure to maintain and repair separate interest property in the external windows, (9) use of [Plaza Pointe] parking lot for maintenance and cleaning of ambulances without authorization."
Judge Polis issued a 74-page final award on June 9, 2017. Although MSS did not carry every point, the award was, in the main, in their favor.
In essence, the arbitrator determined that the board's ostensible reason for denying MSS's 2012 application - aesthetics - was a pretext. The real reason for the denial was that the board members (other than Summers) did not want MSS's property used as an ambulance dispatch service. The problem was that the CC&Rs did not at that time prohibit such a use, so the members figured that if they denied approval for the backflow device and the other required fire suppression changes, MSS could not operate because the City had demanded the fire suppression system in its conditional use permit. Denying the application was a way to get rid of MSS and its ambulance dispatch service. The evidence of bad faith was sufficient in the arbitrator's mind to overcome the presumption of judicial deference to association board decisions described in Dolan-King v. Rancho Santa Fe Assn. (2000) 81 Cal.App.4th 965 (Dolan-King). The board's summary denial of the 2016 resubmitted application was similarly tainted by pretext and lack of reasonableness.
"[C]ourts should defer to the discretionary decisions of duly constituted community associations in exercising their obligations to maintain and repair common areas, where those decisions are made within the scope of their authority under relevant statutes, covenants, and restrictions, upon reasonable investigation, in good faith, and in a manner in the best interests of the Association and its members." (Dolan-King, supra, 81 Cal.App.4th at p. 979.)
"In short, in the Award, it has been shown that the [board] was biased, used a pretext to try to remove a tenancy that they 'to the last man' did not want populating their private reserve, failed to exercise their extreme power in good faith, acted capriciously, arbitrarily and unreasonably in denying two Architectural Application[s], then caused their Bylaws to be rewritten in a manner which would forever preclude the continuation of the [ambulance service] working out of Plaza Pointe. That the [board] now claims [MSS] should have acted more reasonably toward [its] own attorney's fees in light of the intransigence of the [board] is the same kind of hypocrisy that infected the [board's] sense of aesthetics about the required 'backflow device' whose 'red' cousins freely populate the surrounding neighborhood." As a result, the denials of MSS's applications of July 2012 and October 2016 were invalid, and Plaza Pointe failed to prove MSS had violated the CC&Rs or was continuing to violate them.
MSS petitioned to confirm the arbitration award in the trial court. Plaza Pointe opposed the petition, asking that the petition be denied and the award be vacated. The court granted the petition, holding, among other things, that Plaza Pointe failed to authenticate and lay the foundation for the exhibits it sought to introduce into evidence and therefore failed to meet its burden to support its claim of error with evidence. Judgment was entered on January 24, 2018.
DISCUSSION
"Most legal errors in arbitration are not reviewable." (Heimlich v. Shivji (2019) 7 Cal.5th 350, 367.) In Cable Connection, however, the California Supreme Court approved judicial review of legal error in arbitrations subject to the California Arbitration Act. The court reasoned that, since arbitration was a matter of contract, parties are free to construct their arbitrations as they wish, including limiting the arbitrator's power to make legal errors and providing for judicial review of legal errors. The court found statutory authorization for the limitation in Code of Civil Procedure section 1286.2, which allows a court to vacate an arbitration award if "the arbitrators exceeded their powers." (Code Civ. Proc., § 1286.2, subd. (a)(4).) The court saw no reason why the parties could not limit the arbitrator's power to make legal errors. (Cable Connection, supra, 44 Cal.4th at pp. 1355-1356, 1359-1361.)
In this case, the parties explicitly invoked Cable Connection in their stipulation. It provided, in pertinent part, "The Arbitrator shall not have the power to commit errors of law or of legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error. . . ."
The corresponding language in Cable Connection is "The arbitrators shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error." (Cable Connection, supra, 44 Cal.4th at pp. 1341-1342, fn. 3.)
We review the trial court's decision as to whether the arbitrator has exceeded his or her powers de novo. (Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082, 1087.) We also review purely legal issues de novo. (Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888.) There is one condition attached to reversal for legal error - the error must be prejudicial. That is, the outcome would have been more favorable to the appellant had the error not been committed. (See F.P. v. Monier (2017) 3 Cal.5th 1099, 1107-1108; Diaz v. Carcamo (2011) 51 Cal.4th 1148, 1161.) In a review for legal error, a judgment is presumed correct, and "'[a]ll intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown.'" (Denham v. Superior Court (1970) 2 Cal.3d 557, 564 (Denham), quoting 3 Witkin, Cal. Procedure (1954) Appeal, § 79, pp. 2238-2239.)
An arbitration award subject to Cable Connection review alters the role of the superior court when a petition to confirm the award under Code of Civil Procedure sections 1285 et seq. is challenged. In addition to the grounds for vacation set forth in Code of Civil Procedure section 1286.2, the award can also be reviewed for legal error, turning the superior court into a reviewing court and imposing tasks similar to our own when we review an order or judgment from a lower court. The "record on appeal" includes the final award and any documents admitted into evidence the challenger deems necessary to support its argument of error. If a court reporter recorded the proceedings, the transcripts too are part of the record on appeal.
A Cable Connection review for legal error in an arbitration award does not require the trial court to take evidence. The parties therefore cannot be required to start over in the trial court to authenticate documents and provide foundation for them. If documents were admitted into evidence in the arbitration itself, they are part of the record.
That having been said, only those documents admitted into evidence become part of the record, unless legal error or erroneous legal reasoning was responsible for their exclusion. In this case, Plaza Pointe tried to put documents before the trial court that had not been admitted in the arbitration.
In this case, the arbitration stipulation provides that the arbitrator exceeds his powers only if he commits "errors of law" or of "legal reasoning." Mistaken findings of fact are not beyond his powers, and, in accordance with the ordinary rules for arbitration awards, these are not judicially reviewable. (See Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 534.)
We turn now to the errors Plaza Pointe has identified as mandating reversal.
I. Automatic Denial
The CC&Rs in effect in 2012 placed the power to approve plans and specifications for owner improvements in the hands of a development committee and provided that no improvements could be commenced, erected, or maintained or any exterior change made without this approval. The CC&Rs further provided: "Preparation and Submission of Plans. All plans and specifications shall be prepared by an architect, engineer or landscape designer or landscape architect, said person to be employed by and at the expense of the Owner making the application. Plans and resubmittals thereof shall be approved or disapproved within thirty (30) days after receipt by the [Development] Committee, and the Committee shall use due diligence in responding to the applicant upon receipt of all necessary information. Failure of the Committee to respond to a submittal or resubmittal within such period shall be deemed to be disapproval of the plans as submitted or resubmitted." The CC&Rs gave the committee broad powers of discretion, including the power to disapprove the submitted plans because of its "reasonable dissatisfaction with any or all other matters or things which, in the reasonable judgment of the Committee, will render the proposed item of improvement inharmonious to or out of keeping with the Architectural and Landscape Guidelines . . . ."
We have received no information about the difference between the development committee and Plaza Pointe's board, if there is one. The board made the decision to deny MSS's 2012 application, so we will assume it was functioning as the development committee at that time.
Plaza Pointe argues that the CC&Rs provided for automatic denial of an application in the absence of the development committee's response. MSS submitted its application in May 2012, so it was automatically denied in June 2012 because the board took no action on it. Although the point was raised in the course of the arbitration, the arbitrator issued no explicit ruling on the subject. Plaza Pointe now asserts that the arbitrator committed legal error by failing to rule.
When we review a judgment for error, "'[a] judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.' [Citations.]" (Denham, supra, 2 Cal.3d at p. 564.) Given this presumption, we must conclude that the arbitrator implicitly found that failing to act, despite the requirement to "use due diligence" in responding to applications, was part of the board's plan to drive MSS from the development by making it impossible to comply with the conditional use permit. Pretextual decisions do not get the same deference as "reasonable judgment" decisions.
Here are the legal issues raised by Plaza Pointe's argument: If the board considers and issues a decision on an application after the 30-day period has expired, as it did here, is the automatic denial nullified or waived? Does the provision in the CC&Rs requiring the board to exercise reasonable judgment when it disapproves plans apply to the automatic denial? In light of the presumption of correctness, is the lack of an explicit ruling on one of a party's contentions legal error? These are issues of contract interpretation and procedure subject to review for legal error. Plaza Pointe does not address these issues or any similar issues in its opening brief. It also fails to integrate this argument with its insistence that the board correctly and rightfully considered and denied the 2012 application.
II. Aesthetics
Plaza Pointe identifies several purported errors of law relating to the aesthetics issue it promoted during the arbitration as the reason for denying the application to install the backflow device. Plaza Point argues "the minority's" non-aesthetic motive for denying the 2012 application does not taint "the majority's" decision. Furthermore, a board may deny an application on aesthetic grounds, which are neither measurable nor quantifiable. The arbitrator ignored evidence that MSS could have installed a smaller device that would have comported with the board's aesthetic standards.
Plaza Pointe did not identify the "minority" member of the board with the non-aesthetic motive for denying the application.
In making these arguments, Plaza Pointe appears to have missed what the arbitrator called "the crux of the case." The arbitrator did not rule that the board had no right to consider aesthetics when denying MSS's application, nor did he substitute his own opinion about aesthetics for the board's. His ruling on this issue had another basis entirely.
The arbitrator found that the aesthetics explanation for denying MSS's application was a pretext; the board's real purpose was to run MSS out of the development because board members objected to its use of the property for an ambulance dispatch service. "The denial by the [board] on aesthetic grounds was a pretext not in good faith for feeling [MSS]'s 'use' as an ambulance dispatch center was inappropriate." He was convinced aesthetics was just an excuse. He based this finding in part on the flurry of emails among board members prompted by the first application as well as on other evidence of events both before and after the denial. These are findings of fact, and they are not reviewable under the terms of the arbitration agreement.
For example, the arbitrator regarded the August 28, 2012 letter, castigating Summers for "planning to also change the common area landscape of the business park with your plans to suit the needs of an industrial type of business center," as "put[ting] to rest" any doubt that the real reason for the denial was use, not aesthetics.
Legal issues growing out of these factual findings are whether the board had to act in good faith - that is, not arbitrarily and capriciously - when it enforced the CC&Rs and whether its failure to act in good faith nullified the denials and thereby precluded injunctive relief. The arbitrator's legal conclusion was that the board's failure to act in good faith when it denied MSS's applications nullified its denials and precluded it from obtaining injunctive relief against MSS. Plaza Pointe fails to address these critical points in its opening brief.
Another of the purported errors of law Plaza Pointe has identified is closely related to the aesthetics issue. Plaza Pointe contends the arbitrator erred by holding that the denial of the application resubmitted in 2016 was invalid under the Davis-Sterling Act because by that time a new set of statutes, the Commercial and Industrial Common Interest Development Act, Civil Code sections 6500 et seq., was in force. Specifically, the error was that the new act did not require the board to give a reason for denying an architectural application or require the board to give notice and specify an agenda for a meeting where a resubmission was to be considered.
The arbitrator did not rule the 2016 denial of MSS's resubmitted application invalid for lack of reasons or of notice. He ruled the denial invalid for the same reasons the 2012 denial was invalid. He found the 2016 denial was just as arbitrary, capricious, and pretextual as the earlier one. It was simply a continuation of the board's campaign to drive MSS out of the development. Again, this is a finding of fact and not reviewable on appeal.
Plaza Pointe's argument assumes the Commercial and Common Interest Development Act did away with the requirement that the board act in good faith when it denies an application. Thus, an application could be denied for any reason or no reason at all, that is, arbitrarily and capriciously. To find that is the effect of the new law, we would need to see some supporting authority, either case law or legislative history. Plaza Pointe provides none.
Moreover, even if the new act permitted such conduct, the CC&Rs did not. The CC&Rs required that dissatisfaction with proposed plans be "reasonable" and also required the development committee to exercise "reasonable judgment." Even if the new act did not require the board to give a reason for denying an application, the CC&Rs required the board to have a reason for denial, and that reason had to be a reasonable one, not an arbitrary and capricious one. The arbitrator found that the board's reason for the 2016 denial was a pretext; he based the nullification of the denial on that fact.
III. Notice
Plaza Pointe argues the arbitrator committed legal error by faulting it for failing to give notice of violations pursuant to the requirements of a set of CC&Rs that had not yet been written or recorded. Specifically, the notice letter was written in August 2012, while the CC&Rs on which the arbitrator relied were not recorded until February 2015.
It is not clear to which items this objection applies. As stated above, Plaza Pointe had a laundry list of violations - some of which were connected with the fire safety system (backflow device, windows, fire alarm bell) and some of which were not (antennas, cameras, parking lot misuse). The arbitrator ruled that Plaza Pointe had given MSS proper notice of violations with respect to the fire safety items, but not with respect to the other items.
In so doing, the arbitrator did not rely solely, or even primarily, on the new CC&Rs. Instead the reason for excluding the antennas, cameras, and the like from the arbitration was that Plaza Pointe had not given legal notice to MSS that these items would be involved. As the arbitrator pointed out, neither the complaint nor the first amended complaint specified the violations for which Plaza Pointe sought injunctive relief. Plaza Pointe's opening arbitration brief specified only "'the enormous backflow device'" when it asked for an injunction. Not until Plaza Pointe filed its closing arbitration brief did it mention the installation of a fire alarm bell, antennae, and security cameras as also being violations of the CC&Rs.
It should be pointed out that Plaza Pointe apparently participated in the arguments about whether it had complied with the notice procedures of the new CC&Rs instead of arguing that they did not apply.
The arbitrator ruled that MSS had proper notice of violations for "installing the backflow device, including the attendant incursions through the wall, and the exit windows, all unequivocally installed without approval from the [board]. There arises a reasonable inference that the exterior fire alarm bell . . . was installed at the same time the backflow device was constructed and as a part of the entire fire suppression package approved by the City and OCFA. On the other hand, [Plaza Pointe] has not preserved as issues to be resolved here in this arbitration by failing to provide adequate legal notice by the [board] of the alleged violations of the CC&Rs for installing the security camera(s) and antenna, or anything to do with the parking lot. . . . [F]or the reasons stated by [MSS], the issues of the security camera(s), and antenna are not now properly before this arbitrator for want of proper and just notification by the [board]. For the same reasons, stated, also excluded from consideration herein are [Plaza Pointe's] contentions about (2) damage to the parking lot due to faulty work, and (9) failure to secure authorization for past use of the parking lot for maintenance and cleaning of ambulances." The arbitrator also noted Plaza Pointe's failure to produce any evidence of faulty work in the parking lot or evidence permission was required to maintain and clean ambulances there.
As the above passages demonstrate, the exclusion of the antennae, the cameras, and the parking lot issues from the arbitration was not based on the CC&Rs. The arbitrator excluded these items because Plaza Pointe had not identified them as issues until it filed its closing brief in the arbitration. The legal issue is whether these items were properly excluded for lack of notice in the litigation. Plaza Pointe does not address this issue. As the arbitrator agreed with Plaza Pointe that violations relating to the "fire suppression package" - even the fire alarm bell for which no specific notice of violation had been previously given - had been properly noticed, Plaza Pointe can hardly complain about this finding of fact.
IV. Exclusive Use
Plaza Pointe argued in the arbitration that the board was without authority to approve the backflow device because it would convert part of the common area to MSS's exclusive use. Civil Code section 4600, subdivision (a), (formerly section 1363.07) provides, "Unless the governing documents specify a different percentage, the affirmative vote of members owning at least 67 percent of the separate interests in the common interest development shall be required before the board may grant exclusive use of any portion of the common area to a member." (Italics added.) The arbitrator held the backflow device did not convert the common area to MSS's exclusive use because, as two witnesses had testified, it could be hooked up to serve buildings other than just MSS's place of business.
Plaza Pointe does not confront the fact the board acted as if it had the authority to decide whether to approve the device when it met to discuss the application, voted to deny it, issued a denial letter, and followed up with threatening letters and a lawsuit based on the denial. It never offered to put the application to a vote of the owners.
Plaza Pointe faults the arbitrator for basing this finding "on the sole ground that a witness speculated that the backflow device might be able to serve two buildings in the complex[.]" Although the objection to the finding is phrased in terms of facts and lack of evidence, Plaza Pointe has here raised an issue of legal error. It argues that Civil Code section 4600 prevented the board from granting MSS exclusive use of a common area; a vote of 67 percent of the owners would be required.
Plaza Pointe bases its argument on Civil Code section 4145, subdivision (a), which defines "exclusive use common area" as "a portion of the common area designated by the declaration for the exclusive use of one or more, but fewer than all, of the owners of separate interests and which is or will be appurtenant to the separate interest or interests." (Italics added.) The fact that another owner could use the backflow device, Plaza Pointe argues, did not negate "exclusive use"; the use would still be "exclusive" if other owners could use the device, so long as all owners could not use it. Therefore Civil Code section 4600 required a 67 percent vote of all the owners to permit the installation of the device. This is a matter of statutory interpretation, which we review de novo. (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 529.)
It is a basic tenet of statutory interpretation that differing language in two statutes concerning a related subject shows different legislative intents. (Hayes v. Temecula Valley Unified School Dist. (2018) 21 Cal.App.5th 735, 752.) Civil Code section 4145, subdivision (a) uses the phrase "exclusive use common area" and requires that it be "designated by the declaration." Another condition is that the designated "exclusive use common area" be "appurtenant to" the separate interests. Section 4145, subdivision (b), lists some "appurtenant" common areas that, unless the declaration provides otherwise, are automatically "exclusive use common areas": window boxes, porches, patios, and doorsteps, among others.
"A thing is 'appurtenant' to something else when it stands in relation of an incident to a principal and is necessarily connected with the use and enjoyment of the latter." (Black's Law Dict. (5th ed. 1979) p. 94, col. 2.)
Civil Code section 4600, subdivision (a), uses similar but different language: "exclusive use of any portion of the common area." (Italics added.) The statute does not require that the use be designated by the declaration and does not require that the common area necessarily be appurtenant. Moreover, the statute includes an extensive list of exclusive uses that do not require a 67 percent vote. For example, no such vote is required for a "grant of exclusive use" (not a "grant of an exclusive use common area") to install an electric vehicle charging station, to accommodate a disability, or to fulfill the requirement of a public agency. (Civ. Code, § 4600, subds., (b)(3)(D), (F), (H).)
The difference is illustrated in another Davis-Stirling Act statute. In 2012, the Legislature enacted Civil Code section 1353.9 to deal with electric vehicle charging stations in common interest developments. Section 1353.9, subdivision (a), banned any restriction in the CC&Rs that prohibited or hampered the installation of charging stations "within an owner's unit or in a designated parking space, including, but not limited to, a deeded parking space, a parking space in the owner's exclusive use common area, or a parking space that is specifically designated for use by a particular owner[.]" Section 1353.9, subdivision (f) set out the conditions for installation "in a common area or an exclusive use common area, as designated in the common interest development's declaration . . . ." This is pretty clear recognition that a "common area" and an "exclusive use common area" are two different things.
And it gets clearer. Section 1353.9, subdivision (g) provided, in pertinent part, "[I]nstallation of an electric vehicle charging station for the exclusive use of an owner in a common area, that is not an exclusive use common area, shall be authorized by the association only if installation in the owner's designated parking space is impossible or unreasonably expensive." (Italics added.) As this language indicates, an "exclusive use common area" is a different thing than the exclusive use of an owner in a common area. It further appears that the charging station would be designated for only one owner, in light of the requirements that the "owner" (singular) who gets the station has to pay for the electricity, maintain insurance, and assume other responsibilities. (Civ. Code, §§ 4745, subd. (f), 6713, subd. (f); see also Civ. Code, § 4775, subd. (a)(3) [separate interests responsible for maintaining "exclusive use common area"].)
Civil Code section 1353.9 was repealed effective January 1, 2014. Its provisions were carried over into Civil Code section 6713, part of the Commercial and Industrial Common Interest Development Act, and Civil Code section 4745, part of the Davis-Stirling Common Interest Development Act.
We conclude that "exclusive use of any portion of the common area" in Civil Code section 4600 does not have the same meaning as "exclusive use common area" in section 4145. When the Legislature meant "exclusive use common area," it used the term "exclusive use common area." We therefore reject Plaza Pointe's argument that Civil Code section 4145 applied to section 4600 and mandated a 67 percent vote of the owners to install the backflow device.
V. Injunction
Plaza Pointe argues the arbitrator committed legal error by failing to grant injunctive relief, specifically by failing to order MSS to remove the backflow device and the other fire-suppression equipment. Plaza Pointe argues that because MSS's violation was willful, injunctive relief is mandatory.
"'When a homeowners' association seeks to enforce the provisions of its CCR's to compel an act by one of its member owners, it is incumbent upon it to show that it has followed its own standards and procedures prior to pursuing such a remedy, that those procedures were fair and reasonable and that its substantive decision was made in good faith, and is reasonable, not arbitrary or capricious. [Citations.]' [Citation.] 'The criteria for testing the reasonableness of an exercise of such a power by an owners' association are (1) whether the reason for withholding approval is rationally related to the protection, preservation or proper operation of the property and the purposes of the Association as set forth in its governing instruments and (2) whether the power was exercised in a fair and nondiscriminatory manner. [Citations.]' [Citation.]" (Pacific Hills Homeowners Assn. v. Prun (2008) 160 Cal.App.4th 1557, 1565-1566; see Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642, 659 [power to approve plans must be exercised in good faith].) The arbitrator found - as a fact - that the board did not follow its own standards and procedures, and its substantive decision was not made in good faith, but was arbitrary and capricious.
Nevertheless, Plaza Pointe argues, it is still entitled to an injunction against MSS. Plaza Pointe relies on our opinion in Nellie Gail Ranch Owners Assn. v. McMullin (2016) 4 Cal.App.5th 982 (Nellie Gail) and specifically on our ruling in that case regarding injunctive relief:
"'When a trial court refuses to enjoin encroachments which trespass on another's land, "the net effect is a judicially created easement by a sort of non-statutory eminent domain." [Citations.] However, the courts are not limited to judicial passivity as in merely refusing to enjoin an encroachment. Instead, in a proper case, the courts may exercise their equity powers to affirmatively fashion an interest in the owner's land which will protect the encroacher's use.' [Citation.] That interest is commonly referred to as an equitable easement. [Citations.]
"For a trial court to exercise its discretion to deny an injunction and grant an equitable easement, 'three factors must be present. First, the defendant must be innocent. That is, his or her encroachment must not be willful or negligent. The court should consider the parties' conduct to determine who is responsible for the dispute. Second, unless the rights of the public would be harmed, the court should grant the injunction if the plaintiff "will suffer irreparable injury . . . regardless of the injury to defendant." Third, the hardship to the defendant from granting the injunction 'must be greatly disproportionate to the hardship caused plaintiff by the continuance of the encroachment and this fact must clearly appear in the evidence and must be proved by the defendant."' [Citation.] 'Unless all three prerequisites are established, a court lacks the discretion to grant an equitable easement.' [Citation.]" (Nellie Gail, supra, 4 Cal.App.5th at pp. 1003-1004.)
We also held in Nellie Gail that "'[t]he question whether the defendant's conduct is so egregious as to be willful or whether the quantum of the defendant's negligence is so great as to justify an injunction is a matter best left to the sound discretion of the trial court.' [Citation.] 'We review the trial court's application of this doctrine for an abuse of discretion.' [Citation.] [¶] . . . [¶] . . . "The abuse of discretion standard includes a substantial evidence component: 'We defer to the trial court's factual findings so long as they are supported by substantial evidence, and determine whether, under those facts, the court abused its discretion. If there is no evidence to support the court's findings, then an abuse of discretion has occurred.' [Citation.] [¶] When we review the record for substantial evidence, we do not determine whether substantial evidence supports the factual conclusions [advanced by the opposing party]. Rather, we review the entire record solely to determine whether substantial evidence supports the trial court's expressed and implied factual findings. If there is, our analysis ends; we may not substitute our deductions for those of the trial court. [Citation.]" (Nellie Gail, supra, 4 Cal.App.5th at pp. 1004, 1006-1007.)
In this case, the arbitrator made two factual findings, based on substantial evidence, that supported the decision not to grant an injunction. The first was whether MSS's conduct was so egregious as to justify an injunction, or, to put it in Nellie Gail terms, "who is responsible for the dispute." The arbitrator unquestionably found that Plaza Pointe's bad faith was responsible for the dispute, and substantial evidence supports the finding. Second, the arbitrator found that the hardship to Plaza Pointe - the loss of the small area where the concrete pad for the backflow device was installed - was insignificant compared to the hardship to MSS if the backflow device was not installed - the inability to conduct its business at all at the purchased property. Substantial evidence supported this factual finding as well.
"Under the doctrine of '"balancing of conveniences"' or "'relative hardships,"' a trial court has discretion to deny an injunction and instead compel the plaintiff to accept damages as compensation for a judicially created easement that allows the defendant to maintain the encroaching improvement." (Nellie Gail, supra, 4 Cal.App.5th at p. 1003.)
Plaza Pointe conjures up a parade of horribles - mostly involving owners making unapproved changes to common areas as the fancy takes them - but the arbitrator's decision provides no support for such anarchy. Instead, the arbitrator determined that the board abdicated its responsibility under both the law and the CC&Rs to act reasonably and in good faith. We anticipate the board will act in good faith in the future, so the hobgoblins imagined in Plaza Pointe's argument shouldn't be a problem.
DISPOSITION
The judgment is affirmed. The motion to augment the record is denied. Respondents are to recover their costs on appeal.
BEDSWORTH, ACTING P. J. WE CONCUR: IKOLA, J. GOETHALS, J.
APPENDIX A
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