Opinion
A132196
10-11-2011
GREGORY A. MANCHUK et al. Plaintiffs and Appellants, v. KRIS E. TRESIDDER, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Clara County
Super. Ct. No. 110CV174994)
Under California law, a condominium homeowners association may levy assessments against individual owners for maintenance and management of the common areas of the property. (Civ. Code, §§ 1351, subd. (a), 1363, 1366.) Sometimes these assessments are divided equally among the units; sometimes they are based on other factors, such as the square footage or value of the individual units, which results in different owners paying different amounts. (See Cebular v. Cooper Arms Homeowners Assn. (2006) 142 Cal.App.4th 106, 120 (Cebular).) Here, the homeowners association of a four-unit condominium development decided to base its regular monthly assessments on the square footage of the individual units, which range in size from 400 square feet to over 2000 square feet. We are asked to decide whether this formula, which leads to unequal assessments, must be memorialized in the CC&R's to be valid. We conclude the answer is no.
Further statutory references are to the Civil Code unless otherwise indicated.
BACKGROUND
Abby Ahrens was one of the developers of a four-unit condominium complex in Los Altos known as "Villas on the Plaza." The complex included two units that were over 2,000 square feet, one unit that was over 1,200 square feet, and one unit that was 400 square feet. This last, much-smaller unit (which unlike the other units, did not have an enclosed garage) was designated a below market rate unit ("BMR") that would be sold to low-income purchasers at a reduced amount as part of a city affordable housing program.
On January 17, 1996, Ahrens and her partner recorded a Declaration of Covenants, Conditions and Restrictions Establishing a Plan of Condominium Ownership For 'Villas on the Plaza' " (CC&R's). Section 2.1 of the CC&R's provides, "Ownership of each Condominium within the Project shall include a Unit; an undivided one-quarter (1/4) interest as tenants in common in and to the Common Area as shown on the Map and Plan. . . ." The owners of the individual units were to manage the common areas of the property through a nonprofit unincorporated homeowners' association (Association) in which each owner has one membership. (See Corp. Code, § 18000 et seq.) Under Section 6.2 of the CC&R's, "Except as otherwise provided in this Declaration, all Association and other matters requiring the approval of Owners shall be deemed approved if Owners holding one hundred percent (100%) of the total voting power of all Owners assent to them."
Section 5.3 of the CC&R's grants the Association "all the powers of a nonprofit unincorporated association, subject only to such limitations on the exercise of its powers as are set forth in this Declaration. It shall have the power to do any lawful thing that may be authorized, required, or permitted to be done by the Association under this Declaration, and to do and perform any act that may be necessary or proper for or incidental to, the exercise of any of the express powers of the Association." Section 5.4(D) grants the Association the power to "fix, levy, collect and enforce assessments. . . ."
The method of calculating these assessments was not set forth in the CCR's, which instead allow the Association to set the assessments at a later date. Section 5.5 of the CC&R's provided, "As of the date of this Declaration the Declarants/Owners and Association elect to not impose, establish, fix or levy any assessments against the Owners of Condominiums. However, the Association may establish, fix, and levy assessments against the Owners and collect and enforce payment of such assessments, in accordance with the provisions of this Declaration."
On February 19, 1996, the Association held its initial meeting, attended by condominium owners Bonnie Davis and Isabella Fu, and by Abby Ahrens as a representative of the developer/owners. An election of officers was held, the opening of a bank account was authorized, and an initial budget was established for common area maintenance. The Association decided at this meeting to allocate maintenance assessments in the form of monthly dues based on the square footage of each of the four units, and to set an initial monthly budget of $530.00. Under this allocation, Unit 1 (2,002 square feet) paid 35 percent, or $185.50; Unit 2 (1,235 square feet) paid 22 percent, or $116.60; Unit 3 (400 square feet) paid 7 percent, or $37.10; and Unit 4 (2,005 square feet) paid 36 percent, or $190.80. According to Ahrens, this unequal allocation was based in part on Unit 3's status as a BMR.
Unit 3, the BMR unit, was purchased by defendant.
In 2002, plaintiffs purchased Unit 4 from Davis, the original owner, and began paying monthly Association dues. They were aware from the outset that defendant paid lower dues for Unit 3 than they did for Unit 4. In March 2010, plaintiffs notified all of the other unit owners in writing that they believed the dues paid for each unit should be equal, due to the failure of the CC&R's to specify an unequal dues structure. Plaintiffs began paying only 25 percent of the total dues, and the owners of Units 1 and 2 followed suit, with the owner of Unit 1 reducing her share from 35 percent to 25 percent and the owner of Unit 2 increasing his share from 22 percent to 25 percent. Defendant, who was still the owner of Unit 3, objected to this allocation and did not increase her share from 7 percent to 25 percent.
According to the memo from plaintiffs to the other owners, the then-current budget called for monthly fees totaling $1,277, with $467 being paid by Unit 1, $237 by Unit 2, $93 by Unit 3, and $480 by Unit 4.
Plaintiffs filed this action against defendant, seeking a judicial declaration that defendant's share of the Association dues was 25 percent and that Association dues must be paid equally as between all four units of Villas on the Square. The case proceeded to a court trial and judgment was entered in favor of defendant, along with an award of costs and attorney fees under the CC&R's. Plaintiffs appeal.
DISCUSSION
We assume without deciding that plaintiffs have standing to pursue this action, notwithstanding defendant's claim that only the Association has the power to levy or enforce assessments. The parties agree that the relevant facts are undisputed and that the case presents a question of law that we review de novo. (See Cebular, supra, 142 Cal.App.4th at p. 119; Bear Creek Planning Committee v. Ferwerda (2011) 193 Cal.App.4th 1178, 1183 (Bear Creek).)
Plaintiffs submit that assessments relating to the common areas of a condominium project must be imposed equally on a per unit basis unless the CC&R's specify that the owners of different units will pay different amounts. They rely primarily on section 1362, which states, "Unless the declaration otherwise provides, in a condominium project, or in a planned development in which the common areas are owned by the owners of the separate interests, the common areas are owned as tenants in common, in equal shares, one for each unit or lot." Plaintiffs argue that because the CC&R's for Villas on the Plaza did not explicitly state that the monthly Association dues for common area maintenance would be based on square footage, each unit must pay an equal share.
Defendant responds that the CC&R's for Villas on the Plaza permitted the Association to impose common area maintenance assessments under any reasonable formula, including one based on the square footage of the individual units. She claims that at the first Association meeting on February 19, 1996, the Association unanimously agreed to divide the assessment amount based on square footage in the form of unequal monthly dues. Defendant further argues that the 2010 decision of the three other owners to make equal contributions of 25 percent each was not binding, because the CC&R's required unanimous agreement of all four owners before the assessments could be changed.
We agree with defendant.
A condominium development's CC&R's are binding on the individual owners and must be construed according to contractual principles. (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 368, fn. 1 & 380; Cebular, supra, 142 Cal.App.4th at pp. 117, 119.) Here, the CC&R's expressly provide for equal ownership of the common areas and state that maintenance assessments for the common areas shall be set by the Association. Less than a month after the CC&R's were recorded, the Association set the total monthly assessment and decided to allocate it among the four owners in the form of monthly dues proportionate to the square footage of each individual unit, so that the owners of larger units would pay more and the owners of smaller units would pay less.
Plaintiffs do not contend that this unequal allocation of dues based on square footage is arbitrary, unreasonable or unlawful. They admitted at trial that the unequal dues structure would be permissible if it had been set forth in the CC&R's, but claim that under section 1362, the dues must be divided equally unless the CC&R's specify otherwise. We disagree. Under section 1362, the ownership of common areas of a condominium project will be in equal shares "[u]nless the declaration otherwise provides." Plaintiffs suggest that when the ownership of a the common area is equal, maintenance fees must be equal as well, but this is not what section 1362 says. "We do not have the power to add to the statute what the Legislature may have left out or to conform it to an assumed intent that does not appear from its language." (People v. Eckard (2011) 195 Cal.App.4th 1241, 1248.)
Plaintiffs argue that Cebular, supra, 142 Cal.App.4th 106 requires that unequal assessments be set forth in the CC&R's to be effective. We are not persuaded. In Cebular, the declaration governing a 12-story condominium building provided for unequal ownership interests, voting rights and assessments that were not tethered to criteria such as a value or square footage, but had been carried over from a time when the building was held as a stock cooperative. (Id. at pp. 110, 120.) One of the homeowners brought an action challenging the unequal allocation of assessments as arbitrary and unfair. (Id. at pp. 110, 118-120.) The appellate court disagreed, concluding that the homeowner had not established the allocation was wholly arbitrary, violated a fundamental public policy, or imposed a burden on the land that far outweighed any benefit. (Id. at pp. 118-124.)
The court explained that the law "contemplate[s] that the declaration may provide for unequal ownership by condominium owners of common areas as tenants in common" (Cebular, supra, 142 Cal.App.4th at p. 120), and that "neither section 1362 nor any regulation prohibit[s] unequal assessments based upon greater voting power" (ibid.). But this language cannot be construed to mean that the declaration (CC&R's) must provide for unequal assessments for those assessments to be valid. The court in Cebular was considering a situation in which the unequal voting shares, ownership, and assessments of the condominium complex were described in the CC&R's, and it had no need to consider whether section 1362 requires equal assessments in the absence of a CC&R provision to the contrary. The primary relevance of Cebular to the facts before us is its recognition that neither statute nor regulation "requires that equal assessments be imposed in every case" (ibid.)—a proposition with which both parties seem to agree.
Nor are plaintiffs assisted by the decision in Bear Creek, supra, 193 Cal.App.4th 1178. In that case, the CC&R's of a subdivision contained several building restrictions for development on its lots, and established an architectural committee to review and approve building plans. (Id. at p. 1181.) A lot owner sued the committee after his plans for building a house were rejected, claiming the committee had applied criteria that went beyond the restrictions in the CC&R's. (Id. at pp. 1181-1182.) The trial court upheld the committee's decision and ordered the lot owner to pay attorney fees, relying upon an attorney fee provision in an architectural review manual developed by the committee. (Id. at pp. 1181-1182, 1185-1187.) The appellate court upheld the committee's rejection of the building plans, concluding that the CC&R's granted it the power to adopt standards beyond those set forth in the CC&R's, but reversed the award of attorney fees as outside the scope of the power granted the committee under the CC&R's. (Id. at pp. 1182-1187.)
In the case before us, the plain language of the CC&R's gave the Association the power to levy assessments for the common areas, which it did at the February 19, 1996 meeting. The decision to allocate these assessments based on the square footage of the individual units does not exceed the power explicitly granted to the Association under the CC&R's and is analogous to the permissible use of the architectural standards applied by the architectural committee in Bear Creek. It is unlike the attorney fee provision at issue in Bear Creek, which was not authorized by the CC&R's in that case.
The parties also discuss California Code of Regulations, title 10, section 2792.16, which provides that regular assessments "shall ordinarily be levied against each owner according to the ratio of the number of subdivision interests owned by the owner assessed to the total number of interests subject to assessments" (id., subd. (a)), but allows unequal assessments when a unit is likely to receive more than 10 percent of its proportionate share of the value of common services (id., subd. (b)). This regulation appears within an article governing "subdivisions," a term that does not include condominium projects with less than five units, such as Villas on the Plaza. (See Bus. & Prof. Code, § 11004.5, subd. (c).) Even if we were assume the applicability of the regulation to the case before us, it does not preclude unequal dues in an appropriate situation and does not require that an unequal dues structure be set forth in the CC&R's.
In short, plaintiffs have failed to establish that the square-footage formula for monthly dues, which had been in effect for almost 15 years before plaintiffs objected, violated any statute or regulation or was inconsistent with the powers granted to the Association under the CC&R's. The trial court properly denied the declaratory relief they sought.
DISPOSITION
The judgment is affirmed. Ordinary costs on appeal are awarded to defendant, who may also seek reasonable attorney fees in the trial court to the extent authorized by Section 11.15 of the CC&R's at issue.
NEEDHAM, J.
We concur.
JONES, P. J.
BRUINIERS, J.