Opinion
A166089
04-09-2024
MICHAEL ZEHNER et al., Plaintiffs and Appellants, v. DAVID VAN DER VOORT et al., Defendants and Respondents.
NOT TO BE PUBLISHED
(San Francisco City & County Super. Ct. No. CGC-19-580036)
Banke, Acting P.J.
This case involves a contract dispute between parties who own a San Francisco property as tenants in common. Plaintiffs have exclusive use of the "front" part of the property and reside in the building thereon; defendants have exclusive use of the "rear" part of the property and reside in a separate building on that part. When the parties purchased the property, they entered into an agreement "to set forth in writing the parties' agreements regarding the ownership, maintenance, and sale" of the property.
Some years later, defendants made unpermitted improvements to their residence. After receiving a code violation notice from the city, defendants, without plaintiffs' knowledge, filed an application for an accessory dwelling unit (ADU) in an effort to legalize the improvements. The application increased the residential density of the property, altered the property's residential occupancy classification from R-3 to R-2, and triggered additional building code requirements, all of which derailed the improvement plans plaintiffs were in the process of having prepared and approved. Defendants refused to withdraw the ADU application, and plaintiffs were forced to incur additional costs in making changes to their improvement and construction plans, and eventually sued for breach of the ownership agreement.
The parties submitted no extrinsic evidence as to the meaning of the agreement and the trial court considered no such evidence, treating the issue as a legal question and ruling the agreement did not require the parties to mutually agree to the filing of the application for an ADU. Plaintiffs contend the court erred in its interpretation and that neither party could unilaterally file an application for an ADU which altered the legal status of the property. We agree and reverse.
BACKGROUND
Plaintiffs Michael Zehner, Aaron Norton, and Patricia Zehner (plaintiffs) and defendants David Van Der Voort and Tommi West (defendants) are owners, as tenants in common, of real property located in San Francisco. The property has two detached buildings: a "front" structure with one residential unit and one commercial unit, which plaintiffs occupy, and a "rear" structure with one residential unit, which defendants occupy.
In conjunction with their purchase of the property in 2008, the parties executed a "Tenancy-In-Common Ownership Agreement" (ownership agreement), the stated purpose of which is to "set forth in writing [their] agreements regarding the ownership, maintenance, and sale" of the property. At the time, both parties intended to renovate their respective buildings. The agreement includes a number of provisions pertaining to improvements which we discuss in detail in our discussion of the contract interpretation issue raised on appeal.
Some six years later, in 2014, plaintiffs commenced having plans prepared and approved for their renovation of the front building. Around the same time, defendants were completing renovations inside their rear residential unit. Unbeknownst to plaintiffs, defendants did some of the work without the necessary permits from the city-specifically, installation of a shower, sink, and gas cooktop and stove. The following year, the city planning department issued a notice of complaint of illegal construction on the property.
Rather than remove the unpermitted improvements pursuant to the notice, defendants, without notice to or the consent of plaintiffs, sought to legalize the construction by filing an application for an ADU. While an application for an ADU might have eventually led to retroactive legalization of the construction, it immediately effectuated an increase in the residential density of the property, altered the property's residential occupancy classification from R-3 to R-2, and triggered the application of more stringent building code requirements.
Contrary to what might be assumed, the R-2 designation applies to properties with three residential units, while the R-3 designation applies to properties with two residential units.
As a result, plaintiffs lost the benefit of building code exemptions applicable to R-3 classified properties and were required to redesign their own improvement plans for the front structure.
When plaintiffs learned of the ADU application, they objected. And for nearly six years, defendants refused to withdraw it.
In 2021, defendants sought to cure their code violations through a different route and applied for approval of an "independent living space," a new use category the city had recently recognized. They also withdrew the application for an ADU. The property then reverted to the R-3 classification and once again was subject to the building code provisions applicable to R-3 properties. In the meantime, plaintiffs had incurred additional design and planning costs, and the cost of construction had risen significantly.
The permit details report (introduced into evidence without objection) explains "an independent living space" "is allowable per the Zoning Administrator Interpretation for the definition of Dwelling Unit that became effective in March 2021." It also points out "approval is to document that the rear structure is not allowed to operate as a two-family dwelling," and if the city "receives information that the ground floor space is being rented or otherwise occupied in an independent manner, the space would immediately become defined as an Unauthorized Unit per [Planning Code] Section 317(b)(13) and would need to be legalized either as an ADU or removed through the obtention of Conditional Use Authorization."
Plaintiffs sued for breach of the ownership agreement alleging, among other things, that defendants' failure to obtain their consent for the ADU application was a breach of the agreement which, in turn, had delayed and frustrated their own renovation and improvement plans.
Plaintiffs also alleged defendants' unpermitted construction work violated the ownership agreement. The trial court agreed but concluded plaintiffs failed to prove damages from the breach. Plaintiffs do not challenge that ruling on appeal.
Following a bench trial, the trial court issued a statement of decision summarizing the background of the dispute and addressing the merits of the parties' claims. With respect to what the court viewed as the "central issue" in the case, i.e., whether defendants' application for an ADU was a breach of the ownership agreement, the trial court focused on two paragraphs of the agreement. The first was paragraph 3 which provides: "The property, and any interest therein, may be rented, leased, sold, assigned, encumbered, or otherwise conveyed only by written agreement signed by all parties, except as specified elsewhere in this Agreement. All other decisions with respect to said property, except as specified elsewhere in this Agreement, shall be by mutual accord of the two parties." The second was paragraph 18 which provides, in part: "Substantial capital improvements or replacements to the separate structure in which a party's assigned unit(s) is situated, or to any exclusive use common areas allocated to said unit(s), shall not require the consent of the other party, and shall be made at the sole discretion, expense[,] and property tax liability of the party assigned the exclusive right to occupy said unit(s). . . ."
After examining several legal definitions of the term "capital improvement," the court concluded "an ADU is patently a capital improvement." It then reasoned "ADU's (and I suppose most any capital improvement) require permits and other paperwork from the City; it would be quite unreasonable to hold that while an ADU as such is contemplated by [paragraph 18 of the ownership agreement], applications to build them are not; . . . [paragraph] 18's permission for a capital improvement would be empty if further consent from the other party were needed for a permit or application."
Although observing it "need not reach these issues," the trial court went on to find plaintiffs sustained damages as a result of defendants filing the ADU application. The change in occupancy status of the property from R-3 to R-2 "required [plaintiffs] to redesign to . . . more stringent standards," and resulted in out-of-pocket costs of $20,000. The court also observed plaintiffs claimed damages for loss of value of the property and increased costs of labor and materials caused by delay, but concluded it was "unable to award these sums because there is no relevant breach of the contract."
DISCUSSION
Standard of Review
Throughout the litigation the parties have characterized the ownership agreement as "unambiguous." They agreed no extrinsic evidence would be presented at trial as to the meaning of the agreement, and the trial court, in turn, did not consider any extrinsic evidence in interpreting the agreement. Rather, the parties and the trial court treated the interpretation of the agreement as a question of law. (See Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865; Breathe Southern California v. American Lung Assn. (2023) 88 Cal.App.5th 1172, 1181 [interpretation of a contract presents a legal question for the court unless the interpretation turns on the credibility of extrinsic evidence].)
Accordingly, as plaintiffs assert, our standard of review on appeal is de novo and we independently interpret the agreement. (See Westrec Marina Management, Inc. v. Arrowood Indemnity Co. (2008) 163 Cal.App.4th 1387, 1391 (Westrec) [interpretation of contract and application to undisputed facts are questions of law subject to de novo review].)
Although defendants generally agree "the standard of review on this appeal should be de novo," they claim plaintiffs' argument "that [paragraph] 18 cannot authorize the installation of an ADU in [defendants'] structure because [plaintiffs'] structure was also affected by the capital improvement" challenges a "factual finding" by the trial court governed by the substantial evidence standard of review. Defendants are mistaken. Because no extrinsic evidence was presented or considered in connection with the trial court's interpretation of the ownership agreement, the lower court was presented, as are we, with a question of law which we review de novo. (See Westrec, supra, 163 Cal.App.4th at p. 1391.) Moreover, there is no dispute as to the operative facts pertaining to the parties' dispute, underscoring that we are presented with a legal question as to the meaning of the ownership agreement and its application to undisputed facts-again, a question of law which we review de novo. (Ibid.)
We note plaintiffs' trial counsel did not concede the ADU application, itself, was any species of "capital improvement." Appellate counsel has not pursued that particular issue and, instead, focuses on the language of the ownership agreement, urging it did not allow defendants' unilateral submission of the application for an ADU.
Our review is guided by well-established rules of contract interpretation, including the following:" 'The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.' ([Civ. Code,] § 1641.) 'A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.' ([Id.,] § 1643.) 'The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.' ([Id.,] § 1644.)" (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 525-526 (R.J. Reynolds).) "In sum, courts must give a' "reasonable and commonsense interpretation"' of a contract consistent with the parties' apparent intent. [Citation.] The language '" 'in a contract must be construed in the context of that instrument as a whole.'"' [Citation.] Further, if possible, the court should give effect to every provision of the contract." (Id. at p. 526.)
The Ownership Agreement
The parties' dispute, at this juncture, boils down to a single question: Did the ownership agreement permit defendants to file, without notice to or consent by plaintiffs, an application for an ADU in an effort to legalize their unpermitted work?
While defendants assert plaintiffs "throughout the litigation" have been "careful to target the physical installation of the ADU rather than the permit application," the record is to the contrary. In their complaint, plaintiffs alleged defendants' application for an ADU was a breach of the ownership agreement and argued the same during trial. The trial court, in turn, considered this to be the central issue in the case.
As the trial court recognized, "ADUs as such were not known to the parties when they signed the [ownership agreement]." However, while the plain language of the agreement may not have made specific reference to ADU's, our fundamental task is to discern the mutual intention of the parties at the time they entered the agreement with respect to improvements to the property, so far as that is ascertainable. (Civ. Code, § 1636 ["A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful."]; Horath v. Hess (2014) 225 Cal.App.4th 456, 463 [same].) We therefore turn our attention to the entirety of the agreement in an effort to discern, if we can, the parties' intent in that regard. (See R.J. Reynolds, supra, 107 Cal.App.4th at p. 524 [" 'In interpreting an unambiguous contractual provision[,] we are bound to give effect to the plain and ordinary meaning of the language used by the parties.' "].)
As plaintiffs point out, paragraph 3 provides: "The property, and any interest therein, may be rented, leased, sold, assigned, encumbered, or otherwise conveyed only by written agreement signed by all parties, except as specified elsewhere in this Agreement. All other decisions with respect to said property, except as specified elsewhere in this Agreement, shall be by mutual accord of the two parties." (Italics added.) Thus, "all" decisions "with respect to [the] property" require mutual agreement of the parties unless otherwise specified in the agreement. Or stated another way, the default requirement for any decision affecting the property is mutual agreement.
There is no dispute that paragraph 18 sets forth an exception to paragraph 3's mutual agreement requirement. It provides:
"Capital Improvements. Substantial capital improvements or replacements to the separate structure in which a party's assigned unit(s) is situated, or to any exclusive use common areas allocated to said unit(s), shall not require the consent of the other party, and shall be made at the sole discretion, expense, and property tax liability of the party assigned the exclusive right to occupy said unit(s), pursuant to paragraph 2 above, and shall in no way affect the capital accounts of the parties; provided, however, that if the parties mutually concur that the improvement will significantly benefit both structures, and increase the total value thereof, then by written addendum to this Agreement, signed by both parties, specifying the nature of the improvement and the cost thereof, the cost of said improvement, less straight-line depreciation per IRS regulations, shall be recoverable by the party paying same at the time said party's interest in the property shall be sold pursuant to the terms of this Agreement. All work on or about [the property] shall be completed to applicable building and safety codes and with all necessary permits." (Italics added.)
Thus, the plain language of this provision allows either party to make "[s]ubstantial capital improvements" without the consent of the other party if the capital improvement is "to the separate structure in which a party's assigned unit(s) is situated" or "to" the "exclusive use common areas" allocated to that party's unit. (Italics added.) Moreover, read in light of paragraph 3, it is apparent paragraph 18 does not authorize either party to embark on a capital improvement that is not confined to that party's separate structure or their allocated exclusive use common area.
It is undisputed, however, that defendants' application for an ADU made changes to the entire property, not just to the rear structure or to the exclusive use common area allocated to defendants. As the trial court recited in its statement of decision, "The ADU application changed the property's occupancy classification from R-3 to R-2, and consequently, the Department of Building Inspection . . . required compliance with the more stringent building code requirements for an R-2 property. So the parties (plaintiffs in particular) forfeited building code exceptions applicable to R-3."
The court cited in this regard to a letter from the city building inspection department (which was admitted into evidence without objection) that provided a "verification and formal interpretation of code requirements" pertaining to the property and stated, "The rear building currently has one legal unit. Application for an ADU in the rear building increases the rear building unit count to two units, for a total of three units on the parcel." (Boldface omitted & italics added.) The letter further explained that when defendants withdrew the ADU application and applied instead for an" 'independent living space,'" "the front building design regain[ed] accommodations for Group R-3 occupancy, including building code exceptions for window and door fire ratings." (Boldface omitted.) It additionally pointed out the "California Building Code provides numerous exceptions for two-dwelling (R-3) occupancy that are not afforded to three-dwelling (R-2) occupancy, including structural, seismic, fire-rating, plumbing, and other building codes."
Thus, the letter confirms that the ADU application increased the residential density of the property, effectuated a change to the occupancy classification of the property, and altered the building code requirements applicable to the property. In short, the application was not a capital improvement confined "to" defendants' "separate structure" or "to" their "exclusive use common areas." Rather, it made significant changes to and altered the legal status of the entire property and therefore is not embraced by the plain language of paragraph 18's capital improvement exception to the mutual consent requirement set forth in paragraph 3.
Other provisions of the ownership agreement reinforce the plain language of paragraph 18-namely, that it allows for capital improvements that are confined to a party's "separate structure" or "exclusive use common areas," and does not authorize either party to unilaterally submit an application to the city building inspection department that increases the housing density of the property, reclassifies the property's occupancy status from R-3 to R-2, and triggers the application of more rigorous building code requirements.
To begin with, the opening clause of the ownership agreement defines the property as "consisting of a rear structure containing a single residential dwelling unit and a front structure containing a single residential dwelling unit and a single commercial unit." (Italics added.) By submitting the application for an ADU, defendants effectively, and unilaterally, redefined the property. Specifically, the property no longer consisted of "a rear structure containing a single residential unit," but a rear structure containing two residential units. Plainly, changing the definition of the property was a "decision[] with respect to said property" that, pursuant to paragraph 3, required the "mutual accord of the two parties."
Paragraph 2 of the ownership agreement, in turn, provides, "Each party shall have the exclusive right to occupy as that party's principal or secondary residence, or lease pursuant to paragraph 16 below, the unit(s) located within [the property] described next to their names below." The unit described next to defendants' name is the "rear structure," which, as we have just discussed, is defined in the opening clause of the agreement as "containing a single residential dwelling unit." Thus, by submitting the application for an ADU, defendants effectively augmented their occupancy and leasing rights as spelled out in paragraph 2 of the agreement. Again, this was plainly a "decision[] with respect to said property" that, pursuant to paragraph 3, required the "mutual accord of the two parties." In fact, paragraph 3 provides "any reallocation of the exclusive rights defined [in this agreement], shall be only by unanimous written agreement, signed by all of the undersigned." Thus, augmenting defendants' exclusive right to reside in or lease out their "rear structure" not only required mutual consent of the parties, but written mutual consent.
Paragraph 11 of the agreement is also significant. It provides:
"Alteration of Building Exteriors. [Plaintiffs] may improve the front structure with a vertical addition at their sole election and expense, subject to governmental regulations and subject to [defendants'] approval of the design plans which approval shall not be unreasonably withheld; it shall be presumed reasonable for [defendants] to withhold consent to aesthetic components of the design that would lower the 'curb appeal' of the rear structure; it shall be presumed unreasonable for [defendants] to withhold consent to structural parameters of the design that comply with building and planning code. Any other material change in the appearance of the exterior of either building located at [the property], may be altered only with the agreement of both parties, which agreement shall not be unreasonably withheld, including but not limited to the following: (i) painting any portion of the property exteriors with a different color or shade from its previous color or shade, (ii) replacing any building, framing, siding, door, window, or roofing element with a material of a type, style or color different from its previous material, (iii) placing or attaching anything, including but not limited to awnings, canopies, window air conditioners, shutters,
antennas, or wiring to the exterior of the property, (iv) placing on a balcony, deck, patio, yard, garden or other exterior area any screen, cover, awning, hot tub, spa, or fence."
Thus, the first part of paragraph 11 both acknowledges the plaintiffs' anticipated renovation of their separate structure and provides for defendants' approval of the plaintiffs' design plans, but with the important caveat that defendants' approval will not be unreasonably withheld. The paragraph further provides it is presumptively unreasonable for defendants to withhold consent to design plans that comply with the building and planning code. It is undisputed that when defendants filed the application for an ADU, plaintiffs had met with planning department and building inspection department personnel and were having renovation and improvement plans prepared in accordance with the then applicable building code requirements. The filing of the application for an ADU, however, triggered different code requirements, requiring plaintiffs to have changes made to their plans. Thus, for all intents and purposes, by filing the application for an ADU defendants succeeded in "disapproving" plaintiffs' otherwise code-compliant plans. Clearly, that did not comport with the parties' stated intent.
The second part of paragraph 11 makes plain that, regardless of paragraph 18, the parties cannot, unilaterally, make any capital improvement they desire even to their respective "separate structure" or their respective "exclusive common use areas." To the contrary, paragraph 11 requires mutual agreement to any "material change in the appearance of the exterior of either building." Moreover, a "material change" is expansively defined as including, but not limited to, painting any part of the property exteriors a color, or even a shade, different from the previous color or shade, replacing any "building, framing, siding, door, window, or roofing element with a material of a type, style or color different from its previous material," "placing or attaching anything, including but not limited to awnings, canopies, window air conditioners, shutters, antennas, or wiring to the exterior of the property," or installing on or over any exterior area "any screen, cover, awning, hot tub, spa, or fence." Thus, not only is paragraph 18 limited to capital improvements that are confined to the parties' respective "separate structure" and to their respective "exclusive use common areas," but pursuant to paragraph 11, such capital improvements are further confined to improvements that make no material change to the exterior of the "separate structures" and exclude improvements that place or install noticeable features in the "exclusive use common areas."
In short, paragraph 11 dramatically reinforces that the parties' intent is to require mutual consent to any significant change to the property and particularly changes that might compromise the other party's beneficial use and enjoyment of their allocated portion of the property. Paragraph 11 therefore underscores the importance of paragraph 18's limiting language- that the parties can make capital improvements, unilaterally, if the improvement is confined to the party's "separate structure" or to the party's "exclusive use common areas."
Paragraph 41 provides that the ownership agreement "is not intended to create a partnership, joint venture or subdivision" and states "No party hereto . . . is authorized . . . to do any act which will be binding on any other party. . . ." (Italics added.) As discussed above, the ADU application increased the residential density of the property, changed the occupancy classification of the property from R-3 to R-2, and triggered additional building code requirements, requiring plaintiffs to alter their own plans for their designated part of the property. In other words, defendants' submission of the ADU application had binding legal ramifications on plaintiffs- contrary to the parties' plainly stated intent that no party can unilaterally take any such action.
Thus, when the language of paragraph 18 is considered in the context of the ownership agreement as a whole (see R.J. Reynolds, supra, 107 Cal.App.4th at p. 526), it is apparent the trial court's construction of the provision is squarely at odds with the parties' intent as to when they may act unilaterally, and when they must mutually agree, with respect to "decisions with respect to [the] property." Indeed, the court's construction effectively sanctions conduct by defendants that violates at least four other paragraphs of the agreement.
Our task is, when possible, to harmonize the provisions of a contract and give effect to every provision thereof. (R.J. Reynolds, supra, 107 Cal.App.4th at p. 526 ; see Ratcliff Architects v. Vanir Construction Management, Inc. (2001) 88 Cal.App.4th 595, 602 [" 'Courts must interpret contractual language in a manner which gives force and effect to every provision, and not in a way which renders some clauses nugatory, inoperative or meaningless.' "].) We must therefore refrain from interpreting one provision of a contract in a manner that frustrates the parties' rights under other provisions of the contract. (See R.W.L. Enterprises v. Oldcastle, Inc. (2017) 17 Cal.App.5th 1019, 1026 ["' "An interpretation which gives effect to all provisions of the contract is preferred to one which renders part of the writing superfluous, useless or inexplicable."' "]; Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 957 ["An interpretation rendering contract language nugatory or inoperative is disfavored."].) This objective is accomplished by reading paragraph 18 according to its plain terms and in light of the entirety of the agreement. And when so considered, the paragraph must be understood as allowing the parties to unilaterally make a capital improvement only if it is confined to the party's separate structure or to their exclusive use common spaces, and even then, only if it makes no material change to the exterior of either structure and does not place or install any significantly noticeable feature in the party's exclusive use common areas. Defendants' filing of the ADU application in an effort to resolve their own building code violations did not fall within these confines.
As we have recited, the trial court focused primarily on the meaning of "capital improvement," concluding an ADU is "patently a capital improvement" under any of several legal definitions of the term and reasoning that because "ADU's (and I suppose most any capital improvement) require permits and other paperwork from the City," defendants' unilateral application for an ADU must also come within paragraph 18's exception to paragraph 3's mutual agreement requirement. The court recognized that the ADU application increased the residential density of the property, changed the occupancy classification of the property from R-3 to R-2, and triggered additional building code requirements applicable to the property, but stated "any allowed capital improvement is likely, indeed very likely, to affect the property as a whole. For example, it might well increase (or decrease) the value of the whole property. Thus, if plaintiffs were right in their core contention, which is that actions affecting the property as a whole cannot be done without mutual agreement, [paragraph 18]'s carve out for capital improvements would be read out of the agreement."
In focusing solely on whether an ADU is a "capital improvement" and, in turn, whether an application for ADU is also a capital improvement, or part and parcel of a capital improvement, the trial court disregarded paragraph 18's qualifying language-that it allows the parties to unilaterally make capital improvements only to their respective "separate structure[s]" or respective "exclusive use common areas." It further disregarded other pertinent provisions of the ownership agreement evidencing that the parties' intent, even as to capital improvements to a party's "separate structure" or "exclusive use common areas," is that mutual agreement is required for any improvement or action that might compromise the other party's beneficial use and enjoyment of their allocated portion of the property. In short, changing the legal status and classification of the entire property by way of an ADU application is not any kind of unilateral capital improvement allowed by either the plain language of paragraph 18 or the contextual import of the entirety of the ownership agreement.
Furthermore, the trial court relied on two unsupported assumptions to conclude paragraph 18 would effectively be rendered inoperative if construed to require mutual consent for an application for a "capital improvement" that increases the residential density of the property, alters the occupancy classification of the property, and triggers the applicability of additional building codes. First, the court assumed "any allowed capital improvement is likely, indeed very likely, to affect the property as a whole," for example by increasing or decreasing the value of the property. However, there was no such evidence, and this assumption is sheer speculation. Secondly, the trial court lumped together any sort of what it called "permits and other paperwork." This assumption-that all permits and paperwork are of the same ilk-is unfounded. Some permits are, indeed, confined to the oversight and inspection of specific improvements in a specific locale, as were the permits plaintiffs were in the process of securing for improvements to their "separate structure." Such permits reasonably fall within the embrace of paragraph 18. But other kinds of "paperwork" associated with a construction project are not so confined and do much more than ensure the proper and safe installation of the improvement. Such was the case with the application for an ADU, which altered the legal status of the entire property. This is not "paperwork" that reasonably comes within the parameters of paragraph 18, and so concluding does not read paragraph 18 out of the agreement.
Indeed, we note the city has produced a 95-page handbook discussing the requirements for an ADU and the approval process for such. (San Francisco Planning Department, sf-ADU a guide for homeowners, designers, and contractors considering adding an Accessory Dwelling Unit to an existing residence in San Francisco (July 2015) <https://sfdbi.org/sites/default/files/2015_ADU_Handbook.pdf> [as of April 9, 2024].) While ADU approval, by statute, is "ministerial," it is also "conditional," and an applicant must comply with all ADU requirements imposed by local ordinance and/or state statute. (See generally id. at pp. 13- 29; 12 Witkin, Summary of Cal. Law (11th ed., 2023 supp.) Real Property, § 867, pp. 166-167.)
In sum, the ownership agreement did not authorize defendants to file an ADU application without plaintiffs' consent, and the trial court erred in so concluding.
In light of our disposition, we need not, and do not, address any of the parties' other arguments, including whether plaintiffs proved damages for loss of value of the property and increased costs of labor and materials caused by delay, which the trial court declined to award given its determination, which we have concluded is erroneous, that "there [was] no relevant breach of the contract."
DISPOSITION
The judgment is REVERSED with directions to the trial court to determine damages resulting from breach of the ownership agreement and to enter judgment in favor of plaintiffs in the amount it so determines. Plaintiffs to recover costs on appeal.
We concur: Langhorne Wilson, J. Castro, J. [*]
[*]Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.