Ritter & Ritter, Inc. Pension & Profit Plan v. The Churchill Condominium Assn.

• Citation: 166 Cal.App.4th 103,82 Cal. Rptr. 3d 389
• Decision Date: 22 July 2008
• Docket Number: No. B187840.,B187840.
• Court: California Court of Appeals
• Parties: RITTER & RITTER, INC. PENSION AND PROFIT PLAN, et al., Plaintiffs and Respondents, v. THE CHURCHILL CONDOMINIUM ASSOCIATION, et al., Defendants and Appellants.

166 Cal.App.4th 103

82 Cal. Rptr. 3d 389

RITTER & RITTER, INC. PENSION AND PROFIT PLAN, et al., Plaintiffs and Respondents, v. THE CHURCHILL CONDOMINIUM ASSOCIATION, et al., Defendants and Appellants.

No. B187840.

Court of Appeals of California, Second District, Division Eight.

July 22, 2008.

[166 Cal.App.4th 108]

Hillel Chodos, Michael A. Chodos and Rehema Rhodes for Defendants and Appellants.

Minton Ritter; Feldsott & Lee, Stanley Feldsott and Martin L. Lee for Plaintiffs and Respondents.

OPINION

COOPER, P. J.

INTRODUCTORY INFORMATION

BACKGROUND INFORMATION

The Parties

The Churchill is a 110-unit, 13-story condominium building in the "Wilshire Corridor" in the Westwood area of Los Angeles, California. Defendant and appellant (The Churchill) is a California nonprofit mutual benefit corporation. The individual defendant and appellant directors of The Churchill are Tibor Breier, Martha Brown, Theodore Nittler (referred to as Edwin Nittler in some court records), Ruth Hochberg and Basil Anderman (the Board).¹ Each of the individual directors is also an owner in the building and receives no compensation for services as a director. Minton and Roberta Ritter are brother and sister. The Ritter & Ritter, Inc. Pension and Profit Plan, and Ritter and Ritter Family Investment Trust, purchased adjoining units (3H in 1995 and 3J in 1998) in The Churchill. Roberta Ritter is the trustee of both trust entities and a plaintiff in this litigation.²

The Churchill Condominium

The Churchill was built in 1960 with construction completion in 1962. Built originally as an apartment complex, it was converted into a condominium association in 1976, at which time its declaration of establishment of covenants, etc. (hereinafter CC&R's) was recorded. The CC&R's were followed with house rules documents. Together these documents form the governing documents for the organization.

The Churchill is constructed of a series of horizontal concrete slabs attached to and supported by a rectangular structure of steel girders and beams. The ceiling of each unit is actually a "drop ceiling" below the next concrete slab. Above the "drop ceiling" and between it and the concrete slab above is an area referred to as the "plenum."

The various pipes, conduits and ducts needed to serve each unit run up and down central shafts in the building, then branch out sideways through this "plenum" area, and then go up into each unit through slab penetrations (i.e., holes) made in the concrete slab during the building's original construction.

The slab penetrations are holes in the concrete that range in size from six inches in diameter to 12-by-12-inch holes. These "slab penetrations" were created at the time of the initial construction of the building. The purpose of the slab penetrations was to allow space for passage by the vertical plumbing and piping which runs throughout the structure. The original architectural construction plans and the city permit requirement at the time called for these slab penetrations to be "fire proofed." However, this did not occur and The Churchill's original construction (including these slab penetrations) passed all applicable building inspections and The Churchill duly received its certificate of occupancy in 1962. The Churchill has never received any order to change or upgrade these slab penetrations. Existing Los Angeles building codes allow unfilled floor penetrations to remain as an existing, nonconforming condition.

The dispute in this case arose over the existence of these slab penetrations and the duty, if any, of The Churchill to repair the condition that the penetrations were not properly finished during the initial construction of the building.

STATEMENT OF THE CASE

In 1998, the Ritters complained to appellants about smoke odors in unit 3H, a unit which the Ritters never remodeled. In 1999, the Ritters purchased a second unit, 3J, and discovered that this unit had similar odor problems. After bringing this issue to the attention of The Churchill both before and after unit 3J was remodeled, the manager, Bill Brick, told the Ritters that the odor problems originated in their air-conditioning unit and that their air-conditioning unit had to be replaced. The Ritters replaced the air-conditioning unit, but the new unit provided no relief from the odors. The Churchill's management responded to the Ritters' continued complaints by stating that there was no more that could be done and that no other homeowners complained of similar problems.³

In late 2003, a new tenant in the Ritters' unit 3J complained about cigarette odors in the unit. The Ritters demanded that The Churchill identify the source of the odors and abate it. This demand triggered a series of investigations by the parties and the Board decision which is the subject of this lawsuit. Extensive investigation and communication between the parties ensued.

The Ritters hired their own expert engineer who conducted his own investigation. He reported that the source of the odors was the slab penetrations and offered his opinion that these holes constituted a fire hazard and should be filled or fire-stopped.

The Board hired a professional engineer and a ventilation system expert to investigate the source of the problem. Their expert reported that the problem was caused, in part, by the slab penetrations in the Ritters' unit 3J's floor. According to the expert, these holes allowed odors to travel between the 2J unit below, and the Ritters' unit 3J. The Churchill's engineer also indicated slab penetrations posed a significant fire safety risk.⁴

After receiving its expert's report and conducting its investigation and communication with the Ritters, the Board concluded based on the 1999 building code the Ritters should have filled any floor penetrations exposed during their remodel, and that doing so now would abate the odor problem. The Board believed that the Ritters were responsible for making the holes in the slabs and therefore they were also responsible for fixing them and would be expected to enter the 2J unit below, pay for the homeowner to stay in a hotel during the repairs and make all necessary repairs within 30 days.

The Ritters demanded a hearing before the Board. They also demanded that Board and the association do the work to fill the slab penetrations adjacent to their own unit and additionally repair all penetrations throughout the entire building.

The Board agreed to the Ritters' request and on March 9, 2004, held a formal adjudicative hearing of the Ritters' protest and demands. At the hearing, the Ritters were represented by counsel and submitted evidence and witness testimony. After considering all such materials as well as the report of their own expert and the advice of their counsel, the Board concluded (1) that the Ritters' remodel in 1999 "triggered" the obligation to fill the floor penetrations adjacent to their units, which obligation came to light only when their tenant complained of odors in 2003; (2) The Churchill did not have a legal obligation to fill such holes because they were "existing, nonconforming" conditions; (3) The Churchill would not at this time choose to undertake the expense of making the corrections; and (4) the Ritters were required by law and by the CC&R's to fill the penetrations adjacent to their own units and would be ordered to do so.⁵

The Board also imposed daily fines of $200 per day on the Ritters for failure to fill the holes adjacent to their own units, but expressly indicated that all such fines would be waived if the Ritters filled the holes within 30 days after the order. The Churchill's Board notified the Ritters of their decision in writing. It attached a bid from a contractor offering to complete the work adjacent to their units for approximately $2,700 per unit. The Ritters declined the Board's offer.

The Current Litigation

On May 17, 2004, the Ritters sued The Churchill and each of its then directors individually. The Ritters' first amended complaint set forth causes of action for nuisance, negligence, breach of fiduciary duty, breach of the CC&R's, breach of the covenant of good faith and fair dealing, permanent injunctions and declaratory relief. They sought financial damages due to odor intrusion into their unit. They also sought an injunction requiring The Churchill to fill all slab penetrations throughout the building, at association expense. They sought damages of at least $200,000 for diminution in value to their units as a result of the unfilled slab penetrations.

The Churchill cross-complained to require the Ritters to fill the penetrations adjacent to their units and for recovery of the $200 daily fines imposed for their failure to do so. By the time of trial, these daily fines had amounted to $77,000.

The matter went to trial on May 2, 2005, and concluded on May 19, 2005.⁶ The legal causes of action were presented to a jury and the equitable causes of action were presented to the trial judge. The legal causes of action presented to the jury included claims that The Churchill has breached the CC&R's, acted negligently and breached their fiduciary duty against the Ritters. General verdicts and special interrogatories were submitted to the jury. The jury was instructed and began their deliberations. The jury returned their verdict on May 20, 2005.

The jury returned a general verdict that stated:

"On the Ritter plaintiffs' claim for breach of the CC&Rs

"We find in favor of the Ritter plaintiffs and against The Churchill defendants ...

"On the Ritter plaintiffs' claim for breach of fiduciary duty

"We find in favor of the Ritter plaintiffs and against The Churchill defendants ...

"On the Ritter plaintiffs' claim for negligence

"We find in favor of the Ritter plaintiffs and against The Churchill defendants.

"On The Churchill Cross-Complaint...

"We find in favor of cross-defendants the Ritters and against cross-complainant The Churchill."

Special interrogatories were...