Committee v. Beverly Highlands Homes Assn.

• Decision Date: 19 October 2001
• Docket Number: No. B143539.,B143539.
• Citation: 92 Cal.App.4th 1247,112 Cal.Rptr.2d 732
• Court: California Court of Appeals Court of Appeals
• Parties: The COMMITTEE TO SAVE THE BEVERLY HIGHLANDS HOMES ASSOCIATION et al., Plaintiffs and Respondents, v. The BEVERLY HIGHLANDS HOMES ASSOCIATION et al., Defendants and Appellants.

112 Cal.Rptr.2d 732

92 Cal.App.4th 1247

The COMMITTEE TO SAVE THE BEVERLY HIGHLANDS HOMES ASSOCIATION et al., Plaintiffs and Respondents, v. The BEVERLY HIGHLANDS HOMES ASSOCIATION et al., Defendants and Appellants.

No. B143539.

Court of Appeal, Second District, Division 1.

October 19, 2001.

Review Denied January 29, 2002.

Wilion, Kirkwood & Kessler and Allan E. Wilion, Beverly Hills, for Defendants and Appellants Dmitri Villard, Walter DeCaen, Lee Bronson and Margie Oswald.

Chapin, Shea, McNitt & Carter and Neil Gunny, for Defendant and Appellant The Beverly Highlands Homes Association.

Corin L. Kahn and Linda Thornton, Sherman Oaks, for Plaintiffs and Respondents.

SPENCER, P.J.

INTRODUCTION

Defendants The Beverly Highlands Homes Association, Dmitri Villard,¹ Walter DeCaen, Lee Bronson and Margie Oswald appeal from a summary judgment in favor of plaintiffs The Committee to Save the Beverly Highlands Homes Association, Sidney Smilove and Arlene Cohen. We reverse the summary judgment.

STATEMENT OF FACTS

Defendant The Beverly Highlands Homes Association (Association) is a nonprofit mutual benefit corporation. It was formed in 1952. Its members are the owners of buildable lots in the Beverly Highlands, which is located in an area of Los Angeles north of Sunset Boulevard near West Hollywood. The Association itself does not own any of the lots in the Beverly Highlands.

A description of the property included within the Beverly Highlands, a statement as to the powers of the Association, and restrictions as to use of the property within the Beverly Highlands are set forth in the Beverly Highlands Declaration of Restrictions (Declaration). This document was recorded on June 27, 1952 by Title Insurance and Trust Company.

Four of the lots in the Beverly Highlands are called open area non-buildable lots. Owners of these lots are not members of the Association. The Declaration states that Lots 65 and 66 are "restricted for use only as open areas for planting purposes, and no building or other structure shall at any time be erected on said lots ..., nor shall any driveway or street be constructed or maintained over or through said lots ..., without the written approval of the Association, but such restriction shall not be deemed or construed as a present dedication of said lots to the public or to the owners of building sites in said property for park or other purposes. The planting, care and maintenance of said lots shall be the duty of the Association, unless and until said lots shall be dedicated to the public as park areas for planting purposes...." (Art. X, § 10.04.) The Declaration also states that Lots 53 and 62 are "restricted for use only as open areas for natural growth and vegetation, areas for planting purposes and areas within which the Association may, by its written authorization, permit the location of television antennas to serve any or all of the building sites...." Again, no structure, roadway or sidewalk may be constructed on the lots. The Association is responsible for any planting and maintenance of these lots until such time as they may be dedicated to the public for park use. (Art X, § 10.05.) While Lot 53 is large enough to build upon, Lots 62, 65 and 66 are not.²

The Association is governed by a Board of Directors (Board) pursuant to its bylaws. Directors are to "be elected annually by written ballot, which shall be sent for this purpose to each member." The ballots are to be sent back to the Association prior to its annual meeting, then counted and tabulated at the annual meeting. The five persons receiving the highest number of votes are elected to the Board. (Art. IV, § 1.)

The annual meeting is to be held on the first Monday in March. (Art. X, § 2.) "The presence in person or by proxy of members entitled to exercise a majority of the voting power of [the Association] at any meeting shall constitute a quorum for the transaction of business." (Art. X, § 6.)

The Association was suspended as a corporation on April 2, 1972. It was revived on April 19, 1989. Plaintiff Arlene Cohen (Cohen) signed the revivor.

The first annual meeting of the Association following revival of the Association was in March 1990. Whether or not there was a quorum for election purposes present at this meeting and annual meetings through 1996 is disputed. In 1996, however, the members of the Board were Cohen, plaintiff Sidney Smilove (Smilove), Ann Dan, Dan Fast and a fifth person.³

On July 10, 1996, the Board sent a letter to each member of the Association. The letter advised the members that the Association did not have a general liability insurance policy because there was "no property held in common," or common area. In August, the Board discussed purchasing Lot 66, one of the open area non-buildable lots, in order for the Association to fall within the purview of the Davis-Stirling Common Interest Development Act (Davis-Stirling Act, Civ.Code, § 1350 et seq.). At the September 9 Board meeting, the Board decided not to purchase Lot 66.

In September 1996, the Board sent a letter to Association members in response to a flier criticizing the Association. The letter discussed, in part, what the consequences to the members would be if the Association were to be dissolved.

In February 1997, the Board sent a letter to Association members regarding amendment of the Declaration to ensure preservation of the views from the members' properties. The Board expressed the opinion that in order to be able to amend the Declaration at that time, the Association would have to own real property within the Beverly Highlands. The Board enclosed a ballot asking members whether they "supported] going forward with purchase by the Association of real property making the Beverly Highlands Homes Association subject to the provisions of the Davis-Stirling Act, in order to amend the [Declaration] at this time." The response to the letter was 16 yes votes and 40 no votes.

An annual meeting of the Association was held on March 31, 1997. There were 117 votes for the Board at this meeting. It is undisputed that this constituted a quorum. Elected to the Board at this time were defendant Dmitri Villard (Villard), defendant Walter DeCaen (DeCaen), Neil Lidbom (Lidbom), John Lamb and Richard Wells.

At meetings held on September 8 and November 25, 1997, the Board decided to send out a letter regarding the possible dissolution of the Association. On December 1, the Board sent a letter and a ballot asking Association members to vote on dissolution. Because the question of dissolution was hotly debated, the Board undertook to notify every member regarding the matter and to encourage all members to vote.

The votes were counted on January 15, 1998. There were 129 votes out of 205 eligible voters. Of those 129, 94 voted in favor of dissolving the Association and 35 voted against dissolution. The Board then voted unanimously to approve dissolution of the Association. On February 21, the Board sent a letter to Association members notifying them of the results of the vote and that the Board had retained a law firm to advise it on dissolution.

At some point, John Lamb and Richard Wells resigned from the Board. On May 2, 1998, defendants Lee Bronson (Bronson) and Margie Oswald (Oswald) were appointed by the remainder of the Board to replace them. The Board sent a notice to Association members apprising them of this as well as possible problems with dissolution of the Association and encouraging them to attend the annual meeting scheduled for June 2.

While an attempt at an annual meeting and an election was made on June 2, 1998, a quorum was not present. It was proposed that another attempt at an election be made in the fall. No election took place in the fall or thereafter, however.

On March 31, 1999, the Board approved a resolution to take all steps necessary to dissolve the Association. A Certificate of Election to Wind Up and Dissolve the Association was executed. On April 1, the Board approved a Notice of Commencement of Proceedings to Voluntarily Wind Up and Dissolve. On April 28, this was sent to Association members along with a financial statement and accountant's compilation report dated February 28. The Certificate of Election was filed with the Secretary of State on May 5. On July 13, the California Department of Justice Auditing Department notified the Association that it was free to proceed without waiver of objections from the State pursuant to Corporations Code section 8716, subdivision (c). In order to dissolve the Association funds held by the Association had to be returned to the members.

Plaintiffs' attorney, Corin L. Kahn, sent a letter to DeCaen, as Secretary of the Association, on June 8, 1999. He stated that he had been retained by a significant number of Association members who were concerned about the efforts to dissolve the Association. Attorney Kahn requested copies of the minutes of the Board meetings for the period of March 1, 1997 through June 1999. The Board did not supply Attorney Kahn with copies of the minutes in response to this request.

PROCEDURAL BACKGROUND

On July 23, 1999, plaintiffs Committee to Save the Beverly Highlands Homes Association (Committee), Smilove and Cohen filed a first amended complaint against the Association, the Board, and Board members Villard DeCaen, Bronson, Oswald and Lidbom.⁴ In five causes of action, plaintiffs sought (1) to enjoin wrongful dissolution of a nonprofit corporation, (2) removal of the Board, (3) an order permitting inspection of the minutes of the Board meetings, (4) an order that an annual meeting of the Association and an election be held, and (5) declaratory relief. Plaintiffs also sought injunctive relief during the pendency of the litigation. Defendant Association filed a declaration by Villard in opposition to an application for temporary restraining order and preliminary injunction. The record does not show what the trial court ruled with respect to the ...