Diamond v. Superior Court of Santa Clara Cnty.

• Decision Date: 12 July 2013
• Docket Number: H038734
• Citation: 159 Cal.Rptr.3d 110,217 Cal.App.4th 1172
• Court: California Court of Appeals Court of Appeals
• Parties: Arlyne M. DIAMOND, Petitioner, v. The SUPERIOR COURT of Santa Clara County, Respondent; Casa Del Valle Homeowners Association, Real Party in Interest.

217 Cal.App.4th 1172

159 Cal.Rptr.3d 110

Arlyne M. DIAMOND, Petitioner,

v. The SUPERIOR COURT of Santa Clara County, Respondent;Casa Del Valle Homeowners Association, Real Party in Interest.

H038734

Court of Appeal, Sixth District, California.

Filed June 18, 2013

As Modified on Denial of Rehearing July 12, 2013

See 12 Witkin, Summary of Cal. Law (10th ed. 2005) Real Property, § 112.

(Santa Clara County Super. Ct. No. CV099053), Mark H. Pierce, Judge

Attorney for Petitioner, Arlyne M. Diamond: Law Offices of Louis Spitters, Laurence Louis Spitters, San Jose.

Attorneys for Real Parties in Interest, Casa Del Valle Homeowners Association: Edward F. Cullen, San Jose, Law Offices of Charles L. Morrone, Charles L. Morrone

Amicus Curiae on behalf of Petitioner, AARP: Barbara A. Jones

BAMATTRE–MANOUKIAN, J.

I. INTRODUCTION

Petitioner Arlyne M. Diamond owns a townhouse-style unit in the Casa Del Valle common interest development, which is managed by real party in interest Case Del Valle Homeowners Association (Association). After Diamond failed to pay a $9,750 special assessment by the due date, the Association's collection efforts included recording an assessment lien on her townhouse property and filing the instant action for judicial foreclosure. Diamond moved for summary judgment on the ground that the Association could not foreclose because the assessment lien was not valid, since the Association had not complied with the pre-lien and pre-foreclosure notice requirements set forth in the Davis–Stirling Common Interest Development Act (Davis–Sterling Act), Civil Code sections 1367.1 and 1367.4.¹ The trial court denied the summary judgment motion, finding that the Association had substantially complied with the statutory notice requirements.

On appeal, Diamond argues that a homeowners' association must strictly comply with the notice requirements of sections 1367.1 and 1367.4 in order to perfect an assessment lien and foreclose on a homeowner's property in a common interest development. For the reasons stated below, we agree. Since the Association's failure to strictly comply with all of the statutory notice requirements is undisputed, we will issue a peremptory writ of mandate directing the trial court to vacate its order denying Diamond's motion for summary judgment and enter a new order granting the motion.

II. FACTUAL BACKGROUND

Our factual summary is drawn from Diamond's separate statement of facts, the Association's response, and the evidence submitted by the parties in connection with Diamond's motion for summary judgment.

In 1978, Diamond purchased a unit in the Casa Del Valle common interest development, which is managed by the Association through its board of directors (Board). The Association's current governing documents are the 1998 Amended and Restated Covenants, Conditions and Restrictions (CC & Rs). The CC & Rs provide that the Board may levy a special assessment to raise funds for “unexpected operating or other costs ... or such other purposes as the Board in its discretion considers appropriate.” Where a levied assessment is delinquent, the CC & Rs also provide that the Association “may record a notice of delinquent Assessment and establish a lien against” the owner's lot, and may enforce the assessment lien by any manner permitted by law, including judicial foreclosure.

In 2006, the Board decided to replace all of the roofs in the development and engage in other repair projects. Since the Association's reserve funds were insufficient, the Board determined that a special assessment was needed to raise funds to pay for the roof replacement and the repair projects. In March 2007, a special assessment in the amount of $9,750 per unit was approved in a special election by a majority of the voting members of the Association.

Due to her financial situation, Diamond was unable to pay the special assessment by the May 2007 due date. She then attempted to negotiate a payment plan by contacting members of the Board. According to Diamond, her communications with the Board's president resulted in a payment plan agreement that was reached during their meeting on May 14, 2007. Diamond believed that payment plan agreement required her to execute a promissory note for $9,750 plus interest, make a down payment of $1,000, and make monthly payments of $100 until her financial situation improved and she could make larger monthly payments.

After Diamond made the $1,000 down payment and a couple of monthly payments, she received a June 19, 2007 pre-lien letter from the Association's attorney. The letter did not refer to the payment plan that Diamond believed she had negotiated with the Board president. Instead, the letter stated in part: (1) the total outstanding charges were $10,225; (2) the Association would “record a Notice of Assessment (lien claim)” against her “condominium unit” if her account was not brought current within 30 days; (3) she was entitled to inspect the Association's accounting books and records; (4) she could submit a written request to the Board to discuss a payment plan; (5) she had the right to dispute the assessment debt by submitting a written request for dispute resolution to the Association pursuant to the Association's “ ‘meet and confer’ program” or, alternatively, she could request alternative dispute resolution with a a neutral third party pursuant to section 1369.510; and (6) “IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOUR ARE [ sic] BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION.”

Diamond responded to the pre-lien letter by sending the Association's attorney a letter dated July 18, 2007, in which she stated that the Board president had agreed to a payment plan due to her hardship situation, she had complied with the payment plan, and she had offered to sign a promissory note “in lieu of a lien.” She also advised that she could not pay the special assessment without the payment plan.

On July 26, 2007, the Association recorded a notice of assessment against Diamond's townhouse property, which stated that the amount of the assessment lien was $12,010.23. The Association sent a copy of the recorded notice of assessment to Diamond 28 days later as an enclosure in the August 22, 2007 letter mailed to her by the Association's attorney. The August 22, 2007 letter also informed Diamond that the Board had approved a 12–month payment plan that consisted of a monthly payment of $989.17 and maintenance of the assessment lien on her property until her account was paid in full.

Diamond met with the Association's attorney on September 10, 2007, regarding her proposal for a payment plan. As indicated in the September 13, 2007 letter to Diamond, the Association's attorney requested that Diamond supply documentation regarding her financial condition and corroboration of her claim that she had previously reached a payment plan agreement with the Board president. Thereafter, the Board offered Diamond a different payment plan, as stated in the October 18, 2007 letter from the Association's attorney. Although the copy of the October 18, 2007 letter included in the record is incomplete, it appears that the Board accepted Diamond's prior down payment of $1,000, her prior monthly payments of $100 for five months in 2007, and agreed to accept monthly payments of $250 for the two months remaining in 2007. The balance of the proposed payment plan is not reflected in the record.

Now represented, Diamond sent an October 23, 2007 letter to the Association's attorney requesting that the parties meet and confer and stating that if the matter could not be resolved, she requested alternative dispute resolution, specifically mediation, as provided in section 1367.1, subd. (c)(1)(B). The Association rejected Diamond's request to meet and confer and also rejected her request for alternative dispute resolution, stating in its letter of November 21, 2007, that “the [Association] has already met and conferred with Dr. Diamond on September 10, 2007. Dr. Diamond is entitled to either meet and confer with the [Association] or engage in Alternative Dispute Resolution, but not both.” The November 21, 2007 letter also returned three $100 checks that Diamond had sent to the Association.

The Board met in executive session on November 7, 2007, to vote on whether to initiate foreclosure proceedings on Diamond's property. Foreclosure proceedings were approved by a majority vote, as stated in the minutes of the executive session.

III. PROCEDURAL BACKGROUND

A. The Complaint

On November 15, 2007, the Association filed a complaint against Diamond seeking judicial foreclosure on her Casa Del Valle property and application of the sales proceeds to pay a judgment in the amount of $10,064.88 plus costs, interest, and attorney's fees. The Association personally served the summons, complaint, and notice of Board action (decision to initiate foreclosure proceedings) on Diamond on December 9, 2007.

B. The Motion for Summary Judgment

Diamond subsequently filed a motion for summary judgment, combined with a “motion to expunge lien,” in April 2012. She generally argued that it was undisputed that the Association had failed to comply with all of the notice requirements set forth in sections 1367.1 and 1367.4 that a homeowners association must meet in order to perfect an assessment lien and foreclose on a homeowner's property, and absent compliance with the statutory notice requirements, the Association's foreclosure action lacked merit as a matter of law.

Specifically, Diamond asserted that the Association had (1) failed to send her a copy of the recorded notice of delinquent assessment by certified mail within 10 days of the recording (§ 1367.1, subd. (d)); (2) failed give her a pre-foreclosure notice of her right to demand alternative dispute resolution (§§ 1367.1, subd. (c)(1)(B), 1367.4, subd. (c)(1)); (3) failed to record the Board's executive session vote to initiate foreclosure...