Fourth La Costa Condo. Owners v. Seith

• Decision Date: 04 January 2008
• Docket Number: No. D049276.,D049276.
• Citation: 159 Cal.App.4th 563,71 Cal.Rptr.3d 299
• Court: California Court of Appeals Court of Appeals
• Parties: FOURTH LA COSTA CONDOMINIUM OWNERS ASSOCIATION, Plaintiff and Respondent, v. Barbara SEITH, Objector and Appellant.

71 Cal.Rptr.3d 299

159 Cal.App.4th 563

FOURTH LA COSTA CONDOMINIUM OWNERS ASSOCIATION, Plaintiff and Respondent, v. Barbara SEITH, Objector and Appellant.

No. D049276.

Court of Appeal, Fourth District, Division 1.

January 4, 2008.

Alan H. Burson, Feist, Vetter, Kanuf & Loy, Oceanside, CA, for Objector and Appellant.

No appearance for Petitioner and Respondent.

McCONNELL, P.J.

Barbara Seith appeals an order the trial court entered that reduced the percentage of votes necessary to amend the Fourth La Costa Condominium Owners Association's (Owners Association) Declaration of Covenants, Conditions and Restrictions (CC & R's) (Civ.Code,¹ § 1356) and Bylaws (Corp. Code, § 7515). Seith challenges the order on the grounds the underlying vote was invalid because it was by mail ballot, the ballot was not secret, the Owners Association made an insufficient effort to permit all owners to vote, and there was insufficient evidence of lender acquiescence; the court exceeded its statutory authority and implied an improper standard; certain provisions of the amendment are unreasonable; and Civil Code section 1356 is unconstitutional as it impairs the obligation of contracts. We affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

The 48-unit Fourth La Costa condominium development was governed by CC & R's and Bylaws recorded in 1969. Both documents provided they may be amended only by an affirmative vote of not less than 75 percent of the owners.

In 2004 the Owners Association decided the CC & R's and Bylaws should be amended because some provisions were superseded by changes in the law, other provisions were ambiguous and had caused confusion, and provisions pertaining to developer rights and obligations no longer applied. In an August 29, 2005 letter to owners, the Owners Association asked for an affirmative vote on the First Restated CC & R's, which contain dozens of new provisions and the amendment of numerous original provisions, and on amended Bylaws. The letter notified owners of the 75 percent vote requirement, and of an October 1 informational meeting. It requested the return of ballots by October 7.

In a September 2005 newsletter, the Owners Association reminded owners to vote. Many owners did not return their ballots, and on October 11 the Owners Association sent a memorandum and another ballot to each owner who had not voted, and it extended the deadline for voting to October 21.

In February 2006 the Owners Association filed a petition in the superior court for an order under section 1356 to reduce the percentage of affirmative votes needed to amend the CC & R's. The petition stated 25 owners voted in favor of the amendment, 11 owners voted against it, and 12 owners did not return their ballots. The petition prayed that the First Restated CC & R's "be ordered approved based upon the number of affirmative votes actually cast constituting at least a majority of owners."

In July 2006 the Owners Association filed a supplemental petition under Corporations Code section 7515 to reduce the percentage of affirmative votes necessary to approve the Bylaws.

Seith owns and leases out two condominiums at Fourth La Costa. She filed a written objection to the petitions on various grounds, including that the proposed amendments imposed "onerous terms and burdens on the leasing of units."

In a tentative ruling, the court granted the petitions. After an August 16, 2006 hearing, the court took the matter under submission. On August 21 it confirmed its tentative ruling.

DISCUSSION²

I

Validity of Vote

A

"[S]ection 1356, part of the Davis-Stirling Common Interest Development Act [Davis-Stirling Act] ..., provides that a homeowners association, or any member, may petition the superior court for a reduction in the percentage of affirmative votes required to amend the CC & R's if they require approval by `owners having more than 50 percent of the votes in the association....' [Citation.] The court may, but need not, grant the petition if it finds all of the following: Notice was properly given; the balloting was properly conducted [in accordance with all applicable provisions of the governing documents]; reasonable efforts were made to permit eligible members to vote; `[o]wners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment'; and `[t]he amendment is reasonable.'" (Peak Investments v. South Peak Homeowners Assn., Inc. (2006) 140 Cal.App.4th 1363, 1366-1367, 44 Cal.Rptr.3d 892, fn. omitted.)

"Viewed objectively, the purpose of ... section 1356 is to give a property owners' association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association." (Blue Lagoon Community Assn. v. Mitchell (1997) 55 Cal.App.4th 472, 477, 64 Cal.Rptr.2d 81.)

Because section 1356 gives the trial court broad discretion in ruling on a petition (§ 1356, subd. (c)), we review its ruling for abuse of discretion. "Discretion is abused whenever, in its exercise, the court exceeds the bounds of reason, all of the circumstances before it being considered." (Denham v. Superior Court (1970) 2 Cal.3d 557, 566, 86 Cal.Rptr. 65, 468 P.2d 193.)

Seith contends the vote here was not "conducted in accordance with all applicable provisions of the governing documents," as required by section 1356, subdivision (c)(2), because it was by mail ballots. She concedes, however, that there is statutory authority for mail ballots. Corporations Code section 7513, subdivision (a) provides that "unless prohibited in the articles or bylaws, any action which may be taken at any regular or special meeting of members may be taken without a meeting if the corporation distributes a written ballot to every member entitled to vote on the matter."

Seith cites the Bylaws as stating they "may only be amended `at a regular or special meeting of members.'" The Bylaws, however, actually provide they "may be amended, at a regular or special meeting of the members."³ (Italics added.) Seith also cites the CC & R's requirement there must be an affirmative "vote" of at least 75 percent of owners. A vote, however, may be made at a meeting or by mail ballots.

Seith ultimately acknowledges the governing documents did not prohibit mail ballots. She asserts, however, that since the governing documents did not expressly authorize mail ballots, and the authority for their use was purely statutory, the vote was not in accordance with the governing documents and the Owners Association was thus precluded from obtaining relief from the supermajority vote requirement under section 1356.

The interpretation of statutes presents questions of law we review independently. (Board of Retirement v. Lewis (1990) 217 Cal.App.3d 956, 964, 266 Cal. Rptr. 225.) Seith cites no authority that supports her position, and we find it unpersuasive. The Legislature intends to allow mail ballots unless they are expressly prohibited by the governing documents, and their use would run afoul of section 1356, subdivision (c)(2) only if the governing documents prohibited their use.

Additionally, Seith cites Corporations Code section 7513, subdivision (b), which provides that "[a]pproval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot ... equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot."

Seith asserts Corporations Code section 7513, subdivision (b) and Civil Code section 1356 have "equal legislative dignity, and neither prevails over the other." She asserts section 1356 "permits the court to ignore supermajority requirements of the association's CC & R's, but it does [not] permit the court to ignore express provisions of other statutes. By granting the petition under [section] 1356 where the vote was only valid because of the provisions of [Corporations Code section 7513, subdivision (a) ], the court disregarded the express language of [Corporations Code section 7513, subdivision (b) j, which here mandates 75 [percent] owner approval." In other words, Seith again takes the position that when mail ballots are used an association may never petition under Civil Code section 1356 for relief from a supermajority vote requirement.

We disagree. As the court explained in its order, "the relief requested in the petition is exactly the type for which judicial intervention under Civil Code [section] 1356 is deemed proper as only 69 [percent] of the owners have responded despite the efforts of the [Owners] Association to increase participation." There is no suggestion the Legislature intended to limit the reach of section 1356 to votes taken at a regular or special meeting, and we see no reason for such a distinction. If an election is held at a meeting, the governing documents may be amended only if the percentage of affirmative votes required by the governing documents is cast, or the association obtains relief under section 1356. As there is no evidence of legislative intent to the contrary, the same rule should apply to votes by mail ballot.

B

Alternatively, Seith contends the vote violated section 1355, subdivision (b), under which an amendment to CC & R's is effective only after "the proposed amendment has been distributed to all of the owners of separate interests in the common interest development by first-class mail postage prepaid or personal delivery not less than 15 days and not more than 60 days prior to any approval being solicited." Seith complains that the Owners Association...