Jones Ranch Homeowners Association v. Degnan, A118584 (Cal. App. 11/25/2008), A118584

• Decision Date: 25 November 2008
• Docket Number: A118584,A119884
• Parties: JONES RANCH HOMEOWNERS ASSOCIATION, Plaintiff and Appellant, v. KEVIN F. DEGNAN, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

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JONES RANCH HOMEOWNERS ASSOCIATION, Plaintiff and Appellant, v. KEVIN F. DEGNAN, Defendant and Appellant.

A118584

A119884

Court of Appeals of California, First Appellate District, Division Four

November 25, 2008

Not to be Published

Appeal from the Contra Costa County, Super. Ct. No. C04-02341.

RUVOLO, P.J.

I. INTRODUCTION

Appellant Jones Ranch Homeowners Association (HOA) enacted amendments to its governing covenants, conditions and restrictions (CC&R's) that were designed to regulate large-scale social events sponsored by HOA members. In the HOA's action for declaratory relief to determine the enforceability of the amendments, the trial court (1) declared the existence of a justiciable controversy validating the pursuit of declaratory relief; (2) adjudged three of the four amendments valid and enforceable; (3) ruled that the amendment allowing a 500-fold increase in the amount of fines that could be levied against a homeowner was unreasonable and unenforceable; and (4) awarded the HOA 80 percent of its attorney fees.

Kevin F. Degnan (Dr. Degnan) does not attack the enforceability ruling. Rather, he persists in his assertion that the predicate justiciable controversy is lacking and claims he, not the HOA, is entitled to a fee award.¹ The HOA in turn appeals the fee award, assigning error to the trial court's reduction of its fee award for partial success.

We affirm the trial court's conclusions in all respects.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Circumstances Leading to Amendments of CC&R's

Jones Ranch is a common interest development consisting of approximately two dozen large high-end luxury homes in Alamo. The Jones Ranch HOA operates the development under governing CC&R's first adopted in 1987. Dr. Degnan owns the largest site sitting high on a hilltop and comprised of three parcels spanning 13 acres. Access to the property is by way of a long driveway which is gated at the bottom of the hill. In front of appellant's house is a large paved turnaround area that can accommodate at least 50 cars. The backyard is also very large, with a swimming pool and, as expressed by the trial court, "majestic views."²

Dr. Degnan selected this home for its privacy and seclusion. The nature of the home is designed for entertaining; Dr. Degnan enjoys entertaining and holding large-scale social events.

Two events in particular had repercussions within the Jones Ranch community. Dr. Degnan hosted a Halloween pajama party on October 31, 2003. A homeowner found an Evite invitation in the curb by Dr. Degnan's driveway the next morning that was titled, "DR DEGNANS HALLOWEEN PARTY."³ The invitation also included this language: "THIS IS A HALLOWEEN/PAJAMA PARTY, SEXY COSTUMES ARE ENCOURAGED FOR WOMEN. . . . Gentlemen will be expected to bring at least two ladies or you will not get in—NO EXCEPTIONS."

The next morning the street was littered with beer cans and bottles, a resident's brick mailbox had been damaged the night before and a resident complained that her driveway was blocked. The president of the HOA spoke with Dr. Degnan about these matters.

Dr. Degnan hosted another large social event on September 11, 2004, which he described as a pajama-themed costume party. Dr. Degnan testified he invited 15 to 20 couples and 15 to 20 friends, with a restriction that single male friends had to bring two girlfriends. Contra Costa County Deputy Sheriff Mack Cuttitta responded to three calls from Jones Ranch residents about the affair. According to Deputy Cuttitta, there were about 500 people at the event, "in various stages of dress and undress," with many of the women "just dressed in lingerie." To him, the scene "looked like it was getting ready to be a rock concert." The crowd was "very loud, very boisterous," cars were double parked, driveways were blocked and the numerous parked vehicles impeded the flow of traffic. Some guests on the street shouted obscenities at the private security guards. There were reports of littering, loud music and public drinking. At one point a helicopter landed in Dr. Degnan's yard with guests, and later flew off at 1:00 or 2:00 a.m.

In the aftermath of this event the HOA cited Dr. Degnan for violations of the then-existing CC&R's and proposed a third amendment to the CC&R's designed to regulate large-scale social events in Jones Ranch. The board noticed a hearing and special meeting for October 4 to address the alleged violations and the proposed amendment, which was included with the notice.

Adamont Georgeson, Dr. Degnan's attorney, wrote to the HOA on September 24, 2004, notifying the HOA that Dr. Degnan was not available on October 4 to attend the hearing. In the letter, Georgeson pointed out that "we believe that the proposed third amendment to the CC&R's is improper," developing numerous points to support this position. The letter also alluded to litigation over the proposed amendment, noting that "California courts frown on enforcing acts of an Association which have any of the significant defects apparent in the proposed amendment," that the "lack of a good `paper trail' of Association's notice and informal dispute resolution procedures is [sic] typically fatal to later enforcement proceedings," and that "[c]ourts give a tepid reception to relatively minor disputes among neighboring property owners." Georgeson reminded the HOA of Dr. Degnan's resolve to see that the "rights to continue to use his property as he has in the past will be preserved, and he has the resources necessary to resist the Association's improper efforts in a dispute not of his making. Dr. Degnan will bring all of his resources to bear in a lawful and diligent fashion."

In setting forth these matters, Mr. Georgeson also clarified that "Dr. Degnan purchased his property specifically because of its size, location, and physical characteristics, and with the intention to entertain often and lavishly. The restrictions proposed constitute an impairment of private property rights and an impermissible abridgment of other fundamental rights of assembly, expression, and association."

Georgeson attended the October 4 meeting on Dr. Degnan's behalf, reporting that it was "extremely emotionally charged." At that meeting, Georgeson offered no alternative to the proposed amendment, nor did he give the HOA any assurances that future parties would not be disruptive as in the past. On behalf of Dr. Degnan he denied that any violations of existing CC&R's had taken place, and reiterated Dr. Degnan's intention to "entertain frequently and lavishly."

Following up to that meeting, in a letter to Steven Weil, the HOA's attorney, Georgeson wrote to the HOA on October 8, 2004, requesting that action relating to the proposed third amendment be postponed until after October 31, "while we engage in an amicable resolution of current issues." The reason for the postponement was also requested because "Dr. Degnan will be having a Halloween party and will implement some of the suggestions made by the homeowners, along with those discussed with Lieutenant Terry of the Contra Costa Sheriff's office."

Georgeson again alluded to litigation barring an informal resolution of the matter: "In the event that the [HOA] adopts unreasonable CC&R amendments . . . and seeks to obtain attorneys' fees for their efforts against Dr. Degnan, this letter shall serve as notice to the [HOA] . . . that Dr. Degnan has sought an amicable resolution of all of the Homeowners' concerns prior to the [HOA] incurring any fees in enforcement proceedings. Having addressed and we believe resolved any legitimate concerns of his neighbors, we believe that Dr. Degnan would be successful in resisting the overreaching amendments to the CC&R's recently proposed, in which event we will seek recovery of attorneys fees incurred." And, as changes to the amendment were proposed, Georgeson reflected in another letter: "[T]he Association is inviting litigation of its over-reaching restrictions on Dr. Degnan's conduct."⁴

The third amendment contains four key provisions: (1) restricting a member or member's guest from parking more than 10 vehicles in the common area at any given time, without board permission; (2) prohibiting the use of helicopters and light aircraft in Jones Ranch except for emergencies; (3) requiring a member desiring to host a gathering attended at any one time by more than 100 persons to submit an application to the HOA board 45 days in advance the event;⁵ and (4) permitting the HOA to levy reimbursement assessments⁶ to be enforced by lien with power of sale, and increasing the upper limit on fines that can be levied against a member from $ 50 to $25,000. Ballots were sent to the HOA members and the necessary 75 percent approved the amendment. Dr. Degnan was the only member who voted against it.

Georgeson then advised the board by letter dated December 9, 2004, that Dr. Degnan "ha[d] just decided to hold an Open House party on December 31, 2004. He is uncertain how many guests will be attending." Weil, counsel for the HOA, contacted Georgeson on December 17, to discuss the planned event. Georgeson refused to say how many people would be attending the Open House, claiming that he did not know. He did not say he would ask Dr. Degnan how many would be attending.

On December 20, counsel for both sides wrote letters to the other, discussing a number of issues. Weil's letter included a reference to the possibility that the HOA would seek a temporary restraining order (TRO) to prevent the Open House from proceeding on December 31. Weil offered that the HOA would drop its plan to seek a TRO if Dr. Degnan signed a statement indicating that no more than 100 people would attend the party, and that he would otherwise comply with the new amendment conditions.

In his December 20th letter, Georgeson reiterated his continuing claim "that the [HOA] has acted improperly toward [Dr. Degnan] and that the CC&R's are not enforceable." Additionally, he indicated that the...