Lushmeadows Ass'n Inc v. Taggs

Decision Date03 August 2010
Docket NumberF057815,9070,F056967,No. 9018,9018
CourtCalifornia Court of Appeals Court of Appeals
PartiesLUSHMEADOWS ASSOCIATION, INC., Plaintiff and Respondent, v. EUGENE TAGGS et al., Defendants and Appellants.

Jamison & Chappel, Gregory M. Chappel, and Nanette Beaumont for Defendants and Appellants.

Law Offices of Ann Rankin and Ann Rankin for Plaintiff and Respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

OPINION

Poochigian, J.

APPEAL from judgments of the Superior Court of Mariposa County. Terry K. Cole, Judge. (Retired judge of the Stanislaus Sup. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)

INTRODUCTION

Developer Decker Enterprises (Decker) created Lushmeadows Mountain Estates (LME) in four phases between 1962 and 1964. All LME lots were encumbered withrecorded covenants, conditions, and restrictions (CC&Rs). Those CC&Rs primarily consisted of use restrictions and architectural covenants and provided that the CC&Rs could be amended by a vote of the majority of the then-owners of the lots. The original CC&Rs did not create a homeowners association or establish assessments for maintenance of common areas.

In 1963, Decker incorporated the nonprofit Lushmeadows Association (LMA) and charged the corporation with acquiring, improving, and maintaining common areas of real property for park, playground, recreational, and club house purposes. In 1966, Decker deeded the common areas of LME, approximately 15 acres, to LMA. LMA membership was voluntary between 1963 and 1990 and the LMA had a right to levy assessments against owner-members but not LME property owners who were nonmembers.

Appellants purchased their LME lots before 1990 and were not members of LMA. In 1990, the LME owners amended the CC&Rs by a majority vote of lot owners. The amendments made LMA membership mandatory for persons acquiring LME lots after July 1, 1990. In 2003, the LME owners again amended the CC&Rs by majority vote and made LMA membership mandatory for all owners, regardless of the date of acquisition of their lots. The 2003 amendments also required all lot owners to pay annual assessments. Appellants unsuccessfully challenged the amended CC&Rs in superior court. They now appeal on a variety of grounds, essentially maintaining the LMA could not amend and expand the CC&Rs to provide for mandatory membership in LMA and to transform the LME subdivision into a common interest development under California law. We affirm.

STATEMENT OF THE CASE1

On November 29, 2006, respondent Lushmeadows Association, Inc. (LMA), a California nonprofit mutual benefit corporation, filed a complaint for declaratory relief (No. 9018) in Mariposa County Superior Court. LMA named appellant Eugene Taggs and 200 Does as defendants, alleged the defendants were obligated to pay assessments as property owners within the Lushmeadows Mountain Estates planned development (LME), and prayed for a judicial determination of the rights and duties of the parties, including a declaration as to the membership responsibilities of the appellants and the right of LMA to levy assessments.

On January 22, 2007, appellant Taggs filed an answer generally denying the material allegations of the complaint (Code Civ. Proc., § 431.30) and a cross-complaint for declaratory relief. The cross-complaint alleged LMA was not a legally valid homeowners' association for the underlying properties and had no right to create, enforce, or collect property assessments. On January 30, 2007, LMA filed an answer generally denying the material allegations of the cross-complaint and setting forth 11 affirmative defenses.

On March 20, 2007, appellants Cecilia Wray, Jeffrey Whalley, and Mary Whalley filed a verified complaint (No. 9070) against LMA for declaratory relief, slander of title, and cancellation of cloud on title. Wray and the Whalleys alleged they were property owners in LME and prayed for a declaration, among other things, that LMA was not a validly-created homeowners' association for their properties and had no authority to impose assessments.

On March 27, 2007, the court filed an order on stipulation to consolidate case Nos. 9018 and 9070, with all subsequent papers, orders, and judgments to be filed under the latter docket number.

On April 23, 2007, LMA filed an answer generally denying the material allegations of the Wray/Whalley complaint and a cross-complaint against Wray and the Whalleys for declaratory relief and monetary damages.

On June 27, 2008, counsel for appellants advised the superior court of the passing of Cecilia Wray and substituted "NORMAN WRAY as Successor Trustee of The Robert H. Wray and Cecilia K. Wray Trust Dated September 5, 1995" in her place and stead in the first amended complaint and in the answer to LMA's first amended cross-complaint.

On September 8, 2008, bench trial commenced.

On October 17, 2008, Judge Cole filed a written decision in favor of respondent. The court specifically: (1) issued a declaratory judgment that the amended CC&Rs of LME, recorded on December 10, 2003, constituted valid and binding equitable servitudes running in the chain of title and binding the subject real property; (2) held all LME property owners belong to LMA and are required to pay dues, assessments, and other legal obligations to the LMA; (3) held appellant Taggs owed $814.38 in delinquent assessments and late charges as of May 1, 2008; (4) held appellant Wray owed $532.50 in delinquent assessments and late charges as of May 1, 2008; and (5) held appellants Whalley owed delinquent assessments and late charges of $945.53 as of May 1, 2008.

On December 22, 2008, the court filed a statement of decision (Code Civ. Proc. § 632) and formal judgment.

On December 24, 2008, respondent LMA moved for attorney fees after judgment (Civ. Code, § 1354) and filed a memorandum of costs.

On January 9, 2009, appellants moved to strike or, in the alternative, tax respondent LMA's costs.

On January 27, 2009, appellants filed a timely notice of appeal from the judgment after court trial (Case No. F056967).2

On March 9, 2009, the court conducted a contested hearing on the motion to strike costs.

On March 11, 2009, the court filed an order awarding respondent LMA $85,000 in attorney fees and $4,821.92 in costs and directed that appellants were jointly and severally liable for these sums.

On May 11, 2009, appellants filed a timely notice of appeal from the March 11, 2009 order after judgment (case No. F057815).3

On September 23, 2009, this court granted appellants' motion and consolidated Case Nos. F056967 and F057815.

STATEMENT OF FACTS
Development of Lushmeadows Estates
1962-1964

In the early 1960s, Decker Enterprises, Inc. (Decker), a Nebraska corporation that operated as developer/subdivider of real property, created LME in four phases known as Units 1 through 4. LME consisted of 321 lots of Mariposa County land located in Sections 7, 17, 18, 19, and 20 of Township 5 South Range 20 East, M.D.B.B.&M.4 Aseach unit was completed, Decker established and recorded a declaration of CC&Rs for that unit. Each set of CC&Rs consisted primarily of use restrictions and architectural covenants.

The original CC&Rs provided that they would run with the land for a period of ten years from the date of adoption. The CC&Rs further provided they would "be automatically extended for successive periods of 10 years, unless by a vote of the majority of the then owners of said lots, it is agreed to change the said covenants and conditions in whole or in part." The original CC&Rs did not create a homeowners association or impose assessments to create an income stream for maintenance of common areas. The original CC&Rs further provided that individual owners were responsible for enforcing the CC&Rs.

1963

Decker incorporated LMA, a nonprofit corporation, to enforce the architectural covenants in the original CC&Rs and to "hold, maintain and improve real property for the use as a park, playground, recreational areas and club house."

1965-1966

Decker deeded to LMA the common areas of the subdivision, including two lakes (Mallard Lake and Dawn Lake), surrounding acreage, a clubhouse, a campground, and a playground. The deeds made these common areas available to the lot owners of LME for recreational purposes. The LMA articles of incorporation charged LMA with maintenance of the common areas.

The 1990 CC&Rs

In April 1990, the LMA Board of Directors advised LME property owners that the CC&Rs had become outmoded and needed to be changed "to reflect present day conditions and to protect your property values." The directors proposed, among other things, to (a) combine the lot definition provisions of the four separate sets of CC&Rs (b) make LMA membership mandatory for property owners who acquired title on or after July 1, 1990 and voluntary for those who acquired property prior to that date; and (c) allow a property owner or the Board of Directors to initiate enforcement action of CC&Rs.

On July 1, 1990, the LMA Board of Directors held a special meeting to review the results of balloting for the amended declaration of CC&Rs. The recording secretary reported there were 305 owners of the LME lots and parcels because some of the owners had title to more than one parcel. The directors received a total of 212 official signed ballots, 165 approvals and 47 disapprovals. The 165 "yes" votes represented 12 more than the majority needed to approve the amended CC&Rs and the board recorded the amended CC&Rs on July 2, 1990 (Document No. 904235, Mariposa County Official Records). According to an election talley sheet, appellant Taggs and the appellants Whalley voted to adopt the 1990 CC&Rs. The Board transmitted copies of the recorded CC&Rs to LME property owners. In a cover letter dated August 1, 1990, the Board called attention to Paragraph 4 "which in essence provides that if title to a given lot changes and is recorded July 2, 1990, or thereafter, the new owner is required to become a member of the ...

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