Palms & Sands Owners Ass'n, Inc. v. Bank of Am., N.A.
| Decision Date | 18 December 2015 |
| Docket Number | D068681 |
| Court | California Court of Appeals Court of Appeals |
| Parties | PALMS & SANDS OWNERS ASSOCIATION, INC. Plaintiff and Appellant, v. BANK OF AMERICA, N.A. et al., Defendants and Respondents. |
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
APPEAL from a judgment of the Superior Court of Riverside County, Thomas A. Peterson and David M. Chapman, Judges. Affirmed.
Catanzarite Law Corporation, Kenneth J. Catanzarite, Nicole M. Catanzarite-Woodward, and Brandon E. Woodward, for Plaintiff and Appellant.
Bryan Cave, Stuart W. Price, Andrea N. Winternitz and Sean David Muntz, for Defendants and Respondents.
Bank of America, N.A. and ReconTrust Company (Recon) (together, Respondents) successfully demurred to the first amended complaint of the Palms & Sands Owners Association, Inc. (the Association). On appeal, the Association contends the trial court erred by (1) sustaining the demurrer without leave to amend, (2) denying the Association's motion for leave to amend, (3) entering judgment in favor of Respondents while the motion for leave to amend was still pending, and (4) sustaining certain of Respondents' evidentiary objections. We reject these contentions and affirm.
"Palms & Sands" is a common interest development in Rancho Mirage, California. Sixteen of its 71 fee simple parcels are improved with residential duplexes (Residential Units); one parcel is improved with access roads, lawn area, a pool and pool house, and a laundry facility, all of which are used and shared by the owners in common.
The Association manages Palms & Sands under a Declaration of Covenants, Conditions, Restrictions and Easements (the Declaration) that governs each property owner within the development. The Declaration defines "owner(s)" as
The Association maintains the common area roads, parking lot, pool, yard, and buildings; pays property taxes on the common lots; provides trash pickup for the Residential Units; maintains insurance coverage for common area and Residential Unit building structures; and provides water service, general maintenance, and management services.
The Declaration authorizes the Association to require each owner to pay regular and special assessments "for improvement and maintenance of the Common Area(s), administration of the Property, and to promote the recreation, safety, and welfare for the common good of all the owners." Under this authority, the Association levied a regular monthly assessment to pay for the services described in the preceding paragraph. Under the Declaration, an owner's acceptance of a deed to a lot within the development constitutes the owner's agreement to pay the assessments, which are "the personal obligations of the owner . . . ."
If an owner fails to pay an assessment, the Declaration authorizes the Association to record a lien against that owner's lot. "In addition to all other legal rights and remedies," the Association may sue the owner to collect the unpaid assessments or foreclose on the lien.
In December 2002, Ron Bailey purchased Unit 8 at Palms & Sands. In February 2005, he borrowed $129,000 from Countrywide Home Loans, Inc. (Countrywide Loans). The loan was secured by a first deed of trust that named Recon as trustee. Countrywide Bank assigned its interests in the first deed of trust to CitiMortgage, Inc. (Citi) in 2005.
In July 2005, Bailey obtained a $51,000 home equity line of credit from Countrywide Bank, N.A. The line of credit was secured by a second deed of trust that also named Recon as Trustee. In 2013, Countrywide Bank assigned its interests in the second deed of trust to Bank of America.
As a result of these transactions, Citi holds the first deed of trust; Bank of America holds the second deed of trust; and Recon is trustee of both deeds of trust. Bank of America is the servicer of both loans.
At times not specified in any filed pleading, Bailey defaulted on his loans, stopped paying the Association's monthly assessments, and died. The Association initially opened an estate for Bailey, but his heirs had no interest in pursuing it because Unit 8 was then valued at less than $60,000 while its encumbrances exceeded $200,000.
In May 2012, the Association sued Bailey and other Residential Unit owners on a variety of legal theories to recover unpaid assessments. In December 2013, the Association amended its complaint to add Respondents as defendants on four causes of action: breach of oral and written contract, breach of implied contract, declaratory relief, and unjust enrichment. The Association alleged that notwithstanding Respondents' knowledge that Bailey (and his estate) had failed to pay Association assessments, Respondents "strategic[ally]" and "wrongful[ly]" delayed foreclosing on Unit 8 to allow market conditions to improve; in the meantime, Respondents enjoy the benefits the Association provides in maintaining and insuring Unit 8, yet avoid paying the monthly assessments Respondents would incur if they were to acquire title to Unit 8 by foreclosure.
Bank of America moved for judgment on the pleadings and Recon demurred. The trial court dismissed the Association's contract-based claims, but granted leave to amend as to the unjust enrichment and declaratory relief claims.
In April 2014, the Association filed a first amended complaint that, as relevant here, sought to recover Bailey's unpaid assessments on Unit 8 from Respondents under unjust enrichment and declaratory relief grounds.
Respondents demurred. While the demurrer was pending, the Association moved for leave to file a second amended complaint adding a cause of action against Respondents for violation of California's Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200).1 The Association supported its motion with a declaration from the Association's proposed banking industry expert, who opined Respondents' strategic delay in foreclosing on Unit 8 constituted an unfair business practice.
At the hearing on Respondents' demurrer, the trial court announced its tentative decision to sustain the demurrer without leave to amend. The court reasoned that although Respondents were entitled to foreclose, they were not obligated to do so and, thus, had not been unjustly enriched. The Association's counsel requested the trial court immediately consider its motion for leave to amend, which was scheduled to be heard a few weeks later. The court responded it had read the expert's declaration and thought amending to allege a UCL violation "might be, perhaps, a good way for the [Association]to go," but the court was not in a position to accelerate the hearing on the motion for leave to amend.2 The court adopted its tentative ruling as final on July 9, 2014.
On July 11, Respondents served a notice of ruling and attached a trial court order (1) sustaining the demurrer without leave to amend, (2) dismissing the claims against Respondents with prejudice, and (3) stating judgment shall be entered in Respondents' favor.
On July 15, the Association objected to the notice of ruling "in that it asserts [Respondents] were dismissed with prejudice" even though the Association's motion for leave to amend a new claim against them was still pending. On July 18, the Association filed a motion for reconsideration on the same basis. Respondents opposed the Association's various requests for relief and objected to the expert's declaration.
On July 28, the trial court entered a judgment dismissing Respondents with prejudice. The same day, the court continued the hearing on the Association's motion for leave to amend so it could be heard in conjunction with the motion for reconsideration.
On August 18, the trial court issued tentative rulings denying the Association's motions for leave to amend and for reconsideration. The trial court denied leave to amend on the basis the Association
The trial court explained it was denying the motion for reconsideration because the court lacked jurisdiction by virtue of having already entered a judgment dismissing Respondents, but further explained it would have denied the motion in any event for the same reasons it denied the motion for leave to amend.
The Association did not request oral argument and the court adopted its tentative ruling as final on August 19, 2014.
The Association contends the trial court erred by sustaining Respondents' demurrer to the unjust enrichment claim. The Association does not challenge the ruling as to the declaratory relief claim.
"In reviewing a judgment following the sustaining of a demurrer without leave to amend, we decide de novo whether the complaint states facts sufficient to state a cause of action." (Bower v. AT&T Mobility, LLC (2011) 196 Cal.App.4th 1545, 1552.) "We treat the demurrer as admitting all facts properly pleaded, but we do not assume the truth of contentions, deductions or conclusions of law." (Ibid.) We may also consider documentsattached to the complaint and matters subject to judicial notice.3 (Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400....
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