Park Wellington Owners' Ass'n v. Edwards

• Decision Date: 25 October 2012
• Docket Number: B235623
• Court: California Court of Appeals Court of Appeals
• Parties: PARK WELLINGTON OWNERS' ASSOCIATION et al., Plaintiffs and Appellants, v. WILLIAM T. EDWARDS et al., Defendants and Respondents.

PARK WELLINGTON OWNERS' ASSOCIATION et al., Plaintiffs and Appellants, v. WILLIAM T. EDWARDS et al., Defendants and Respondents.

B235623

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FOUR

Dated: October 25, 2012

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC455632)

APPEAL from a judgment of the Superior Court of Los Angeles County, William F. Fahey, Judge. Affirmed in part, reversed in part, and remanded.

K&L Gates, Cyrus Naim and Ronald W. Stevens for Plaintiffs and Appellants.

Law Offices of Roderick J. Lindblom, Roderick J. Lindblom and Caroline G. Rath for Defendants and Respondents.

This appeal stems from defamation claims brought by the Park Wellington Owners' Association (PWOA or Association) and three members of its Board of Directors, Sue Banas, Melissa Kent, and Jenny Worman (collectively appellants), against one of the homeowners, William T. Edwards, his tenant and employee, Lolly Howe (collectively respondents), and numerous Does. The superior court granted respondents' special motions to strike under Code of Civil Procedure section 425.16 and awarded costs and attorney fees.¹

"An anti-SLAPP-suit motion is not a vehicle for testing the strength of a plaintiff's case, or the ability of a plaintiff, so early in the proceedings, to produce evidence supporting each theory of damages asserted in connection with the plaintiff's claims. It is a vehicle for determining whether a plaintiff, through a showing of minimal merit, has stated and substantiated a legally sufficient claim. [Citations.]" (Wilbanks v. Wolk (2004) 121 Cal.App.4th 883, 906 (Wilbanks).) We conclude that appellants have made a sufficient showing of a legally sufficient claim as to Edwards and so reverse the order granting Edwards' motion. However, as to Howe, we conclude that appellants have not made a sufficient showing and so affirm the order granting her motion. On remand, the trial court is to reevaluate the award of costs and attorney fees and determine the portion attributable to work performed on behalf of Howe.

FACTUAL AND PROCEDURAL BACKGROUND

PWOA is the homeowners' association for a residential community of 163 condominium units in Los Angeles, known as Park Wellington. The PWOA isgoverned by bylaws and a Declaration of Covenants, Conditions and Restrictions (CC&Rs). Every condominium owner is a member of the PWOA, which is governed by a five-person Board of Directors. In the time period relevant here, Banas was Treasurer, Kent was President, and Worman was Secretary of the Board of Directors. Worman was elected to the Board in January 2008. Kent was appointed to the Board on May 11, 2007, by then-President Shanel Stasz, and Kent was elected President in January 2008. Banas was elected to the Board in March 2008 by the other Board members.

Edwards is the owner of a unit at Park Wellington. He served on the Board from 1988 to 1994. Howe and her 14-year-old son are tenants in Edwards' unit, and Howe works as the office manager for Edwards' business. Edwards is not computer literate, so Howe types his correspondence, email, and comments for the "Park Wellington Grievance Line" blog, which is the source of most of the allegedly defamatory statements at issue. Edwards stated in his declaration that he did not create the blog, and that he instructed Howe to sign his comments on the blog with his full name. Howe did not edit Edwards' statements or comments on the blog.

The statements at issue in this case arose from several different incidents concerning Park Wellington. We describe the background of each incident below.

I. Lawsuit against Shanel Stasz

Unit 129 at Park Wellington, which was originally used as housing for the on-site manager, was rented by PWOA to tenants until September 1, 2007. In September 2007, Stasz told Kent that she planned to move into Unit 129 as compensation for serving as the Association's legal consultant. Stasz was the acting President of the Board at the time. According to Kent's declaration, Staszunilaterally decided that the Board would give her the unit as payment for being a legal consultant to the PWOA, even though the PWOA bylaws prevented Board members from being compensated for their service. Kent knew that Stasz was in bankruptcy proceedings, so she asked Stasz about it, and Stasz told her she would have no place to live in October as a result of her bankruptcy.

Kent thought that Stasz's plan to take Unit 129 was not legal or authorized, so she spoke with another Board member, Mr. Meimandi, about it. Mr. Meimandi told her he did not want to get involved and thereafter refused to speak with her or return her calls. Kent began to feel ostracized by Stasz, Meimandi, and the on-site property manager, Gregg Landis. On September 16, 2007, Kent received a letter "purporting to be from the Association," stating that she was removed from the Board.

While Kent was on the Board, she learned of other problematic financial and administrative practices under Stasz's leadership, such as questionable charges on PWOA's credit card and payment of the credit card charges from PWOA's reserve account. For example, she learned that Stasz had charged more than $120,000 in Landis' personal living expenses on the Association credit card and used funds from the Association's reserve account to pay the charges. She also learned that Stasz had "relieved herself of the obligation to pay thousands of dollars of monthly PWOA dues." In addition, Ross Morgan & Company, PWOA's property management company which was responsible for the Association's financial and administrative management, was prevented from acting as the independent election examiner and from obtaining copies of the credit card statements.

Because Kent was concerned about PWOA's finances, she hired the law firm of K&L Gates to represent the Association. In her capacity as a Board member and as Vice President of the Board, on October 15, 2007, Kent filed acomplaint to remove Stasz from the Board, to prevent her from obtaining title to Unit 129, to prevent her from destroying PWOA records, for misappropriating funds, and for an accounting and restitution.

During the lawsuit, "a number of PWOA owners/members signed a petition to hold a recall election for the purpose of recalling Stasz as a director and officer of the PWOA." Edwards did not sign the petition. When the Association members were informed of the lawsuit, Edwards stated that he favored paying Stasz at least $10,000 to induce her to enter into an agreement to resign her positions.

In August 2009, judgment was entered against Stasz and in favor of the Association for $103,068.74 plus costs, and a preliminary injunction was issued, preventing Stasz from serving on the Board and ordering the election of a new Board. The superior court found that Stasz had used the Association's credit card for her personal living expenses, in the amount of $89,325.00, and paid for the charges out of the Association's reserve account. The court further found that Stasz was not entitled to be on the Board of Directors or to serve as President of the Board because she was not the owner of a condominium in Park Wellington. The court also found that Stasz had arranged to have six checks issued, totaling $13,473.74, from the Association's operating account to pay charges on a credit card issued to Landis, but the charges were not related to Association business. The court concluded that Stasz had committed conversion and breached a fiduciary duty to the Association by arranging the issuance of the credit card and diverting reserve account funds for her personal gain.

Kent stated that she initiated the action against Stasz for the benefit of the Association and all its members in order to remove a director/president who had misappropriated over $100,000 of Association funds from the reserve account.She also stated that she brought the suit under provisions of the CC&Rs and California law, which entitle an owner who successfully enforces the CC&Rs and Bylaws to payment of legal fees.

Kent recused herself from the Board's discussion and vote regarding the payment of the legal fees from the Stasz litigation. The other directors on the Board, advised by an independent attorney, determined that the legal expenses were reasonable and were incurred on behalf of and for the benefit of the PWOA and all its owners/members; therefore, the Board adopted a resolution approving payment of the legal expenses. The legal expenses were paid from the Association's operating funds, not the reserve account.

In October 2009, Stasz filed suit against the Association and Board, claiming an unlawful conspiracy for refusing to pay her legal defense costs and seeking $2 million in damages. Stasz alleged that the directors and officers of the Board caused the Association to pay $160,000 from the reserve account to the law firm that prosecuted the suit against her. The trial court found that Stasz's suit for indemnification was barred by the fact that the judgment against her was based on breach of fiduciary duty and conversion of Association funds and so dismissed the suit. Stasz's case was on appeal at the time appellants filed the complaint in the instant case.²

II. Eviction of the Stanzlers

In December 2009, Jeffrey Stanzler and his wife, Annouchka Yameogo, who were renting Unit 129 from PWOA, had an altercation with a PWOA owner and her guest, which resulted in the Stanzlers being evicted. The details are as follows.On December 13, 2009, around 3:30 a.m., Stanzler and Yameogo were awakened by the sound of women's voices at the valet drop-off in front of the building.

According to Stanzler, the...