VILLA DE LAS PALMAS HOMEOWNERS v. Terifaj

• Decision Date: 14 June 2004
• Docket Number: No. S109123.,S109123.
• Citation: 90 P.3d 1223,33 Cal.4th 73,14 Cal.Rptr.3d 67
• Court: California Supreme Court
• Parties: VILLA DE LAS PALMAS HOMEOWNERS ASSOCIATION, Plaintiff and Respondent, v. Paula TERIFAJ, as Trustee, etc., Defendant and Appellant.

14 Cal.Rptr.3d 67

90 P.3d 1223

33 Cal.4th 73

VILLA DE LAS PALMAS HOMEOWNERS ASSOCIATION, Plaintiff and Respondent, v. Paula TERIFAJ, as Trustee, etc., Defendant and Appellant.

No. S109123.

Supreme Court of California.

June 14, 2004.

Law Office of Russell P. Nowell and Russell P. Nowell, Brea, for Defendant and Appellant.

Jeff Thom, Los Angeles, for California Council of the Blind as Amicus Curiae on behalf of Defendant and Appellant.

Fiore, Racobs & Powers, Peter E. Racobs, Riverside, and Margaret G. Wangler, Palm Desert, for Plaintiff and Respondent.

MORENO, J.

Civil Code section 1354, subdivision (a),¹ provides that covenants and restrictions in the declaration of a common interest development "shall be enforceable equitable servitudes, unless unreasonable." Section 1355, subdivision (b), in turn, provides that the declaration may be amended if certain procedures are followed. In Nahrstedt v. Lakeside Village Condominium Association (1994) 8 Cal.4th 361, 33 Cal.Rptr.2d 63, 878 P.2d 1275 (Nahrstedt), we construed subdivision (a) of section 1354 and held that covenants and restrictions in the declaration are enforceable "unless they are wholly arbitrary, violate a fundamental public policy, or impose a burden on the use of affected land that far outweighs any benefit." (Nahrstedt, supra, at p. 382, 33 Cal.Rptr.2d 63, 878 P.2d 1275.) The use restriction in that case, a no-pet restriction, was included in a condominium development's originating declaration and recorded prior to the conveyance of any of the units.

The questions we confront in this case are whether use restrictions added to a declaration through an amendment and recorded after a homeowner has purchased an individual unit bind such an owner, and whether the rule of Nahrstedt — that restrictions in a development's declaration are presumed to be reasonable and are enforceable unless they are arbitrary, impose an undue burden on the property or violate fundamental public policy (Nahrstedt, supra, 8 Cal.4th 361, 386, 33 Cal. Rptr.2d 63, 878 P.2d 1275)—applies to subsequently enacted restrictions. We are also called upon to decide whether the trial court abused its discretion in awarding attorney fees to the homeowners association.

We conclude that under the plain and unambiguous language of sections 1354, subdivision (a), and 1355, subdivision (b), use restrictions in amended declarations recorded subsequent to a challenging homeowner's purchase of a condominium unit are binding on that homeowner, are enforceable via injunctive relief under section 1354, subdivision (a), and are entitled to the same judicial deference given use restrictions recorded prior to the homeowner's purchase. We also conclude the trial court did not abuse its discretion in awarding attorney fees to the homeowners association as the prevailing party.

I. FACTS AND PROCEDURAL HISTORY

Villa De Las Palmas is a relatively small condominium development consisting of 24 units located in a single L-shaped building. There are 12 units each on the top and bottom levels, and all units have either a small patio or a deck, with common walls separating them. The walls, described as "pony walls," initially extend from the unit at full height, and then slope down. Many owners, including defendant Paula Terifaj, do not make Villa De Las Palmas, which is located in Palm Springs, their primary residence, but visit only periodically or seasonally.

The individual condominium units were conveyed to the original grantees in 1962 by recorded grant deeds that contained the development's covenants, conditions, and restrictions, also commonly known as CC & R's. Pursuant to the 1962 deed (Declaration), all grantees were required to execute a management agreement and "covenant and agree to observe, perform and abide by any and all lawful by-laws, rules, regulations and conditions with respect to the use and occupancy of said premises which may from time to time be adopted or prescribed by the Board of Governors constituted in said Management Agreement." Failure to abide by any covenant or restriction in the Declaration could result in forfeiture, and "any owner or occupant of any apartment upon said premises may bring legal action for injunction and/or damages against said defaulting owner. . . ." The Declaration further provided that "[t]he benefits and obligations of this deed shall inure to and be binding upon the heirs . . . and assigns of the respective parties hereto."

Pursuant to the authority granted in the Declaration, the Villa De Las Palmas Homeowners Association (the Association) adopted a rule prohibiting pets. The unrecorded rule provided: "Pets of any kind are forbidden to be kept in the apartment building or on the grounds at any time." While the exact date of the adoption of the no-pet rule is unknown, it is undisputed that it was in existence when Terifaj purchased her unit. Terifaj, a veterinarian who purchased her unit in 1995, did not receive a written copy of the rule prohibiting pets, but she admitted at trial that she was aware of the no-pet rule when she purchased her unit.

Despite the prohibition on pets, from the time Terifaj purchased her unit until 1998, she visited her unit with her dog Lucy. When Lucy died in 1998, Terifaj acquired another dog, a female boxer, and brought her to the property. Terifaj attempted to have the Association amend the no-pet rule at the Association's 1996 and 2000 general meetings, but was unsuccessful.

The Association repeatedly warned Terifaj that she was violating the rule prohibiting pets on the property and fined her accordingly. Terifaj, however, was undeterred and continued to bring her dog to the development. In response, in August 1999, the Association filed a complaint for injunctive and declaratory relief and nuisance, along with a motion for preliminary injunction, to compel Terifaj to abide by the no-pet rule. The trial court denied the motion for preliminary injunction in October 1999, ruling that it was not convinced the Association would prevail on the merits and that irreparable injury was not evident. The court ordered the case to nonbinding arbitration with a March 8, 2000, completion date.

In the interim between the denial of the preliminary injunction and the completion of arbitration, the members of the Association voted to amend the Declaration. In January 2000, the Association adopted and recorded the Amended and Restated Declaration of Covenants, Conditions and Restrictions (Amended Declaration), which added a no-pet restriction, providing: "No pets or animals of any kind, including without limitation, dogs, cats, birds, livestock, reptiles or poultry, may be kept or permitted in any Apartment or anywhere on the Property." The Amended Declaration further provides that violations of the covenants and restrictions contained in the Amended Declaration are nuisances, and that such violations may be enjoined.

Based on the recorded Amended Declaration, the Association filed an amended complaint alleging the same causes of action and seeking the same relief as the original complaint. Following a bench trial, the trial court ruled in favor of the Association on all causes of action. It found the covenants and restrictions in the Amended Declaration to be enforceable equitable servitudes, granted a permanent injunction against any further violation of the no-pet restriction, and found the violation to be a nuisance. The court awarded the Association $15,000 in attorney fees.

The Court of Appeal affirmed. It concluded that section 1354 "[o]n its face . . . applies to any declaration, regardless of when it is adopted and recorded." Because the no-pet restriction was in the recorded Amended Declaration, it therefore constituted an equitable servitude under section 1354, subdivision (a). Relying on Nahrstedt, which the Court of Appeal found governed review of the pet restriction, the court held the restriction was not unreasonable.

We granted Terifaj's petition for review.

II. DISCUSSION

As a condominium project, Villa De Las Palmas is a common interest development subject to the provisions of the Davis-Stirling Common Interest Development Act (the Davis-Stirling Act or the Act). (§ 1350 et seq.) The Davis-Stirling Act, enacted in 1985 (Stats.1985, ch. 874, § 14, pp. 2774-2786), consolidated the statutory law governing condominiums and other common interest developments. Under the Act, a common interest development is created "whenever a separate interest coupled with an interest in the common area or membership in [an] association is, or has been, conveyed" and a declaration, a condominium plan, if one exists, and a final or parcel map are recorded.² (§ 1352.) Common interest developments are required to be managed by a homeowners association (§ 1363, subd. (a)), defined as "a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development" (§ 1351, subd. (a)), which homeowners are generally mandated to join (Nahrstedt, supra, 8 Cal.4th at p. 373,33 Cal.Rptr.2d 63,878 P.2d 1275).

The Act contains a fairly extensive definitions section, defining as relevant here "governing documents" and "declaration." The declaration is defined as "the document, however denominated, which contains the information required by section 1353." (§ 1351, subd. (h).) Section 1353 requires that declarations recorded on or after January 1, 1986, contain certain information, including the development's covenants and restrictions. The governing documents encompass a broader category of documents, including "the declaration and any other documents, such as bylaws, operating rules of the association, articles of incorporation, or articles of association, which govern the operation of the common interest development or association." (§ 1351, subd. (j).)

The declaration is often referred to as the development's constitution (see Rest.3d Property, Servitudes, § 6.10, com. a, p. 196; 1...