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Community Association Update: Issue # 39
- Workplace Harassment in a HOA Environment
- Voter Apathy Not a Required Showing in a Petition to Reduce CC&R Amendment Approval Requirements
- Architectural Variances Binding Future Owners
- Courts will Defer to the Good Faith Decisions of Boards
- Recent Ruling Limits Anti-SLAPP Protection for Board Actions
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This Community Association Update is part of our commitment to providing the highest quality legal services to our clients and industry partners. If your company or Association would like to see a topic or issue covered in future editions, feel free to call our offices, email us, or submit a question online!
Sincerely,
Steven Tinnelly, Esq.
Tinnelly Law Group
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Workplace Harassment in a HOA Environment
*New Library Article
Workplace harassment and hostile work environments are nothing new for management professionals. Emotionally charged conversations can become uncomfortable and antagonistic for many managers. Unfortunately, such dialogue frequently crosses the line from demanding direction to demeaning personal attacks.
Previously, employer liability for employee claims based on nonemployee conduct was generally limited to sexual harassment. Effective January 1, 2019, newly adopted California law (
Senate Bill 1300) lowers the burden by which California employees can bring successful harassment claims against California employers and expands the scope by which those employers may now be responsible to their employees for third party, nonemployee conduct, among other things.
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Voter Apathy Not a Required Showing in a Petition to Reduce Percentage of Affirmative Votes Required to Amend CC&Rs
*New Case Law
Amending a HOA's CC&Rs can be a challenging endeavor. This is true, in large part, to the onerous approval requirements imposed by the
CC&Rs
themselves. Indeed, many CC&Rs require a super-majority (i.e., 67% or more) of the HOA's members to approve an amendment. Such requirements make it difficult for an association to pass a proposed amendment, often as a result of member apathy or lack of participation in the voting process.
In the recent case of
Orchard Estate Homes, Inc. v. The Orchard Homeowner Alliance
, the California Court of Appeal rejected an argument brought by a group of homeowners objecting to the HOA's petition to reduce the percentage of affirmative votes necessary to amend their CC&Rs. (2019 Cal.App.Lexis 144.) ("Orchard Estate
") In particular, and relying on the
Mission Shores Assn v. Pheil
case, the homeowners argued that, in order to prevail on their petition, the HOA must demonstrate that the CC&R amendment failed due to "voter apathy." (2008) 166 Cal.App.4th 789, 794-95
).
The Court in
Orchard Estate
rejected this argument, noting that the statutory language contained in California Civil Code section 4275(c) clearly and unambiguously identified the "elements required to be established to authorize a reduction in the required voting percentage to amend a provision of the governing CC&Rs." (Id.
at p. **6-7.) As such, the Court was unwilling "to imply an element that was not expressed by the Legislature" based on off-hand statements made in appellate decisions. (Id.
at p. *7.)
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Architectural Variances Binding Future Owners
*Asked and Answered
Asked - We are thinking about granting a variance to the Covenants of our Homeowner's Association. The question is: would the Variance, if granted, apply to the next landowner (i.e., does the grant of a variance run with the land)?
Answered - A homeowners association's ("HOA's") governing documents may permit the HOA to, under limited and extraordinary circumstances, issue a variance from compliance with one or more of the HOA's architectural standards. In light of the binding nature of architectural variances, there may be circumstances where it would be prudent for the HOA to document such variance through a recorded agreement or covenant. This is particularly important where the HOA's approval is conditioned upon continued action by the property owners (e.g., maintenance and indemnification). Moreover, although the property owner would have an affirmative obligation to disclose the existence of any variance granted and/or any obligations imposed by the Association in connection therewith (see generally,
Kovich v. Paseo Del Mar Homeowners' Assn
. (1996) 41 Cal.App.4th 863), a recorded agreement is the most dependable way of ensuring that future owners are on notice of the existence of the agreement and they assume upon purchase.
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Courts Will Defer to the Decisions of Boards Based on Good Faith and Regard for the Best Interests of the Community
*New Case Law
In
Eith v. Ketelhut, No. B272028
(Cal. Ct. App. Dec. 17, 2018), a homeowners association featuring estate properties where members maintain fruit orchards and vineyards yielding fruit that can be made into wine and offered to the public for sale required the Board of Directors ("Board") to determine if sale of products made from fruit produced on the property is a prohibited business or commercial activity under the CC&Rs. Looking to the purpose of the prohibition - to protect the residential character of the community - the Board examined whether the activity negatively impacted the residential character of the community.
Eith and other neighbors demanded the Ketelhuts cease operating a commercial vineyard, so the Board investigated the Ketelhuts' vineyard operation. The Board determined that the vineyard did not constitute business or commercial activity prohibited by the CC&Rs, because there was no negative impact on the community. No wine was produced or stored on the property, there was no tasting room drawing retail traffic to the community, and the wine was sold over the Internet to the public and local restaurants and hotels and shipped from an off-site warehouse.
Eith and other neighbors sued the Ketelhuts for operation of the vineyard as a prohibited business or commercial activity in violation of the HOA's CC&Rs.
The trial court elected not to decide whether the operation of the vineyard was a prohibited business or commercial activity, but to find in favor of the Ketelhuts by applying the rule of judicial deference adopted by the California Supreme Court in
Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249
("Lamden") to the Board's decision that the vineyard was not a prohibited use based "upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members."
The neighbors appealed the decision in favor of the Ketelhuts to the California Court of Appeal, which confirmed the trial court's application of the judicial deference rule in the Lamden case stating, "Common interest developments are best operated by the board of directors, not the courts."
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Recent California Court of Appeal Ruling Limits Anti-SLAPP Protection for Actions by Board of Directors
The recent unpublished opinion of
Chemers v. Quail Hill Community Association et al.
(2018) shines some light on the oft-misunderstood California
Anti-SLAPP statute
and its effectiveness as a defense for actions by a homeowners association's board of directors. The Fourth District California Court of Appeal held that certain actions by the board in a dispute with a director were not in furtherance of the right of free speech or petition as to be protected by the anti-SLAPP statute.
In October 2016, Chemers filed a lawsuit against the association and other directors, alleging eight causes of action including breach of governing documents, breach of fiduciary duty, negligence, declaratory relief, and various violations of the Civil Code and Corporations Code. In response, the defendants filed an anti-SLAPP motion seeking an order striking the complaint and the eight causes of action within it. The trial court granted the moving defendants' anti-SLAPP motion as to six of the eight causes of action.
Chemers subsequently appealed the trial court's decision, and the Court of Appeal concluded that the trial court erred by granting the anti-SLAPP motion as to the claims alleged against Quail Hill for breach of contract, violation of Civil Code section 5850 et seq., and for two counts of declaratory relief. The Court of Appeal reasoned that none of those four causes of action arose out of protected activity - whether speech or petitioning activity - within the meaning of the anti-SLAPP statute.
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FIRM NEWS
New TLG Attorney! Omar Subat, Esq.
Omar Subat, Esq. received his BA in Political Science from the University of California, Santa Barbara. Later, he earned his Juris Doctorate from St. John's University School of Law. Mr. Subat attended St. John's University School of Law with a St. Thomas More scholarship (full tuition).
While in law school, Mr. Subat was an Executive Editor for the Journal of Civil Rights and Economic Development and was named a Winner of the Journal's Best Legal Notes Competition for "Who has Standing? Why the Supreme Court's Holding in Hollingsworth v. Perry Empowers Politicians at the Expense of Citizens."
While obtaining his law degree, Mr. Subat served as a judicial intern for the Honorable Judge Geoffrey Glass in the Orange County Superior Court. Prior to joining Tinnelly Law Group Mr. Subat worked as a litigator representing several Fortune 500 companies in handling premises liability, negligence, and product liability cases. Mr. Subat has handled every aspect of the defense of such matters from pre-litigation resolutions through trial. Mr. Subat also has experience litigating real estate and HOA disputes. He prides himself on his ability to obtain quick resolutions when possible, but also being able to provide effective, aggressive representation of our client's interests when required.
Omar is another strong addition to our growing team of dynamic, talented HOA lawyers. His strong corporate defense background and experience litigating HOA disputes have already proven valuable. We are thrilled to have him on the team.
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