APPEAL from an order of the Superior Court of San Diego County, Super. Ct. No. 37-2014-00014860-CU-PT-CTL, Lisa Schall, Judge. Affirmed.
Green Bryant & French, Jeffrey A. French, Timothy P. Flanagan; Williams Iagmin and Jon R. Williams for Petitioner and Respondent.
Ocean Windows is a common interest development located in Del Mar, California. It consists of 45 units and a common area. There is only one class of voting members within the Association.
As relevant here, section 12.1 of the original CC&R's provided: "At any time(s), and from time to time hereafter, this instrument may be amended by written instrument . . . (i) signed and acknowledged by the Owners of at least seventy-five percent of the Condominiums, (ii) bearing, or to which is attached, written consent of the holders of every real property mortgage or deed of trust encumbering (as of the time of recording such amendment) such Condominiums, and (iii) filed for record in the Office of the Recorder of San Diego County, California." (Italics added.) The record shows the original CC&R's were never amended until the proposed restated CC&R's that are the subject of this appeal.
B. The Davis-Stirling Act (Act)
The Act was adopted in 1985 and became operative January 1, 1986. (Stats. 1985, ch. 874, § 14.) It "consolidated the statutory law governing condominiums and other common interest developments." (Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 81.) The Act includes laws governing the amendment of the declaration of a homeowners association's covenants, conditions and restrictions. Section 42752 provides a mechanism by which an association, or an individual member, may petition the court for relief when, such as in the instant case, an association's covenants, conditions and restrictions require a supermajority vote to effectuate the amendment.
Section 4275, subdivision (a) of the Act, provides in pertinent part, "If in order to amend a declaration, the declaration requires owners having more than 50 percent of the votes in the association . . . to vote in favor of the amendment, the association, or any owner of a separate interest, may petition the superior court . . . for an order reducing the percentage of the affirmative votes necessary for such an amendment. The petition shall describe the effort that has been made to solicit approval of the association members in the manner provided in the declaration, the number of affirmative and negative votes actually received, the number or percentage of affirmative votes required to effect the amendment in accordance with the existing declaration, and other matters the petitioner considers relevant to the court's determination."
Upon filing of a petition, subdivision (b) of section 4275 requires the matter be set for hearing with notice of said hearing given to all eligible members. Under subdivision (c) of this statute, the court in its discretion may grant the petition if it finds notice was properly given; the balloting was properly conducted in accordance with the governing documents; a reasonable effort was made to permit all eligible members to vote; members having more than 50 percent of the vote "vote[d] in favor of the amendment"; and the amendment was "reasonable." (§ 4275, subd. (c)(1)-(6).)
"Viewed objectively, the purpose of [former] . . . section 1356 [now section 4275] is to give a property owners' association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. [Citation.] In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association." (See Blue Lagoon Community Assn. v. Mitchell (1997) 55 Cal.App.4th 472, 477.)
C. Efforts to Amend the Original CC&R's and the Resulting Petition
In support of its petition, Board President Terry Footer declared under penalty of perjury that in May 2013 the board, "with the help of legal counsel, undertook a comprehensive restatement of the Association's [CC&R's] to bring the document into compliance with existing law"; and that the board decided to amend and restate the original CC&R's in their entirety because they "contained a lot of unnecessary language that was not legally or practically applicable  years after the CC&Rs were originally recorded by the developer."
Footer also declared the proposed restated CC&R's accomplished all of the following: "1) eliminated and modified sections of the CC&Rs to conform to the Association's historical operating practice; 2) made the CC&Rs more user friendly by using everyday language and eliminating legal jargon; 3) clarified the maintenance and repair responsibility of various components by attaching a `Maintenance, Repair, and Responsibility Matrix'; 4) [brought] the CC&Rs into compliance with existing (and new) law concerning homeowners associations; 5) [eliminated] problems which have plagued the community, such as short-term/weekend rentals, parking problems and occupancy restrictions; and 6) removed the super-majority [75 percent] requirement necessary to amend the CC&Rs, and replaced it [with] a bare majority requirement, so as to make future amendments easier and less costly." (Italics added.)
In further support of the petition, Footer declared that on or about January 22, 2014, each eligible member of the Association received a four-page letter prepared by legal counsel of the Association summarizing the reason(s) for the need to amend the original CC&R's and providing an overview of the proposed "substantive changes" to certain key provisions of the CC&R's. Included with the letter was a copy of the proposed restated CC&R's, a notice of special meeting, voting instructions and a ballot with the following two items: 1) to "approve" or "decline" to amend the CC&R's (requiring 75 percent of the "voting power"), and 2) to "approve" or "decline" to amend the bylaws of the Association (requiring 50 percent plus one of the "voting power").
As particularly relevant here, the January 22 letter discussed the proposed amendment to Article XI "concerning the leasing and rental of units . . . to prevent short-term/weekend rentals, encourage long-term rentals and require tenants to abide by the Governing Documents for the Association same as any owner." The letter noted these new rental provisions were intended to "preserve and protect property values, enhance the ability to finance units, and lessen wear and tear on the project associated with tenant moves-ins and move-outs."
Specifically, section 11.11.4, subdivision (a) of the proposed restated CC&R's provided: "Units may not be rented for transient purposes. All rentals must be for a term of no fewer than thirty (30) consecutive days in any one (1) calendar year, except month-to-month tenancy created by law or except an Owner who is a lender in possession of a Condominium following (i) a default in the first mortgage, (ii) a foreclosure proceeding or (iii) any deed or other arrangement in lieu of foreclosure. All rentals must be for the entire Unit, and not for any partial portion of such Unit[.]"
As further relevant here, the letter also included a discussion of the proposed amendment to Article XVIII, a "catchall" provision, allowing the CC&R's to be amended "by vote of a bare majority of Owners as opposed to the current 75 [percent]" supermajority.
Specifically, section 18.13, subdivision (a) of the proposed restated CC&R's provided: "This Declaration may be amended at any time and from time to time by the vote or written consent of a majority of the total voting power of the Association[.]"
The community manager of the Association, Jonathon Stout, declared under penalty of perjury that since 2002 he has managed the day-to-day operations of the Association; that the Association's "most problematic operating issues revolve[d] around parking and the few owners who rent their units out to short-term renters, as if the property was a hotel, especially during the summer and around the holidays"; that the Association "is a residential development and has been since its inception"; and that the original CC&R's did not prohibit such short-term rentals, which a "few owners have taken advantage of" in order to rent out their units on a short-term basis.
Stout further declared that, because short-term renters "do not reside at the property, they tend not to care about the community or the neighboring owners"; that he "regularly receive[d] complaints from the neighbors who reside[d] next to these short term rentals about the noise and about unknown drunken people wandering the property"; that as such, the Association has been unable to manage effectively the behavior of such people; that short-term rentals also has led to increased property damage in the common area, including to the elevator, lobby doors and the hallways; and that owners and/or prospective owners of Ocean Windows have had difficulty obtaining refinancing and/or financing because "some lenders perceive Ocean Windows to be a `"condotel"' as a result of the short term vacation rentals."
The record shows that the January 22 letter "encouraged" eligible members to review and ultimately "support" the proposed restated CC&R's and that if any member had "any questions" about the proposed amendments, they could contact Stout at a telephone number provided in the letter.
The Association received back 42 of the 45 ballots it sent. Stout in his March 27, 2014 "inspector of election" report noted that 32 members voted to approve the proposed restated CC&R's and 10 voted against it. Thus, although 71 percent of the members voted in favor of the proposed restated CC&R's, the restatement of the original CC&R's did not pass because it failed to garner 75 percent of the vote.3
Jeffrey French, legal counsel of the Association's board, also submitted a declaration in support of the petition. In that declaration, French stated under penalty of perjury that, after the Association was unable to reach the 75 percent supermajority vote needed to pass the proposed restated CC&R's, the board unanimously decided to pursue a section 4275 petition, inasmuch as the 71 percent vote it did receive showed there was "strong support" among eligible members to restate the CC&R's.
French further declared that, in response to the board's decision to seek relief under section 4275, only three owners "voiced opposition to the petition process on the basis that they did not like the thirty (30) day rental restriction contained in the restated CC&R's"; that this same "small group" of owners wanted to continue to rent out their units on a short-term basis like a hotel and even initiated a "recall election in an effort to recall the Board . . . to stop this petition process"; and that as a result of short-term renters, there were increased costs to homeowners associations such as petitioner herein including from trash pickup, added security and damage to the common area among other items.
As noted, Spataro opposed the petition.4 Although the primary basis of her opposition concerned the imposition of section 11.11.4, subdivision (a) and its 30-day minimum tenancy requirement, she also objected to sections 11.11.2 and 11.11.3 governing lease agreements and the Association's right to obtain "reasonable information" about any such arrangements; section 11.11.6 delegating to the Association the power and authority to enforce against tenants violations of the "[g]overning documents"; section 11.24 prohibiting timeshares as defined under Business and Professions Code section 11003.5; and section 12.1, subdivision (a), giving the Association the ability to "limit the number of guests of members and to limit the use of the recreational facilities" by certain persons, as therein defined.
The petition came on for hearing on August 22, 2014, which hearing was not reported. As noted, the court in its August 25 order granting the petition found the Association had complied with the requirements of section 4275. As relevant here, the court relied on the Stout and French declarations detailing the "issues" confronted by the Association in connection with short-term rentals in finding the proposed restated CC&R's limiting such rentals were reasonable.
A. Guiding Principles
A trial court has broad discretion in ruling on a section 4275 petition. (See Mission Shores Assn. v. Pheil (2008) 166 Cal.App.4th 789, 795 [discussing former section 1356] (Pheil).) We review the trial court's ruling on such a petition for abuse of discretion. (Quail Lakes Owners Assn. v. Kozina (2012) 204 Cal.App.4th 1132, 1139 (Kozina); Pheil, at p. 795.) The trial court is not required to make any particular findings when considering such a petition; rather, it is sufficient if the record shows that the court considered the requisite factors in making its ruling. (Kozina, at p. 1140.)
For purposes of ruling on a section 4275 petition, "[t]he term `reasonable' . . . has been variously defined as `not arbitrary or capricious' [citations], `rationally related to the protection, preservation and proper operation of the property and the purposes of the Association as set forth in its governing instruments,' and `fair and nondiscriminatory.' [Citation.]" (Fourth La Costa Condominium Owners Assn. v. Seith (2008) 159 Cal.App.4th 563, 577 (Seith); see Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 382 (Nahrstedt).) In determining the reasonableness of a restated provision of an association's covenants, conditions and restrictions, the court's focus is on the effect of that restated provision on the development as a whole, not its effect on individual homeowners. (Nahrstedt, at pp. 387, 389.)
1. Short-Term Rentals
On appeal, appellant does not directly challenge the finding of the court that, in connection with its petition, the Association properly complied with the procedural requirements of section 4275, subdivision (c)(1)-(4) concerning notice, balloting, voter participation and majority approval of the proposed restated CC&R's. Rather, her primary challenge to the August 25 order is that the court abused its discretion in granting the petition because restated CC&R section 11.11.4, subdivision (a), requiring rentals to be for a minimum of 30 days, was not "necessary for the good of the community." We find this contention unavailing.
Initially, we note the test is not whether the proposed amendment to the original CC&R's was necessary, but rather whether it was reasonable. (See § 4275, subd. (c)(5) [providing the amendment should be "reasonable"]; former § 1356, subd. (c)(5) [same]; see also Seith, supra, 159 Cal.App.4th at p. 577.)
We further note there is ample evidence in the record to support the finding of the trial court that inclusion of section 11.11.4, subdivision (a) in the restated CC&R's was "`rationally related to the protection, preservation and proper operation'" (see Seith, supra, 159 Cal.App.4th at p. 577) of the Ocean Windows development as a whole, as opposed to just appellant and a few others similarly situated who rented their units out on a short-term basis (i.e., less than the 30-day minimum) (see Nahrstedt, supra, 8 Cal.4th at pp. 387, 389).
Indeed, as summarized ante, Stout declared under penalty of perjury that in overseeing the day-to-day operations of the Association, he regularly received complaints about noise and public drunkenness from neighbors who reside next to units used for short-term rentals; that as a result of such short-term rentals, the Association had experienced an increase in property damage to the common area, including to the elevator, lobby doors and hallways; that because of the transient nature of short-term rentals, it was nearly impossible for the Association to know at any given time who was residing in such units; and that some current and prospective owners of units in the Ocean Windows development had difficulty obtaining financing because lenders perceived Ocean Windows to be a "`condotel.'"
What's more, French, who declared that for the last 20 years he has represented "almost daily" homeowners associations such as petitioner, noted that short-term rentals have led to an increase in costs for homeowners associations, including petitioner, as a result of trash pickup, security, project management and damage to the common areas. French further declared that short-term rentals also have led to increases in complaints about noise, parties, loud music and parking issues, all of which have disrupted the rights of other owners/tenants to the quiet use and enjoyment of their units.
That appellant disagrees with the court's reasonableness finding and continues to argue aggressively on appeal that section 11.11.4, subdivision (a) was "unnecessary" and/or unreasonable because it was a "`power grab'" by the Association and because its imposition was not in the "`best'" interest of a few owners such as herself does not change our conclusion.
In making this argument, appellant fundamentally misconstrues our role as an appellate court. As a court of review, we do not reweigh the evidence or assess witness credibility. (See Niko v. Foreman (2006) 144 Cal.App.4th 344, 364.) Rather, under the substantial evidence standard of review, we liberally construe findings of fact in support of an order and we consider the evidence from the entire record in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings. (See Citizens Business Bank v. Gevorgian (2013) 218 Cal.App.4th 602, 613 (Gevorgian).)
Based on the evidence in the record, which we conclude is substantial (see Gevorgian, supra, 218 Cal.App.4th at p. 613), we conclude the court properly exercised its broad discretion when it found section 11.11.4, subdivision (a) of the proposed restated CC&R's, which applies to all units in the Ocean Windows development, was reasonable. (See Pheil, supra, 166 Cal.App.4th at p. 796 [concluding the imposition of a 30-day minimum lease term was not unreasonable because this limitation applied to all owners who rented their homes and because "any burden to enforce the minimum lease term [was] outweighed by its beneficial value in preserving the residential character of the development"].)
2. Remaining Contentions
In addition to challenging section 11.11.4, subdivision (a), appellant on appeal also challenges restated section 12.1.1 concerning the right of the Association "to establish reasonable rules and regulations pertaining to the use of the Hotel's amenities[.]"5
We note appellant did not raise this specific challenge to the restated CC&R's in the trial court. As such, we conclude this claim is forfeited on appeal. (See Kevin R. v. Superior Court (2010) 191 Cal.App.4th 676, 686 [noting the well-recognized rule that a "`party forfeits the right to claim error as grounds for reversal on appeal when he or she fails to raise the objection in the trial court'"]; see also Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564 [noting the "[f]ailure to raise specific challenges in the trial court forfeits the claim on appeal"].) In any event, appellant's contention lacks merit.
First, we note appellant solely relies on cursory argument and provides no citation to any legal authority to support her contention that restated section 12.1.1, subdivision (b) is unreasonable. For this reason alone, we reject this contention. (See Pheil, supra, 166 Cal.App.4th at p. 796.)
Second, appellant cites no specific instance of any rule or regulation adopted by the Association under this amended section that she claims was unreasonable. Although it appears there is no "actual controversy" involving section 12.1.1, subdivision (b) (see City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 59 [noting "`an action not founded upon an actual controversy between the parties to it, and brought for the purpose of securing a determination of a point of law . . . will not be entertained'"]), we nonetheless perceive nothing improper about restated section 12.1.1, subdivision (b), as it merely gives the Association the right to establish reasonable rules and regulations pertaining to the use of the Hotel's amenities.
For similar reasons, we reject appellant's contention that the amendment to article VIII of the restated CC&R's concerning "insurance" was unreasonable. In addition, we note in contending restated article VIII allegedly was unreasonable, appellant relies on facts that are not only outside the record, but that also arose ostensibly after the court issued its August 25 order granting the petition. For this additional reason, we reject her contention that the amendment to article VIII was unreasonable. (See Cal. Rules of Court, rule 8.204(a)(2)(C); Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 102.)
Appellant also challenges restated section 3.8 concerning homesteads and article X concerning eminent domain. Again, for the reasons already given, we reject both such challenges inasmuch as appellant failed to raise in the trial court any such challenge to either provision; cites no legal authority in support of her argument(s) that the amendment to these two provisions was unreasonable; and discusses each provision in general terms without regard to any actual dispute arising under such provision or provisions.
Finally, petitioner challenges the restated CC&R's on the basis they violate the privacy of an owner/tenant because the Association "now wants all personal information from guests/renters with the power to evict them at their will." In making this challenge, appellant does not cite to any particular article or section of the restated CC&R's. In any event, as before she also does not cite to any legal authority to support her argument that such a provision or set of provisions violate public policy and, thus, are unreasonable. We thus reject her contention that these restated provisions in the amended CC&R's violate the privacy of an owner/tenant.
The August 25 order granting the Association's petition to amend the original CC&R's, including reducing the required voting percentage of qualified members from 75 to 50 percent plus one and limiting short-term rentals to a minimum of 30 days, is affirmed. The Association to recover its costs of appeal.
McCONNELL, P. J. and HALLER, J., concurs.