SAMII v. LA VILLA GRANDE HOMEOWNERS ASSN.
California Court of Appeals, Second Appellate District, Division Four
(December 17, 2009) UNPUBLISHED
Schreiber & Schreiber, Inc., Edwin C. Schreiber and Eric A. Schreiber for Defendant and Appellant.
Domine Adams, Jeffrey B. Domine and Ryan P. Sheahan for Plaintiffs and Respondents.
Defendant La Villa Grande Homeowners Association (the Association) appeals from an order directing the Association to conduct an election for the board of directors. The order was issued in a case filed by several members of the Association (plaintiffs)1 seeking declaratory and injunctive relief, as well as costs and expenses incurred in enforcing the documents governing the Association. The Association contends that (1) the trial court erred by granting a preliminary injunction that provides the ultimate relief sought in the complaint; (2) the order was improper because plaintiffs did not bring a claim under Corporations Code section 75102 (hereafter section 7510); (3) plaintiffs' action was premature; and (4) the order was too vague. While it may have been preferable — and certainly more efficient — for plaintiffs to have sought an order mandating an election through the summary procedure authorized in section 7510, subdivision (c), the procedure used here gave the Association sufficient notice and an adequate opportunity to be heard, and therefore the order (which we find was not impermissibly vague) was proper. Accordingly, we affirm the order.
The Association was formed in 1980 to manage La Villa Grande, a 19-unit condominium project. According to the Declaration of Covenants, Conditions and Restrictions (Declaration), the original board of directors was named in the articles of incorporation for the Association; subsequent boards were to be elected at the annual meetings in accordance with the Association's bylaws. Under the bylaws, the annual meeting is to be held on the first day of March each year for the purpose of electing the board of directors and conducting other business. In practice, however, the Association typically held its annual meeting (and elected the board) in July or August.4
In 2007, the elections were held in August. Three of the plaintiffs — Steven Samii, Penny Altman, and Azar Sotoudeh — were among the board members elected to serve until August 2008. However, the entire board was recalled by a special vote of the Association members on April 29, 2008. On May 1, 2008, Tammy Gamblin, the property manager for the Association, sent a letter to all homeowners, informing them of the recall and the election to be held in June 2008 to elect a new board. The letter stated, "This new Board will sit for the remainder of the term which ends in August '08."
No election or annual meeting was held in August 2008. On December 22, 2008, Jeffrey B. Domine, an attorney representing plaintiffs and two other homeowners, wrote to the board, noting that the election was not held in August 2008 as required, and requesting that the board schedule an election within 30 days. Domine also noted that, under section 7510, a court may summarily order an election and that plaintiffs would file a petition requesting such an order if no election was conducted within 30 days.
Domine did not receive a response to his letter. On February 5, 2009, plaintiffs filed their complaint, alleging three causes of action. The first cause of action alleged that the Association breached the Declaration by failing to hold the annual meeting and election in August 2008, and that this breach also violated section 7510. Plaintiffs alleged that they "have incurred and will continue to incur attorney fees, costs, and expenses in connection with enforcement of the governing documents" as a result of this breach. In the second cause of action for declaratory relief, plaintiffs sought a declaration that the Association's governing documents, which require annual elections, are enforceable equitable servitudes, that under section 7510 the court can summarily order that the election be held, and that the Association must give notice of and hold the annual election on February 7, 2009. The third cause of action for injunctive relief sought an injunction ordering the Association to hold the annual election on February 7, 2009.
On February 10, 2009, plaintiffs moved ex parte for a temporary order and order to show cause re: preliminary injunction. The trial court denied plaintiffs' request, and plaintiffs filed a petition for writ of mandate in this court. We denied the petition, noting that plaintiffs were not precluded from filing a noticed motion for a preliminary injunction or seeking an order to show cause in the trial court.
Following our denial of the writ petition, plaintiffs filed another ex parte application for an order to show cause re: preliminary injunction and for a temporary restraining order enjoining the Association from entering into any binding contracts pending the hearing on the order to show cause. The trial court denied immediate relief, but set a hearing on the order to show cause, giving the Association a week to file a response to plaintiffs' moving papers.
Plaintiffs' moving papers included, among other things, declarations from Domine (plaintiffs' counsel), Gamblin (the property manager at the time of the recall of the previous board), and each of the plaintiffs. According to Domine, when he received no response to his December 22, 2008 letter, he called the current property manager, Tom Jackman. Jackman told Domine that he had spoken to Meir Cohen, the president of the board, who told Jackman that the Association would not hold the requested election. Jackman, who said he agreed with plaintiffs that an election was required, told Domine that he would contact all of the members of the board to emphasize the seriousness of the situation. Shortly thereafter, one of the board members contacted Domine and told him that the Association had already held an election and did not have to hold another one.
In her declaration, Gamblin stated that in 2007, the Association members agreed to hold the election on August 28, 2007, and that the board members would serve for one year. However, after the members of the Association recalled the board on April 29, 2008,5 she sent each Association member a notice that an election would be held to elect board members to serve the remainder of the recalled board members' terms, i.e., until August 28, 2008. That election was held at a meeting conducted on June 24, 2008, during which the fact that the new board members would serve out the remainder of the term ending on August 28, 2008 was discussed.
Each of the plaintiffs stated in his or her declaration that each of them understood that the board members elected in June 2008 would serve only for the remainder of the term ending in August 2008, that no election has taken place since June 2008, and that they each have repeatedly requested that the board hold the required election.
The Association filed an opposition to plaintiffs' motion, supported by the declaration of Cohen, the president of the board. Cohen acknowledged that the previous board had been recalled in April 2008 and the new board was elected in June 2008. He also acknowledged that the bylaws of the Association state that the annual meeting and elections were to be held in March, but that the meeting and elections generally were held in July or August. He stated, however, that the board "was of the opinion that the appointment [of the board members who were elected in the June 2008 special election] was not only a two-month appointment, but rather, should continue up and until the next voting period, which is scheduled for July of 2009." The Association opposed plaintiffs' motion on the grounds that (1) the court cannot issue a preliminary injunction because it would grant plaintiffs all of the relief they seek without a trial; (2) plaintiffs must proceed under section 7510 rather than by means of common law causes of action; (3) elections cannot be ordered summarily, but must be conducted in accordance with the Davis-Stirling Common Interest Development Act (Civ. Code, § 1350, et seq.); (4) the lawsuit and motion were premature because the bylaws do not require an election until the March annual meeting;6 and (5) a preliminary injunction was unnecessary because by the time an injunction would be issued and enforced, the annual meeting and elections would have taken place.
After hearing the parties' arguments on May 12, 2009, the trial court took the matter under submission. It issued its ruling a month later, on June 15, 2009. The court began by citing two provisions of the Corporations Code governing non-profit mutual benefit corporations such as the Association: Corporations Code section 7515, subdivision (a), which provides that a superior court may, upon petition of a member of a non-profit mutual benefit corporation, order that a written ballot be authorized in such a manner as the court finds fair and equitable under the circumstances; and section 7510, subdivision (c), which allows the court to summarily order an election to be conducted, upon application by a member and after the corporation is provided an opportunity to be heard. The court noted the Association's contention that plaintiffs did not file a petition under these sections, but concluded that the procedure used in this case was sufficient to allow the court to determine whether an election was warranted. Finally, the court determined that an election was warranted because the Association did not dispute that the notice of the June 2008 special election stated that the term of the board members elected in that special election would expire in August 2008, and the Association presented no evidence or bylaw citation to support the authority for the board's decision (as described in Cohen's declaration) to extend their terms beyond August 2008. Thus, the court granted plaintiffs' motion and ordered the Association to conduct an election in compliance with Civil Code section 1363.03, subdivision (e), i.e., the provision of the Davis-Sterling Common Interest Development Act governing the use of ballots.7
The Association timely filed a notice of appeal from the trial court's order.
Most of the arguments the Association raises on appeal are procedural. First, it argues that the trial court's order was improper because it was a mandatory preliminary injunction that awarded plaintiffs all of the relief they sought in their complaint. Next, it argues that plaintiffs are not entitled to an order directing that an election be held because they brought common law claims rather than a petition under section 7510. It also argues that, if section 7510 controls, plaintiffs' lawsuit and motion were filed prematurely because plaintiffs were required to wait to file until 60 days passed after the Association failed to hold an election required by the bylaws, and the Association contends that the bylaws required the election to be held on March 1, 2009. While there is some merit to the Association's assertion that the way in which plaintiffs obtained the election order was procedurally unusual, the trial court nonetheless was authorized to order an election and the Association suffered no prejudice by the unusual procedure.
We begin with the Association's second argument — that the complaint itself was improper, because the proper procedure is to bring a petition under section 7510. Section 7510, subdivision (c) provides that, if a mutual benefit corporation fails to hold a regular meeting or written ballot in accordance with its bylaws, and fails to do so "for a period of 60 days after the date designated therefor, then the superior court of the proper county may summarily order the meeting to be held or the ballot to be conducted upon the application of a member or the Attorney General, after notice to the corporation giving it an opportunity to be heard." There is no procedure specified in the Corporations Code regarding how such an application is to be made. But what is clear is that section 7510 contemplates a summary procedure that simply provides notice to the corporation and gives it an opportunity to be heard.
To be sure, plaintiffs made this case more complicated than need be by bringing a complaint alleging three causes of action followed by an ex parte application for an order to show cause re: preliminary injunction to obtain an election order, when a simple application and an opportunity to be heard would suffice. But the fact that plaintiffs filed a complaint with common law causes of action — in which they also asserted section 7510 — rather than an application under section 7510 did not render their request for relief defective. Nor does the fact that they styled their ex parte application as a request for an order to show cause re: preliminary injunction warrant reversal of the trial court's order mandating an election. The complaint and ex parte application provided notice to the Association that plaintiffs sought an order mandating an election, and the Association was given an opportunity to be heard on that request. Thus, plaintiffs' complaint and ex parte application were sufficient for the purposes of section 7510. (Civ. Code, § 3528 ["The law respects form less than substance"].)
Our resolution of the Association's second argument also resolves the Association's first argument, that the issuance of a preliminary injunction that grants all of the relief requested in the complaint was improper. The Association is correct that ordinarily a trial court does not have the power to decide the merits of an action on an application for a preliminary injunction. (See, e.g., Paul v. Allied Dairymen, Inc. (1962) 209 Cal.App.2d 112.) But that rule does not apply when there is a "`satisfactory showing' which warrants `submitting the cause on the merits.'" (Camp v. Board of Supervisors (1981) 123 Cal.App.3d 334, 358.) In light of section 7510's contemplation of a summary procedure for issuing an election order, we find that the ordinary rule does not apply here.
We turn next to the Association's argument that plaintiffs' lawsuit and motion were premature under section 7510 because they were filed less than 60 days after the date designated in the bylaws for the annual meeting and election — i.e., March 1, 2009. It could be argued that the relevant date is the date designated as the next annual meeting in the notice of the special election in which the current board was elected — i.e., August 28, 2008 — and therefore the complaint filed in February 2009 was filed more than 60 days after the designated date. But we need not decide which is the correct date because the Association misreads the statute. The time period set forth in section 7510 relates to when a court may order an election rather than when a member of the corporation may apply for such an order — it states that the court may order an election if one has not been held on the designated date or for a period of 60 days after the designated date. (Corp. Code, § 7510, subd. (c).) The order in this case was issued on June 15, 2009, more than 90 days after the date designated in the bylaws. Therefore, regardless of which date is the relevant date, the trial court's order complied with section 7510.
Finally, the Association argues that the order mandating the election is defective because it is too vague to be enforceable. The order states, "Thus, the Court grants the motion and orders an election in compliance with Civil Code section 1363.03(e)." The Association contends the order is not enforceable because it "fails to state when the election must occur, or how it must be done." Not so. The order that the election must be conducted in compliance with Civil Code section 1363.03, subdivision (e), resolves any question the Association might have about when and how the election is to be conducted. That statute provides that ballots and two preaddressed envelopes and instructions must be delivered to every member of the Association at least 30 days before the voting is to take place, and that the ballot is to be returned by the members to an inspector of elections, who will tally the votes. Thus, while it may have been beneficial (considering the history of the parties) if the order had provided dates by which certain tasks should be accomplished, the order may reasonably be understood to require the Association to deliver the ballots to members immediately, with the vote to take place approximately 30 days after delivery.
The order is affirmed. Plaintiffs shall recover their costs on appeal.
EPSTEIN, P. J.
1. The plaintiffs are Steven Samii, Penny Altman, Katherine Christopher, Yasmin Ghadimi, Shabnam Vaziri, Vitaly Leonov, Lana Leonov, and Azar Sotoudeh.
2. The Association also cites to Corporations Code section 12460, which governs consumer cooperative corporations and is virtually identical to section 7510. Because the Association was formed as a nonprofit mutual benefit corporation under the Nonprofit Mutual Benefit Corporation Law (Corp. Code, § 7110 et seq.), we will refer only to section 7510.
3. The facts in this case are largely undisputed; where differences in the parties' recitation of the facts arise, they will be noted.
4. There is some dispute about when the annual meeting typically took place. Although the president of the current board states that the meeting usually took place in July or August, the property manager for the Association from January 2004 to June 2008 states that, until 2007, the annual meeting took place in May. The parties agree that the meeting typically did not take place in March.
5. There is a typographical error in Gamblin's declaration; although the declaration states that the recall took place on April 29, 2007, it is clear that the recall took place in 2008.
6. We note that the Association's opposition was filed on May 5, 2009, more than two months after the date set forth in the bylaws for the annual meeting and election.
7. Although the court granted plaintiffs' request for an order mandating an election, it denied their request to enjoin the current board from entering into binding contracts, finding that the motion lacked sufficient argument to support the latter request. That part of the trial court's ruling is not at issue in this appeal.