Attorneys and Law Firms
Stuart Kane LLP, Donald J. Hamman and Eve A. Brackmann for Defendants and Appellants.
Bohm Wildish & Matsen, LLP, Daniel R. Wildish and Charles H. Smith, for Plaintiff and Respondent.
Christina Schwindt lives in a Newport Beach community governed by a Homeowners Association (HOA) and its Board of Directors (the Board). Schwindt’s next door neighbors, Ruhksana and Akbar Omar, built a room addition that extends into their patio area. The Board had approved the room addition over Schwindt’s objection.
Schwindt then sued the Omars. Schwindt claimed that under the community’s Covenants, Conditions, and Restrictions (CC&Rs), room additions cannot be built in patio areas, and that the Omar’s room addition unreasonably interferes with her view. Following a bench trial, the court ordered the Omars to demolish their room addition and return their home to its original state.
The Omars appeal. They argue that the Board’s approval of their addition should have been binding on the parties, unless the trial court found the Board’s approval to be clearly arbitrary and capricious. We agree. That is the correct standard; it is plainly stated in the CC&Rs. But the court’s statement of decision fails to address this issue; we do not know if the court found the Board’s decision to be clearly arbitrary and capricious.
Thus, we reverse the judgment so that the court can clarify its statement of decision on remand. The court may also reconsider its ruling if it chooses to do so.
FACTS AND PROCEDURAL BACKGROUND
The Bluffs Community consists of 647 homes in Newport Beach. The community is governed under its CC&Rs, which were revised and recorded in 1984. At that time, the lot lines of the individual properties were adjusted, which created easements into the common areas. Some of the easements were designated “Existing Patio Area Easements” and some were designated “Future Patio Area Easements.” The CC&Rs prohibit an owner from building a room addition in a “Patio Area” or a “Future Patio Area.”
In January 2004, Schwindt purchased a home in the Bluffs Community. Schwindt’s home features views of Newport Bay when looking out of the back of her home, to include views of the Pacific Ocean and Catalina Island. According to Schwindt, the views were the “sole reason why I purchased the house.” When Schwindt first moved into the home, her next door neighbor was Toby Larson, whose home featured a large patio area.
In July 2014, Larson sold his home to the Omars, who submitted an application to the HOA to build a room addition. Their architect, David Bailey, drafted plans for the addition, which extended into the Omars’ patio area. However, according to Bailey, the room addition did not extend into any prohibited “Patio Area Easements.” The HOA’s Architectural Control Committee (ACC) considered the Omars’ proposal. Schwindt and others attended the ACC meeting and objected to the proposal.
The ACC initially rejected the Omars’ proposed room addition. Over the next several months, the Omars revised their plans for the room addition and erected story poles, indicating how the views of surrounding neighbors might be impacted. The ACC conducted two additional meetings to consider the Omars’ revised plans. The ACC visited the property and eventually approved the Omars’ proposed room addition. Schwindt appealed the ACC’s decision to the Board.
In December 2014, Schwindt and others attended a Board meeting and objected to the ACC’s approval of the Omars’ room addition. A long-time resident of the Bluffs, Claude Whitney, who had participated in the drafting of the revised CC&Rs in the 1980s, attended the meeting. Whitney said that each of the units in the community included a patio area, and the intent of the CC&Rs was “to make sure that people didn’t build in the patios.” The Board voted and upheld the ACC’s decision approving the Omars’ room addition.
About two weeks later, Schwindt’s counsel sent a request for alternative dispute resolution to the Omars and the HOA. According to Ruhksana Omar, she received the letter in January 2015, and by that time “we had already begun construction.” In February 2015, the Omars’ counsel sent a letter to Schwindt’s counsel stating that “my clients do not consent to any form of arbitration, mediation, or alternative dispute resolution.”
According to Schwindt, the (now completed) room addition “completely blocks my view from the dining room area. As I look out, that is the only thing I see.” Schwindt’s father, who lives with her, said that the Omars’ room addition caused their view to be 80 percent “destroyed.” Larson testified that the addition created “a slight obstruction of the view [from the Schwindt’s home] looking out toward the back bay and the ocean.” Bailey said there was a “minimal reduction in the overall view ... I think it was seven to nine percent.”
In February 2015, Schwindt filed a complaint seeking to enforce the CC&Rs by way of declaratory and injunctive relief; Schwindt named the Omars as the defendants. According to the complaint, the room addition extended into the “patio easement area.” Schwindt asserted that: “The CC&Rs specifically state that ... no Owner shall build, construct, erect or otherwise install any room addition or other enclosed improvement on any portion of his patio area and/or future patio area. Further, the enclosure will substantially block the view of the Plaintiff.”
In March 2015, Schwindt filed for a temporary restraining order requiring the Omars to “immediately cease and desist all construction activity.” The trial court found “that [Schwindt] has not established that she has a reasonable probability of prevailing in this lawsuit, and therefore the Court denies the request for a preliminary injunction.”
In July 2016, the court conducted a three-day bench trial. Prior to trial, Schwindt had filed a Joint List of Controverted Issues: “The Parties dispute whether Defendants violated any of the provisions of the recorded CC&Rs from the Bluffs Homeowners Association in connection with their ... construction of an enclosed room addition?”
On September 6, 2016, the trial court filed a tentative ruling. The court stated that Schwindt had “purchased a condominium in 2004 which had an existing view of the Back Bay of Newport Beach.” The court quoted two CC&Rs concerning views: 1) “No owner shall build, construct, or erect any improvements ... located on such owner’s Residential Estate to unreasonabl[y] interfere with the passage of light and air to, or the view from, any other residence in the project[ ]”; and 2) “The [ACC] shall not approve any Proposed Improvement which would unreasonably obstruct the view from any Other Residence in the Project.” (Italics added.) The court ruled that: “The weight of the evidence favored [Schwindt] and the Tentative Decision is in favor of [Schwindt].”
The Statement of Decision
On September 21, 2016, the Omars filed a request for a Statement of Decision. The request asked the trial court to address 81 “principal controverted issues.” The controverted issues included what definitions the court used in defining: “existing patio area easement”; “future patio area easement”; “patio area”; and “future patio area.” The Omars also asked the court to address whether it “took into account the portion of ... the CC&Rs which states: ‘All decisions of the Board shall be conclusive on the issue and binding on the parties unless such decision is clearly arbitrary and capricious.’ ”
On October 4, 2016, Schwindt filed a proposed statement of decision. The proposed statement quoted the two CC&R provisions concerning views and concluded: “In sum, the Court finds the diminution of [Schwindt’s] view caused by [Omar’s] unlawful construction (a) is unreasonable ... and (b) was caused by [Omar’s] construction of the enclosed room addition.” The proposed statement further held that a mandatory injunction to “demolish the enclosed room addition” was an appropriate remedy.
On October 21, 2016, the Omars filed objections to the proposed statement of decision. The Omars argued that the proposed statement omitted material controverted facts, including the disputed “patio” definitions and whether the court utilized the “arbitrary and capricious” standard when reviewing the Board’s decision regarding the Omar’s room addition. Schwindt filed an opposition to the Omar’s objections. The trial court conducted a hearing on the proposed statement of decision. The court denied the Omars’ request for a modification of the statement of decision.
The Omars are appealing the judgment. There is also a companion appeal in which the Omars are challenging a related attorney fees award (G055020).
The interpretation of CC&Rs is generally governed by the same rules for interpreting contracts. (Fourth La Costa Condominium Owners Assn. v. Seith (2008) 159 Cal.App.4th 563, 575.) The CC&Rs “must be ‘construed as a whole’ so as ‘to give effect to every part thereof [citations], and particular words or clauses must be subordinated to general intent.’ ” (Ezer v. Fuchsloch (1979) 99 Cal.App.3d 849, 861.)
In this appeal, the Omars primarily argue that under the CC&Rs it was Schwindt’s burden at trial to prove that the Board’s approval of their room addition was arbitrary and capricious and the court failed to apply that standard. However, we are unable to review that issue because the court’s statement of decision does not address it.
The Code of Civil Procedure provides that upon request, “[t]he court shall issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial ....”1 (§ 632.) Further, if “a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brought to the attention of the trial court ... , it shall not be inferred on appeal ... that the trial court decided in favor of the prevailing party as to those facts or on that issue.” (§ 634.)
“Section 634 ... does not require that a finding be made as to every minute matter on which evidence is received at the trial ....” (Coleman Engineering Co. v. North American Aviation, Inc. (1966) 65 Cal.2d 396, 410.) However, a statement of decision must fairly disclose “the determinations as to the ultimate facts and material issues in the case. [Citation.] When this rule is applied, the term ‘ultimate fact’ generally refers to a core fact, such as an essential element of a claim. [Citation.] Ultimate facts are distinguished from evidentiary facts and from legal conclusions. [Citation.]” (Central Valley General Hospital v. Smith (2008) 162 Cal.App.4th 501, 513.)
Ordinarily, under the “implied findings doctrine” we presume the trial court made all the factual findings necessary to support the judgment. (Espinoza v. Shiomoto (2017) 10 Cal.App.5th 85, 100.) However, the court’s statement of decision in this case (as drafted by Schwindt) did not adequately address the “ultimate facts” at issue in the trial. (§ 632.) Therefore, “it shall not be inferred on appeal ... that the trial court decided in favor of the prevailing party as to those facts or on that issue.” (§ 634.)
A court’s failure to explain the basis for its ruling does not necessarily require a reversal of the judgment on the merits. Rather, the proper procedure is to reverse and remand the case so the trial court can explain its ruling more clearly. (See e.g., Social Service Union v. County of Monterey (1989) 208 Cal.App.3d 676, 681.)
Here, we are reversing and remanding the matter so that the trial court can address at least two additional “principal controverted” trial issues in its statement of decision. (§§ 632, 634.) First, whether the court applied the standard stated in the CC&Rs and found the decision of the Board to be clearly arbitrary and capricious. Second, whether the Omars’ room addition was built in a prohibited patio area.
1. Was the Board’s decision clearly arbitrary and capricious?
The Bluffs Community CC&Rs specify a comprehensive process for the approval of proposed home improvements. “All plans and specifications shall have been prepared by an architect, landscape architect, engineer, or designer licensed or certified by the State of California ....” The plans then go to the ACC for review and action (approval, approval with conditions, or disapproval). Thereafter, “[t]he Owner submitting plans ... or any affected Owner may appeal [the decision of the ACC] to the Board of Directors .... The Board shall conduct a hearing .... At the hearing, the party making the appeal shall have the opportunity to be heard and to present evidence .... The Board ... shall issue a written decision .... All decisions of the Board shall be conclusive on the issue and binding on the parties unless such decision is clearly arbitrary and capricious.” (Italics added.)
Here, the Omars submitted the plans for their proposed room addition to the ACC. The proposal was revised and ultimately approved by the ACC. Thereafter, Schwindt appealed the ACC’s decision to the Board, which approved the ACC’s ruling. The trial court’s statement of decision states that the room addition unreasonably interferes with Schwindt’s view. However, the statement does not address whether the court found the Board’s decision to be clearly arbitrary and capricious. Again, given the disputed statement, we cannot make any assumptions regarding the court’s ruling. (§§ 632, 634.) On remand, the court is directed to squarely address this unresolved issue.
In her respondent’s brief, Schwindt argues that the “clearly arbitrary and capricious” standard does not apply. Schwindt cites two published opinions for the proposition that: “this rule of judicial deference applies only to homeowner’s associations and its officers and directors.” (Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249, 253; Ekstrom v. Marquesa at Monarch Beach Homeowners Assn. (2008) 168 Cal.App.4th 1111, 1123.)
But Schwindt’s citations entirely miss the mark. The CC&Rs explicitly provide that when it comes to proposed home improvements: “All decisions of the Board shall be conclusive on the issue and binding on the parties unless such decision is clearly arbitrary and capricious.” (Italics added.) Schwindt is plainly a “party” and is subject to this provision of the CC&Rs.
2. Was the Omars’ room addition built in a prohibited patio or future patio area?
The Bluffs Community CC&Rs provide: “There is hereby created and established an exclusive easement appurtenant to each Residential Parcel in the Project for patio purposes ... (hereinafter referred to as the ‘Patio Areas’).” The CC&Rs further provide: “There is hereby created and reserved an exclusive easement ... for potential expansion of the Patio Area ... (hereinafter referred to as the ‘Future Patio Areas’).” The CC&Rs later provide: “[N]o Owner shall build, construct, erect or otherwise install any room addition or other ‘enclosed’ Improvement on any portion of his Patio Area and/or Future Patio Area.” The primary factual dispute at trial concerned whether the Omars’ room addition was built in a restricted “Patio Area” or a restricted “Future Patio Area” within the meaning of the CC&Rs.
Schwindt presented the testimony of Larson, the former owner of the Omars’ home. Larson testified that the room addition was built in an area that he had formerly used as a patio. Robert Reed, a designated construction expert, said that he had reviewed the “plans that were drawn by the architect of the [Omar] property and the room addition. I also reviewed the CC&Rs.” Reed opined that the addition was built in a “patio area” and “the CC&Rs state that you can’t build in [an] existing or future patio area.” Whitney, the long-time Bluffs community resident who had participated in the drafting of the revised CC&Rs, testified that the intent of the revised CC&Rs was “to make sure that people didn’t build on the patios.”
The Omars presented the testimony of Bailey, the architect who had drawn their plans for the room addition. Bailey testified that he had worked on several other projects within the Bluffs Community and he was familiar with its CC&Rs. Bailey testified that the Omars’ addition was not built on a restricted “patio area” easement; rather it was built “within their buildable property.” Rick Stack, a commercial real estate broker and the chair of the ACC, testified that the ACC had “looked closely” at the proposal and determined that the room addition “did not overlap any easements.” Wilfredo Ventura, whom the parties had stipulated was an expert witness, opined that the room addition was not built in an “existing patio easement.” Jeffrey Smith, a licensed architect who the HOA retained as consultant testified that the Omars’ property did not contain an “existing patio area” as defined in the CC&Rs.
We cannot make a factual determination as to whether the Omars’ room addition was constructed in a prohibited easement. Only the trial court is in a position to gauge the credibility of the conflicting witness testimony.
3. Directions on Remand
We direct the trial court on remand to directly address the two above “principal controverted issue” (§ 632) within its statement of decision (whether the court found the decision of the Board to be clearly arbitrary and capricious, and whether the Omar’s room addition was built on a prohibited patio easement). The trial court may also reconsider its ruling in light of our directions, or it may reinstate its earlier judgment (so long as—in either event— the court addresses these two specified issues in the statement of decision). Further, the court may also address any additional issues that it deems relevant. For instance, it is unclear from the record whether the court conducted a view of the premises during the trial. If the court did so, it may want to include any factual findings that support its rulings.
The judgment is reversed. The matter is remanded for further proceedings consistent with this opinion. In the interests of justice, each party shall bear their own costs on appeal.
BEDSWORTH, ACTING P. J.
1. All further undesignated statutory references will be to the Code of Civil Procedure.