Cheveldave v. Tri Palms Unified Owners Ass'n

238 Cal. Rptr. 3d 792, 27 Cal. App. 5th 1202
CourtCalifornia Court of Appeal, 5th District
DecidedOctober 3, 2018
DocketE066461
StatusPublished
Cited by10 cases

This text of 238 Cal. Rptr. 3d 792 (Cheveldave v. Tri Palms Unified Owners Ass'n) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cheveldave v. Tri Palms Unified Owners Ass'n, 238 Cal. Rptr. 3d 792, 27 Cal. App. 5th 1202 (Cal. Ct. App. 2018).

Opinion

MILLER J.

Tri Palms Unified Owners Association (the Association) is a group of homeowners in the Tri-Palms Estates.1 There is a recreation facility adjacent to the Tri-Palms Estates, and homeowners pay a fee for that recreation facility. In 2014, in bankruptcy proceedings, Kort & Scott Financial Group, LLC (K & S) was the successful bidder on the recreation facility. The Association entered into a settlement agreement (the Agreement) with K & S. As a result of the Agreement, some members of the Association were required to pay an increased fee for the recreation facility.

In 2016, Alex Cheveldave and Richard N. Davis, who were members of the Association, sued the Association, K & S, and Shenandoah Ventures, L.P., arguing that the Association did not have standing to enter into the Agreement. The Association filed an anti-SLAPP motion ( Code Civ. Proc., 2 § 425.16), which the trial court granted. Cheveldave contends the trial court erred by granting the anti-SLAPP motion. We reverse the judgment.

FACTUAL AND PROCEDURAL HISTORY

A. PROPERTY

Tri-Palms Estates was a real estate development consisting of 10 separate housing tracts. Each housing tract had its own set of covenants, conditions, and restrictions (CC&Rs). There was a recreation facility adjacent to the housing tracts, which was a separately owned facility. Tri-Palms Estates' various CC&Rs required homeowners to pay fees for the recreation facility.

The recreation facility had been in continuous operation since the early 1960s and consisted of an 18-hole regulation golf course, a nine-hole executive golf course, a 15,000-square foot clubhouse, a public restaurant, three large swimming pools, two spas, tennis courts, a shuffleboard complex, a pro shop, banquet facilities, a 1,000-square foot arts and crafts building, and offices. Throughout the years, there have been various owners of the recreation facility. In 2003, in a recorded "Master Declaration," property owners within Tri-Palms Estates formed the Association for the purpose of communicating with the management *798of the recreation facility and for supervising compliance with the CC&

B. PRIOR TRIAL COURT CASE

In 2008, the recreation facility was owned by The Club at Shenandoah Springs Village, Inc. (Shenandoah). The Association and Karla Wilson, a homeowner within the Association, brought a class action against Shenandoah. The Association and Wilson alleged that Shenandoah received $3,700,000 per year in fees from members of the Association. The Association and Wilson accused Shenandoah of (1) allowing the general public to use the recreation facility for additional fees, thus depriving the homeowners of their exclusive use of the recreation facility; (2) charging homeowners unauthorized use and cleaning fees-in addition to the monthly fees already being paid; and (3) mismanaging the fees received from homeowners.

On June 18, 2012, following a trial, the Riverside County Superior Court found Shenandoah breached the governing documents by not maintaining the recreation facility in a reasonable manner and by charging fees in excess of those permitted by the governing documents. The court also found that the homeowners had a nonexclusive easement for the use and enjoyment of the recreation facility, and therefore, Shenandoah could permit the public to use the recreation facility.

The trial court issued a permanent injunction requiring Shenandoah to maintain the recreation facility in a reasonable manner and to hire and retain a professional management company to operate the recreation facility. The injunction prohibited Shenandoah from charging homeowners a greater amount of fees than those provided for in the governing documents. The trial court awarded the Association approximately $365,648.88 plus interest for attorneys' fees.

C. BANKRUPTCY CASE

In May 2007, Shenandoah borrowed $15,000,000 from General Electric; the loan was secured by the recreation facility. On November 28, 2012, General Electric recorded a notice of default and election to sell under deed of trust against the recreation facility, alleging at least $11,486,181 was owed. A receiver was to be appointed on December 4. On December 3, Shenandoah filed a petition for Chapter 11 bankruptcy in the United States Bankruptcy Court, Central District of California, Riverside Division. The Association filed a claim as a secured creditor.

Shenandoah sought to increase the fees paid by homeowners. The CC&Rs permitted the fees to be recalculated based upon the consumer price index; however, such an increase had not occurred "for years." The Association opposed Shenandoah's recalculation of the fees. In January 2014, the Association and Shenandoah participated in a mediation concerning the increased fees, but the issue was not resolved. The Association then filed a demand for arbitration against Shenandoah.

In March 2014 Shenandoah sought the bankruptcy court's permission to sell Shenandoah's assets. Shenandoah hoped to sell the recreation facility to Inspire Communities for $15,000,000 with $850,000 used exclusively for improvements and repairs on the recreation facility. The Association was worried that the bankruptcy court would soon grant Shenandoah's motion to sell the recreation facility, and therefore entered into a settlement agreement (the Agreement) with Inspire Communities. The Agreement required the Association to (1) withdraw its arbitration case, and (2) permit Shenandoah's suggested fee increase, in exchange for Inspire Communities agreeing to (a) maintain the recreation facility as required by the state trial court's 2012 injunction, and (b) not *799having the increased fees be retroactive to an earlier date.

In May, the bankruptcy court held a hearing on Shenandoah's motion for authorization to sell the recreation facility. The Association was at the hearing. The bankruptcy court granted the motion. The court approved K & S as the successful bidder and explained that K & S substituted into the Agreement for Inspire Communities. In the bankruptcy court's order it wrote, "The Court approved K & S as the successful bidder at the hearing on the Motion in lieu of Inspire Communities, in part, based on K & S' agreement on the record in open court to the terms and conditions of the Inspire Settlement Agreement."

D. CURRENT CASE

1. COMPLAINT

In January 2016, Cheveldave and Davis (collectively, Plaintiffs) sued the Association, K & S, and Shenandoah Ventures, L.P. Cheveldave owned property within Tri-Palms Estates, and Davis also owned property within Tri-Palms Estates. Plaintiffs alleged there is no common property within Tri-Palms Estates, that Tri-Palms Estates is not a common interest development, and therefore the Association did not have the authority to enter into the Agreement on behalf of the homeowners. Plaintiffs asserted that the fee increase set forth in the Agreement was void because such an increase can only occur upon a vote to amend the CC&Rs.

Plaintiffs sought a declaration that (1) Tri-Palms Estates is not a common interest development; (2) the fee increase is a breach of the CC&Rs; and (3) "that [the] bankruptcy settlement agreement is void."

2.

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Cite This Page — Counsel Stack

Bluebook (online)
238 Cal. Rptr. 3d 792, 27 Cal. App. 5th 1202, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cheveldave-v-tri-palms-unified-owners-assn-calctapp5d-2018.