Property Owners of Whispering Palms, Inc. v. Newport Pacific, Inc.

132 Cal. App. 4th 666, 33 Cal. Rptr. 3d 845, 2005 Daily Journal DAR 11043, 2005 Cal. Daily Op. Serv. 8189, 2005 Cal. App. LEXIS 1413
CourtCalifornia Court of Appeal
DecidedSeptember 8, 2005
DocketNo. D045150
StatusPublished
Cited by12 cases

This text of 132 Cal. App. 4th 666 (Property Owners of Whispering Palms, Inc. v. Newport Pacific, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Property Owners of Whispering Palms, Inc. v. Newport Pacific, Inc., 132 Cal. App. 4th 666, 33 Cal. Rptr. 3d 845, 2005 Daily Journal DAR 11043, 2005 Cal. Daily Op. Serv. 8189, 2005 Cal. App. LEXIS 1413 (Cal. Ct. App. 2005).

Opinion

[670]*670Opinion

McINTYRE, J.

An association of residents in two standard subdivisions (i.e., those not having any areas of common ownership) sued the developer that retained control over the architectural committees responsible for enforcing the subdivisions’ declarations of restriction (CC&R’s), seeking in part to validate its attempts to wrest that control away from the developer. This appeal from a judgment in favor of the developer, the architectural committees and certain others raises two primary issues: (1) whether the association lacks standing to sue because its membership included residents of another subdivision that would not have standing to assert such claims in their own right, and (2) whether the requirements of California Code of Regulations, title 10, section 2792.28 (Regulation 2792.28) relating to a developer’s obligation to turn over control of an architectural committee to subdivision homeowners are inapplicable to standard subdivisions. We hold that the association’s membership does not preclude its standing to sue, but that the association cannot assert causes of action based on Regulation 2792.28 because the regulation is inapplicable in the context of a standard subdivision.

FACTUAL AND PROCEDURAL BACKGROUND

The Whispering Palms community is a multi-use housing development in Rancho Santa Fe that consists of three standard single-family home subdivisions known as Greens Nos. 1, 2 and 3, respectively. The subdivisions were developed by Newport Pacific, Inc., or its predecessor in interest (Newport Pacific, Inc., and its principal, Richard Cavanaugh, are referred to collectively as the Developer).

Each of the subdivisions has its own CC&R’s. Since the late 1970’s, the owners of the homes in Greens No. 1 have elected the members of the architectural committee that is responsible for the enforcement of the CC&R’s for their subdivision. By contrast, pursuant to the CC&R’s applicable to Greens Nos. 2 and 3, the Developer (or its predecessor in interest) appointed the original members of the architectural committees responsible for enforcing the CC&R’s for those subdivisions (the Architectural Committees). The Greens Nos. 2 and 3 CC&R’s authorize the members of the Architectural Commmittees to designate the successors for any members who die or resign and provide that the Develpers’s consent is required to amend the CC&R’s.

In 1971, residents of Greens Nos. 1, 2 and 3 formed Property Owners of Whispering Palms, Inc. (the Association), the primary purpose of which was to “provide a mechanism whereby the members of the corporation can collectively solve social welfare problems facing them as property owners in the Whispering Palms development. . . .” At some point, residents of Greens [671]*671Nos. 2 and 3 became dissatisfied with how the Architectural Committees were enforcing the applicable CC&R’s and they tried to convince the Developer to give them control over the Committees’ membership; however, the Developer rebuffed the residents’ requests.

In December 2001, certain members of the Association spearheaded an effort to revise the Association’s articles of incorporation and bylaws and to create a revised and unified set of CC&R’s that would govern both Greens Nos. 2 and 3. The revised bylaws provided that only the residents of Greens Nos. 2 and 3 would be members of the Association and the revised CC&R’s provided the Association’s board with the sole authority to appoint the members of the new architectural committee that would be responsible for enforcement of the CC&R’s in Greens Nos. 2 and 3.

In early 2002, the Greens Nos. 2 and 3 homeowners who were Association members voted overwhelmingly to approve the revised Association articles and bylaws and the revised CC&R’s. Although the Developer owned four of the 104 lots in Greens No. 2 and seven of the 53 lots in Greens No. 3, it declined to participate in the voting process, and later refused to relinquish control of the Architectural Committees, contending that the revised governing documents were not validly adopted in accordance with the requirements of the existing CC&R’s and California law. The Association disagreed, asserting that the Developer’s ability to control the governing documents was greatly restricted by the adoption of Regulation 2792.28 in 1976.

The Association filed this action in May 2002 on behalf of the owners of homes in Greens Nos. 2 and 3 against the Developer, seeking declaratory relief regarding the application of Regulation 2792.28, quiet title, breach of process of amendment and injunctive relief. The Developer demurred to the complaint on numerous grounds; as relevant here, it contended that Regulation 2792.28, which was the basis for the Association’s breach of process and injunctive relief claims, was inapplicable since Greens Nos. 2 and 3 were not common interest developments. The Association opposed the demurrer, arguing that Regulation 2792.28 was equally applicable to all subdivisions, whether in the nature of a common interest development or not. The court sustained this demurrer with leave to amend and the Association filed a petition for a writ of mandate in this court, seeking to challenge the superior court’s holding that Regulation 2792.28 was inapplicable to standard subdivisions. This court summarily denied the petition.

After another round of pleadings and demurrers, the Association filed a second amended complaint in June 2003, which reasserted many of the prior claims, added claims to reform the original CC&R’s for Greens Nos. 2 and 3 and for an accounting, and named the Architectural Committees and the [672]*672individual members of those Architectural Committees as defendants (collectively the defendants). The individual committee members demurred to the second amended complaint on the ground that it failed to allege facts establishing liability on their part. Before the court ruled on the demurrer, the Association dismissed two of the individual members, leaving Cavanaugh and his wife as the only remaining committee members named as defendants. The court took the demurrer off calendar as to the dismissed defendants and sustained the Cavanaughs’ demurrer as to all causes of action.

After the Association filed its third amended complaint for declaratory relief relating generally to unfair enforcement of the Greens Nos. 2 and 3 CC&R’s, the Developer and the Architectural Committees moved for summary judgment on the ground that the evidence showed that the Association’s membership included at least some residents of Greens No. 1, who did not have standing to bring claims in their own right, and that this precluded the Association’s standing in accordance with Hunt v. Washington State Apple Advertising Comm’n (1977) 432 U.S. 333 [53 L.Ed.2d 383, 97 S.Ct. 2434] (Hunt). The Association opposed the motion, arguing that, after the adoption of the Association’s revised articles and bylaws, the residents of Greens No. 1 were no longer members of the Association and, even if those revised articles and bylaws were invalid, it nonetheless had standing under established law.

The court granted the motion for summary judgment. It found that there was no triable issue of fact as to whether the Association had standing to sue because (1) the revised articles and bylaws, which purported to remove the Greens No. 1 residents from Association membership, were invalid because the Greens No.

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Bluebook (online)
132 Cal. App. 4th 666, 33 Cal. Rptr. 3d 845, 2005 Daily Journal DAR 11043, 2005 Cal. Daily Op. Serv. 8189, 2005 Cal. App. LEXIS 1413, Counsel Stack Legal Research, https://law.counselstack.com/opinion/property-owners-of-whispering-palms-inc-v-newport-pacific-inc-calctapp-2005.