Topic: Homeowners Association Law
At some point it may appear that litigation is your only option remaining to resolve the dispute with the association. There are many different causes of action that may be asserted. These include: breach of fiduciary duty, negligence and/or breach of contract. Breach of contract is based upon a violation of the CC&R’s or the other governing documents of the association which are generally considered to be a three-way contract between the property owner, the association and the other property owners within the association. In some cases, litigation would have to be against the association and a neighboring property owner, such as in a case where the association has approved the neighbor’s second story addition, despite your objections that a second story addition would violate your view, privacy or other rights. Another basis for litigation could be a violation of the Davis-Stirling Common Interest Development Act, which is found at Civil Code Sections 4000, et seq. In 2014, the code sections were renumbered, reorganized and slightly modified by the Legislature. Court decisions prior to 2014 reflect the prior numbered code sections. This is the statute that primarily governs homeowners associatiOns. The remedies sought may include monetary relief, injunctive relief and declaratory relief.
One issue that sometimes develops in litigation planning is whether or not to name the board of directors individually. Although this decision must be made on a fact specific basis, it is generally inadvisable to name the individual board members in such litigation because they have some defenses that the association does not have, such as the business judgment rule. See Ritter & Ritter Inc. vs. Churchill Condominium Association (2008) 166 Cal.App.4th 103 re: naming Board members. However, in a case where the association has no revenue or other assets and may not have any insurance, you may wish to pierce the corporate veil and name the individual directors. Finally, there are limitations on the ability of a property owner to bring an action against the Association ‘s community manager or other association vendor. Brown v. Professional Community Management (2005) 127 Cal.App. 4th 532; Berryman v. Merit Property Management (2007) 152 Cal.App. 4th 1544. Sometimes, the community manager is the person your client most wants to sue.