Bear Creek Master Ass'n v. Edwards (130 Cal. App. 4th 1470, 2005)

Opinion

WARD, J.

Defendants and appellants Parlan L. Edwards and Gloria Renico Edwards, as trustees of the Parlan L. Edwards and Gloria Renico Edwards Family Trust (the Trust), appeal from a judgment in favor of plaintiff and respondent Bear Creek Master Association (Bear Creek), on Bear Creek’s action for breach of contract and foreclosure. Although both Edwardses are named trustees of the trust, the primary actor throughout has been Parlan L. Edwards; for convenience, therefore, we refer to Edwards in the singular, as the representative of the Trust and as the person who performed most of the salient acts on defendants’ behalf.

Edwards and the Trust also appeal postjudgment orders for attorney fees and requiring them to post additional security pending appeal.

The key issue in the appeal is whether a homeowners’ association may charge homeowners’ association dues or assessments for unbuilt property within a planned and partially built homeowners’ association development. The Trust’s parcel was planned for eight condominium units, out of a phase of 16, but none of the units on the Trust’s portion of the property had actually been constructed. This dispute arose because the Trust failed to pay homeowners’ association assessments; indeed, it refused to do so on the theory that assessments are chargeable only to a condominium unit, but that there were no built-out units on the Trust’s property.

As we shall explain below, we affirm the judgment and the postjudgment orders.

FACTS AND PROCEDURAL HISTORY

Bear Creek is the master homeowners’ association for the master Bear Creek development. Country Club Villas (CCV) is the homeowners’ association, or subassociation, within the Bear Creek master development. The property at issue is located within the CCV subassociation area within the Bear Creek master development. The property comprises what is described as units 9 through 16 of phase IV of the CCV subassociation. Units 9 through 16 were eight unbuilt condominium units within CCV phase IV. Sixteen condominiums were originally designed for CCV phase IV; eight condominiums were built in “pods” of two units each, but the remaining eight units, comprising units 9 through 16, were never constructed.

A company called Watt Bear Creek had owned units 9 through 16 of CCV phase IV, but lost title to that property through foreclosure. The property was acquired by Bear Creek Limited, which was owned by Bill Johnson. Edwards apparently lent a sum of money to Johnson, which Johnson failed to repay.

At the time that Edwards lent the funds to Johnson, he did not further investigate the status of Johnson’s property; he simply relied on Johnson’s representation that the property was worth twice the amount borrowed. He did no research in the Riverside County Assessor’s Office, he did not research recorder’s office records regarding the property, and he never read the Bear Creek covenants, conditions, and restrictions (CC&R’s) applicable to the property. Edwards testified that he had purchased numerous properties in the past and that he was familiar with title reports, but that he did not review any title report on the property before lending to Johnson.

Johnson defaulted on the Edwards loan, and Edwards foreclosed. Again, before foreclosing and taking title to the property, Edwards did not check the assessor’s records, did not check the recorder’s records, and did not obtain a title report. Edwards foreclosed on the property and took title for the Trust in approximately December 1997. Edwards’s attorney, Lucila Enriquez, telephoned the Bear Creek property manager in January 1998 to explain that Edwards was now the owner of units 9 through 16 of CCV phase IV. Attorney Enriquez told the property manager that she was representing Edwards in connection with his ownership of the lots, and advised that she and Edwards had had some difficulty accessing the property. She followed up the telephone conversation with a copy of the title document showing the transfer from Johnson to Edwards.

The deed giving title to Edwards, on behalf of the Trust, listed Attorney Enriquez’s address as the address to which the recorded deed was to be mailed. It was to Attorney Enriquez’s address, therefore, that Bear Creek sent various notices to Edwards, as owner of units 9 through 16 of CCV phase IV.

Among other things, Bear Creek mailed homeowners’ association ballots and notices of association assessments to Edwards, always to Attorney Enriquez’s address. As already noted, Attorney Enriquez herself had telephoned Bear Creek’s property manager in January of 1998 to inform Bear Creek that the Trust had acquired ownership of the property. The homeowners’ ballots for each of the Trust’s units were voted and returned. The ballots included a space to write in the owner’s address; except in two instances in which the address space was left blank, the voted ballots that Edwards returned all gave Attorney Enriquez’s address as the owner’s address.

Bear Creek also sent notices of delinquent homeowners’ association assessments for the units, and notices of intent to file a lien. These notices were sent both by first class mail and by certified mail with return receipt requested, to the Trust at Attorney Enriquez’s address. The certified mail envelopes were returned unclaimed, but the first class mail was not returned by the post office.

Before Bear Creek filed the instant suit, no one had ever informed Bear Creek that Attorney Enriquez was not authorized to receive communications from Bear Creek at her address. Normally, if a property owner wishes to change its address of record with Bear Creek, the owner notifies the property manager in writing. The property manager never received such a notification with respect to units 9 through 16 of CCV phase IV.

Bear Creek adduced evidence that it had charged association assessments to prior owners of units 9 through 16, even though those eight units were unbuilt. Bear Creek also charged assessments to other unbuilt units within the Bear Creek master development. The triggering event is when one unit in a phase is sold; after that, assessments are charged to each unit in the phase. Bear Creek consistently charged such assessments against every unit in a phase which had sold one property, and had done so regardless of whether the unit consisted of a house, townhouse, condominium, or unbuilt structure.

Edwards testified that he believed the assessments, under the CC&R’s, applied only to “condominiums.” Inasmuch as there were no condominium buildings on his property, he took the view that he had no duty to pay the assessments. He further testified that he also believed that he had no right, as he owned no “units” or “condominiums,” to vote in homeowners’ association elections. He claimed that Bear Creek had erred in sending him any homeowners’ association ballots, but that he had voted the ballots only to “protect” himself. The day following this testimony, however, Edwards executed a proxy with respect to the Bear Creek election for three members of the board of directors, and cast 24 ballots (three for each unit of his property) in that election. Edwards did not deny sending the proxy, but testified that he had immediately sent a revocation of the proxy “[t]o the same man I sent the proxy to.”

In December 1998, Edwards executed a deed of trust on the property in favor of Attorney Enriquez; this transaction was to secure payment of Enriquez’s attorney fees in representing Edwards in various matters concerning the property; Edwards had encountered numerous difficulties in getting the property ready to develop. Among other things, he learned after he had acquired the property that tax assessments were delinquent.

Edwards gave evidence that he and Attorney Enriquez had had difficulty gaining access to the Bear Creek development, a gated community. Edwards spoke to an onsite employee to apply for vehicle stickers for his and Enriquez’s cars. In the vehicle permit application, Edwards requested that stickers for his and his wife’s cars be mailed to his business address. He testified that he duly received the vehicle permits, and never thought to do anything else about changing his record address with the property manager.

In any event, Bear Creek charged assessments and sent notices for these assessments to Edwards at Attorney Enriquez’s address. Edwards disputed the legality of the assessments, inasmuch as there were no built-out structures corresponding to units 9 through 16 of CCV phase IV. Bear Creek sent notices of delinquency, filed lis pendens until its lien could be established, and filed the instant action for, among other things, judicial foreclosure, foreclosure of an equitable lien, and breach of contract. Edwards answered on October 13, 2000. (Edwards also filed a cross-action which was later dismissed as to Bear Creek—as a sanction for discovery abuses—and apparently transferred to a different court to be consolidated with a different action involving different parties. The cross-complaint is not in issue on this appeal.)

After considerably protracted and contentious pretrial proceedings, trial began on May 27, 2003. The court exercised its discretion to try the equitable issues and questions of law first, to the court, reserving jury trial for the common law issues, if any remained.

The trial proceeded normally for the first two days. On the third day of trial, Attorney Enriquez did not appear. Edwards, who had been traveling with her, reported that Enriquez had suffered chest pains while en route to court that day, and went to the emergency room for evaluation. On the following day, a Friday, Enriquez again did not appear. She sent a letter and a note to the court by fax, after normal business hours. The note stated that Enriquez was placed on a 60-day medical leave for further evaluation, but the note was not signed under oath and gave no details of Enriquez’s medical condition.

The following Monday, June 2, 2003, the court ordered Attorney Enriquez to appear by June 5, 2003, or to submit a sworn declaration of a physician explaining why Enriquez had failed to appear in court. Enriquez instead filed a request for a continuance of the trial for 60 days for claimed medical disability. Enriquez averred that she was completely debilitated and could not “function in day to day activities.” She also appended a doctor’s letter, which stated only vaguely that Enriquez’s condition was being “worked-up,” and that “[depending on the outcome of the work-up, she may return to work prior to or after the estimated sixty-days period.” This letter was unsworn and provided no intelligible information on Enriquez’s medical condition.

On June 5, 2003, the date set to resume trial, neither Attorney Enriquez nor Edwards appeared. The court therefore ordered a postponement of the trial until July 30, 2003 (approximately 60 days from the onset of Attorney Enriquez’s alleged medical disability). The order advised both Enriquez and Edwards that, if Enriquez was medically unable to resume trial on July 30, 2003, Edwards should be prepared to go forward with new counsel; the 60-day continuance should afford Edwards sufficient time for new counsel to prepare to proceed.

On July 30, 2003, Attorney Enriquez again failed to appear. A new attorney, Carter E Johnston, appeared on Enriquez’s behalf. This time, Attorney Enriquez averred that she may have suffered a small stroke four or five days earlier. This claim was supported only by unsworn doctors’ statements, despite the court’s earlier order that Enriquez must present verified evidence of her medical condition, substantiating her incapacity to appear at trial.

Attorney Johnston also claimed that he was unprepared to proceed with the trial on July 30, 2003, despite the court’s express direction to Attorney Enriquez to inform her client (Edwards) of the need to proceed without fail on that date, and to obtain new counsel if necessary to do so. The court denied Attorney Johnston’s request for a further continuance. The highly unusual circumstances of Attorney Enriquez’s absenting herself from court in the midst of trial, without providing verified evidence of any medical disability or incapacity, resulted in an order for sanctions, which has been reviewed in a separate appeal. (Bear Creek Master Association v. Edwards (Sept. 21, 2004, E034591) [nonpub. opn.].)

The case then proceeded on July 30 and 31, 2003. The court issued a statement of decision, finding in favor of Bear Creek on both the judicial and equitable foreclosure causes of action. Because no triable issues of fact remained with respect to any alleged breach of contract, the court also granted Bear Creek’s motion for a directed verdict on that cause of action. The court thereupon gave judgment for Bear Creek in the amounts requested. The court further found that Bear Creek was the prevailing party and thus entitled to attorney fees.

Edwards moved for a new trial. This was apparently denied, and Edwards filed a notice of appeal from the judgment.

Bear Creek submitted a motion for attorney fees; Bear Creek then moved to amend the judgment to include both the attorney fees and costs award and an amount previously ordered as sanctions. The court signed the judgment as amended.

Bear Creek then objected to the amount of the undertaking Edwards had posted before taking an appeal; inasmuch as the judgment had been substantially increased by the addition of the attorney fees and costs award, Bear Creek asked the court to order Edwards to provide an increased undertaking on appeal. The court found that the undertaking already deposited was insufficient, in light of the amounts added to the judgment for attorney fees and costs, and ordered Edwards to deposit additional funds for the undertaking on appeal. Edwards filed a second notice of appeal, encompassing the award of attorney fees and costs as well as the requirement of an additional undertaking on appeal.

This court eventually consolidated these two appeals.

ANALYSIS

Edwards raises a plethora of issues, some of which are duplicative, and none of which has merit, with only one possible minor exception.

I. Edwards Was Required to Pay Assessments, Notwithstanding the Absence of an Actual Structure on the Property

Edwards’s primary contention throughout the action was that assessments pertain only to a “condominium,” and that a “condominium” must contemplate an actual, existing structure. In the absence of a building or structure, no duty to pay assessments arose under either statutory law or under the Bear Creek CC&R’s. Edwards thus argues, first of all, that the court erred in denying his motion for a directed verdict on all causes of action. He asserts that Bear Creek could not prove an essential element of all the causes of action: to wit, the existence of a “condominium.”

A. The Davis-Stirling Act Defines a “Condominium” as “Space” Described in a Qualifying Instrument

Edwards insists that “[vjacant land is not a condominium.” This claim is based upon a proposed construction of the relevant statutory authority and, to some extent, of the Bear Creek CC&R’s. The construction of both statutes and contractual documents presents questions of law, which we review de novo. (Regents of the University of California v. Superior Court (1999) 20 Cal.4th 509, 531 [85 Cal.Rptr.2d 257, 976 P.2d 808]; Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 843 [102 Cal.Rptr.2d 468].)

Civil Code section 783 was enacted in 1963. (Stats. 1963, ch. 860, § 1, p. 2090.) It defined a condominium as “an estate in real property consisting of an undivided interest in common in a portion of a parcel of real property together with a separate interest in space in a residential, industrial or commercial building on such real property, such as an apartment, office or store.” (Italics added.) An amendment in 1969 did not alter this language in the statute. (Stats. 1969, ch. 275, § 1, p. 624 [amending the description of a possible condominium interest from an “estate for years” to an “estate for years, such as a leasehold or subleasehold”].)

In 1984, however, the definition of a “condominium” was changed considerably. Civil Code section 783 was amended to read: “A condominium is an estate in real property consisting of an undivided interest in common in a portion of a parcel of real property together with a separate interest in space, the boundaries of which are described on a recorded final map, parcel map, condominium plan or other document in sufficient detail to locate all boundaries thereof The area within such boundaries may be filled with air, earth, or water or any combination thereof and need not be physically attached to the land except by easements for access and, if necessary, support. The description of such space may refer to (i) boundaries described in the recorded final map, parcel map, condominium plan or other document; (ii) physical boundaries, either in existence, or to be constructed, such as walls, floors and ceilings of a structure or portion thereof; (iii) an entire structure containing one or more separate interests in space; or (iv) any combination thereof. The portion of the parcel of real property held in undivided interest may be all of the real property of an existing parcel or lot (except for the separate interests in space) or may include a particular three-dimensional portion thereof, the boundaries of which are described on a recorded final map, parcel map, condominium plan or other document. The area within the boundaries may be filled with air, earth, or water, or any combination thereof, and need not be physically attached to land except by easements for access and, if necessary, support. A condominium may include in addition a separate interest in other portions of such real property. . . .” (Italics added.) Civil Code section 1350 was amended to reflect that, “As used in this title unless the context otherwise requires: [][] 1. ‘Condominium’ means a condominium as defined in Section 783 of the Civil Code, [f] 2. ‘Unit’ means the elements of a condominium which are not owned in common with the owners of other condominiums in the project, [f] 3. ‘Project’ means the entire parcel of real property divided, or to be divided into condominiums, including all structures thereon. [