Mount Olympus Property Owners Ass'n v. Shpirt (59 Cal. App. 4th 885, 1997)

Opinion

BARON, J.

Boris and Jenny Shpirt appeal from a judgment granting Michael G. Ross and the Mount Olympus Property Owners Association, Inc. (MOPOA) injunctive relief and punitive and general damages, and from a posttrial order awarding attorney fees to Ross. In a separate cross-appeal, Ross seeks amendment of the judgment to include a previously granted order on summary adjudication. We affirm the judgment insofar as it pertains to injunctive relief and damages, but reverse the award of attorney fees, remanding the case to the trial court for consideration of one issue: whether to award under section 2033, subdivision (o) of the Code of Civil Procedure the reasonable expenses incurred in proving the genuineness of any document or the truth of any matter, which expenses would not have been incurred but for the Shpirts’ refusal to admit such matters when requested to do so.

I.

Appeal

A. Factual and Procedural Background

The preliminary facts which led to the initiation of the lawsuit underlying this appeal are almost entirely undisputed. In November of 1988, appellants and cross-respondents the Shpirts purchased a home at 2121 Mount Olympus Drive, located in the Mount Olympus area of Laurel Canyon. Respondent and appellant Ross lived next door at.2129 Mount Olympus Drive. The Shpirts wished to remodel their house, intending to greatly enlarge it and add a second story.

A “Declaration of Establishment of Restrictions” had been recorded for the tract in which both properties were located. (This document shall hereinafter be referred to as the CC&R’s.) The successor in interest to the “Declarant” under the CC&R’s, and the entity responsible for approving alterations to existing structures, was respondent MOPOA. The Shpirts twice submitted plans to MOPOA, which were rejected because of its dissatisfaction with the proposed structure. The Shpirts then submitted some preliminary drawings to which MOPOA gave tentative approval subject to, among other more minor conditions, submission of final plans and the Shpirts’ agreement to indemnify MOPOA should it be sued by Ross. The Shpirts did not fulfill the conditions, but instead demolished a portion of the existing home and allowed the property to fall into a state of disrepair.

1. The CC&R’s

The CC&R’s included a provision that “[n]o building, fence, wall, pole or other structure shall be erected, constructed, altered or maintained upon any portion of said property, unless a complete set of plans and specifications therefor . . . shall have been submitted to and approved in writing by Declarant . . . .” Approval could be withheld due to “reasonable dissatisfaction of Declarant with the grading plan, location of the structure on the building site, the color scheme, finish, design, proportions, architecture, shape, height, style or appropriateness of the proposed structure or altered structure, the materials used therein, the kind, pitch or type of roof proposed to be placed thereon, or because of its reasonable dissatisfaction with any or all other matters or things which, in the reasonable judgment of Declarant, would render the proposed structure or alteration inharmonious or out of keeping with the general plan of improvement of said property or with the structures erected on other building sites in the immediate vicinity of the building site on which said structure is proposed to be erected or altered.”

Paragraph 8.01 of the CC&R’s further provided that “[i]n the event any structure or any part thereof on any portion of said property shall be damaged or destroyed by any cause, the owner of the building site upon which the same is located shall within ninety (90) days from and after the date of such damage or destruction commence and within one (1) year after the date of such damage or destruction complete the repair or reconstruction of said structure.” Paragraph 10.04 of the CC&R’s obligated “the owners of lots and building sites ... to perform all duties incident to maintaining their respective lots and building sites including vegetation thereon, in neat, clean and good order.”

2. The Indemnity Agreement

In March of 1992, MOPOA entered into an agreement with Ross under which Ross and MOPOA agreed to file and prosecute a lawsuit against the Shpirts to prevent them from constructing a building which would infringe on the rights of Ross as set forth in the CC&R’s and which had not been approved by MOPOA. The agreement gave Ross “the exclusive right to decide and determine whether any claim or cause of action brought in the Lawsuit against Shpirt shall be prosecuted, compromised, tried, appealed or dismissed,” and required “Ross’s prior written approval” before MOPOA could “approve any plans for any proposed construction at 2121 Mount Olympus Drive,” unless “all claims and disputes between Ross and Shpirt, as set forth in the Lawsuit, have been resolved, or unless ordered to do so by the Court.”

The agreement between Ross and MOPOA also contained an assignment of “all of [MOPOA’s] rights to recover attorney’s fees in the Lawsuit, including awards of sanctions” unless “Ross and [MOPOA] are awarded attorney’s fees in excess of the amount expended by Ross or his own counsel, and the amount expended by Ross pursuant to his indemnity of [MOPOA] . . . .” In return, Ross agreed “to indemnify and hold harmless [MOPOA], and its directors and officers, from any claim, action or suit for liability or damages arising directly from the Lawsuit,” and agreed “to indemnify [MOPOA] for legal fees and costs incurred in prosecuting the Lawsuit.”

3. The Complaint and Cross-complaint

In April of 1992, Ross and MOPOA (hereafter respondents) jointly sued the Shpirts for enforcement of equitable servitude, nuisance, enforcement of easement, and breach of contract. The complaint alleged that the Shpirts had commenced demolition of the existing house in October 1991, before plans had been approved by MOPOA. Respondents sought an injunction preventing the Shpirts from erecting or constructing a house without the approval of MOPOA or from erecting or constructing a house which interfered with or reduced the view from Ross’s property, and an award of attorney fees under paragraph 12.04 of the CC&R’s. The nuisance claim was based on the accumulation of garbage on the property, the existence of garbage containers and portable toilets in front of the house, the presence of construction materials, weeds, broken windows, and stagnant water on the property, and construction noise from 7 a.m. until 6 p.m. Ross also alleged entitlement to an easement “consisting of an unobstructed view to the south and west of the Ross Property, i.e. of Laurel Canyon and the City of Los Angeles.” The breach of contract claim was based on violation of the CC&R’s by failing to keep the property in good repair under paragraph 8.01.

The Shpirts cross-claimed against Ross and MOPOA for conspiracy to induce breach of contract and interfere with prospective business relations. The cross-complaint alleged that the Shpirts had submitted plans to MOPOA for consideration in 1992 in accordance with the preliminary approval obtained, but that MOPOA refused to consider the plans because it had entered into the indemnity agreement with Ross under which Ross held veto power over any proposed construction on their property. The Shpirts sought an injunction requiring MOPOA to review the plans which had been submitted. The Shpirts also sought declaratory relief. They claimed that delay in obtaining approval for the construction jeopardized their ability to obtain favorable financing. Finally, the Shpirts accused Ross of trespass.

4. Trial and Settlement With MOPOA

As discussed in greater detail in connection with the cross-appeal (unpublished part of opn.), the Shpirts’ cross-complaint and Ross’s claim for view easement were resolved by summary adjudication. The claims for enforcement of equitable servitude, nuisance, and breach of contract were tried to the court. In the middle of trial, the Shpirts settled with MOPOA. Under the agreement, the Shpirts agreed to pay the sum of $35,000 to MOPOA for failure to maintain their property in neat, clean, and good order, and MOPOA stipulated to waive its right to file a motion for attorney fees and dismissed its own claim for breach of contract. MOPOA stayed in the case for the purpose of being bound by any judgment issued by the court as to injunctive relief.

Ross presented evidence that the Shpirts allowed large quantities of water to stagnate in their pool, which was directly under his window, such that he could smell a rancid odor emanating from it. The pool became a breeding ground for mosquitoes, and the City of Los Angeles Department of Health Services sent mosquito abatement teams out at least six times. Ross was bitten repeatedly over a five-year period.

On June 5, 1990, shortly after he had a meeting with the Shpirts about their proposed construction, music was blasted from the Shpirts’ property from 7 a.m. until 10 p.m. at night. The music could be heard even with the windows closed. When Ross complained to the Shpirts, they responded by adding a second radio on a property they owned on the other side of Ross. The devices playing the music appeared to be on timers since they started every morning at 7 a.m. Ross reported the disturbance to the police on more than one occasion and asked the Shpirts to turn the volume down several times. He wrote a letter to the Shpirts informing them that the music was “ ‘interfering with my sleep and peaceful enjoyment of my premises[.]’ ” He also obtained a temporary restraining order which the Shpirts ignored. The music-playing ended sometime between the end of June and the early part of July, after Ross obtained a preliminary injunction.

Ross also attested to the general state of disrepair at the Shpirt premises and showed pictures of construction debris, accumulated trash, overgrown weeds, and a partially demolished structure. Ross testified that he had “anxiety,” when he viewed appellants’ house, and that he was “embarrassed” and “angry.” He testified that it “affects [his] personality . . . it’s like being forced to live next to a junkyard,” and has “a radical effect on [his] whole mental state every time [he] ha[s] to take a look at it and know what’s gone on and what [they]’ve gone through, and what it appears [they] will have to continue to go through for God knows how long.” He referred to the inability of being able to use his backyard or entertain because of the mosquitos, and the “whole anxious, irritating mental state” which “goes along with having to view it and see it. [•][]... You can’t miss it, so it’s a constant source of aggravation and embarrassment and humiliation of unnecessary explanation to both new friends and old.” He told of why he no longer gardened: “. . . When you have a rose garden and you go to plant your roses and you look at them and immediately on the other side of your roses are weeds, and trash, and glass, and broken bottles, and broken concrete, and dried-out wood and everything else, it kind of takes the fun and the beauty out of the gardening.” He testified he had lost sleep, and developed an ulcer and tinnitus. Concerning the period of time when the music was playing, he said: “. . . Mr. Shpirt’s playing of the music perpetually, on what was almost a 24-hour-a-day basis for almost a week, was interfering with my ability to sleep, concentrate, deal with my family, my wife, my step-son, and my overall ability to enjoy my home.”

5. The Trial Court’s Findings

Based on the evidence presented, the court found that the Shpirts had breached the CC&R’s and created a nuisance. The court specifically found that the Shpirts “demolished substantial portions of the residence at 2121, piling dirt, debris, building materials or scrap and appliances on the site, on the sidewalk and in the street for periods varying from weeks to months and years.” In addition, “[the Shpirts] allowed their swimming pool for weeks and months to accumulate dirt, debris and scum.” The court believed Ross’s testimony that “the daily view of [the Shpirts’] property made him sick,” and that “[the Shpirts’] conduct caused or triggered ulcers.” The court concluded that the Shpirts “acted wilfully and with malice in demolishing portions of the structure at 2121, knowing that they had no permission to rebuild; in using and maintaining the location as a dump and construction site; in abandoning the maintenance of their swimming pool, knowing that the pool was just below plaintiff Ross’[s] window; [and] in playing radios on unoccupied property.” The court awarded Ross $40,000 in general damages “for his physical and emotional distress in being exposed to defendants’ conduct.” The court later awarded $50,000 as exemplary damages and $218,000 for attorney fees paid to Ross’s counsel, plus $5,812 for the portion of attorney fees incurred by MOPOA to which Ross was entitled under the indemnity agreement.

The court specifically determined both that Ross was incorrect in his contention that he was “entitled to maintain the view he has enjoyed since 1981” and that the Shpirts were incorrect in asserting that Ross was not entitled to any view under the CC&R’s. According to the court, “Mt. Olympus is ... a view development, and the criteria of ‘location, design, proportions, architecture, shape, height, style, or appropriateness’ reasonably encompasses the factor of a ‘view.’ ”

In accordance with these findings, the court issued a permanent injunction preventing the Shpirts from: “Erecting, constructing, improving or altering any building, wall, structure or other improvement on the real property at 2121 Mount Olympus Drive (the ‘Shpirt Property’) without the prior written approval of [MOPOA].” The Shpirts were likewise not to erect or construct “any building, wall, structure or other improvement on the Shpirt Property containing a second story which unreasonably interferes with or reduces the view from the existing house at 2129 Mount Olympus Drive of Laurel Canyon or the City of Los Angeles, unless defendants, their successors or assigns have obtained the approval of MOPOA.” The Shpirts were further “enjoined and directed to clear and render the Shpirt Property in neat and clean condition, within 90 days, and to maintain the Shpirt Property in a neat and clean condition thereafter.”

B. Discussion

1. Emotional Distress

2. Ross’s Attorney Fees

The second question to be considered in connection with the appeal is whether the trial court erred in granting attorney fees or in the amount of fees awarded.

After judgment, Ross claimed entitlement to attorney fees on four separate grounds: (1) Civil Code section 1354; (2) paragraph 12.04 of the CC&R’s; (3) the indemnity agreement’s assignment of MOPOA’s rights to attorney fees; and (4) Code of Civil Procedure section 2033. He sought attorney fees in the total amount of $380,228.25. This included $246,213.75 out of a total of $268,592.75 billed by Gary Gans, who had represented Ross, and $134,014.50 billed by Douglas I. Pollock, who had represented MOPOA. Ross conceded he was not entitled to recover attorney fees for time spent in seeking damages for nuisance and punitive damages, and his attorney stated that such amounts had been deleted from the amount sought. The declarations indicated that he had attributed approximately $20,000 to these claims.

The trial court ruled: “. . . Ross is entitled to attorneys fees under CC section 1354 (f) but is not entitled to attorneys fees under the CC&R’s. [