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Subject: HOA Holding Up My Escrow over Legal Fees
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WendyP5
(California)

Posts:43


07/03/2019 10:02 AM  
I filed a lawsuit against my HOA for violating the Davis Stirling Common Interest Act. They assert they are not subject to the law, and have gone through the CC&Rs and deleted anything referring to the law, without consulting the membership and without a quorum, and refiled them in Riverside County.

In the meantime, I had a house fire, the burnt out house was properly demoed and I sold the vacant lot for $34K. We haven't been to court yet, regarding the DSA violations, there is no ruling, no judgement or liens on my property, nevertheless, the HOA is demanding $12K in legal fees in order to allow escrow to close. They have never presented me with a bill or an invoice for their legal fees, and the case hasn't been dismissed yet, due to my lack of standing, because I am still the owner of the property until escrow closes.

Does the HOA have the right to demand these fees without a lien or a judgement, and hold up my escrow?
LetA
(Nevada)

Posts:736


07/03/2019 10:40 AM  
I'm confused as to why your HOA is involved with the private sale of your land. If there is not any liens filed against the property, then the sale should proceed uninterrupted.

Is the HOA asking for damages related to the fire like fines that violated the CC&R's?
WendyP5
(California)

Posts:43


07/03/2019 10:59 AM  
No, the HOA isn't asking for anything related to the fire. Because of the fire and the expense of rebuilding, I decided to sell the vacant lot. Once the sale goes through I won't have legal standing to take the HOA to court, as I won't be an HOA member anymore, the case will have to be dismissed.

Anticipating that, the HOA is demanding that I pay the legal fees that incurred to launch a defense against my lawsuit against them for violations of and the rejection of the Davis Stirling Common Interest Act before they allow my escrow to close.

Normally the prevailing party is awarded legal fees, but in this case there is no prevailing party.
CathyA3
(Ohio)

Posts:338


07/03/2019 11:12 AM  
This is a question for a lawyer who is familiar with the details. None of us here are privy to what actually happened when, and with a lawsuit already filed, it would be irresponsible to speculate.
SheilaJ1
(South Carolina)

Posts:110


07/03/2019 11:16 AM  
Posted By WendyP5 on 07/03/2019 10:59 AM
No, the HOA isn't asking for anything related to the fire. Because of the fire and the expense of rebuilding, I decided to sell the vacant lot. Once the sale goes through I won't have legal standing to take the HOA to court, as I won't be an HOA member anymore, the case will have to be dismissed.

Anticipating that, the HOA is demanding that I pay the legal fees that incurred to launch a defense against my lawsuit against them for violations of and the rejection of the Davis Stirling Common Interest Act before they allow my escrow to close.

Normally the prevailing party is awarded legal fees, but in this case there is no prevailing party.




Your two issues are related, your attorney should advise not to dismiss/withdraw the lawsuit until he/she has negotiated a "without prejudice" dismissal/withdrawal, if successful in negotiating without prejudice, they cannot come after you for fee's and you still have the right to reopen the complaint.


If negotiations fail. Your attorney needs to file another lawsuit in form of an injunction and have a court decide on if the legal fee's are valid. In almost all cases, legal fee's are shared amongst the homeowners.

Are you sure you have a competent attorney that has experience in HOA's and corporate law?

As for the illegal CC&R's amendment, was this the builder that had them changed?
WendyP5
(California)

Posts:43


07/03/2019 11:19 AM  
Nothing "actually happened". There is no lien, no judgement and no ruling. I personally have no invoice or bill from the HOA for legal fees incurred by them because of the suit I filed against them for DSA violations. I haven't seen their legal invoices, so I don't even know if those legal bills are actually related to my case, or if they are for legal advice on how to operate going forward, no longer being subject to DSA.

WendyP5
(California)

Posts:43


07/03/2019 11:26 AM  
"As for the illegal CC&R's amendment, was this the builder that had them changed? "

No. The membership voted to be a common interest development subject to the Davis Stirling Common Interest Act in 1998. In 2017, an unelected, self appointed board decided they didn't want to be subject to that pesky law, so they stripped any reference to the law from the CC&Rs, and without a quorum and without notifying the membership or getting their consent they filed the revised CC&Rs with the county.

I and my attorney, who owns 30 homes in the development, filed for injunctive relief. The HOA is dragging their feet and demanding all kinds of discovery before we actually see a judge. Due to the expense of depositions etc., the case is stalled.

SheilaJ1
(South Carolina)

Posts:110


07/03/2019 11:29 AM  
Posted By WendyP5 on 07/03/2019 11:19 AM
Nothing "actually happened". There is no lien, no judgement and no ruling. I personally have no invoice or bill from the HOA for legal fees incurred by them because of the suit I filed against them for DSA violations. I haven't seen their legal invoices, so I don't even know if those legal bills are actually related to my case, or if they are for legal advice on how to operate going forward, no longer being subject to DSA.



You need to talk to your attorney. It doesn't matter whatever changes they made to the CC&R's or if they believe they are no longer subject to it. At the time of filing, they were subject to it and this is where your attorney needs to start negotiating an exit.
SheilaJ1
(South Carolina)

Posts:110


07/03/2019 11:35 AM  
Posted By WendyP5 on 07/03/2019 11:26 AM
"As for the illegal CC&R's amendment, was this the builder that had them changed? "

No. The membership voted to be a common interest development subject to the Davis Stirling Common Interest Act in 1998. In 2017, an unelected, self appointed board decided they didn't want to be subject to that pesky law, so they stripped any reference to the law from the CC&Rs, and without a quorum and without notifying the membership or getting their consent they filed the revised CC&Rs with the county.

I and my attorney, who owns 30 homes in the development, filed for injunctive relief. The HOA is dragging their feet and demanding all kinds of discovery before we actually see a judge. Due to the expense of depositions etc., the case is stalled.



It's usually the other way around, the plaintiff usually proceeds with discovery and the defendant usually drags their feet on providing discovery. Like I stated, your attorney needs to start negotiating with the HOA and possibly the insurance if they are involved.
WendyP5
(California)

Posts:43


07/03/2019 12:01 PM  
Posted By SheilaJ1 on 07/03/2019 11:29 AM
Posted By WendyP5 on 07/03/2019 11:19 AM
Nothing "actually happened". There is no lien, no judgement and no ruling. I personally have no invoice or bill from the HOA for legal fees incurred by them because of the suit I filed against them for DSA violations. I haven't seen their legal invoices, so I don't even know if those legal bills are actually related to my case, or if they are for legal advice on how to operate going forward, no longer being subject to DSA.



You need to talk to your attorney. It doesn't matter whatever changes they made to the CC&R's or if they believe they are no longer subject to it. At the time of filing, they were subject to it and this is where your attorney needs to start negotiating an exit.





They are arguing that the references to Davis Stirling in the CC&Rs was a typo. Just a mistake and a misunderstanding. That's why, they say, they didn't need to consult the membership to make the change.

PaulJ6
(New York)

Posts:184


07/03/2019 12:08 PM  
Wendy, HOAs (like most people) get mad when they're sued. They're just being vindictive.

Can your lawyer re-file the complaint and now include additional grounds that would be grounds to make the directors personally liable? Isn't wrongfully blocking the sale by wrongfully demanding legal fees an additional tort that you can sue for?

I'd try that. If they want to up the ante, do the same.
AugustinD


Posts:1886


07/03/2019 12:28 PM  
I am putting myself in the HOA Board's shoes here. Suppose the following:

-- Pursuant to California statute, Member John Doe has been through IDR and mediation with the HOA. Neither IDR nor mediation yielded a settlement. Pursuant to statute, Member Doe then filed suit in California District Court against the HOA.

-- At the time of filing, John Doe thinks he is correct about the law and his claim. The HOA thinks it is correct about the law. The HOA believes the judge will rule against Doe. California Civil Code 5975 states: "In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs." The "shall" here is important. The HOA is expecting an award of attorney's fees.

-- If Member Doe perceives that he is going to lose the lawsuit, then getting the lawsuit withdrawn, without a court's ruling on the merits, is maybe one way he can avoid the court imposing the HOA's attorney's fees on him.

-- If Doe sells his home, and the case has not been decided, but now Doe is no longer a HOA member and so has no standing, supposedly requiring withdrawal of the suit, the HOA misses out on an opportunity to win back the cost of its attorney's fees.

-- If I were on the Board, I might very well support seeing if Member Doe's escrow yada could legally be held up until Member Doe paid the attorney's fees to date. I suspect it can. (Granted it sounds like an incompetent Board. If I were a member there, I think I'd want out, too.)

Wendy, as you know, one alternative is to hang onto the vacant lot and continue to pursue the present lawsuit. But barring more information, I think the better alternative may be to cut your losses. I suggest negotiating with the HOA. You can contact the Board and say you want to discuss a settlement. Or you can be more formal and, pursuant to statute, file a new complaint requesting IDR. At IDR, present a dollar figure you are willing to pay the HOA. If IDR fails, then per statute, seek mediation.

I do not think you are going to get out of this HOA without paying some amount of the HOA's attorney's fees for the suit you started.
SheliaH
(Indiana)

Posts:2621


07/03/2019 12:30 PM  
I'm with Cathy and LetA - you need to be discussing all this with your attorney. We live in different states and aren't attotneys, and it's not a good idea to get legal advice on something this involved from the internet
PaulJ6
(New York)

Posts:184


07/03/2019 12:31 PM  
I'm thinking:

Plaintiff is right.

HOA board knows little and just has insurance coverage. And HOA board is mad.

So HOA board can stall the case as long as it wants and try to get back at Plaintiff.

I think that's what's happening.
SheilaJ1
(South Carolina)

Posts:110


07/03/2019 12:32 PM  
Posted By WendyP5 on 07/03/2019 12:01 PM
Posted By SheilaJ1 on 07/03/2019 11:29 AM
Posted By WendyP5 on 07/03/2019 11:19 AM
Nothing "actually happened". There is no lien, no judgement and no ruling. I personally have no invoice or bill from the HOA for legal fees incurred by them because of the suit I filed against them for DSA violations. I haven't seen their legal invoices, so I don't even know if those legal bills are actually related to my case, or if they are for legal advice on how to operate going forward, no longer being subject to DSA.



You need to talk to your attorney. It doesn't matter whatever changes they made to the CC&R's or if they believe they are no longer subject to it. At the time of filing, they were subject to it and this is where your attorney needs to start negotiating an exit.





They are arguing that the references to Davis Stirling in the CC&Rs was a typo. Just a mistake and a misunderstanding. That's why, they say, they didn't need to consult the membership to make the change.



This excuse is used a lot. I don't think removing civil law codes constitutes typos. I'm surprised the court clerk didn't say anything. But your CC&R's have been around since 1998? So the excuse to change them now due to a typo is a bit weak. Your lawsuit appears to have been the deciding factor.
PaulJ6
(New York)

Posts:184


07/03/2019 12:36 PM  
Posted By SheliaH on 07/03/2019 12:30 PM
I'm with Cathy and LetA - you need to be discussing all this with your attorney. We live in different states and aren't attotneys, and it's not a good idea to get legal advice on something this involved from the internet




I get why the plaintiff is asking: no lawyer is the definitive source of legal wisdom, so the plaintiff is asking around to get some other ideas, in case the plaintiff's lawyer hadn't thought of something. I think what the plaintiff is doing is a good idea.
AugustinD


Posts:1886


07/03/2019 12:47 PM  
Posted By PaulJ6 on 07/03/2019 12:31 PM
I'm thinking:
Plaintiff is right.
HOA board knows little and just has insurance coverage. And HOA board is mad.
So HOA board can stall the case as long as it wants and try to get back at Plaintiff.


I agree that, from what has been presented here, it's as likely the Plaintiff is in the right. Before the fire, the HOA may have been using its corporate wealth and insurance to prolong the lawsuit to try to intimidate the plaintiff into cutting her losses. So even if the Plaintiff is in the right, (small town) corporate America may be able to mop the floor with her.

Wendy, is the HOA's insurer providing the attorney for the HOA's defense? Per chance, is there a hammer clause? At this point, I kind of doubt it. Still, if the HOA's insurance policy has a hammer clause, this may be in your favor. It means your attorney can talk to the HOA's insurer-provided attorney in a rational, bottom line, way. The insurer is a third interested party in this conflict, and it may have a lot of sway.
WendyP5
(California)

Posts:43


07/03/2019 12:52 PM  
I don't know what IDR is, but the board has repeatedly ignored my formal disputes and they don't have any hearing policy. They haven't asked for mediation.

It looks like, at this point, hanging onto the property is my only option, because escrow can't close on time and the buying is likely to pull out.

WendyP5
(California)

Posts:43


07/03/2019 12:59 PM  
"Wendy, is the HOA's insurer providing the attorney for the HOA's defense?"

I don't think so. They declined their request when this was in Small Claims, (dismissed without prejudice because Small Claims wasn't the proper venue, once they changed the CC&Rs) before we filed for injunctive relief.

The insurance company won't defend cases where the defendants are willfully in violation of the law, in this case, the board is willfully violating the Davis Stirling Act.

PaulJ6
(New York)

Posts:184


07/03/2019 1:09 PM  
Posted By WendyP5 on 07/03/2019 12:59 PM
"Wendy, is the HOA's insurer providing the attorney for the HOA's defense?"

I don't think so. They declined their request when this was in Small Claims, (dismissed without prejudice because Small Claims wasn't the proper venue, once they changed the CC&Rs) before we filed for injunctive relief.

The insurance company won't defend cases where the defendants are willfully in violation of the law, in this case, the board is willfully violating the Davis Stirling Act.





Why not sue each board member individually in small claims court, for monetary damages to you from breach of fiduciary duty?

That might wake them up. They'd claim that those claims have to be brought as part of the main litigation, but there might be a way to separate them.
AugustinD


Posts:1886


07/03/2019 1:10 PM  
Posted By WendyP5 on 07/03/2019 12:52 PM
I don't know what IDR is, but the board has repeatedly ignored my formal disputes and they don't have any hearing policy. They haven't asked for mediation.

It looks like, at this point, hanging onto the property is my only option, because escrow can't close on time and the buying is likely to pull out.


... and I gather one reason the Board is ignoring your complaints and has no hearing policy is because it claims the HOA is not subject to the Davis-Stirling Act. If the HOA is not subject to Davis-Stirling, then IDR, followed possibly by mediation, is not required. Also Davis-Stirling Section 5975 would not apply. This means the HOA is on weak ground when it comes to demanding attorney's fees. Even if a lawsuit goes forward, and the HOA wins, the courts rarely award attorney's fees to the prevailing side unless a statute authorizes it.

Given everything, consider asking your attorney about mediation. E.g. your attorney could ask the HOA for mediation. If this fails, then your attorney could ask the court to order mediation. The HOA can always say no, but subsequently the judge is going to be a tad annoyed with the HOA, for wasting court resources.




WendyP5
(California)

Posts:43


07/03/2019 1:22 PM  
"Why not sue each board member individually in small claims court, for monetary damages to you from breach of fiduciary duty? "

I'm not sure I would do that or calculate my monetary losses. I'm losing a potential sale of $34K, and the buyer just offered an additional $2500 to close on time, but I don't how to calculate my actual monetary losses, since I still own the land.

But, if I could articulate is right before the judge, maybe that's a option.
WendyP5
(California)

Posts:43


07/03/2019 1:23 PM  
Requesting mediation is a great idea! I'll ask my attorney about that.

PaulJ6
(New York)

Posts:184


07/03/2019 1:43 PM  
Posted By WendyP5 on 07/03/2019 1:22 PM
"Why not sue each board member individually in small claims court, for monetary damages to you from breach of fiduciary duty? "

I'm not sure I would do that or calculate my monetary losses. I'm losing a potential sale of $34K, and the buyer just offered an additional $2500 to close on time, but I don't how to calculate my actual monetary losses, since I still own the land.

But, if I could articulate is right before the judge, maybe that's a option.




Your losses are $2500 if you don't close on time and $34k if you don't close.

Maybe attorneys' fees are recoverable too (but likely not).
PaulJ6
(New York)

Posts:184


07/03/2019 2:55 PM  
Posted By WendyP5 on 07/03/2019 12:01 PM
Posted By SheilaJ1 on 07/03/2019 11:29 AM
Posted By WendyP5 on 07/03/2019 11:19 AM
Nothing "actually happened". There is no lien, no judgement and no ruling. I personally have no invoice or bill from the HOA for legal fees incurred by them because of the suit I filed against them for DSA violations. I haven't seen their legal invoices, so I don't even know if those legal bills are actually related to my case, or if they are for legal advice on how to operate going forward, no longer being subject to DSA.



You need to talk to your attorney. It doesn't matter whatever changes they made to the CC&R's or if they believe they are no longer subject to it. At the time of filing, they were subject to it and this is where your attorney needs to start negotiating an exit.





They are arguing that the references to Davis Stirling in the CC&Rs was a typo. Just a mistake and a misunderstanding. That's why, they say, they didn't need to consult the membership to make the change.





The HOA must have a pretty ratty attorney to be making an argument like that. That's pitiful and doesn't even seem like a serious legal position.
RichardP13
(California)

Posts:3763


07/03/2019 4:45 PM  
Posted By WendyP5 on 07/03/2019 1:23 PM
Requesting mediation is a great idea! I'll ask my attorney about that.




Any chance you reside in Hemet?

Been there, Done that
WendyP5
(California)

Posts:43


07/03/2019 5:12 PM  
Hi Richard.
I lost my computer in the fire, and most of my screen names and passwords with it, so I had to sign in with a new account. Otherwise, I would have continued on my original thread. But, I couldn't find it.

UPDATE: My attorney was finally able to speak to the HOA's (new) attorney, and he was unaware of this issue. Hopefully, we'll have something resolved by Monday, or not. The funny think is their attorney is from the law firm that specializes in Davis Stirling and hosts most of the Davis Stirling web pages!

SteveM9
(Massachusetts)

Posts:3296


07/03/2019 5:19 PM  
I guess we are all confused at how this $12k bill came up in escrow. If there is no lien, why would your escrow company stop the sale? What paperwork was provided that stopped this?
RichardP13
(California)

Posts:3763


07/03/2019 5:19 PM  
I remember this well. Yes, based on the documents, the association is subject to the Davis-Stirling Act of California Civil Code. If they have a management adding these legal fees, they would be in for big trouble, IMO.

Been there, Done that
WendyP5
(California)

Posts:43


07/03/2019 5:39 PM  
"What paperwork was provided that stopped this?"

Just the standard demand letter that states what the assessments are, if the homeowner has unpaid assessments and what late fees are due. The board just added a statement claiming that they have spent "in excess" of $12K on legal fees due to a law suit that I files, and the escrow company took that as a legitimate demand for payment.

We are all baffled with the escrow company's "Switzerland" stance.
AugustinD


Posts:1886


07/03/2019 5:42 PM  
Wendy, does your HOA own any land (a.k.a. "common area")? See https://www.hoalawblog.com/not_every_homeowners_associati/
WendyP5
(California)

Posts:43


07/03/2019 5:50 PM  
We never owned the clubhouse, the pool or the recreational areas. Those are privately owned. But, there are walkways established throughout the development that are for the common use of the residents of the community, according to the CC&Rs. Their rewrite didn't edit that out of the CC&Rs.

But, that is there claim, that there are no common areas, therefore we are not a common interest. It's all just a big misunderstanding, they say.
RichardP13
(California)

Posts:3763


07/03/2019 6:03 PM  
Posted By WendyP5 on 07/03/2019 5:39 PM
"What paperwork was provided that stopped this?"

Just the standard demand letter that states what the assessments are, if the homeowner has unpaid assessments and what late fees are due. The board just added a statement claiming that they have spent "in excess" of $12K on legal fees due to a law suit that I files, and the escrow company took that as a legitimate demand for payment.

We are all baffled with the escrow company's "Switzerland" stance.



The demand for legal fees is nullified unless there is a judgement on the title report, which I am assuming there isn't.

Been there, Done that
AugustinD


Posts:1886


07/03/2019 6:09 PM  
Posted By WendyP5 on 07/03/2019 5:50 PM
We never owned the clubhouse, the pool or the recreational areas. Those are privately owned. But, there are walkways established throughout the development that are for the common use of the residents of the community, according to the CC&Rs. Their rewrite didn't edit that out of the CC&Rs.

But, that is there claim, that there are no common areas, therefore we are not a common interest. It's all just a big misunderstanding, they say.


Just to keep the archives filled with possibly interesting info: Do these walkways cross people's home lots? Does either the plat or Declaration record easements that state that other owners may use these walkways? Who has the maintenance responsibility for these walkways?

It sounds like it is possible that it is a (court's?) judgment call as to whether this HOA is subject to Davis-Stirling. Signs are that the HOA is subject to California Corporations Code.

I realize this attorney of yours (who also owns a number of homes in this HOA) has likely considered all this.

See also https://www.epsten.com/category/case-law-legislation/davis-stirling-act/
RichardP13
(California)

Posts:3763


07/03/2019 6:15 PM  
Posted By AugustinD on 07/03/2019 6:09 PM
Posted By WendyP5 on 07/03/2019 5:50 PM
We never owned the clubhouse, the pool or the recreational areas. Those are privately owned. But, there are walkways established throughout the development that are for the common use of the residents of the community, according to the CC&Rs. Their rewrite didn't edit that out of the CC&Rs.

But, that is there claim, that there are no common areas, therefore we are not a common interest. It's all just a big misunderstanding, they say.


Just to keep the archives filled with possibly interesting info: Do these walkways cross people's home lots? Does either the plat or Declaration record easements that state that other owners may use these walkways? Who has the maintenance responsibility for these walkways?

It sounds like it is possible that it is a (court's?) judgment call as to whether this HOA is subject to Davis-Stirling. Signs are that the HOA is subject to California Corporations Code.

I realize this attorney of yours (who also owns a number of homes in this HOA) has likely considered all this.

See also https://www.epsten.com/category/case-law-legislation/davis-stirling-act/



Each incorporated entity must file Statement of Information with the Secretary of State. In this instance, this HOA, which happens to be a mobile home park, filed a SI-CID form and checked off the box saying they were a Common Interest Development, signed by the agent THE attorney in question.

Been there, Done that
WendyP5
(California)

Posts:43


07/03/2019 6:41 PM  
The definition of "lot" is the plot of land, including any common area, as defined by the CC&Rs. The walkways are owned by the owners who are, through the rules, responsible for their maintenance, like pulling weeds and trimming trees. But in 2016 the HOA was (almost?) sued by a homeowner whose walkway was buckling due to tree roots, and wanted the HOA to pay for it.

The HOA attorney at the time opined in a letter that the HOA was responsible for the repair of the walkway, and board accepted that and paid for the repair. They also issued a letter from their attorney at the time opining that the HOA was indeed a common interest, and subject to the Davis Stirling Act. The 2016 board declared that opinion as "question answered". "We are common interest development"

The 2017 board fired that attorney.

The 2016 board also raised the assessments to pay the $3500 it cost to do the repairs, but the 2017 board eliminated the "reserve fund" and declared that money now a "legal fund".
AugustinD


Posts:1886


07/03/2019 6:45 PM  
Posted By RichardP13 on 07/03/2019 6:15 PM
Each incorporated entity must file Statement of Information with the Secretary of State. In this instance, this HOA, which happens to be a mobile home park, filed a SI-CID form and checked off the box saying they were a Common Interest Development, signed by the agent THE attorney in question.




The California case law articles I linked indicates that a HOA is not subject to Davis-Stirling when it owns no "common area." If in fact this HOA has no "common area," then I think this case law may easily trump (a) this filed "Statement of Information"; (b) the governing documents stating the HOA is subject to Davis-Stirling; and (c) a vote by the residents to make the community subject to Davis-Stirling.

The case law articles I linked talk about what "common area" means when it comes to determining whether the HOA is subject to Davis-Stirling. Here's the court's actual ruling in one of the two major cases on the subject: https://law.justia.com/cases/california/court-of-appeal/4th/59/885.html

If it is a subjective issue, and given the general loathing for HOAs, I can understand how a HOA, with questionable "common area," would perhaps fight tooth and nail not to be subject to Davis-Stirling.

I think this HOA's strategy is to never get a judgment from a court, via burying the OP and her attorney in paperwork and delays. The HOA may agree to a settlement to get this member out.

AugustinD


Posts:1886


07/03/2019 6:49 PM  
Posted By WendyP5 on 07/03/2019 6:41 PM
The definition of "lot" is the plot of land, including any common area, as defined by the CC&Rs. The walkways are owned by the owners who are, through the rules, responsible for their maintenance, like pulling weeds and trimming trees. But in 2016 the HOA was (almost?) sued by a homeowner whose walkway was buckling due to tree roots, and wanted the HOA to pay for it.


What do you mean by "owned by the owners"? Are you saying the walkways are collectively owned by all the owners in the HOA? Or is each section of walkway owned by the owner of the lot over which the walkway section passes?
NpS
(Pennsylvania)

Posts:3572


07/03/2019 6:50 PM  
Hi Wendy
I'm struck by the fact that your attorney owns 30 units in your community.

1. Is he a named Plaintiff in the lawsuit?

2. How many other owners are Plaintiffs?

3. How many units represented in the lawsuit and how many total in the community?

Sikubali jukumu. Read all posts at your own risk.
WendyP5
(California)

Posts:43


07/03/2019 6:56 PM  
The walkways run behind all the home within the walls of the community. The houses with yards that but the wall don't have an attached common area. There are 335 homes, so a majority of homeowners own a portion of the walkways.

And yes, the walkways are also considered areas of ingress and egress, but for the most part utilities are accessed by the company's agent walking from the street, where they parked, through the yard to the common area where the meters are.

WendyP5
(California)

Posts:43


07/03/2019 7:01 PM  
This is not a class action suit. It's just me, represented by my lawyer, who obviously has a vested interest in how the property is managed.

A lot of homeowners are eagerly waiting for the outcome of this case, so that they can claim the common area part of their lot as their yard, fence it in and have a 5 feet deeper yard space. The HOA isn't keen on letting homeowner do that though, and have forbidden any fencing blocking the "common area" of the walkways.



AugustinD


Posts:1886


07/03/2019 7:09 PM  
Wendy, thank you for the elaboration. My impression is this may be one expensive complicated lawsuit you filed, and not because the defendant HOA wants all manner of discovery. The issues are murky.

I wish your attorney had signed on as co-plaintiff. I feel like he may be using you? Now you're potentially on the hook for a settlement (dollars) to the HOA (for the HOA's court costs) since your home burned and you want to sell your lot.

Your attorney and you may be right. But I think a court ruling to this effect may cost a lot of money.

I wonder how the HOA is raising money to pay the HOA attorney. Is a special assessment being planned?

You do realize that simpler cases can run into the hundreds of thousands of dollars for attorney's fees, right?

Sorry to rain on any parade you had going, from across the miles and distance of the internet. You've been through enough. Settle and be done with this?
WendyP5
(California)

Posts:43


07/03/2019 7:18 PM  
We have been trying to settle for a few months now. They just keep upping the ante, like this latest surprise of adding $12K in attorney fees to the escrow demand.




WendyP5
(California)

Posts:43


07/03/2019 7:39 PM  
Also, keep in mind, the board that rewrote the CC&Rs wasn't elected. There was no election that year, and the outgoing board either stayed on or appointed their own replacement. The decision to rewrite the CC&Rs was done without a quorum, and the membership was never consulted.

They may be able to convince a judge that they deserve to be able to have the membership vote on opting out of the law, but I doubt any judge would agree with their methods or that the original declaration of Common Interest and inclusion of the Davis Stirling Act was a mistake.

AugustinD


Posts:1886


07/03/2019 9:04 PM  
Posted By WendyP5 on 07/03/2019 7:39 PM
Also, keep in mind, the board that rewrote the CC&Rs wasn't elected. There was no election that year, and the outgoing board either stayed on or appointed their own replacement. The decision to rewrite the CC&Rs was done without a quorum, and the membership was never consulted.

They may be able to convince a judge that they deserve to be able to have the membership vote on opting out of the law, but I doubt any judge would agree with their methods or that the original declaration of Common Interest and inclusion of the Davis Stirling Act was a mistake.


I believe the CC&Rs explicitly declaring something like, "This HOA is hereby subject to the Davis-Stirling Act, California Civil Code 4000 to... ", has no bearing on whether the HOA is subject to the Davis-Stirling Act. What does determine if the HOA is subject to the D-S statute is, for one thing, whether the HOA meets the requirements as given in the statute. In particular, Section 4175 states:
---
“Planned development” means a real property development other than a community apartment project, a condominium project, or a stock cooperative, having either or both of the following features:

(a) Common area that is owned either by an association or in common by the owners of the separate interests who possess appurtenant rights to the beneficial use and enjoyment of the common area.

(b) Common area and an association that maintains the common area with the power to levy assessments that may become a lien upon the separate interests in accordance with Article 2 (commencing with Section 5650) of Chapter 8.
---

If either (a) or (b) is not met, then there is no "planned development" and other sections of the statute say the statute therefore does not apply. This is per the case law I linked above. It makes sense: No "common area," then no "common interest" exists. The statute was written for communities with a "common interest" based in a "common area."

Nor can a membership vote cause the Davis-Stirling statute verbiage just go away. A community cannot just vote to become subject to D-S. The community has to meet certain requirements, as laid out by the statute itself.

Your community may or may not qualify as a D-S "planned development." I would have to study your governing documents a lot more. Then case law. The practice within your community over the years might come into play as an indication of whether the original developer's intent was to make the walkways, "common area." Hence the massive discovery.

I hope your attorney principally addressed the above D-S verbiage (about what "common area" is) in the filing he made on your behalf. I could be wrong, but I get the feeling he did not explain to you on what much of this lawsuit will hinge.
RichardP13
(California)

Posts:3763


07/03/2019 9:10 PM  
The HOA is a Common Interest Development under the Davis-Stirling section of California Civil Code. I have seen the docs.

Been there, Done that
RichardP13
(California)

Posts:3763


07/03/2019 9:13 PM  
Title is held as a Planned Unit Development (PUD) and that document is recorded.

Been there, Done that
AugustinD


Posts:1886


07/03/2019 9:15 PM  
Yeah, we disagree.
NpS
(Pennsylvania)

Posts:3572


07/04/2019 1:38 AM  
Posted By AugustinD on 07/03/2019 7:09 PM
I wish your attorney had signed on as co-plaintiff. I feel like he may be using you? Now you're potentially on the hook for a settlement (dollars) to the HOA (for the HOA's court costs) since your home burned and you want to sell your lot.



If what Richard and Augustin say are correct, the $12k in fees is small potatoes. I'm going to guess that they have adequate documented support for those expenditures and those expenditures are on this lawsuit. They would be fools to claim legal expenses that don't apply.

I am troubled by the fact that, even before the fire, your attorney was 30x more likely to benefit than you from the outcome if you won, but he is not a co-plaintiff and therefore, you are solely liable if things go against you.

In your shoes, I would go to an independent lawyer to discuss the position that your "lawyer" put you in. Why should you be left holding the bag when he benefits more than you from the outcome? Maybe he should replace you as the plaintiff? Maybe he should put up a bond to cover the HOA's legal fees so that you can get your money and move on? Maybe the threat of a complaint against him to your state's bar association will get him to start thinking about his "client's" best interest instead of his own?

This is especially unfortunate for you, since the value of the asset you're left with after the fire is nowhere near what your lawyer's 30 units are worth. Find a lawyer who doesn't mind taking action against another lawyer and at minimum get yourself a consultation with that new lawyer.

I understand that your focus is on the behavior of your BOD. You're personally invested in that lawsuit, and it's grinding on you. Maybe you should shift some of that grind to your supposed lawyer. No matter what happens at the HOA at this point, the BOD's prior behavior shouldn't be your concern anymore. Let it go. Protect yourself as best you can financially. Talk to someone who will only be thinking about how to get you out of this jam at the least cost to you.

Best.






Sikubali jukumu. Read all posts at your own risk.
NpS
(Pennsylvania)

Posts:3572


07/04/2019 2:20 AM  
A bit more on your supposed lawyer:

- Anyone who owns 30 units is a sophisticated investor, which I assume you are not.
- He had to know that the BOD would defend its behavior and spend money on lawyers.
- He had to know that the BOD (no matter how they got their positions) were legally obligated to try to recover those legal expenditures from you before they looked to any other source.

In your shoes, I would not speak to him first about any of this. Speak to another lawyer first. Find out what your options are. Maybe let your new lawyer speak for you instead of getting played again.

Sikubali jukumu. Read all posts at your own risk.
CathyA3
(Ohio)

Posts:338


07/04/2019 6:58 AM  
Posted By NpS on 07/04/2019 2:20 AM
A bit more on your supposed lawyer:

- Anyone who owns 30 units is a sophisticated investor, which I assume you are not.
- He had to know that the BOD would defend its behavior and spend money on lawyers.
- He had to know that the BOD (no matter how they got their positions) were legally obligated to try to recover those legal expenditures from you before they looked to any other source.

In your shoes, I would not speak to him first about any of this. Speak to another lawyer first. Find out what your options are. Maybe let your new lawyer speak for you instead of getting played again.




I agree. Note that if the HOA had to pass a special assessment to pay the legal costs associated with this lawsuit, the OP's lawyer would pay 30 times what other owners would pay. He has a vested interest in the HOA successfully passing these costs onto his client. I hope the OP takes these comments to heart and finds a lawyer who will act in her best interest.
MelissaP1
(Alabama)

Posts:8396


07/04/2019 7:03 AM  
Kept silent on this as more details came out. Wow. You really need to let this all go. Suing your HOA is suing yourself and your neighbors. You should NOT be suing your HOA on your own. Your neighbors waiting on the outcome of the case is a HUGE red flag!!! Hello they are NOT that "upset" if they did not join you in a lawsuit or do the changes in the RIGHT way. The right way of course was NEVER to have gone to court. It was to READ your documents to enact the changes you all needed to do. Which was to get together to recall the board or to have a special meeting to make rule changes.

The HOA board is typically ONLY homeowners. Are you still developer owned? It would seem that your treating the board as if they are "aliens" from another world. In fact they are people who also have a vested interest as well in the HOA. As they are also members and have to live under the same conditions.

Your lawyer is also a red flag. He's got enough power under him to be part of the "Class action" suit against the HOA as if you ever sue your HOA, it is best option. A class action suit spreads out the expenses and also shows unity of what the membership wants. Otherwise it does make you stick out as the "Squeaky wheel". The HOA can then could focus on you and force your payment to them.


I am not sure how exactly the HOA is holding up your Escrow? That is a bit confusing to me on how that process works. Our HOA had nothing to do with one's escrow. You wanted to sell your home, then you did. We just may tell the mortgage company the dues rate so they can pro-rate it for the new owner. They may want to know what the previous owner owed etc...


My thoughts are that there are more apples and oranges that your trying to put together as grapes. Meaning that you are attributing them charging you the 12K in legal fees for your lawsuit. However, your house caught on fire and you demolished the remains. Our HOA the documents say you have to rebuild on the lot a similar home. You left an empty lot. So I would check your rules on how an empty lot is to be handled.

Your basically out of there once you sell. So why care to keep up the lawsuit? I'd drop the lawyer, the lawsuit, and position. Do best to get out of this mess.

Former HOA President
AugustinD


Posts:1886


07/04/2019 7:59 AM  
I think the comments by NpS and Cathy are great. Rule 1.7 of California's Rules of Professional Conduct requires that the OP's attorney (a) provide a written disclosure of his financial conflicts of interest to the OP; and (b) obtain "informed written consent" from the OP. See http://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.7-Exec_Summary-Redline.pdf. Wendy, did your attorney do these things?
PaulJ6
(New York)

Posts:184


07/04/2019 8:31 AM  
The OP's lawyer would not be bringing this case if it were frivolous. The OP's lawyer probably figured that without applicable insurance coverage, the HOA would settle. Surely the HOW will have to at some point since it likely doesn't have the funds for protracted litigation, without imposing a special assessment on owners, which wouldn't be too popular.

But I also recommend that the OP talk to a few other lawyers about this. It is odd that the lawyer is a major owner in the HOA.

OP, when you speak to others, be sure not to disclose the advice that your lawyer has given you, since if you do so, it might no longer be "privileged" and the HOA could require you to cough it up to the HOA during discovery.
AugustinD


Posts:1886


07/04/2019 8:46 AM  
Posted By PaulJ6 on 07/04/2019 8:31 AM
The OP's lawyer would not be bringing this case if it were frivolous.


I agree this case is likely not frivolous. It appears to me to be messy and way too far from a slam dunk, but it's no where near "frivolous" as the courts define "frivolous."

The OP's lawyer probably figured that without applicable insurance coverage, the HOA would settle.


The dispute is about whether this HOA is subject to a certain well-known and demanding statute. Nothing else. No way do I see the HOA caving to this and agreeing to conduct itself per the statute. The board and many members of the HOA may be in the category of being /very/ anti-government regulation or similar. I think the HOA may be ready to pay a lot of money to defend its position. Many members may feel similarly.
WendyP5
(California)

Posts:43


07/04/2019 8:55 AM  
I'm not suing my neighbors, I'm taking the Association to court and asking for injunctive relief. Since the Association claims that the development is not a common interest development, and the California code that regulates common interest HOAs doesn't apply to them, they do not represent the common interests of the homeowners and my neighbors. They represent the egos of two people, one of whom serves as president and treasurer and conducts his own financial audits AND has diverted all the funds that have accrued over the past 20 years for the maintenance and repair of the common area to a legal fund to protect their illegal actions.

It's the Association that's keeping this fight going. And by blocking my escrow's closing they're forcing me to keep it going too. IF they allowed me to sell I would be forced to ask for a dismissal because I would not have legal standing to sue for injunctive relief.

Also, there is so much apathy in our community that they had to resort to recruiting renters. There are renters serving on the Association's board, in violation of the CC&Rs and the by laws.

WendyP5
(California)

Posts:43


07/04/2019 9:08 AM  
Posted By CathyA3 on 07/04/2019 6:58 AM
Posted By NpS on 07/04/2019 2:20 AM
A bit more on your supposed lawyer:

- Anyone who owns 30 units is a sophisticated investor, which I assume you are not.
- He had to know that the BOD would defend its behavior and spend money on lawyers.
- He had to know that the BOD (no matter how they got their positions) were legally obligated to try to recover those legal expenditures from you before they looked to any other source.

In your shoes, I would not speak to him first about any of this. Speak to another lawyer first. Find out what your options are. Maybe let your new lawyer speak for you instead of getting played again.




I agree. Note that if the HOA had to pass a special assessment to pay the legal costs associated with this lawsuit, the OP's lawyer would pay 30 times what other owners would pay. He has a vested interest in the HOA successfully passing these costs onto his client. I hope the OP takes these comments to heart and finds a lawyer who will act in her best interest.





The HOA doesn't do "special assessment. When the 2016 board raised the dues (forever), their excuse was that it was to cover the costs of the repair of a section of walkways, they should have levied a one time special assessment, or better yet, paid for it from the reserve fund.

PaulJ6
(New York)

Posts:184


07/04/2019 9:13 AM  
Posted By WendyP5 on 07/04/2019 8:55 AM
I'm not suing my neighbors, I'm taking the Association to court and asking for injunctive relief. Since the Association claims that the development is not a common interest development, and the California code that regulates common interest HOAs doesn't apply to them, they do not represent the common interests of the homeowners and my neighbors. They represent the egos of two people, one of whom serves as president and treasurer and conducts his own financial audits AND has diverted all the funds that have accrued over the past 20 years for the maintenance and repair of the common area to a legal fund to protect their illegal actions.

It's the Association that's keeping this fight going. And by blocking my escrow's closing they're forcing me to keep it going too. IF they allowed me to sell I would be forced to ask for a dismissal because I would not have legal standing to sue for injunctive relief.

Also, there is so much apathy in our community that they had to resort to recruiting renters. There are renters serving on the Association's board, in violation of the CC&Rs and the by laws.





If you're selling, why would you care about how the HOA conducts itself after you sell?

Could you change the demand to be for a modest amount of monetary damages, get paid something, and move on?

Unless you're doing a derivative suit or class action on behalf of all owners, couldn't you just get paid your actual damages due to the HOA's misconduct, and be done with it?
WendyP5
(California)

Posts:43


07/04/2019 9:16 AM  
Posted By AugustinD on 07/04/2019 8:46 AM
Posted By PaulJ6 on 07/04/2019 8:31 AM
The OP's lawyer would not be bringing this case if it were frivolous.


I agree this case is likely not frivolous. It appears to me to be messy and way too far from a slam dunk, but it's no where near "frivolous" as the courts define "frivolous."

The OP's lawyer probably figured that without applicable insurance coverage, the HOA would settle.


The dispute is about whether this HOA is subject to a certain well-known and demanding statute. Nothing else. No way do I see the HOA caving to this and agreeing to conduct itself per the statute. The board and many members of the HOA may be in the category of being /very/ anti-government regulation or similar. I think the HOA may be ready to pay a lot of money to defend its position. Many members may feel similarly.





The thing is, the board doesn't seem to understand that by dismissing the civil code and the accountability it imposes, they also lose the rights and protections that it provides. They found out, for example, that they can't place a lien on my property and foreclose without a judgment from a court. They lost a huge set of teeth, right there.

Likewise, they can't compel homeowners to dues pay dues, anymore, without a judgment from a court. Under the corporate code, corporation don't have governing authority and don't represent an arm of the government like HOA's do in California under Davis Stirling.



NpS
(Pennsylvania)

Posts:3572


07/04/2019 9:18 AM  
Posted By PaulJ6 on 07/04/2019 8:31 AM
The OP's lawyer would not be bringing this case if it were frivolous. The OP's lawyer probably figured that without applicable insurance coverage, the HOA would settle. Surely the HOW will have to at some point since it likely doesn't have the funds for protracted litigation, without imposing a special assessment on owners, which wouldn't be too popular.



Who cares what the her supposed lawyer thought about the weaknesses of the HOA's position or the possibility of winning a case without regard for how much Wendy will be out of pocket? Every indication is that he took unfair advantage of her. An infraction like that could even rise to the level of losing his license to practice law for some period of time.

Posted By PaulJ6 on 07/04/2019 8:31 AM
But I also recommend that the OP talk to a few other lawyers about this. It is odd that the lawyer is a major owner in the HOA.



Worthless advice. Depending on where Wendy is located, it might not be easy to find a new lawyer who will help her pursue a claim against her current lawyer. She'll probably need help just finding the right kind of lawyer for this situation.

Posted By PaulJ6 on 07/04/2019 8:31 AM
OP, when you speak to others, be sure not to disclose the advice that your lawyer has given you, since if you do so, it might no longer be "privileged" and the HOA could require you to cough it up to the HOA during discovery.



Another oversimplification that could lead her in the wrong direction. If she finds a new lawyer, that lawyer will tell her who she can talk to about what. Blanket statements are rarely all that they're cracked up to be.

Sikubali jukumu. Read all posts at your own risk.
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