By Glen Hansen
In Robert Ekstrom v. Marquesa at Monarch Beach Homeowners Association (2008) 168 Cal.App.4th 1111, the Court of Appeal, Fourth Appellate District, emphasized that boards of directors of homeowners associations do not have the discretion to ignore the express requirements of the conditions, covenants and restrictions (“CC&Rs”) for the development, despite the “judicial deference rule” adopted by the California Supreme Court in Lamden v. La Jolla Shores Clubdominium Homeowner’s Assn. (1999) 21 Cal.4th 249.
In Ekstrom, homeowners in a common interest development with beach and golf course views complained to the Board of Directors (“Board”) of the development’s homeowners association (“Association”) about palm trees that were growing higher than the rooftops and blocking those views. The homeowners had paid premium prices for those views. The CC&Rs expressly provided that “all trees, hedges and other plant materials shall be trimmed by the Owner of the Lot upon which they are located so that they shall not exceed the height of the house on the Lot.” (Emphasis added.) Because trimming a palm tree would effectively require its removal, the Board took the position over the years that that requirement of the CC&Rs did not apply to palm trees. The Board decided that the aesthetic benefit to the entire community from the maturing and now very lush looking palm trees outweighed the value of preserving views of just a few homeowners, and therefore it would be unreasonable to require any homeowner to top or remove any palm tree in the community.
A lawsuit was then brought against the Association by individual homeowner plaintiffs whose views had been reduced by neighboring palm trees. After the litigation commenced, the Board adopted new rules and regulations concerning the enforcement of that section of the CC&Rs, as it pertained to palm trees. The new rules defined “view” as being only that which is visible from the back of the house, six feet above ground level, standing in the middle of the outside of the house looking straight ahead to infinity, with nothing to the left or right of the lot lines being considered part of the home’s view. This definition of “view” precluded most of the plaintiffs from claiming any view obstruction from palm trees either because of the shape of the lot, or because the plaintiffs’ primary view was from the second floor of the house, not the first. The new rules also provided no palm tree planted before adoption of the rules would be removed without the tree owners’ approval.
The trial court granted the plaintiffs’ request for declaratory relief and mandamus to compel the Association to enforce the CC&Rs. The trial court held that the Association did not have discretion to exempt from enforcement palm trees that were found to block views. The appellate court affirmed.
On appeal, the Association argued, among other things, that the “judicial deference rule” precluded judicial review of the Association’s decisions concerning the enforcement of that provision of the CC&Rs. In Lamden, the Supreme Court adapted the “judicial deference rule” from the business judgment rule that is applicable to directors of corporations. Under the judicial deference rule,
[w]here a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development’s common areas, courts should defer to the board’s authority and presumed expertise.
That rule applies where owners “seek to litigate ordinary maintenance decisions entrusted to the discretion of their associations’ boards of directors.”
In Ekstrom, the appellate court rejected the Association’s argument and refused to apply the judicial deference rule to the Board’s decisions regarding the palm trees. The reason was that the Board’s decisions in this case were outside the scope of the Board’s authority under the CC&Rs. The appellate court explained that nothing in the CC&Rs permitted the Board to simply exclude an entire species of trees from the application of the CC&Rs simply because it preferred the aesthetic benefit of those trees to the community. Even if the Board was acting in good faith and in the best interests of the community as a whole, its policy of excepting all palm trees was not in accord with the CC&Rs, which require all trees be trimmed so as to not obscure views. The Board’s interpretation of the CC&Rs was inconsistent with the plain meaning of the document and thus not entitled to judicial deference. Also, the new rules promulgated after the lawsuit was initiated were not entitled to judicial deference because those rules were also in direct conflict with the CC&Rs.
The Ekstrom case demonstrates that the governing board of a homeowners’ association cannot alter or ignore the express terms of the CC&Rs, without a duly approved amendment, even if the board believes that such alteration is in the best interests of the community.
Glen Hansen is a senior associate at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.