By Glen C. Hansen
In Tesoro del Valle Master Homeowners Assn. v. Griffin (October 3, 2011, B222531) ___ Cal.App.___, the Court of Appeal for the Second Appellate District affirmed a judgment following a jury verdict that found that a homeowners’ association (“HOA”) complied with the California Solar Rights Act (Civ. Code, § 714) when it denied the application of property owners to install solar panels on a slope adjacent to their residence; where the conditions, covenants and restrictions (“CC&Rs”) and Design Guidelines for the HOA expressly incorporated the requirements of section 714; where the homeowners failed to satisfy their burden to submit an application to the HOA that was complete and that addressed the HOA’s concerns about location, safety and aesthetics; and where expert testimony at trial demonstrated that an alternative solar energy system of comparable costs and efficiency could be installed that did not significantly increase the cost or decrease the efficiency of the system sought by Defendants.
In Tesoro, defendants Martin and Carolyn Griffin were owners of property who sought to install a solar energy system at their residence in a development subject to CC&Rs. The CC&Rs provided that “[t]here shall be no construction, alteration, or removal of any Improvement in the Project (other than repairs or rebuilding done by the Association pursuant hereto) without the approval of the Architectural Control Committee.” The Design Guidelines adopted by the HOA expressly provided the following architectural standards for solar energy systems, in relevant part: “As provided for in Section 714 of the California Civil Code, reasonable restrictions on the installation of solar energy systems that do not significantly increase the cost of the system or significantly decrease its efficiency or specified performance, or which allow for an alternative system of comparable costs, efficiency, and energy conservation benefits may be imposed by the Committee.” The CC&Rs and Design Guidelines listed the requirements for an application to the Architectural Control Committee ("ACC"), which included the submission of a plot plan drawn to scale, a detailed description of the proposed materials, a landscape plan and a drainage plan. Defendants’ application to the ACC for the solar system in this case did not meet those requirements. Defendants’ application contained only a handwritten drawing with a rectangle signifying the approximate location of the proposed solar panels; it did not contain information concerning the panels’ dimensions, number or color; the setback; the proposed alterations to the landscaping; or the amount of electricity proposed to be generated. After receiving preliminary information from the HOA that the ACC would probably not approve their application, Defendants received another bid proposal to install additional solar panels on the roof of their residence. However, Defendants did not amend their application to include that roof-top installation.
The ACC did not approve the Defendants’ application, but instead provided comments on the application noting that the roof of the casita adjacent to Defendants’ residence should be considered as a location for the panels; that the project’s dimensions and minimum setbacks needed to be provided on the site plan; that Defendants needed to indicate how the slope beneath the solar panels would be maintained; and that Defendants needed to submit photographs of the existing landscape and superimpose the proposed panel elevation. The ACC was concerned about the proposed slope-mounted system because it was at the entry to the neighborhood, adjacent homes had a direct line of sight, the CC&R’s prohibited slope alteration and any alteration or landscape removal could impact drainage. The ACC expected that Defendants would address those concerns and submit a revised application.
However, Defendants went ahead and installed the solar panels on the roof, and then, after discussions between all of the parties, submitted a revised application for the entire project. The ACC approved the roof installation but again denied the slope installation. Defendants installed the solar panels on the slope anyway, and the HOA filed this action against Defendants. Defendants filed a cross-complaint that generally alleged that the HOA failed to comply with both section 714 and the CC&R’s in denying the Defendants’ solar energy system application.
At trial, the jury returned a verdict that found, among other things, that the HOA did nothing prohibited by the CC&R’s or governing law; that the HOA did not fail to do anything required by the CC&R’s and governing law with respect to its consideration of Defendant’s solar energy system; that the HOA did not breach the implied covenant of good faith and fair dealing; and that the HOA did not violate section 714; that Defendants failed to follow the CC&R’s and governing law in connection with their solar energy system; and that Defendants were required to remove the 22 solar panels from their hillside slope. Defendants appealed the judgment based on the jury verdict. The Court of Appeal affirmed.
The Tesoro court heavily relied upon a similar Second Appellate District decision in Palos Verdes Homes Association v. Rodman (1986) 182 Cal.App.3d 324. The Tesoro court held that substantial evidence supported the jury’s conclusion that the CC&R’s imposed reasonable restrictions that were in compliance with section 714. Not only did the Design Guidelines mirror section 714, but an expert testified for the HOA at trial that, as an alternative to Defendants’ installation of 22 panels on their slope, Defendants could install 16 to 20 panels in an area above the casita that would yield the same performance efficiency but have a 14 percent reduction in output, and it would be less expensive to install than the slope panels. The court also held that the ACC could properly consider the aesthetic impact of a solar energy system in its determination whether to approve Defendants’ proposed solar panel installation. The court further held that the HOA did not have the burden to propose a comparable alternative system at the time it denied Defendants’ application. Instead, under the CC&R’s, the burden was on the homeowner to submit an application that is complete and sufficient to generate approval of a solar energy system utilizing an application that both satisfied the procedural requirements in the CC&R’s, as well as addressed the ACC’s concerns about location, safety and aesthetics.
Glen C. Hansen is an attorney 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, or 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.