Tri Palms Unified Owners Association (the Association) is located
in Thousand Palms. There is a recreation facility adjacent to the Association
which the homeowners pay a fee to use. In 2014, in bankruptcy proceedings,
Kort & Scott Financial Group, LLC (K&S) was the successful bidder on
the recreation facility. The Association entered into a settlement agreement
with K&S. As a result of the Agreement, members of the Association were
required to pay an increased fee for use of the recreation facility which
exceeded the percentage of increased assessments allowed under the CC&Rs
without vote of the Association membership.
In 2016, Cheveldave and Davis, who were members of the Association, sued the Association, K&S, and another entity arguing that the Association did not have standing to enter into the Agreement without a vote of the Association members. The Association filed an anti-SLAPP motion claiming the Association was a Common Interest Development under the Davis Stirling Act. Plaintiffs argued the Association was not a Common Interest Development under the Act. The trial court granted defendants’ motion, but it was overturned on appeal. (See Cheveldave v. Tri Palms Unified Owners Association (2018) 27 Cal. App. 5th 1202, rev. denied, 2019 Cal. LEXIS 829.)
The dispositive issue in the case was statutory interpretation of what constitutes a Common Interest Development—whether there was “common area.” Under Cal. Civil Code § 4095(b); specifically, if there were “mutual or reciprocal easement rights appurtenant to the [homeowners’] separate interests.” The appellate court held there was no common area and no mutual or reciprocal easement. The court held each homeowner had a unilateral easement in the recreational facility for the development, but the recreational facility had no easement on the homeowner’s property. Similarly, each homeowner’s interest was burdened by a unilateral easement in favor of utility companies, but the companies granted no mutual or reciprocal right to the homeowners. As there was no common area, the Association could not invoke the Davis-Stirling Act or bring or compromise a claim without joining the homeowners.
Why is it Important?
This is a significant case as it helps further define when an HOA is—or is not—a Common Interest Development under the Davis-Stirling Act.
Zimberoff Deutsch, APC, does not warrant or guaranty any result or outcome for its clients. Past performance is not reflective of any potential or actual result for current or future clients. If you have a question whether your HOA is a Common Interest Development, contact legal counsel with experience in HOA matters.