Revisiting Lamden-Common Interest Association Decision Making

Revisiting Lamden-Common Interest Association Decision Making

By David Van Atta, Hanna & Van Atta © 2020

We had previously written about the scope of the California Supreme Court case of Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249, 87 Cal.Rptr.2d 237, 980 P.2d 940 (“Lamden”), stating that a later court of appeal case limited the application of the judicial deference rule in Lamden to maintenance issues.(Affan v. Portofino Cove Homeowners Assn. (2010) 189 Cal.App.4th 930, 940, 117 Cal.Rptr.3d 481 (“Affan”). However, as we now discuss, recently the concept of such a narrowing of the interpretation of Lamden has not been followed by other courts of appeal.

Eith v. Ketelhut: In Eith v. Ketelhut (31 Cal.App.5th 1, 242 Cal.Rptr.3d 566 (2nd Dist., 2018)) (“Eith”) the court of appeal revisited the Supreme Court’s decisions in Lamden, finding that the trial court properly applied the Judicial Deference Rule adopted Court in Lamden. The Eith case pertained to objections that a property owner in a common interest development was growing and harvesting grapes on its property. The appellate court in Eith stated that a determination made by a common interest association was entitled to application of the judicial deference rule of Lamden. The Eith court quoted from Lamden, as follows:

The Supreme Court stated, ‘[W]e adopt today for California courts a rule of judicial deference to community association board decisionmaking that applies … when owners in common interest developments seek to litigate ordinary maintenance decisions entrusted to the discretion of their associations’ boards of directors. [Citation.] The rule is as follows: “Where 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.” [Citation.]

The Supreme Court explained: “The formulation we have articulated affords homeowners, community associations, courts and advocates a clear standard for judicial review of discretionary economic decisions by community association boards, mandating a degree of deference to the latter’s business judgments sufficient to discourage meritless litigation …. [¶] Common sense suggests that judicial deference in such cases as this is appropriate, in view of the relative competence, over that of courts, possessed by owners and directors of common interest developments to make the detailed and peculiar economic decisions necessary in the maintenance of those developments. A deferential standard will, by minimizing the likelihood of unproductive litigation over their governing associations’ discretionary economic decisions, foster stability, certainty and predictability in the governance and management of common interest developments.” [Citation.] “

The Eith court stated that some courts have narrowly construed the Lamden rule, citing Affan, where that court observed: “It is important to note the narrow scope of the Lamden rule. It is a rule of deference to the reasoned decisionmaking of homeowners association boards concerning ordinary maintenance. … The Supreme Court’s precise articulation of the rule makes clear that the rule of deference applies only when a homeowner sues an association over a maintenance decision that meets the enumerated criteria. [Citations.]”

However, the Eith court then stated that most courts have broadly construed the Lamden rule, citing for one, Haley v. Casa Del Rey Homeowners Assn. (2007) 153 Cal.App.4th 863, 875, 63 Cal.Rptr.3d 514 (“Haley”), wherein the court concluded that Lamden “reasonably stands for the proposition that the Association had discretion to select among means for remedying violations of the CC&R’s without resorting to expensive and time-consuming litigation, and the courts should defer to that discretion.”

Further, as referenced in Eith, in Harvey v. The Landings Homeowners Assn. (2008) 162 Cal App 4th 809, 76 Cal Rptr 3rd 41 (“Harvey ”), regarding use of storage areas in the common area of the project, the court held, “Under the ‘rule of judicial deference’ adopted by the court in Lamden, we defer to the Board’s authority and presumed expertise regarding its sole and exclusive right to maintain, control and manage the common areas ……”

Watts v. Oak Shores: The Eith court cited the 2015 case of Watts v. Oak Shores Community Association (2015) 235 Cal.App.4th 466, 473, 185 Cal.Rptr.3d 376 (“Watts”). In so referring to Watts, the Eith court stated that in Watts the court rejected the argument “that the rule applying judicial deference to association decisions applies only to ordinary maintenance decisions” with the following reasoning: “It is true the facts in Lamden involve the association board’s decision to treat termites locally rather than fumigate. But nothing in Lamden limits judicial deference to maintenance decisions.” (Ibid.) “[T]here is no reason to read Lamden so narrowly.” (Ibid.) “Common interest developments are best operated by the board of directors, not the courts.” (Ibid.) (Emphasis added.)

Eith also noted that the judicial deference rule was applied to a board’s adoption of rules and imposition of fees relating to short-term rentals of condominium units in Dolan-King v. Rancho Santa Fe Assn. (2000) 81 Cal.App.4th 965, 979, 97 Cal.Rptr.2d 280 (“Dolan-King”),

In summary, the Eith court stated “[b]ased on Lamden, Haley, Harvey, Watts, and Dolan-King, the judicial deference rule applies to an association board’s discretionary decisions concerning the operation of the common interest development, e.g., the board’s maintenance and repair decisions (Lamden), its selection of the appropriate means to remedy a violation of the CC&Rs (Haley), its designation of storage space in a common area (Harvey), its adoption of rules relating to short-term rentals (Watts), or its approval or rejection of a homeowner’s improvement plan (Dolan-King)… Common interest developments are best operated by the board of directors, not the courts.” (Citing Watts.)

However, it should be noted that the Eith court stated the court would not defer to the a board’s interpretation of the project’s CC&Rs, with interpretation of CC&R’s being a legal question to be decided by the courts, not the Board.

As an alternative holding, the Eith court concluded that as a matter of law, the operation of the vineyard, based on the facts, was not a prohibited business or commercial activity because it does not affect the community’s residential character.

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