W&W Del Lago v. Rancho Del Lago HOA CA4/1 (2013) · DecisionDepot
W&W Del Lago v. Rancho Del Lago HOA CA4/1
California Court of Appeal Jun 19, 2013 No. D060990Unpublished
Filed 6/19/13 W&W Del Lago v. Rancho Del Lago HOA CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
W&W DEL LAGO, LLC, et al., D060990
Plaintiffs and Appellants,
v. (Super. Ct. No. 37-2010-00101941-CU-OR-CTL) RANCHO DEL LAGO HOMEOWNER'S ASSOCIATION,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Joel M.
Pressman, Judge. Affirmed.
Fleming & Fell, George E. Fleming, Bibianne U. Fell and Tracey L. Angelopoulos
for Plaintiffs and Appellants.
Kulik, Gottesman & Siegel, Leonard Siegel, Thomas M. Ware II and David A.
Bernardoni for Defendant and Respondent.
W&W Del Lago, LLC, Stanley Westreich, and Ruth Westreich (collectively
Plaintiffs) appeal a judgment in favor of defendant Rancho Del Lago Homeowner's
Association (Defendant) after the trial court sustained Defendant's demurrer to Plaintiffs'
complaint. Plaintiffs' complaint alleged causes of action against Defendant for
negligence, negligent misrepresentation or omission, breach of contract, and
indemnity/contribution. On appeal, Plaintiffs contend the trial court erred by concluding
their complaint did not state causes of action against Defendant. Plaintiffs assert the trial
court erred by concluding: (1) Defendant did not owe them any duty of care in reviewing
engineering plans they submitted for development of their property; and (2) they did not
state causes of action for breach of contract, negligent misrepresentation or omission, and
equitable indemnity.
FACTUAL AND PROCEDURAL BACKGROUND
For purposes of this opinion, we consider all properly pleaded material facts in
Plaintiffs' complaint as admitted by Defendant. (Aubry v. Tri-City Hospital Dist. (1992)
2 Cal.4th 962, 966-967 (Aubry).) Our summary of the factual background is based on the
material facts properly pleaded in that complaint.
In June 2007, Plaintiffs purchased lot 42 in the common interest development of
Rancho Del Lago in Rancho Santa Fe, California. W&W Del Lago, LLC is the record
owner of that lot and Stanley and Ruth Westreich are the sole members of that limited
liability company. Rancho Del Lago is subject to a first amended and restated
declaration of restrictions (CC&Rs) adopted by Defendant's members. Defendant
manages that development. Pursuant to section 7.2 of the CC&Rs, no building or other
improvement may be constructed on any lot unless the property owner first submits plans
and specifications for that improvement and obtains approval in writing of Defendant's
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board or art jury. Pursuant to section 7.3 of the CC&Rs, the owner must submit to the
board or art jury complete plans and specifications for any proposed improvement "for
approval as to quality of workmanship and materials, harmony of height, location, and
external design with existing structures, and as to location in relation to surrounding
structures, topography, and finish grade elevation."
Plaintiffs retained San Dieguito Engineering, Inc. (SDE) to provide them with a
tentative parcel map, survey, and preliminary grading plan for proposed construction on
lot 42. Those plans showed the elevation for Plaintiffs' proposed pad was 389 feet and
the elevation of the existing adjacent Feinberg residence was 407 feet, resulting in a
height differential of 18 feet between the neighboring pads. However, in calculating
those elevations, SDE used a false and inaccurate benchmark, resulting in elevations
shown on Plaintiffs' plans being seven feet lower than their actual elevations. The actual
elevation of Plaintiffs' proposed pad was 396 feet.
In October 2007, Plaintiffs retained Coffey Engineering, Inc. (CE) to assume
SDE's duties and responsibilities. CE prepared a final preliminary grading plan, which
was based on SDE's false and inaccurate benchmark and therefore showed elevations for
Plaintiffs' proposed pad and the existing Feinberg pad seven feet lower than their actual
elevations. Plaintiffs submitted to Defendant for preliminary approval a site development
plan, site sections, and a topographic survey reflecting elevations on lots 42, 27, and 33,
based on the assumed elevation benchmark originally established by SDE. Pursuant to
the CC&Rs, Defendant's art jury considered Plaintiffs' development plans. Unbeknownst
3
to Plaintiffs, in November the art jury reviewed a topographical plan unrelated to
Plaintiffs' proposed development that showed the elevation of the Feinberg pad to be 414
feet, which was seven feet higher than shown on the plans submitted by Plaintiffs. Based
on its review of those plans, the art jury determined the height differential between
Plaintiffs' proposed pad at the elevation certified by their engineers and the existing
Feinberg pad was 25 feet. However, the actual elevation of Plaintiffs' proposed pad was
seven feet higher than shown on Plaintiffs' plans.
In May 2008, the art jury asked Plaintiffs to erect story poles on their property to
reflect the height and general exterior dimensions of their proposed structure. On June
12, the art jury viewed the story poles erected by Plaintiffs, but did not view them from
surrounding properties. In a letter to Plaintiffs, the art jury conveyed its approval of the
story poles, stating:
"The story poles were reviewed and approved with the following exception, by three Art Jury members. [¶] 1. The studio-garage- staff quarters is to be re-designed to one story in height with the staff quarter portion relocated to a ground floor elevation. [¶] Prior to approval, the Art Jury requests architectural working drawings, equivalent to the drawings submitted to the [C]ounty, including the changes made to the staff quarters. [¶] The grading work may proceed at this time."
Plaintiffs then proceeded to grade the property and construct their home in accordance
with their plans. In October 2008, CE provided Defendant with a letter certifying that the
actual elevations of the pads and slopes for Plaintiffs' development were in conformance
with the (inaccurate) plans submitted by Plaintiffs (e.g., that the surveyed elevation of the
4
pad for the northeast wing was 388.86 feet as compared to the plan's elevation of 388.8
feet).
In March 2009, Jeffrey Feinberg, Stacey Woolf-Feinberg, and the Feinberg Family
Trust (Feinbergs) filed an action against Plaintiffs to recover damages arising out of
obstruction of their view by Plaintiffs' construction on lot 42. Recognizing their plans
were defective and not approved as presented, Plaintiffs settled the lawsuit by paying the
Feinbergs $210,000 and agreeing to remove the home under construction on lot 42.
In 2010, Plaintiffs filed the instant action against SDE, CE, and Defendant. In
their first amended complaint, Plaintiffs alleged a cause of action against Defendant for
negligence. Defendant demurred to the complaint, arguing it did not owe Plaintiffs a
duty of care. The trial court sustained the demurrer with leave for Plaintiffs to amend
their complaint.
Plaintiffs filed their operative second amended complaint, alleging causes of
action against Defendant for negligence, negligent misrepresentation or omission, breach
of contract, and indemnity/contribution. That complaint alleged that Defendant
recognized there was a uniform variance of seven feet in all elevations between the plans
for lot 33 (the Feinberg pad) and those plans submitted by Plaintiffs for lot 42, but
nevertheless did not seek any explanation for that variance. Defendants demurred to the
second amended complaint, arguing it did not owe Plaintiffs a duty of care. The trial
court sustained the demurrer without leave to amend, finding the duties Defendant owed
Plaintiffs were limited to those set forth in its governing documents (e.g., the CC&Rs),
5
the Davis-Stirling Common Interest Development Act (Civ. Code, § 1350 et seq.)1 and
Corporations Code section 7110 et seq. The court stated: "Nowhere in [Defendant's]
governing documents, the Davis-Stirling Common Interest Development Act or the
Corporations Code is there any obligation imposed on the Board of Directors or a
volunteer Art Jury to insure the homeowner for errors in plans submitted to a
governmental entity and certified by the member's own licensed engineer. [Citation.] [¶]
As such the Court finds [Defendant] cannot be held liable for negligence, negligent
misrepresentation/omission, breach of contract, and/or indemnity/contribution as set forth
in the second amended complaint." Furthermore, because Plaintiffs had not shown an
ability to amend their complaint to state viable claims against Defendant, the court
sustained the demurrer without leave for Plaintiffs to amend their complaint. On
September 6, 2011, the court entered a judgment dismissing Plaintiffs' action against
Defendant. Plaintiffs timely filed a notice of appeal.
DISCUSSION
I
Demurrer Standard of Review
"On appeal from a judgment dismissing an action after sustaining a demurrer
without leave to amend, the standard of review is well settled. The reviewing court gives
the complaint a reasonable interpretation, and treats the demurrer as admitting all
material facts properly pleaded. [Citations.] The court does not, however, assume the
1 All further statutory references are to the Civil Code unless otherwise specified. 6
truth of contentions, deductions or conclusions of law. [Citation.] The judgment must be
affirmed 'if any one of the several grounds of demurrer is well taken. [Citations.]'
[Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff
has stated a cause of action under any possible legal theory. [Citation.] And it is an
abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows
there is a reasonable possibility any defect identified by the defendant can be cured by
amendment." (Aubry, supra, 2 Cal.4th at pp. 966-967.)
II
Negligence Cause of Action
Plaintiffs contend their second amended complaint stated a cause of action against
Defendant for negligence in approving their plans for construction on lot 42.
A
The elements of a cause of action for negligence are: (1) a legal duty to use due
care; (2) a breach of that legal duty; and (3) the breach is a proximate or legal cause of
the resulting injury. (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.) "The
threshold element of a cause of action for negligence is the existence of a duty to use due
care toward an interest of another that enjoys legal protection against unintentional
invasion." (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 397.) "The existence of a
duty is a question of law for the court. [Citations.] Accordingly, we determine de novo
the existence and scope of the duty owed by [a defendant to a plaintiff]." (Ann M. v.
Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 674.) "Some factors that courts
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consider in determining the existence and scope of a duty in a particular case are: '[T]he
foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered
injury, the closeness of the connection between the defendant's conduct and the injury
suffered, the moral blame attached to the defendant's conduct, the policy of preventing
future harm, the extent of the burden to the defendant and consequences to the
community of imposing a duty to exercise care with resulting liability for breach, and the
availability, cost, and prevalence of insurance for the risk involved.' (Rowland v.
Christian [(1968) 69 Cal.2d 108, 113].)" (Id. at p. 675, fn. 5.) To state a viable cause of
action for negligence, "the complaint must allege facts showing the existence of a legal
duty of care." (Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051, 1076.)
B
Based on our independent review of the second amended complaint, we conclude
Plaintiffs have not stated a cause of action for negligence because the alleged facts do not
show Defendant owed them a legal duty of care in the circumstances of this case. In
general, "[t]he duties and powers of a homeowners association are controlled both by
statute and by the association's governing documents. The primary governing document
of the association is the [CC&Rs] . . . . [¶] . . . [¶] The statutory duties of homeowners
associations are set forth in the Davis-Stirling Common Interest Development Act (Civ.
Code, § 1350 et seq.) and the Nonprofit Mutual Benefit Corporation Law (Corp. Code,
§ 7110 et seq.)." (Ostayan v. Nordhoff Townhomes Homeowners Assn., Inc. (2003) 110
Cal.App.4th 120, 127.) However, neither the CC&Rs nor those applicable statutes
8
contain any provision imposing a legal duty on Defendant to verify the accuracy of
development plans submitted by Plaintiffs or any other member of the homeowners
association.
If a member of Defendant seeks to develop his or her property, section 7.3 of the
CC&Rs requires that member to submit to the board or art jury "[c]omplete plans and
specifications showing the nature, kind, shape, color, size, height, materials to be used
and location of any proposed improvements, alterations or landscaping . . . for approval
as to quality of workmanship and materials, harmony of height, location, and external
design with existing structures, and as to location in relation to surrounding structures,
topography, and finish grade elevation." (Italics added.) That section imposes a duty on
the member, not Defendant. Plaintiffs presumably breached that duty when they
submitted development plans containing inaccurate elevation measurements. Likewise,
as Defendant asserts, Plaintiffs presumably breached their duty to comply with
governmental laws and regulations pursuant to section 7.14 of the CC&Rs when they
submitted to the county grading plans containing inaccurate elevation measurements.
In approving or disapproving a member's proposed development, the CC&Rs
require the board or art jury to act in good faith and not arbitrarily. Section 3.7 of the
CC&Rs provide: "All Directors and members of Committees appointed by the Directors
shall perform their duties in good faith, in a manner which is not arbitrary, capricious, or
discriminatory, and which is in accordance with procedures which are fair and
reasonable." Contrary to Plaintiffs' apparent assertion, the CC&Rs' requirement that the
9
procedures for approving or disapproving a proposed development of property be "fair
and reasonable" does not impose on the board or art jury a duty to act reasonably in
reviewing and approving or disapproving a particular development proposal (e.g.,
Plaintiffs' proposed development). Rather, the CC&Rs require only that the established
procedures for approving or disapproving all development proposals be fair and
reasonable. Plaintiffs do not allege Defendant's established procedures, as set forth in
section 7.3 of the CC&Rs, are not fair and reasonable.
Plaintiffs do not allege the art jury acted arbitrarily or not in good faith in
approving their development proposal. Instead, they allege the art jury acted
unreasonably in reviewing their development proposal because it did not verify the
accuracy of the elevation measurements set forth in their engineer's plans (e.g., by
noticing and reconciling the elevation discrepancy between Plaintiffs' plans and existing
plans for the Feinberg pad and by viewing Plaintiffs' story poles from neighboring
properties). However, the CC&Rs do not impose a duty of care on Defendant to act
reasonably in reviewing, and to verify elevation and other measurements set forth in,
plans for development proposals submitted by members.
Plaintiffs also cite section 7.5(d) of the CC&Rs as a basis for Defendant's alleged
duty owed to them. However, that section merely provides that the art jury "shall meet as
often as it deems necessary to properly carry out the obligations imposed upon it." It
does not set forth any duty of reasonable care Defendant allegedly breached in the
circumstances of this case.
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Likewise, the pertinent statutes do not impose such a duty on Defendant. Section
1378 provides:
"(a) This section applies if an association's governing documents require association approval before an owner of a separate interest may make a physical change to the owner's separate interest or to the common area. In reviewing and approving or disapproving a proposed change, the association shall satisfy the following requirements:
"(1) The association shall provide a fair, reasonable, and expeditious procedure for making its decision. The procedure shall be included in the association's governing documents. The procedure shall provide for prompt deadlines. The procedure shall state the maximum time for response to an application or a request for reconsideration by the board of directors.
"(2) A decision on a proposed change shall be made in good faith and may not be unreasonable, arbitrary, or capricious."
Section 1378, subdivision (a)(1), pertains to the procedures established by an association
for approving or disapproving development proposals. Plaintiffs do not allege
Defendant's established procedures, as set forth in section 7.3 of the CC&Rs, are not fair
and reasonable. Neither section 1378 nor section 7.3 of the CC&Rs precluded
Defendant's art jury from reviewing documents other than those submitted by Plaintiffs
(e.g., plans for the Feinberg property). Section 1378, subdivision (a)(1), does not require
that all specific procedures for reviewing development plans be set forth in the CC&Rs,
and it does not limit an association to consideration only of documents submitted by the
member applicant. Furthermore, neither section 1378 nor section 7.3 of the CC&Rs
required the art jury to inform Plaintiffs it was reviewing other documents (e.g., plans for
the Feinberg property) in approving or disapproving their proposed development.
11
Section 1378, subdivision (a)(2), pertains to the decision on a development
proposal. Plaintiffs do not allege Defendant's decision to approve its development
proposal was unreasonable, arbitrary, or capricious. Instead, they allege the art jury acted
unreasonably in reviewing their development proposal because it did not verify the
accuracy of the elevation measurements set forth in their engineer's plans (e.g., by
noticing and reconciling the elevation discrepancy between Plaintiffs' plans and existing
plans for the Feinberg pad and by viewing Plaintiffs' story poles from neighboring
properties). However, section 1378 does not impose a duty of care on Defendant to act
reasonably in reviewing, and to verify elevation and other measurements set forth in,
plans for development proposals submitted by members.
Because Plaintiffs did not allege facts showing Defendant owed them a duty of
care under the CC&Rs and applicable statutes in the circumstances of this case, they did
not state a cause of action against Defendant for negligence. (Roy Supply, Inc. v. Wells
Fargo Bank, supra, 39 Cal.App.4th at p. 1076; Ostayan v. Nordhoff Townhomes
Homeowners Assn., Inc., supra, 110 Cal.App.4th at p. 127.) Alternatively stated,
Plaintiffs have not stated a negligence cause of action because under the CC&Rs and
applicable statutes Defendant did not owe them a duty of care to act reasonably in
reviewing their development proposal to verify the accuracy of the elevation
measurements set forth in their engineer's plans (e.g., by noticing and reconciling the
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elevation discrepancy between Plaintiffs' plans and existing plans for the Feinberg pad
and by viewing Plaintiffs' story poles from neighboring properties).2
Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642 (Cohen), cited by
Plaintiffs, does not persuade us to reach a contrary conclusion. In Cohen, the
homeowners association approved construction of a neighbor's proposed solid side yard
fence that would block the Cohens' view. (Id. at pp. 646-647.) However, the
association's CC&Rs expressly provided that solid fences could not be constructed in side
yards with a view. (Ibid.) The Cohens filed an action against the association and their
neighbors, alleging the association's approval of the solid fence breached the CC&Rs and
was negligent. (Id. at p. 647.) The trial court sustained the association's demurrer to the
complaint. (Ibid.) On appeal, Cohen carefully phrased the issue, stating:
"[D]id the complaint allege facts sufficient to establish that the Association owed a duty to plaintiffs and that the former breached that duty, thereby entitling plaintiffs to some or all of the remedies sought? Such a determination must be based on the terms and conditions of the [CC&Rs]." (Cohen, supra, 142 Cal.App.3d at p. 647, italics added.)
Cohen concluded the CC&Rs' express provisions "create[d] an affirmative duty on the
part of the Association to protect individual homeowners affected by the improvement."
(Cohen, supra, 142 Cal.App.3d at p. 653.) It stated: "[P]laintiffs' suit here turns on the
good faith and lack of arbitrariness of the Committee's approval, assessed in the light of
2 Because we dispose of Plaintiffs' negligence cause of action based on the absence of a duty of care, we do not address Defendant's alternative argument that the exculpatory clauses set forth in the CC&Rs preclude its liability for breach of any duty of care owed to Plaintiffs.
13
all of the provisions of the [CC&Rs]. It appears from the record that the fence in
question was not in conformity with the provisions of the [CC&Rs] . . . ." (Id. at p. 654.)
Accordingly, Cohen reversed the judgment, finding the trial court erred by sustaining the
demurrer. (Id. at pp. 654, 656.)
Because the CC&Rs in this case do not contain any express provisions requiring
Defendant to protect an individual homeowner's view, Cohen is factually inapposite and
does not persuade us Defendant owed Plaintiffs a duty of care in the circumstances of this
case. As discussed above, Plaintiffs have not sufficiently alleged Defendant violated any
provisions of the CC&Rs. Furthermore, as Defendant notes, Cohen dealt with the
association's approval of a solid fence that affected a neighbor's protected views. In this
case, Plaintiffs allege Defendant negligently approved their own development plans,
resulting in damage to them. Neither Cohen nor any of the other cases cited by Plaintiffs
hold homeowner associations owe duties to member applicants to verify the accuracy of
their own plans for proposed development of their properties. We decline to expand
Cohen's holding to find Defendant owed Plaintiffs a duty of care in the circumstances in
this case.
Finally, to the extent Plaintiffs argue Defendant owes them a common law duty of
care not based on the CC&Rs or applicable statutes, we reject that argument. Citing
Artiglio v. Corning Inc. (1998) 18 Cal.4th 604, 613, Plaintiffs argue the "Good
Samaritan" rule should apply here. They argue that even though Defendant did not have
a duty initially to act reasonably in approving their proposed development, once
14
Defendant voluntarily undertook to act it owed them a duty to act reasonably. However,
Plaintiffs' conclusory argument does not persuade us this common law rule should be
extended to impose a duty on Defendant in the circumstances of this case. Although
Plaintiffs do not address the Rowland factors for determining whether a common law
duty of care should be imposed, our consideration of those factors supports our
conclusion that Defendant did not owe Plaintiffs a duty of care in the circumstances of
this case. (People v. Rowland, supra, 69 Cal.2d at p. 113.)
III
Cause of Action for Negligent Misrepresentation or Omission
Plaintiffs contend the trial court erred by concluding their second amended
complaint did not state a cause of action for negligent misrepresentation or omission.
A
The elements of a cause of action for negligent misrepresentation are: (1) a
misrepresentation of a past or existing material fact; (2) without reasonable grounds for
believing it to be true; (3) with an intent to induce another's reliance on the
misrepresented fact; (4) ignorance of the truth and justifiable reliance thereon by the
party to whom the misrepresentation was directed; and (5) damages. (Fox v. Pollack
(1986) 181 Cal.App.3d 954, 962.) The misrepresentation must be express (or "positive")
and not implied. (Wilson v. Century 21 Great Western Realty (1993) 15 Cal.App.4th
298, 306 (Wilson); Huber, Hunt & Nichols, Inc. v. Moore (1977) 67 Cal.App.3d 278, 304
(Huber); Yanase v. Automobile Club of So. Cal. (1989) 212 Cal.App.3d 468, 472-473
15
(Yanase); Weissich v. County of Marin (1990) 224 Cal.App.3d 1069, 1082-1083
(Weissich).)
Plaintiffs' complaint set forth only one purported misrepresentation of fact by
Defendant, alleging: "On or about June 12, 2008, [Defendant] represented to Plaintiffs
that the height reflected by their story poles and height differential of 18 feet in the
Plaintiffs' plans were approved." However, as Defendant asserts, that conclusory
allegation is factually inadequate to state a cause of action for negligent
misrepresentation. Plaintiffs' complaint refers to "Exhibit 6," the June 17, 2008, letter in
which the art jury conveyed to them its approval of their story poles. That letter stated in
part: "The story poles were reviewed and approved with the following exception
[regarding the staff quarters], by three Art Jury members. [¶] . . . [¶] Prior to approval,
the Art Jury requests architectural working drawings, equivalent to the drawings
submitted by the [C]ounty, including the changes made to the staff quarters. [¶] The
grading work may proceed at this time." Reading Plaintiffs' allegations together, Exhibit
6 contradicts their allegation that Defendant represented to them the height reflected by
their story poles and height differential of 18 feet in the Plaintiffs' plans were approved.
Defendant did not make those express representations of fact. At most, they were
implied representations, which are insufficient to support a cause of action for negligent
misrepresentation. (Wilson, supra, 15 Cal.App.4th at p. 306; Huber, supra, 67
Cal.App.3d at p. 304; Yanase, supra, 212 Cal.app.3d at pp. 472-473; Weissich, supra,
224 Cal.App.3d at pp. 1082-1083.)
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Furthermore, the complaint shows Plaintiffs' engineers (i.e., CE) were required to,
and did, thereafter certify the elevation of Plaintiffs' pad after grading. Therefore, the
complaint's conclusory allegations are insufficient to state a cause of action against
Defendant for an express misrepresentation that it approved the height of Plaintiffs'
proposed structures. The trial court correctly sustained Defendant's demurrer to the
negligent misrepresentation cause of action. (Aubry, supra, 2 Cal.4th at pp. 966-967; Fox
v. Pollack, supra, 181 Cal.App.3d at p. 962; Wilson, supra, 15 Cal.App.4th at p. 306;
Huber, supra, 67 Cal.App.3d at p. 304; Yanase, supra, 212 Cal.App.3d at pp. 472-473;
Weissich, supra, 224 Cal.App.3d at pp. 1082-1083.)
B
In support of their cause of action for negligent omission, Plaintiffs' second
amended complaint alleged Defendant "negligently omitted the following material facts:
(1) the height differential [of] 18 feet set forth in the plans Plaintiffs submitted was not
approved; (2) in order for Plaintiffs to build the structure as 'approved,' they needed to
consult the Feinbergs' plans, which had never been given to the Plaintiffs; and (3) the
height represented by the Plaintiffs' story poles was not, in fact, approved."
To the extent Plaintiffs' cause of action for negligent omission is based on section
1709, which defines fraudulent deceit, it does not state a cause of action because it does
not allege a willful concealment by Defendant with an intent to induce Plaintiffs to alter
their position. Section 1709 provides: "One who willfully deceives another with intent to
induce him to alter his position to his injury or risk, is liable for any damage which he
17
thereby suffers." (Italics added.) To the extent Plaintiffs base their cause of action solely
on section 1710, that section does not provide an independent cause of action, but instead
sets forth the definition of "deceit" for purposes of a section 1709 cause of action.
Plaintiffs apparently base their cause of action for negligent omission on case law
setting forth those circumstances in which nondisclosure or concealment constitutes
fraud. There are "four circumstances in which nondisclosure or concealment may
constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the
plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to
the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff;
and (4) when the defendant makes partial representations but also suppresses some
material facts." (Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651.) However,
Plaintiffs do not set forth the elements of any such cause of action and do not cite any
case holding the elements of willful concealment and intent to induce reliance do not
apply. Furthermore, to the extent Plaintiffs base their negligent omission cause of action
on Defendant's alleged fiduciary relationship with them, we conclude Defendant did not
have a fiduciary relationship with Plaintiffs in the context of its review and approval or
disapproval of the proposed development of their property. (Cf. Frances T. v. Village
Green Owners Assn. (1986) 42 Cal.3d 490, 514 [association's directors did not owe
member any fiduciary duty in exercising their discretion under CC&Rs regarding
member's lighting].) Alternatively stated, the scope of any fiduciary duty Defendant
owed to Plaintiffs did not extend to its review and approval or disapproval of their
18
development plans. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th
394, 425 [question is not whether a fiduciary duty exists, but what is the scope or extent
of that duty in the facts of a particular case].) Cohen, supra, 142 Cal.App.3d at page 651,
cited by Plaintiffs, is factually inapposite and does not persuade us to reach a contrary
conclusion.
To the extent Defendant had exclusive knowledge that it considered Feinberg's
plans and approved Plaintiffs' proposed development based on a 25-foot height
differential, Plaintiffs do not persuade us such knowledge, in and of itself, imposes a duty
on Defendant to not suppress or conceal those facts when reviewing and approving or
disapproving Plaintiff's development plans. Likewise, Plaintiffs do not persuade us
Defendant's alleged partial representation while suppressing other material facts (e.g., it
considered Feinberg's plans and approved Plaintiffs' proposed development based on a
25-foot height differential), is sufficient to state a cause of action for negligent omission
in the circumstances of this case. The trial court correctly sustained Defendant's
demurrer to the negligent omission cause of action.
IV
Breach of Contract Cause of Action
Plaintiffs contend the trial court erred by concluding they did not state a cause of
action for breach of contract. To state a cause of action for breach of contract, Plaintiffs
were required to allege: (1) the existence and terms of the contract; (2) their performance
or excuse for nonperformance; (3) Defendant's breach; and (4) resulting damage to them.
19
(Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821; McDonald v. John P.
Defendant breached certain provisions of the CC&Rs "by failing to 'properly' carry out
the design approval process, including failing to view the story poles from the
neighboring property, failing to advise the neighbors of the story poles, and failing to
evaluate the view from the surrounding properties." In general, those allegations simply
recast the allegations on which Plaintiffs' negligence cause of action were based. As we
discussed above, the CC&Rs did not impose a duty on Defendant to view the story poles
from neighboring properties. Likewise, our review of the CC&Rs shows there is no
provision obligating Defendant to advise neighbors of story poles or to evaluate the
surrounding properties' views when reviewing a member's development plans for
approval or disapproval. Finally, the CC&Rs do not obligate Defendant to "properly"
carry out the design approval process. Rather, section 7.5(d) simply states: "The Art Jury
shall meet as often as it deems necessary to properly carry out the obligations imposed
upon it . . . ." That provision addresses the frequency of art jury meetings rather than
establishing any contractual duty to properly carry out the design approval process.
Similar to our conclusion above in addressing the negligence cause of action, we
conclude the CC&Rs did not contractually obligate Defendant to act reasonably in
reviewing Plaintiffs' development proposal to verify the accuracy of the elevation
measurements set forth in their engineer's plans (e.g., by noticing and reconciling the
elevation discrepancy between Plaintiffs' plans and existing plans for the Feinberg pad,
20
and by viewing Plaintiffs' story poles from neighboring properties). The trial court
correctly sustained Defendant's demurrer to the breach of contract cause of action.
V
Equitable Indemnity Cause of Action
Plaintiffs contend the trial court erred by concluding they did not state a cause of
action for equitable indemnity.
A
"Indemnification between joint tortfeasors is an equitable rule created to correct
potential injustice, and the doctrine is not available where it would operate against public
policy." (Leko v. Cornerstone Bldg. Inspection Service (2001) 86 Cal.App.4th 1109,
1117.) The doctrine of equitable indemnity "applies only among defendants who are
jointly and severally liable to the plaintiff. . . . [¶] . . . With limited exception, there must
be some basis for tort liability against the proposed indemnitor." (BFGC Architects
Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852.)
"Joint and several liability does not depend on whether the tortfeasors owe a duty to one
another. . . . Nor must joint tortfeasors owe the same duty of care to the plaintiff. '[A]
defendant/indemnitee may in an action for indemnity seek apportionment of the loss on
any theory that was available to the plaintiff upon which the plaintiff would have been
successful.' " (Leko, at p. 1115.)
However, "[a] person may not ordinarily recover in tort for the breach of duties
that merely restate contractual obligations. Instead, ' "[c]ourts will generally enforce the
21
breach of a contractual promise through contract law, except when the actions that
constitute the breach violate a social policy that merits the imposition of tort
remedies." ' " (Aas v. Superior Court (2000) 24 Cal.4th 627, 643.) Therefore, even
though a complaint may use negligence terminology, if the alleged facts support, at most,
a breach of contract, rather than a breach of a legal duty of care, then there can be no
liability in tort for equitable indemnity. (Stop Loss Ins. Brokers, Inc. v. Brown & Toland
Medical Group (2006) 143 Cal.App.4th 1036, 1041-1042.)
B
Plaintiffs' equitable indemnity cause of action alleged Defendant owed the
Feinbergs a duty to act reasonably and exercise due care during the approval process for
Plaintiffs' proposed construction. It further alleged Defendant breached that duty by
performing negligently, resulting in approval of Plaintiffs' proposed construction at a
height that would partially block the Feinberg's view. It alleged Plaintiffs paid the
Feinbergs $210,000 to settle the subsequent action against them. Alleging those damages
recovered by the Feinbergs were primarily caused by Defendant's breach of the CC&Rs
and duty to act reasonably and with due care, Plaintiffs sought equitable indemnity from
Defendant.
C
We conclude Plaintiffs have not stated a cause of action for equitable indemnity.
Although they attempt to phrase their equitable indemnity claim in terms of a duty of
reasonable care owed to the Feinbergs, Plaintiffs' equitable indemnity claim simply
22
recasts their breach of contract theory of liability in negligence terms in an attempt to
obtain indemnity from Defendant as an alleged joint tortfeasor. They cite provisions of
the CC&Rs as purportedly imposing obligations on Defendant regarding the manner in
which it reviews and approves or disapproves plans for proposed development of
members' properties. In so doing, Plaintiffs have not sufficiently alleged facts showing
Defendant was negligent for breaching a duty of reasonable care owed to the Feinbergs.
(Aas v. Superior Court, supra, 24 Cal.4th at p. 643; Stop Loss Ins. Brokers, Inc. v. Brown
& Toland Medical Group, supra, 143 Cal.App.4th at pp. 1041-1042 [if the alleged facts
support, at most, a breach of contract, rather than a breach of a legal duty of care, then
there can be no liability in tort for equitable indemnity].)
Assuming arguendo Plaintiffs' equitable indemnity cause of action was not based
solely on an alleged breach of contract, we nevertheless would conclude the alleged facts
do not state a cause of action for equitable indemnity. To the extent Defendant's alleged
duty of care owed to the Feinbergs is based on the CC&Rs, we concluded above that the
CC&Rs do not impose any legal duty on Defendant to verify the accuracy of
development plans (e.g., elevations and other measurements shown thereon) submitted by
Plaintiffs or any other member of the homeowners association. Likewise, we concluded
above none of the applicable statutes imposed any legal duty of care on Defendant to act
reasonably in reviewing and approving or disapproving plans for proposed development
of members' properties. In particular, Defendant did not owe any member of the
homeowners association (whether Plaintiffs, the Feinbergs, or other members) any legal
23
duty of care to notice and reconcile the elevation discrepancy between Plaintiffs' plans
and existing plans for the Feinberg pad or to view Plaintiffs' story poles from neighboring
properties. To the extent Plaintiffs may rely on Cohen, supra, 142 Cal.App.3d 642 as
support for their equitable indemnity claim, we concluded above that Cohen is factually
inapposite to this case because the CC&Rs in this case do not contain any express
provisions requiring Defendant to protect an individual homeowner's view. Cohen does
not persuade us Defendant owed the Feinbergs a duty of care in the circumstances of this
case.3 Because Plaintiffs' second amended complaint did not allege a legal duty of care
owed by Defendant to the Feinbergs, it fails to state a cause of action for equitable
indemnity for the settlement payments made to the Feinbergs and other damages
Plaintiffs sustained.
VI
Amendment of Complaint
Plaintiffs have not argued on appeal that the trial court abused its discretion by
sustaining Defendant's demurrer without leave to amend their complaint. In general, a
demurrer should be sustained with leave to amend if the plaintiff has shown there is a
reasonable possibility the complaint can be amended to cure the defect and state a valid
cause of action. (Aubry, supra, 2 Cal.4th at pp. 966-967; Schifando v. City of Los
3 In so concluding, we need not address Defendant's alternative argument that the CC&Rs' exculpatory provisions (e.g., section 7.11) were valid and enforceable and precluded any liability of Defendant to the Feinbergs for any loss they suffered on account of its approval or disapproval of Plaintiffs' plans for their proposed development of their property.
24
Angeles (2003) 31 Cal.4th 1074, 1081.) It is the plaintiff's burden to "spell out in his
brief the specific proposed amendments" that would cure the complaint's defects.
(People ex rel. Brown v. Powerex Corp. (2007) 153 Cal.App.4th 93, 112; see also Cooper
v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636.) Because Plaintiffs have not set forth any
specific proposed amendments that purportedly would cure the defects in their second
amended complaint, they have waived or forfeited any contention on appeal that the trial
court abused its discretion by denying them leave to amend the complaint.
DISPOSITION
The judgment is affirmed. Defendant is entitled to costs on appeal.
McDONALD, J.
WE CONCUR:
NARES, Acting P. J.
O'ROURKE, J.
25
AI Brief
AI-generated · verify before citing
Holding. The court held that a homeowners association does not owe a legal duty of care to member applicants to verify the accuracy of elevation measurements in development plans submitted by the members themselves. Consequently, the association is not liable for negligence or negligent misrepresentation when it approves plans containing errors created by the member's own engineers.
Issues
Whether a homeowners association owes a duty of care to a member to verify the accuracy of development plans submitted by that member.
Whether an association's approval of development plans constitutes an actionable negligent misrepresentation regarding the accuracy of the member's own submitted measurements.
Whether the association's governing documents or the Davis-Stirling Act impose a duty on the association to act as a guarantor of the accuracy of a member's engineering plans.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“The misrepresentation must be express (or "positive") and not implied.”
“Neither Cohen nor any of the other cases cited by Plaintiffs hold homeowner associations owe duties to member applicants to verify the accuracy of their own plans for proposed development of their properties.”