In Harvey v. Landing Homeowners Association, (— Cal.Rptr.3d —, 2008 WL 903096, Cal.App. 4 Dist., Apr. 4, 2008), a California Court of Appeal upheld summary judgment in favor of a condominium homeowners’ association accused of exceeding its authority in allowing a group of homeowners to exclusively use certain common area space for rough storage. The court also held that the association’s action was not invalidated even though some of the directors who voted on the resolution were personally affected by the outcome.
The Landing is a four-story 92-unit condominium complex in Coronado, California. The complex contains a total of 265,479 square feet, including 80,000 square feet of common area, of which 2,760 square feet is fourth-story attic space adjacent to, and accessible only by, the complex’s fourth-story units. For several years, unit owners in most of the 23 fourth-story units had used the common area attic space adjacent to their respective units for storage, although one owner had converted the area adjacent to his unit into habitable living space.
In 2006, The Landing Homeowners’ Association Board of Directors (“Board”) passed a resolution transferring to fourth-floor owners the exclusive right to use, for rough storage, up to 120 square feet of otherwise inaccessible, common area attic space immediately adjacent and appurtenant to their units. The vote followed the Board’s lengthy investigation into a unit owner’s complaint concerning use of common attic area, and a notice of violation from the City of Coronado that the attic space could not be used for anything but storage. The Board acted pursuant to a provision in Association’s declaration of restrictions (“CC&Rs”) giving the Board authority to allow an owner to exclusively use common area provided such use is “nominal in area,” is adjacent to the owner’s exclusive use area, and does not interfere with any other owner’s use or enjoyment of the condominium project.
Unit owner Miles Harvey (“Harvey”) sued Association and Board for trespass, breach of fiduciary duty and injunctive relief. Harvey argued the Board did not have authority under the CC&Rs to determine what was “nominal use,” and that the CC&Rs specifically prohibited use of common area for storage. Harvey also claimed the resolution was invalid because Board members who were also fourth-floor unit owners had participated in the vote. The trial court granted the defendants’ motion for summary judgment, and Harvey appealed.
The California Court of Appeal found the CC&Rs were clear in their grant of “sole and exclusive” authority to the Board to “manage” the common area, to “adopt reasonable rules and regulations” regarding area use, to designate portions of the common area as “storage” area, and to allow an owner to exclusively use portions of the common area “nominal” in size. The total common area at issue was only slightly more than 1 percent of the total building area, and was accessible only to owners whose units were immediately adjacent to it; thus, the Board clearly had authority to manage and interpret the CC&Rs as it did, the court stated.
The court rejected Harvey’s claim that the Board had no discretion to override a prohibition in the CC&Rs against use of the common area for storage. The CC&Rs did not impose a blanket prohibition against such use, but did give the Board authority and discretion to permit such use under certain conditions, the court stated, as it applied the “rule of judicial deference,” recognized by the California Supreme Court in Lamden v. La Jolla Shores Clubdominium Homeowners Ass’n (1999) 21 Cal.4th 249. The evidence showed the Board had conducted an investigation, consulted with its insurance broker, met with City representatives, and otherwise acted reasonably in reaching its resolution, and the court deferred to the Board’s authority and “presumed expertise” in managing the common area.
The court also rejected Harvey’s claim that the resolution was invalid because some voting Board members had an alleged conflict of interest. Harvey failed to show that a conflict existed, the court noted, because he presented no evidence that fourth floor directors received a “material financial interest” when they voted in favor of allowing common area to be used for storage. Furthermore, even if a conflict existed, the resolution was passed by a majority of disinterested Board members who were fully aware of the alleged conflict, the court stated, thus assuring the resolution’s validity. The court therefore affirmed the trial court’s grant of summary judgment for defendants.