Articles Posted in Litigation

By David Swedelson, Senior Partner at Swedelson & Gottlieb, California Community Association Attorneys

Protect_your_condo__co-op_or_apartment_building_with_commercial_umbrella_insurance_-_Mackoul___Associates__Inc_.png We are often asked how much insurance a condo or coop association should carry. I often respond by saying as much as the association can afford. Here is a great example of a situation involving one of our firms clients (the facts have been altered to maintain confidentiality). A woman was trying to get into a condo association and the parking arm was stuck. She and her entourage were physically trying to get the arm to move when it dropped hitting her in the leg. It hit an artery and she almost died. She suffered some permanent disabilities and then she sued the association.

Turns out the association knew about the problem and its maintenance guy had been fiddling with the equipment to get it to work. Long story short, there was little question that the association was negligent and the association’s insurance carrier paid out almost 3 million to settle the claim just before trial was supposed to start. The association had a $2 million general liability policy. Fortunately, the association also had a $1 million umbrella policy and with that additional money was able to settle a claim that had the potential for damages that could have exceed the association’s insurance coverage. This is just one of many other examples.

So, what is an umbrella policy?
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By David Swedelson, Partner at SwedelsonGottlieb, Community Association Attorneys

hard_flooring_nuisance_noise_-_Google_Search.png

Many homeowners want hard surface flooring instead of carpet. And they will often present a prescription from their doctor for a hard wood floor in an effort to get around their association’s restrictions or prohibitions on hard surface flooring. Yes, a prescription for a hard wood floor on a doctor’s prescription form. But anyone that works with condos knows that hard surface flooring may create nuisance problems for the downstairs neighbor. And when the downstairs neighbor complains to the board about the hard surface floor that was not approved and violates the CC&Rs, the board is sometimes reluctant to take legal action thinking that a court is not going to rule in its favor. The California Court of Appeal debunked that thinking in the case of Ryland Mews v. Munoz upholding a California condominium association’s ability to limit hard surface flooring in response to nuisance complaints.

The story in the Ryland Mews case is all too familiar. Munoz moved into their upstairs unit at Ryland Mews and replaced the carpets with hardwood floors allegedly to accommodate the wife’s severe dust allergy. And it was not to soon after that when the downstairs neighbors complained about the additional noise they were now hearing.

When the association’s manager wrote to Munoz regarding the complaints and the fact that the alteration of the flooring was made without prior approval of the association, Munoz did not respond within the 30 days Management had given them. Management wrote to Munoz again, this time requesting Alternative Dispute Resolution (ADR) under the Davis-Stirling Act. Munoz still did not respond to the Association’s Request for Resolution.
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By David Swedelson, Senior Partner at SwedelsonGottlieb, Community Association Attorneys

trivial_walkway_defects_-_Google_Search.pngI recently assisted a large condominium association in dealing with a claim by an owner that she had fallen and injured herself after tripping on a common area walkway. Management looked at the area where this woman claimed to have fallen, and all they could find was a slightly raised area of concrete – a trivial defect. It reminded me of a 2011 Court of Appeal decision in the case of Cadam v. Somerset Gardens Townhouse HOA involving a 63-year-old woman who was injured when she fell after tripping on a separation in a concrete walkway next to the townhome she was leasing.

In that case, Cadam filed an action against the homeowner’s association and its management company claiming causes of action for premises liability and negligence. She alleged that the walkway had shifted and adjacent sections had separated such that they differed in height by three-fourths to seven-eighths of an inch, creating a dangerous condition.

Following a jury verdict in favor of the injured resident, the trial court granted the association’s motion for judgment notwithstanding the verdict (meaning that despite what the jury found, the judge felt that the evidence was not sufficient to justify the jury’s decision and set it aside). And the judge did this despite the fact that the association’s president had testified that a defect of one-half inch or more is “probably” dangerous. The court found that no reasonable person could find that the condition was not a trivial defect under the circumstances.
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By David Swedelson, Senior Partner at SwedelsonGottlieb, Community Association Attorneys

lawyers.pngIt is a common scenario. A homeowner (usually disgruntled or in trouble with their association) either wants their attorney to attend a board meeting with them or in their place. Often, we hear about it after the meeting where the attorney appeared on behalf of their client and intimidated the board. This situation raises three hotly contested issues: (1) Do homeowners have the right to have their attorney present at board meetings? (2) Can homeowners delegate their right to attend board meetings to nonmembers? and (3) Does it make a difference in delegating powers to attend board meetings if the owner of a unit is a natural person or an entity? We have not had a solid answer to these questions. That is, until the Court of Appeal came down with its decision in the case of SB Liberty, LLC, v. Isla Verde Association, Inc. Based on this decision, we can definitively say that the answer to all three questions is NO.

The Court ruled in SB Liberty (in May of 2013) that Section 1363.05 of the California Civil Code (now found in Civil Code Section 4925) specifically states that members may attend an association’s board meetings. This means that owners cannot have their attorney, or any other nonmember, attend in their place.

drug_sniffing_dogs_-_Google_Search-1.pngIf you live in a condo in North Dakota and are into illegal drugs, be advised that it is OK for the police to bring drug-sniffing dogs into your association’s common area without a warrant, according to the North Dakota Supreme Court (follow this link to read the full opinion).

As summarized by a newspaper article, the North Dakota Supreme Court made this the law in their posted opinion that rejected an appeal by a West Fargo man who “was arrested for possession of marijuana with intent to deliver after police brought Disco the dog into a common hallway that [he] shared with another resident in the condo. Police say they received a tip that pot was being sold out of the residence.” Although not made clear in the article, the dog alerted its handlers to the presence of drugs behind the condominium door, and the officers obtained a warrant before searching the condominium.

The trial judge denied a motion to exclude the evidence that argued that it was an unreasonable search and seizure. “The Fargo lawyer had argued that the hallway in the condo should be considered curtilage, or part of the home, and that gave Williams an expectation of privacy.” The ND Supreme Court stated in its 5-0 ruling that the common areas of a multi-family dwelling are not protected by the Constitution, and the search was legal, stating that “. . .we conclude the condominium building’s common hallway was not curtilage, and [the resident] had no expectation that the shared space would be free from any intrusion”.

By David C. Swedelson, Esq., Senior Partner at SwedelsonGottlieb, Condo Lawyers and HOA Attorneys

damagephotooblog.pngConsider the following, a somewhat typical scenario: your association has been sued by an owner who claims the board failed to maintain the common area that resulted in water leaking into that homeowner’s unit, causing damage. The board tenders the claim to the association’s insurance carrier. The claim is not resolved, or it may not even be a covered claim under the association’s insurance policy, and the owner files a lawsuit. The lawsuit is tendered to the association’s insurance carrier with a request that the carrier defend the lawsuit and indemnify the association from any damages. The insurance carrier accepts the tender with limited reservations of rights (insurance carriers always reserve rights to deny coverage if it later determines or discovers there is no coverage).

What I have recited above is how most lawsuits get handled. Many boards expect that once they have tendered the claim to the insurance carrier, they can more or less forget about the claim or lawsuit. That would be a big mistake. In addition, many boards expect that the insurance company’s defense attorney is going to handle the matter and they don’t need to involve their association’s corporate counsel. That can also be a costly mistake.

While the association’s insurance carrier will, in most cases, pay the homeowner claimant for damages caused to the homeowner and/or their property, the insurance carrier will not (in most cases) pay the cost of repairing the common area (the leaking roof, deck, window, stucco, etc.) that is leaking or leaked. Many boards are shocked when they attend a mediation and hear from the insurance adjustor or claims representative, the judge or the mediator, or all three, telling the board that they have to pay for replacement of the windows, fixing the flashing, replacing the leaking pipes, the list goes on. And, of course, there may be mold or even asbestos that the carrier will likely not pay to abate.
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By David Swedelson, Senior Partner SwedelsonGottlieb, Condo Lawyer and HOA Attorney

san-diego-1.pngThe Court of Appeal recently came down with a decision regarding a lawsuit filed by several condominium owners who bought units in the Hard Rock Hotel San Diego, a mixed-use development with 420 condominium units. The Court of Appeal’s decision indicates that when these owners bought their units, they not only entered into purchase agreements, they also signed rental management agreements eight to fifteen months later. Does this mean that they get to sue for securities violations? Relating to a condo association? The following is a good definition of “Securities Fraud”.

Securities Fraud: A type of serious white-collar crime in which a person or company, such as a stockbroker, brokerage firm, corporation or investment bank, misrepresents information that investors use to make decisions. Securities Fraud can also be committed by independent individuals (such as by engaging in insider trading). The types of misrepresentation involved in this crime include providing false information, withholding key information, offering bad advice, and offering or acting on inside information.
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By David Swedelson, Condo Lawyer and HOA Attorney, Partner at SwedelsonGottlieb, Community Association Attorneys

TenderClaim.pngIt is not uncommon for a condo association or HOA to become embroiled in some sort of dispute or litigation as a defendant, having been named in a lawsuit by a disgruntled owner. The lawsuit comes in, and after being evaluated to determine if it is a case that should be defended by the Association’s insurance carrier, it is tendered to the carrier. The fact that the Association has been named in the lawsuit raises several questions:

• What does “tendering the lawsuit” mean?

“Tendering the lawsuit” means that the lawsuit is sent over to the association’s insurance carriers for defense. The insurance company’s obligations to provide indemnity or defense to the lawsuit is triggered by the tender. The tender is usually made by the association’s management, legal counsel or the board of directors and is usually accomplished by sending the lawsuit paperwork (the summons and complaint) to the association’s insurance broker/agent or carrier, as the case may be.
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By David Swedelson, Senior Partner at
SwedelsonGottlieb, Community Association Attorneys

SwedelsonGottlieb_Prevails_In_Spite_Fence__View_Obstruction__Lawsuit___Entries___HOA_Law_Blog___Movable_Type_Publishing_Platform.pngA longtime client of the firm was sued by a woman that did not live in the association who claimed that our client had illegally obstructed her view of a lake owned by our client association. After a jury trial on the sole cause of action that was left after we prevailed on a motion for summary adjudication knocking out all of her other frivolous claims, the jury decided that there was no spite fence. This result was not a surprise as the plaintiff was not entitled to her view of the lake, no matter how precious it was to her.

Here are the facts: the plaintiff’s home bordered a park that the association owned and maintained and she was entitled to use the park. The park was between the plaintiff’s home and the lake, hundreds of feet separating her home from the lake. The park had been, at the time the plaintiff built her home, unimproved except for two 200 year old oak trees that partially obstructed her view. Otherwise, the park was made up of dirt and native grasses. Her neighbors wanted the park improved and prevailed upon the developer of the association to improve the park as was required by the development documents and the county. Exhibit_6a_Patterson_Home_before_Park.pdf__1_page_.pngThe plaintiff did enjoy a view of the association’s lake. But her view became obstructed several years later when the trees that the association’s developer planted grew up.

The plaintiff’s property, while not part of the association, is part of a community association, which unlike the association that is our client, is not a mandatory membership community association. It is a voluntary association, formed to manage issues of the homes in and around the plaintiff’s home (which homes were built before the association was formed). The plaintiff acknowledged that there were no restrictions on the land that require that she be provided a view or that require that our client association provide the plaintiff with an unrestricted view of the lake.

[NOTE: In the 1986 case of Pacifica Homeowners Association v. Wesley Palms Retirement Community, the California Court of Appeal concluded that “[a]s a general rule, a land owner has no natural right to air, light or an unobstructed view and the law is reluctant to imply such a right.” However, “such a right may be created by private parties through the granting of an easement or through the adoption of conditions, covenants and restrictions …”]
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By David Swedelson, Condo Lawyer and HOA Attorney; Senior Partner at SwedelsonGottlieb, Community Association Attorneys

ParkingBarrier.pngThe Daily Journal, a newspaper for attorneys, reports weekly on various verdicts and settlements. I read those reports, as it keeps me up on what kind of cases are being filed and what kind of verdicts and settlements are being made.

Recently, I read a report of a settlement in a lawsuit where a woman sued a property owner for damages she suffered after tripping and falling over a concrete parking barrier in a parking lot. Although the case did not involve a community association parking lot, it easily could have. The fact is, some our condo clients have been sued by owners, residents or guests after they likewise tripped over a concrete parking barrier, claiming that it was a dangerous condition because they could not distinguish the parking barrier from the asphalt parking lot surface.

In the report about the case I referenced above, the injured woman settled her claims against the property owner for $500,000. While most community associations have at least $1,000,000 liability insurance, imagine if the injuries were so severe that the injured homeowner or resident was claiming damages in excess of one million dollars. And imagine the impact on a community association’s insurance coverage, both the ability to get insurance and the cost of a liability policy after their carrier has paid out $500,000 in a liability settlement.
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