Associations Must Act Timely and Decisively to Enforce Covenants
This summary of a recent Court of Appeals decision was published in the October 2008 edition of the Community Association Law Reporter published by Community Associations institute. What do you think of the Court’s decision?
Pacific Hills Homeowners Association v. Prun, No. G038244, Cal. App. Ct., March 20, 2008
Covenants Enforcement: If an association does not act timely and decisively in enforcing covenants, then the association may face penalties if the dispute goes to court.
Jon and Linda Prun live in a planned community in Mission Viejo, Calif. Their property is subject to a declaration of covenants, conditions, and restrictions, which is enforced by the Pacific Hills Homeowners Association (“association”). The declaration requires that prior written approval from the association’s architectural committee is needed before construction of any improvement, including a fence or wall, can commence. The association also adopted architectural guidelines that limit fences to six feet in height unless the fence is within 20 feet of the front property line, in which case the maximum height is three feet.
In late 2000, the Pruns erected a mechanical gate, connected to a fence, across their driveway. Jon Prun testified at trial that they reviewed the copy of the declaration and guidelines they received when they purchased the home and found no mention of setbacks. He also testified after the lawsuit was filed that he noticed that his copy of the guidelines contained only odd-numbered pages; he stated that the version he had was missing the page containing setback requirements. The court noted, however, that the guidelines and amended guidelines in the record show the setback requirements were on odd-numbered pages.
After reviewing the declaration and guidelines, Jon Prun called the property management company for the community and asked about setbacks. He testified at trial that Bill Scales, the management company’s architectural administrator, told him that neither the association nor the City of Mission Viejo had setback requirements. According to Prun, Scales only said that color was critical and that the gate should be of high quality. Scales assured him “there won’t be any problem” after Prun told him a professional contractor was installing the gate. Prun also testified that Scales said he would fax the forms the Pruns needed for the association’s approval and that receiving approval from the association should take only a couple of weeks. Prun testified at trial that he understood that obtaining approval was merely a formality. Scales testified that he did not remember the call with Prun and would not have checked a city setback requirement for a homeowner because he had no copy of those codes.
In the meantime, the Pruns began building the gate. When Scales learned of it, he sent a letter informing them that the construction violated the declaration because prior approval was required and asked the Pruns to submit plans. In late November 2000, Jon Prun completed the forms he had received from Scales and sent the forms both to Scales and to the committee; he did not enclose plans.
In January 2001, the association sent a letter to the Pruns asking for the plans for the gate. The Pruns re-sent their application with a drawing that did not show the specifics of the gate as required by the declaration and guidelines. Consequently, the association returned their application stamped “disapproved as submitted” with another request that the Pruns submit clear drawings of their plans. The Pruns proceeded to submit clear drawings of their plans to the association, showing the gate within three feet of the front property line. In mid-February 2001, the committee denied approval of the Pruns’ proposed fence and gate because they did not comply with the setback requirements in the declaration and guidelines; however, the Pruns had already completed the gate.
In July and August 2001, the association sent letters to the Pruns, first asking them to comply with the declaration and guidelines, and then inviting them to attend a board meeting in October 2001. Thereafter, the association sent a letter giving the Pruns a November deadline to move the gate to comply with the setback requirements and advising that it would assess a $100 fine if they did not comply; the association also invited them to a meeting in December to “discuss the situation.”
At some point, the association contacted the City of Mission Viejo to advise it of the problem with the Pruns. In May 2002, the city sent written notice to the Pruns that their gate and fence violated its setback requirements. Between November 2002 and January 2003, the association sent four more letters to the Pruns, assessing fines and inviting them to association meetings, which they attended.
In March 2003, the association’s lawyer sent a letter to the Pruns, stating it was the association’s last effort to resolve the matter and insisting that the gate be moved. The letter gave the Pruns 10 days to advise whether they intended to comply; if they did not comply, the letter threatened legal action. Jon Prun testified at trial that he called the association’s lawyer and explained his side of the story. He also testified that the association’s counsel told him he thought his story sounded “logical” and “plausible.” The lawyer stated he wanted to research the matter and that if he did not get back to the Pruns, they should consider the matter closed.
Thirteen months later, in April 2004, a different lawyer for the association sent a letter to the Pruns inviting them to submit the matter to alternative dispute resolution and advising them if they did not respond in 30 days, the association might authorize a lawsuit. When Jon Prun called that lawyer he was told, “We’re going to make you move the gate.” Nothing happened until almost one year later, in March 2005, when the association’s lawyer sent another letter suggesting mediation.
The Pruns did not mediate and in April 2005, the association sued them for breach of the declaration and guidelines, nuisance, and declaratory and injunctive relief. One of the Pruns’ defenses was that the statute of limitations had run on the action, and in the alternative, the five-year statute of limitations for suits regarding covenants running with the land did not apply if such covenants were not recorded in the land records.
The court ruled in favor of the association. It ruled, in part, that the five-year statute of limitations applied and thus the action was filed timely. The court also found that the Pruns had not proven their other affirmative defenses of estoppel, laches or waiver. The judgment ordered the Pruns to lower their fence and gates to a maximum of three feet, or, in the alternative, to set them back to at least 20 feet from the front property line. In that case, the height could be up to six feet. If the Pruns chose the latter alternative and gave the association timely written notice of their decision, the association would be required to pay two-thirds of the cost of the relocation of the fence and gate. If the Pruns did not give timely notice to the association of their intentions, they had to pay the entire cost of the ordered corrections. If the Pruns gave such notice, and the association did not agree in writing to pay two-thirds of the cost, the injunction ordered by the court would dissolve, and the Pruns would be allowed to keep the gates and fence as built. The association appealed.
On appeal, the appeals court upheld the trial court’s decision that the statute of limitations had not run on the action. While the dispute in question did fall under the applicable statutory provision, the association filed the action more than four years, but less than five years, after the Pruns erected the fence and gate; and thus, the action was filed within the time limit required under the law.
The court also considered whether the association’s claim against the Pruns was barred by laches. Laches is a defense that requires unreasonable delay in asserting one’s rights or prejudice to the defendant in the lawsuit as a result of the delay. The Pruns argued that the association’s more than four-year delay in filing the action was “patently unreasonable” and that the delay showed that the association acquiesced in the Pruns’ placement of the gate. The Pruns pointed to three one-year periods in which the association did virtually nothing with respect to the Pruns’ gate.
The court did agree with the Pruns that the association delayed in enforcing the setback restriction, and the association could not explain the lengthy gaps in its contact with the Pruns and its extended inactivity. While the court did not condone the association’s conduct, it did not find support for a finding of laches because the Pruns could not show prejudice to them that stemmed from the association’s delay. According to the record, they began building the gate before the Pruns submitted an application for approval of their project and before the committee got involved. The evidence at trial showed that construction was finished as early as November 2000 and no later than February 2001. According to the court, it would not have mattered if the association was diligent in filing the suit. The court also remarked that despite the delays, the Pruns could not show that the association acquiesced to their actions. According to the facts, the association made its opposition to the gate known from the moment it was built and never changed its position or communicated to the Pruns that it had changed its position. Furthermore, Jon Prun testified that, from February 2001 on, he understood that the association wanted the gate moved.
The Pruns also argued that the association waived its right to enforce the guidelines because it did not apply them fairly, reasonably or uniformly. The court disagreed, stating that there was evidence the association followed its ordinary procedures in attempting to enforce the setback requirement. It sent letters demanding that the Pruns comply with the guidelines, invited them to meet with the board of directors of the association, imposed fines and eventually filed suit. Therefore, the court ruled in favor of the association on the issue of whether it waived its right to enforce the guidelines.
Finally, the court responded to the association’s cross-appeal, which claimed that the trial court abused its discretion in ordering it to pay for two-thirds of the cost of moving the Pruns’ gate. The trial court ordered this payment because it viewed the association as being sloppy in its pursuit of this case. The court stated that it saw no abuse of discretion in the result the trial court fashioned. The court confirmed the trial court’s decision in all respects, and in order to serve “justice,” each of the parties were required to bear their respective costs on appeal.