The New Normal

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By Rhonda R. Adato

We are now entering the third year of the COVID-19 pandemic. Summertime Is approaching, and with the new season comes questions regarding how associations should manage their common area recreational facilities during the current phase of the pandemic.

Governor Newsom declared a State of Emergency on March 4, 2020, quickly followed by a Stay at Home Order on March 19, 2020. The State of California and local municipalities began Issuing COVID-19 regulations soon after, including regulations, restricting gatherings, mandating mask-wearing, limiting the use of pools, gyms, and playgrounds, setting forth cleaning protocols, and more. These regulations often arrived and changed at rapid-fire pace. Association managers, like many Californians across a wide swath of Industries, struggled to keep up with the changes.

The COVID-19 regulations in place during the last two summers provided some sense of structure (albeit and often onerous and confusing one) as associations were required to follow the law. What other option was there?

Now, many COVID-19 regulations have been rolled back, but California’s State of Emergency remains in place. The pandemic, unfortunately continues, mutating into different strains that dominate the news and bring more uncertainty. We have not entirely returned to a pre-COVlD world, as much as we wish to do so. So how, to approach the upcoming summer?

Associations may consider doing the following:

Defer to the law. New governmental restrictions, such as mask mandates, may come into place in the event of new surges. Associations can consider adopting rules that mirror existing governmental restrictions verbatim in order to bolster the reasonableness of those rules. Or, associations can simply refer residents to the governmental regulations for a more hands-off approach.

Address clashes. At least anecdotally, it seems that confrontations are on the rise as Americans enter the third year of a difficult, stressful pandemic. Associations should Investigate and appropriately address any governing document violations, including nuisances, harassment violations, or hostile environment harassment based on a protected status.

Clean smarter. Hopefully, the longer the pandemic goes on, the more we learn about how COVID-19 and its mutations spread. Associations should rely on their cleaning and janitorial professionals regarding best practices for maintaining common area facilities in as reasonably safe a condition as possible.

Continue to rely on experts. Associations can and should continue to rely on qualified experts like cleaning professionals, legal counsel, and Insurance representatives to minimize the associations’ liability, Including with regard to managing the common area and holding meetings and events.

With these steps, associations can ready themselves for the upcoming summer, as we settle into the “new normal” of the post-shutdown world.

 

 


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* This article was originally published in CAI San Diego  Community Insider  Magazine in the Summer  2022 edition and was adapted from the original article, The New Normal as authored by Rhonda R. Adato, Esq.

Refresher on the Architectural Approval Process

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By Lindsay J. Anderson, Esq. and Karyn A. Larko, Esq.

Most CC&Rs require owners of the separate interests to obtain association approval prior to making structural alterations or alterations to the exterior of their separate interests or common area.

In some instances, the language is vague, imposing the obligation on owners, but providing few details. In other instances, the CC&Rs set forth in detail the process owners (and the association) must follow.

Directors should be encouraged to review their association’s CC&Rs so they are well-versed on the architectural approval process (“Process”) they must follow. Likewise, if the CC&Rs provide for an architectural review committee (“ARC”), ARC members should be encouraged to review the Process.

Having said this, “knowing” the Process is not enough. The board and ARC, if any, must also comply with the Process. Failure to do so can lead to the inadvertent approval of alterations that are not acceptable to the board or ARC.

Many CC&Rs state that if an application is not approved or denied within a specified time period, the application is automatically approved or association approval is no longer required.

The inadvertent approval of alterations can result in alterations that are detrimental to the appearance of the community and property values, or that undermine the structural integrity of a building. Inadvertent approval of alterations can also lead to potential liability for the association and, in some instances, individual board or ARC members.

On a related note, be sure your boards and ARCs know the time periods imposed by California law for reviewing solar energy systems and electric vehicle charging station applications. California Civil Code (“CC”) §714(e) (2)(B) provides that unless a solar energy system application is denied in writing within 45 days of submission, it is deemed approved.

CC §4745(e) provides that if an electric vehicle charging station is not denied in writing within 60 days of submission, it is deemed approved. The Civil Code controls in the event the governing documents grant a longer review period.

Federal law also imposes a deadline for reviewing applications for qualifying satellite dishes and antennas. If your clients require approval for the installation of these devices, encourage your boards to consult with their association’s legal counsel on this matter

REVIEWING APPLICATIONS

The CC&Rs generally identify the factors the board or ARC is to consider when evaluating applications, such as conformity of the alterations with the governing documents, the quality of the proposed workmanship, the design and harmony of the alterations with existing structures, the location of the alterations in relation to surrounding structures, topography, and finish grade elevation.

It is important that boards and ARCs understand the scope of their authority and duty when evaluating applications, and perform their evaluation in keeping with this scope.

If an application contains a disability related request for a reasonable accommodation, the board or ARC should consult with the association’s legal counsel on how best to evaluate the application.

APPROVING/DENYING APPLICATIONS

Boards and ARCs must act reasonably and not in a capricious or arbitrary manner when deciding applications. This does not mean that if they have previously approved an alteration, they must approve all future applications for the same or similar alterations.

Nor does it mean that if they have previously denied an alteration, they must do so in the future. However, they should have objective reasons for treating the applications differently and these reasons should be noted in the meeting minutes.

For example, the location of a proposed alteration in relation to other structures might be a basis for denying a request that was previously approved elsewhere in the community.

CC §4765(a)(4) mandates that applications be approved or denied in writing, and that if an application is denied, the notice of denial must include the reason(s) for the denial and a description of any procedure the owner must follow to appeal the denial.

Your boards and ARCs may impose reasonable conditions when approving applications, subject to any limitations imposed by the governing documents. If any conditions are imposed, these conditions should be clearly set forth in the notice of approval.

APPEALS

If applications are denied by an ARC, other committee, or subcommittee of less than the whole board, CC §4765(a)(5) grants owners the right to appeal the denial of their application to the board. Section 4765(a)(5) does not extend this same right of appeal to other owners who may object to the approval of a neighbor’s application.

Some governing documents provide an appeal process regardless of the composition of the body reviewing applications. In such instances, this process must be followed even if the right to appeal is not imposed by the CC.

If owners are entitled to appeal, the board must promptly consider their appeal at a duly noticed open session board meeting, subject to any additional requirements imposed by the governing documents.

ARCHITECTURAL GUIDELINES

CC §4765(a)(1) requires associations to have a fair, reasonable, and expeditious procedure for deciding applications, including the maximum time for responding to applications and appeal requests. This procedure must be set forth in the governing documents, which include CC&Rs and rules or guidelines.

Therefore, if any of your clients have CC&Rs that do not include a detailed description of the architectural review process or have concerns about the current process, they should consult with legal counsel.

If authorized by the governing documents, your boards should adopt architectural guidelines that set forth any standard restrictions on commonly requested alterations. By doing so, they reduce the potential for inconsistent application decisions and claims of wrongdoing.

ANNUAL DISCLOSURE

CC §4765(c) requires associations to notify their members annually of any requirements for association approval of physical changes to property. This notice must describe the types of changes that require association approval and include a copy of the association’s process.

 


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*This article was originally published in The CACM Law Journal, Fall 2022 edition and was adapted from the original article, Refresher on the Architectural Approval Process) as authored by Lindsay J. Anderson, Esq. & Karyn A. Larko, Esq.

 

JOYCE J. KAPSAL, Esq.

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Joyce J. Kapsal

JOYCE J. KAPSAL, Esq.

Senior Attorney at Law

Practice Areas

Community Association Counsel
Civil Litigation





Legal Assistant: Suzi Estilow


Education

University of Arizona, 1973
University of Arizona College of Law, 1978

Affiliations and Memberships

State Bar of California
Community Associations Institute (CAI)
California Association of Community Managers (CACM)
San Diego County Bar Association

Overview

Joyce graduated Phi Beta Kappa from the University of Arizona where she obtained her B.A. degree in political science and J.D. degree from the University of Arizona College of Law.

Joyce joined Epsten, APC in October 2004, and is a member of the firm’s litigation department. Joyce’s practice is devoted to representing condominium and homeowner associations in all types of litigation related matters including CC&R disputes, enforcement actions, restraining orders, small claims appeals, property disputes, breach of fiduciary duty claims, view disputes, fair housing and construction related matters. She also represents condominium and homeowner associations in mediations and alternative dispute resolution proceedings.

In her early years of practice, Joyce served as a research attorney for the San Diego County Superior Court where she honed her research and writing skills which has since resulted in numerous published and unpublished appellate decisions.

Joyce is licensed to practice law in California and Arizona and is also admitted to practice before the United States Supreme Court. Joyce is a member of the State Bar of California, the State Bar of Arizona and the San Diego County Bar Association. She is also a member of Community Associations Institute (CAI) and California Association of Community Managers (CACM).

Honors & Awards

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    An interview with ProTec Building Services and Kieran J. Purcell, Esq.

    An interview with ProTec Building Services and Kieran J. Purcell, Esq.

    Dave Rauch of ProTec Building Services interviews Epsten, APC Shareholder, Kieran Purcell, Esq., to discuss a wide variety of topics including SB 326 and what it means for communities as the deadline nears. They also discuss future legislation we can expect to see here in California in response to the Champlain Towers collapse and other trends in the industry.

    Click here to check out the full interview.

    Video source credits to ProTec Building Services

    Leonard SPORN, et al., Plaintiffs, v. OCEAN COLONY CONDOMINIUM ASSOCIATION, et al., Defendants.

    173 F.Supp.2d 244 (2001)

    Leonard SPORN, et al., Plaintiffs,
    v.
    OCEAN COLONY CONDOMINIUM ASSOCIATION, et al., Defendants.

    No. 00-1179 (JEI).
    United States District Court, D. New Jersey.
    October 29, 2001.
    245*245 246*246 247*247 Taylor, Boguski & Greenberg, by Robert Aaron Greenberg, Larchmont Law & Professional Center, Mount Laurel, NJ, for Plaintiffs.

    Stark & Stark by David J. Byrne, Princeton, NJ, for Defendants.

     

    OPINION

     

    IRENAS, District Judge.

    Presently before the Court is the Motion for Summary Judgment of Defendants Ocean Colony Condominium Association, Carol Ramchandani, Charles Haines, Betsy Beaver, Fred Shoyer and Frank Pisaturo. For the reasons set forth below, Defendants’ motion is granted.

     

    I.

     

    Plaintiffs Leonard Sporn (“Mr.Sporn”), Dolores Sporn (“Mrs.Sporn”), Amelia Thomas (“A.Thomas”) and Rosemarie Thomas (“R.Thomas”) were unit owners at the Ocean Colony Condominium in Ocean City, New Jersey. The dispute out of which this action arose began in January 1998 when Defendant Ocean Colony Condominium Association (“the Association”), through its Board of Trustees, a number of whom are named as defendants in this case, issued a regulation in which an “Adult Lounge”, inaccessible to children, was created at Ocean Colony. (Compl.¶ 15). In response to this regulation, Plaintiffs filed, in January 1999, a petition with the United States Department of Housing and Urban Development (“HUD”) seeking a ruling on whether the exclusion of children from the adult lounge violated the provisions of the Fair Housing Act (“FHA”), 42 U.S.C. § 3601, et seq. According to Plaintiffs, Defendants allegedly responded to this complaint by engaging in “a campaign to discredit the plaintiffs with other unit owners” and “shunning” and “ostracizing” Plaintiffs. (Compl. at ¶ 17).

    In March 2000, Plaintiffs filed the instant action against the Association and several individual members of the Board of Trustees, alleging that the creation of the adult lounge violated the FHA and that Defendants’ “retaliatory” actions constituted 248*248 unlawful interference with the exercise and enjoyment of Plaintiffs’ FHA rights. (Compl.¶¶ 28, 31).

    In addition, Plaintiffs assert a number of claims related to the Defendants’ treatment of Leonard Sporn. Mr. Sporn suffers from severe spinal stenosis and is confined to a wheelchair. Plaintiffs assert that Defendants failed, in a number of ways, to comply with their obligations under the FHA and New Jersey law to “reasonably accommodate” Mr. Sporn’s handicap. Specifically, Plaintiffs claim that Defendants refused to honor Mr. Sporn’s request that he be provided with a handicapped parking space adjacent to a wheelchair-accessible entrance to the Condominium, and failed, in connection with renovations to the Condominium made in 1999, to provide handicapped access to the building and to the common area restrooms. (Compl.¶¶ 22-26).

    Plaintiffs’ final claim is that the actions of the Defendants constitute intentional and negligent infliction of emotional distress.

    This Court has jurisdiction over the matter pursuant to 28 U.S.C. § 1331, 1367.

     

    II.

     

    “[S]ummary judgment is proper `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)).

     

    III.

     

     

    A.

     

    The Fair Housing Act, 42 U.S.C. § 3601, et seq., passed as Title VIII of the Civil Rights Act of 1968 and amended by the Fair Housing Amendments Act (FHAA) of 1988 to protect handicapped persons, provides that it is unlawful “to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services in connection with such a dwelling, because of the handicap of that person….” 42 U.S.C. § 3604(f)(2). The relevant provisions of the FHA’s definition of “discrimination” make unlawful:

    (B) A refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling; [and]

    (C) in connection with the design and construction of covered multifamily dwellings for first occupancy after the date that is 30 months after September 13, 1988, a failure to design and construct those dwellings in such a manner that the public use and common use portions of such dwellings are readily accessible to and usable by handicapped persons [and] all the doors designed to allow passage into and within all premises within such dwellings are sufficiently wide to allow passage by handicapped persons in wheelchairs.

    42 U.S.C. §§ 3604(f)(3)(B), (C). Although Plaintiffs fail to cite to any specific provisions FHA in their complaint and cite to inapplicable provisions of the Act in the single paragraph discussing the issue in their response to the instant motion, it appears from their references to the denial of a “lawful accommodation” and their use of language identical to that in § 3604(f)(3)(C) that their claims are properly regarded as brought under the sections cited above.

    249*249 The evidence offered by Plaintiffs relating to the inadequacy of Defendants’ renovations under 3604(f)(3)(C) is wholly insufficient to survive a motion for summary judgment. Even assuming that the subsection’s requirements relating to the design and construction of “covered multifamily dwellings for first occupancy” apply to renovations such as those alleged here (a proposition for which Plaintiffs cite no legal authority), Plaintiffs have not offered a single shred of evidence relating to the nature of renovations undertaken, the condition of the facilities at issue prior to the renovations or the alleged inadequacies of the Condominium after the renovations. As the Supreme Court has noted, “a party opposing a properly supported motion for summary judgment may not rest upon the mere allegations or denials of his pleading, but … must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citation omitted). Here, Plaintiffs have failed entirely to meet this requirement.[1]

    Plaintiffs claim of denial of reasonable accommodations under § 3604(f)(3)(B) is similarly without merit. While it is true that the FHA’s reasonable accommodation requirement “can and often will” involve the imposition of some costs upon a landlord, Shapiro v. Cadman Towers, Inc., 51 F.3d 328, 334-335 (2d Cir.1995); see also, Assisted Living Associates of Moorestown v. Moorestown Township, 996 F.Supp. 409, 434-435 (D.N.J.1998), accommodation is required only where such measures “may be necessary to afford such a [handicapped] person equal opportunity to use and enjoy a dwelling” and need only be “reasonable.” 42 U.S.C. § 3604(f)(3)(B); see also, Gavin v. Spring Ridge Conservancy, Inc., 934 F.Supp. 685, 687 (D.Md. 1995) (emphasizing that FHA does not require accommodation wherever convenient or desired, but only where necessary). Given the dearth of evidence offered by Plaintiffs relating to necessity of Leonard Sporn’s requested accommodations and the rather extensive evidence offered by the Defendants relating to the reasonableness of their efforts to accommodate Mr. Sporn, Plaintiffs claim cannot survive the instant motion.

    As mentioned, Plaintiffs have offered no evidence whatsoever regarding the 1999 renovations to the Condominium or Plaintiff’s claims relating thereto. Therefore, those claims cannot stand, regardless of the theory offered to support them. Accordingly, the only remaining issue in this area relates to Mr. Sporn’s claim of entitlement to a handicapped parking space.

    It has been recognized on numerous occasions that the FHA may, in certain cases, entitle a handicapped tenant to a reserved parking space adjacent to the tenant’s dwelling. See, e.g., Jankowski Lee & Associates v. Cisneros, 91 F.3d 891, 895-896 (7th Cir.1996); Shapiro, 51 F.3d at 335; Hubbard v. Samson Management Corporation, 994 F.Supp. 187, 192 (S.D.N.Y.1998); Trovato v. City of Manchester, 992 F.Supp. 493, 498 (D.N.H. 1997); see also, 24 C.F.R. § 100.204, Example (2) (2001). Although Plaintiffs have not offered any evidence of the specific 250*250 nature of Mr. Sporn’s handicap, or of the inadequacy of the parking arrangements that pre-existed his request for accommodation, Defendants do not appear to challenge the necessity of Plaintiff’s accommodation, but instead focus on the reasonableness of the accommodations they attempted to provide. (See Def. Br. at 26).

    “The reasonable accommodation inquiry is highly fact-specific, requiring a case-by-case determination.” Hovsons, Inc. v. Township of Brick, 89 F.3d 1096, 1104 (3d cir.1996) (quoting United States v. California Mobile Home Park Management Co., 29 F.3d 1413, 1418 (9th Cir. 1994)). Here, while Plaintiffs have provided no evidence relating to Mr. Sporn’s request for a handicapped parking space, Defendants have demonstrated that they did, in fact, take significant steps to provide Mr. Sporn with an acceptable accommodation and never “refused” to permit such accommodations.

    The FHA entitles a handicapped individual to “equal opportunity to use and enjoy a dwelling.” 42 U.S.C. § 3604(f)(3). Accordingly, “an accommodation should not `extend a preference to handicapped residents [relative to other residents], as opposed to affording them equal opportunity'” and “accommodations that go beyond affording a handicapped tenant `an equal opportunity to use and enjoy a dwelling’ are not required by the Act.” Hubbard, 994 F.Supp. at 190 (citing United States v. California Mobile Home Park, 29 F.3d 1413, 1418 (9th Cir.1994) and Bryant Woods Inn, Inc. v. Howard Cty. 124 F.3d 597, 605 (4th Cir.1997)). In this case, in response to Leonard Sporn’s requests for a handicapped parking, the Association adopted a “Handicapped Parking Policy” in December 1999. (Beaver Cert. ¶ 25). This policy provided that “handicapped parking spaces [defined as spaces closer to the Condominium entrance] shall be provided to residents” provided that any resident seeking such a space “trade in their deeded parking space for an Association owned space closer to the building entrance.” (Id., Ex. D) On its face, this policy grants the same rights to handicapped tenants as it does non-handicapped residents. In order to prevail on his discrimination claim, therefore, Mr. Sporn must demonstrate that the Association’s actions toward him individually constituted a refusal to reasonably accommodate his handicap. This he cannot do. According to his own testimony, the problems that arose between the Association and Mr. Sporn began when Sporn demanded that he be provided a handicapped space (a proposal to which Defendants agreed) but refused to give up his non-handicapped, deeded space as required by the Handicapped Parking Policy. (L. Sporn Dep. at 58-59). When asked why he needed two spaces, Sporn did not offer any explanation related to his handicap, but instead responded, “because during the summertime we couldn’t get any parking for any of our family that came down.” (Id.). These comments reveal that Sporn’s request for “reasonable accommodation” was really a request for accommodation coupled with a demand for special treatment. Thus, Sporn’s refusal to accept the Association’s proposed accommodation cannot provide the basis for an FHA discrimination claim. As the Seventh Circuit noted in Jankowski, the FHA only creates a right to a “reasonable accommodation,” it “does not create a right to an assigned handicapped space.” 91 F.3d at 896. Accordingly, the Court determines that the actions of the Association in negotiating with Mr. Sporn and his attorneys about the creation of a handicapped space (see Beaver Cert. at ¶¶ 11-24), promulgating non-discriminatory handicapped parking regulations and 251*251 offering a handicapped space to Mr. Sporn several times even after he had rejected the Association’s proposal (see letters of Steven Scherzer to Carl Bowman, Beaver Cert., Ex. F) constitute a “reasonable accommodation” within the meaning of § 3604 of the Fair Housing Act and that Defendants’ Motion for Summary Judgment as to the claims contained in Count III of Plaintiffs’ Complaint should therefore be granted.

     

    B.

     

    The primary contention involved in Plaintiffs’ claim of unlawful interference with FHA rights appears to be that Defendants’ actions in “shunning” them, allegedly in retaliation for Plaintiffs’ filing of their HUD complaint, constituted a violation of the FHA, 42 U.S.C. § 3617. Section 3617 provides that:

    It shall be unlawful to coerce, intimidate, threaten or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encourage any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605 or 3606 of this title.

    42 U.S.C. § 3617.

    As one district court has noted, a plaintiff’s “subjective beliefs of intentional discrimination and retaliation” are “of course insufficient to show an intentional discriminatory animus.” Gavin, 934 F.Supp. at 687. In their brief, Plaintiffs point to the deposition testimony of a number of unit owners (including Plaintiffs) and to statements made by Board member Carol Ramchandani as evidence of the retaliatory actions taken by Defendants. This evidence, even when viewed in the light most favorable to Plaintiffs, amounts to nothing more than repeated statements of Plaintiffs’ subjective beliefs of discrimination and is therefore insufficient to survive summary judgment.[2]

    Even if there were sufficient evidence to support an inference that Plaintiffs were “shunned” in response to their HUD complaints, such actions simply do not constitute “coercion, intimidation, threats or interference” within the meaning of § 3617. The Fair Housing Act is remedial legislation designed to address the very important goal of providing accessibility to housing without regard to race, color, religion, sex, familial status, national origin or disability. See generally, 42 U.S.C. §§ 3601, 3604. Consistent with this goal, the prohibitions of § 3617 operate to ensure that situations that need to remedied can be brought to the attention of those with the power to effectuate the necessary changes. Section 3617 does not, however, purport to impose a code of civility on those dealing with individuals who have exercised their FHA rights. Simply put, § 3617 does not require that neighbors smile, say hello or hold the door for each other. To hold otherwise would be to extend § 3617 to conduct it was never intended to address and would have the effect of demeaning 252*252 the aims of the Act and the legitimate claims of plaintiffs who have been subjected to invidious and hurtful discrimination and retaliation in the housing market.

    While “the language `interfere with’ has been broadly applied to `reach all practices which have the effect of interfering with the exercise of rights’ under the federal fair housing laws”, Michigan Advocacy Serv. v. Babin, 18 F.3d 337, 347 (6th Cir.1994), a brief look at the cases in which § 3617 violations have been found demonstrates that “shunning” is not the kind of behavior that interferes with FHA rights. See, e.g., Fowler v. Borough of Westville, 97 F.Supp.2d 602 (D.N.J.2000) (use of building code and police harassment to drive handicapped plaintiffs out of their special residences); Byrd v. Brandeburg, 922 F.Supp. 60 (N.D.Ohio 1996) (tossing of Molotov cocktail onto porch of African-American residents); United States v. Sea Winds of Marco, Inc., 893 F.Supp. 1051 (M.D.Fla.1995) (requiring Hispanic tenants to wear special wrist bands and subjecting them to excessive monitoring and racially-derogatory remarks); Johnson v. Smith, 878 F.Supp. 1150 (N.D.Ill.1995) (cross burned in front yard of African-American family and brick thrown through their window); People Helpers v. City of Richmond, 789 F.Supp. 725 (E.D.Va.1992) (police “bullied” their way into and selectively searched handicapped and African-American plaintiffs’ apartments). While this Court has, as Plaintiffs note, recognized that “violence or physical coercion is not a prerequisite to a claim under § 3617,” Fowler v. Borough of Westville, 97 F.Supp.2d 602 (D.N.J.2000), the conduct complained of must nevertheless be of sufficient magnitude to permit a finding of intimidation, coercion, threats or interference. See, e.g., Babin, 18 F.3d at 347, 348 (holding that actions of defendants in engaging in economic competition did not “rise to the level of interference with the rights of plaintiffs” and that actions of neighbors, while interfering with plaintiff’s negotiations, were not “direct enough” to state a claim for violation of § 3617). That said, the actions allegedly taken by Defendants do not, even if taken for the reasons that Plaintiffs suggest, constitute interference with any rights protected by § 3617.[3]

     

    C.

     

    Plaintiffs’ final FHA claim is based on the designation of part of the common area of the Condominium as an “adult lounge.” Plaintiffs seek an injunction “prohibiting the defendant from prohibiting reasonable access to all person in common areas regardless of age.” (Compl.¶ 51(a)). However, it is undisputed that the former Adult Lounge was made accessible to all residents by the Board on July 10, 1999, some eight months prior to the filing of the instant suit. Accordingly, there is no justiciable case or controversy on this issue and Defendants’ Motion for Summary Judgment will be granted. See City of Los Angeles v. Lyons, 461 U.S. 95, 111, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983) (“The equitable remedy is unavailable absent a showing of irreparable injury, a requirement that cannot be met where there is no showing of any real or immediate threat that the plaintiff will be wronged again.”); Anderson v. Davila, 125 F.3d 148, 163 (3d Cir.1997) (“A party seeking injunctive relief 253*253 must demonstrate that there exists some cognizable danger of recurrent violation of its legal rights.”) (citation omitted). Further, to the extent that Plaintiffs are seeking damages on their claim regarding the adult lounge (it is unclear whether they are doing so), their claim fails as they have not demonstrated that they suffered any injuries as a result of the Association’s policy. (See A. Thomas Dep. at 24, 31-34; R. Thomas Dep. at 16, 21; L. Sporn Dep. at 15-17; D. Sporn Dep. at 20).

     

    IV.

     

    Plaintiffs also assert a number of state law claims related to their dispute with the Association. Although Plaintiffs do not cite to any specific provisions of New Jersey law to support their contentions, they appear to argue that Defendants’ actions violated the provisions of the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1, et seq. Since Plaintiffs in their brief focus exclusively on their Fair Housing Act claims and do not clarify the vague assertions made in their Complaint, Defendants (and the Court) are forced to speculate as to the specific claims asserted under the LAD. While Defendants point to a number of provisions of the LAD on which Plaintiffs claims could be based, Plaintiffs do not address these arguments in their response. Accordingly, the Court will assume that Defendants have correctly identified the specific LAD provisions implicated by Plaintiffs’ claims.

    The provision of the LAD which deals specifically with the accommodation of handicapped persons in housing is N.J.S.A. 10:5-12.4, which states that “a failure to design and construct any multi-family dwelling of four units or more in accordance with barrier free standards promulgated by the Commissioner of Community Affairs … shall be an unlawful discrimination.” As with Plaintiffs’ FHA claims, there has been offered no evidence whatsoever regarding the legal obligations of Defendants to comply with 10:5-12.4 or the actions that Defendants did or did not take with regard to the 1999 renovations. Accordingly, any claims that Plaintiffs intended to assert in this area cannot survive the instant motion.

    Plaintiffs also contend that the filing of their HUD complaint was protected by the LAD and that Defendants’ actions interfered with that protected conduct. Like the FHA, the LAD contains an anti-retaliation provision that makes it unlawful to “take reprisals against any person because that person has opposed any practices or acts forbidden under this act … or to coerce, intimidate, threaten or interfere with any person in the exercise or enjoyment of … any right granted or protected by this act.” N.J.S.A. 10:5-12. Although “it is well-established that the LAD is intended to be New Jersey’s remedy for unacceptable discrimination and is to be construed liberally,” Franek v. Tomahawk Lake Resort, 333 N.J.Super. 206, 217, 754 A.2d 1237 (App.Div.2000); see also, Cedeno v. Montclair State Univ., 163 N.J. 473, 478, 750 A.2d 73 (2000), the Court would simply be stretching the definition of “interference” too far if it were to hold that a lack of friendliness and civility between neighbors caused by a dispute over the use of their Condominium constitutes a violation of the LAD.[4] While there 254*254 are, no doubt, a variety of ways that these Defendants could have unlawfully retaliated against Plaintiffs under the LAD, mere “shunning”, without more, is not one of them.

    Finally, Plaintiffs assert claims for intentional and negligent infliction of emotional distress against Defendants. To state a claim for intentional infliction of emotional distress under New Jersey Law, a plaintiff must demonstrate severe emotional distress resulting from conduct that is “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” Buckley v. Trenton Saving Fund Society, 111 N.J. 355, 367, 544 A.2d 857 (citing Restatement (Second) of Torts, § 46). In this case, Defendants’ actions in response to what they perceived as unnecessary antagonism and meritless and expensive litigation created by Plaintiffs simply cannot be said to rise to the level of outrageous conduct required before a recovery for intentional infliction of emotional distress is permitted. Thus, summary judgment on this claim is appropriate.

    As to Plaintiffs’ claim for negligent infliction of emotional distress, it should be noted that New Jersey recognizes two types of claims in this area. The first group of claims encompasses cases “in which a person who is the direct object of a tortfeasor’s negligence experiences severe emotional trauma as a result of the tortfeasor’s negligent act or omission.” Gendek v. Poblete, 139 N.J. 291, 296, 654 A.2d 970 (1995). Second, a plaintiff may prevail on a so-called “indirect claim” for negligent infliction of emotional distress where “a person, not otherwise a direct object of a tortfeasor’s negligence, experiences severe emotional distress when another person suffers serious or fatal injuries as a result of that negligence.” Id. As there are no “serious or fatal” injuries involved in this case, Plaintiffs’ claims must treated as “direct”.

    The analysis of direct claims of negligent infliction of emotional distress “involves traditional concepts of duty, breach and causation” and “determining defendant’s negligence depends on whether defendant owed a duty of care to the plaintiff, which is analyzed in terms of foreseeability.” Williamson v. Waldman, 150 N.J. 232, 239, 696 A.2d 14 (1997). In this case, it cannot be said that Defendants conduct breached any duty of care owed to Plaintiffs. Plaintiffs allege, in essence, that Defendants were obligated to be as friendly to Plaintiffs after the filing of the HUD complaints and the instant lawsuit as they were before. This contention simply has no basis in the law of negligence. Any duty of care that exists between neighbors simply does not extend to the niceties of day-to-day interactions. In this case, Plaintiffs and Defendants were involved in a dispute over the regulations and policies of the Association at Ocean Colony. This dispute had dragged on for a number of years and had cost each side thousands of dollars in legal fees. Given that context, it cannot be said that the Defendants’s conduct in ignoring Plaintiffs or failing to say hello in the hallways gives rise to a claim for negligent infliction of emotional distress. Defendants neither owed Plaintiffs a duty of civility, nor would they, under the circumstances, be considered to have breached any such duty were one to exist. Accordingly, Plaintiff claim for negligent 255*255 infliction of emotional distress must be dismissed.

     

    V.

     

    In conjunction with their response to the instant motion, Plaintiffs filed a request that, rather than deciding the case against them on the merits, the Court permit Plaintiffs to voluntarily dismiss their case without prejudice under Rule 41 of the Federal Rules of Civil Procedure. Rule 41(a)(2) provides that once a defendant files an answer or motion for summary judgment, a plaintiff may not voluntarily dismiss its action “save upon order to the court.” Generally, a motion for dismissal “should not be denied absent substantial prejudice to the defendant.” Johnston Development Group, Inc. v. Carpenters Local Union No. 1578, 728 F.Supp. 1142, 1146 (D.N.J.1990) (Brotman, J.) (quoting Andes v. Versant Corp., 788 F.2d 1033, 1036 (4th Cir.1986)); see also, 9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2364 (2d ed.1995). In determining whether a voluntary dismissal is likely to result in prejudice to the defendant, the factors to be considered include “the expense of a second litigation, the effort and expense incurred by a defendant in preparing for trial in the current case, the extent to which the current case has progressed, and plaintiff’s diligence in bringing the motion to dismiss.” Palmer v. Security National Bank, 2001 WL 877584, at * 1 (E.D.Pa. June 13, 2001)(citing Maleski v. DP Realty Trust, 162 F.R.D. 496, 498 (E.D.Pa.1995)). An examination of these factors as they relate to this case leads to the conclusion that Plaintiffs’ motion should be denied. This case was originally filed in March 2000 and the dispute underlying it has been going on for almost four years. In addition, the instant motion has, due in large part to the disappearance of Plaintiffs’ former attorney, been pending for nearly four months. Further, significant discovery has already been conducted, the merits of the legal issues involved are determinable and Defendants have incurred substantial expense both in defending the merits of the case and in simply attempting to keep this case moving along toward resolution. Finally, while it is indeed unfortunate that Plaintiffs appear to have gotten a raw deal from their former attorney, they have known since May 2001 that that attorney would no longer be representing them but did not retain new counsel or seek to dismiss their action until now. Accordingly, because Defendants would suffer substantial prejudice as a result of voluntary dismissal without prejudice and because the merits of the instant motion can be readily reached, Plaintiffs motion for voluntary dismissal pursuant to Fed.R.Civ.P. 41(a)(2) shall be denied.

     

    VI.

     

    For the reasons set forth above, Defendants’ Motion for Summary Judgment will be granted and Plaintiffs’ Motion to Voluntarily Dismiss will be denied. The Court will enter an appropriate order.

    [1] It should be further noted that there are some vague allusions in Plaintiffs’ papers to the requirements of § 3604(f)(3)(A), which require that a landlord permit a tenant to modify the existing premises so as to make them handicapped accessible where such modifications would help the handicapped tenant attain “full enjoyment” of the premises. However, such modifications need only be permitted “at the expense of the handicapped person” and, as Defendants point out, there is no evidence that Plaintiffs ever offered to pay for the modifications to the restrooms and the facility entrance.

    [2] Plaintiffs rely heavily on a statement made by Carol Ramchandani to the effect that the other unit owners should “shun the people that create the disturbance.” While Plaintiffs contend that this statement was targeted at Plaintiffs, the overwhelming evidence suggests that it instead referred to problems caused by another unit owner who had allegedly threatened Defendants with violence in response to the handling of the community room issue. Thus, even viewing the facts and inferences in a light most favorable to the non-moving party, Pollock v. American Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986), the Court determines that no reasonable finder of fact could, after considering Ramchandani’s statements in their proper context, draw the inferences that Plaintiffs suggest.

    [3] Plaintiffs also point to Leonard Sporn’s testimony that he believed that the installation of a new front door at the Condominium was delayed because of the filing of his complaints. However, the evidence offered (which consists of a statement made to Sporn by a city inspector based on a conversation between the inspector and the contractor charged with the installation of the new door) is insufficient to permit an inference of a retaliatory motive for this alleged foot-dragging.

    [4] Relevant to the Court’s interpretation of this provision is that N.J.S.A. 10:5-12 was amended in 1992 to add reference to coercion, intimidation, threats and interference and that this additional language is identical to that incorporated into the Fair Housing Act. Therefore, given that New Jersey courts have often looked to federal standards in interpreting the LAD, see, e.g., Grigoletti v. Ortho Pharmaceutical Corp., 118 N.J. 89, 97, 570 A.2d 903 (1990) (“The substantive and procedural standards that we have developed under the State’s LAD have been markedly influenced by the federal experience.”), the Court considers those cases interpreting the provisions of § 3617 of the FHA discussed above instructive in determining the proper scope of the LAD’s anti-retaliation provision.

    Parking and Requests for Accommodation for a Disability

    Download pdf

    By Jillian M. Wright, Esq.

    Parking requests to accommodate a disability bring about a particular set of issues and questions.  What requests are reasonable? If the board deems a request reasonable, who pays for the accommodation, if a cost is involved? What if parking spots are so limited in the community that accommodating the request seems impossible? What to do?

    When in receipt of an accommodation request, a board is strongly encouraged to engage in an interactive process and make a good faith effort to consider the following when deciding how to handle the request:

    Does the requesting party have a qualifying disability?

    If someone has a physical or mental impairment which substantially limits a major life activity like walking, talking, hearing, seeing, breathing, learning, performing manual tasks or caring for themselves, then federal law considers them disabled. State law offers broader protection; disability is defined as an impairment that makes performance of a major life activity “difficult.” If a requesting party’s disability is obvious, e.g., they use a wheelchair, then it could be considered discriminatory to ask for verification of the disability.

    Does the requesting party have a disabled person placard or license plate?

    Oftentimes, when requesting a parking accommodation the requesting party will have a disabled person placard from the DMV. Presuming the plate or placard is current and valid, then this should constitute sufficient verification of a disability related to use of a vehicle

    Is the request reasonable?

    Every community’s parking situation differs and so too will the reasonableness of a request for accommodation. One main factor to consider is whether the request is even possible. For example, if the requesting party asks for a parking space closer to their unit but there are no common area spaces closer to the unit, the board likely does not have the power under the governing documents to displace another owner from their deeded or assigned parking spot.

    A board should also consider whether there is a causal link between the disability and the request for a parking accommodation. Not every disability impacts the use of a vehicle and parking. If a person with a mental disability requests a parking accommodation, it would be reasonable to request verification to identify the link between the request and the disability.

    Another consideration is cost. Typically, granting parking variances have minimal costs to the community while physical modifications can become costly. If the cost to the association is minimal and the benefit to the disabled person is significant it will be difficult to argue that the request is not reasonable.

    Is the request necessary to allow equal enjoyment of the community or just convenient?

    A requesting party is not entitled to an accommodation if the accommodation is merely convenient, but they are entitled to a reasonable accommodation if the accommodation is necessary to allow them the equal use and enjoyment of their home or the common area facilities.

    One federal case illustrates this point well: In Sporn v. Ocean Colony Condominium Ass’n. (D NJ 2001) 173 F.Supp.2d 244, a disabled owner sought and received permission to use a parking space closer to his unit, but Sporn refused to relinquish his assigned space despite the association’s parking rules requiring such transfer. Sporn argued that he needed the space for his guests.  The Sporn court held, “an accommodation should not ‘extend a preference to handicapped residents [relative to other residents], as opposed to affording them equal opportunity'” and “accommodations that go beyond affording a handicapped tenant ‘an equal opportunity to use and enjoy a dwelling’ are not required …”(Citations omitted.) The association’s parking policy requiring the relinquishment of one’s deeded parking space granted the same rights to disabled tenants as it did to non-disabled residents. When plaintiff Sporn was asked to relinquish his parking space pursuant to the association’s parking policy, Sporn refused and when asked why he needed two spaces, Sporn did not offer any explanation related to the disability, but instead responded, “because during the summertime we couldn’t get any parking for any of our family that came down.” (Id.). This comment lead the Sporn court to determine that Sporn’s request for “reasonable accommodation” was really a request for accommodation coupled with a demand for special treatment.

    Even if the board determines the requesting party is disabled and accommodation is necessary, unique concerns arise that are specific to parking accommodation requests:

    Are common area disabled parking spots required by law/building code?

    Not necessarily.  While disabled parking spots are common in public accommodations (hotels, restaurants, grocery stores, etc.), if the community is not a public accommodation subject to the Americans with Disabilities Act and was built prior to building code regulations requiring disabled parking spaces, then the association likely does not need to convert any open parking spaces to disabled parking spaces. When asked, each community should review its conditional use permit and consult with a licensed contractor or architect familiar with the applicable building code. Moreover, construction of additional disabled parking spots is often impossible because there is limited space or a limited number of common area parking spaces.

    What if there are no open common area spaces to provide?

    An association is only required to accommodate a reasonable request to the extent possible. If, for example, there are no spaces closer to the requesting party’s residence or there is no way to convert an existing common area space to make it more accessible, then the association should engage in the interactive process with the requesting party to determine if there is any reasonable alternative which alleviates some of the requesting party’s concerns. Every community and disability is different, so it is best to consult with legal counsel if approval of a reasonable accommodation seems impossible.

    Does the association have to help pay for the accommodation?

    Maybe! Some accommodation requests include physical alterations to the parking lot – painting new lines, making and installing a “reserved” sign, etc. Such alterations might sound more like a reasonable modifications rather than accommodations. Owners are often responsible for the cost to install reasonable modifications if it benefits them individually. However, the courts have treated requests for parking spaces as requests for reasonable accommodations, making associations responsible for some costs.  Providing a parking accommodation could include creating signage, repainting markings, redistributing spaces, or creating curb cuts.  This list is not exhaustive and there is no clear law on how much expense is unreasonable.

    Can a disabled resident allow their non-disabled guests to park in a spot afforded to them as an accommodation?

    Yes. As mentioned above, disabled persons must be afforded equal enjoyment of the community. If an association would allow any other resident to have guests park in their assigned parking spot, then the association must also extend this right to disabled persons, even if their guests are not disabled.

    The resident has a disabled parking placard and claim that they can park anywhere with the placard regardless of the rules. Is this true?

    No, not necessarily. While a resident with a disabled parking placard or license plate may park in all disabled parking spaces, when parking on private property they are still subject to the reasonable rules of the community. For example, they may not park in a fire lane or in a manner that blocks the ingress and egress of other residents. Another example: if there is a limit to parking in a guest spot for more than 72 hours, this rule applies to all guest spots, including disabled parking spots. The disabled parking placard or plate does not give them the right to store their vehicle in a guest parking spot. However, we strongly encourage consulting with legal counsel before towing a vehicle with a disabled parking placard or plate.

    Can the association explain to other inquiring residents why someone is receiving a special parking accommodation or variance?

    No. The association must keep all information relating to someone’s disability confidential.

    This area of law is complicated. A board should carefully consider each reasonable accommodation request and engage in the interactive process to avoid discrimination claims, even if there is limited parking in your community. When in doubt, contact your legal counsel.

    CORONADO CAYS HOMEOWNERS ASSOCIATION, Plaintiff and Respondent, v. CITY OF CORONADO, Defendant and Appellant.

    CORONADO CAYS HOMEOWNERS ASSOCIATION, Plaintiff and Respondent,
    v.
    CITY OF CORONADO, Defendant and Appellant.

    193 Cal.App.4th 602 (2011)
    123 Cal.Rptr.3d 90

    Court of Appeal of California, Fourth District, Division One.
    February 28, 2011.

    604*604 McDougal, Love, Eckis, Boehmer & Foley, Steven E. Boehmer, David M. Stotland and Randall R. Sjoblom for Defendant and Appellant.

    Epsten Grinnell & Howell, Rian W. Jones, Vincent J. Sincek and Carrie M. Timko for Plaintiff and Respondent.

    605*605 OPINION

    McCONNELL, P. J. —

    City of Coronado (the City) appeals a judgment in which the court determined the City, rather than Coronado Cays Homeowners Association (the Association),[1] is responsible for maintaining a berm that laterally supports bulkheads located on property within the Coronado Cays subdivision. The bulkheads are adjacent to and act as a retaining wall for a waterway that belongs to the City, over which the Association has an easement. The City contends the court erred by granting the Association declaratory relief as there was no actual controversy between the parties; misinterpreting the operative documents, a special use permit and an assessor’s parcel map; and not including in the judgment certain information included in the statement of decision. We find all contentions lack merit and affirm the judgment.

    FACTUAL AND PROCEDURAL HISTORY

    In 1967 the City sold property to Atlantic Richfield Company and Cedric Sanders (together the developer) for the development of a “marina type residential planned community … development” called Coronado Cays. The contract required the developer to obtain a special use permit (SUP).

    Under the 1968 SUP, the developer installed concrete bulkheads along “Lot 90” of the development to act as a retainer for a 200-foot-wide waterway to be dredged on the adjacent “Lot C.” The bulkheads, which are connected by tongue-and-groove construction, consist of concrete sheet piles that were “jetted” into place in native soil. Lot C was then dredged into a trapezoidal waterway, leaving a slope, called a “berm,” to provide passive lateral support for the toes of the bulkheads. The tops of the bulkheads are “restrained by a tie-back” system that “goes underneath the residence[s], about 25 feet back.”

    Under the SUP, the developer dedicated Lot C to the City for public recreational use, reserving a 55-foot-wide easement for docks and related structures for the private use of Coronado Cays residents. The reserved area of Lot C is referred to as “Lot 90-A and 90-B.”

    The Association eventually succeeded to the developer’s or its assignee’s interest in the project. It is agreed that the Association must maintain the bulkheads and the City must maintain the waterway. In around 1985, 606*606 however, a question arose as to whether the City or the Association is responsible for maintaining the berm in which the bulkheads are imbedded.

    In 1986, a bulkhead elsewhere in Coronado Cays failed because of erosion of the supporting berm. In response, the City passed a resolution to implement a periodic inspection program and to perform required maintenance. Between 1974 and 2006, the City had surveys conducted of the condition of the berm at issue in this litigation.

    In February 2008 the Association brought this declaratory relief action against the City. In March 2008 it filed a first amended complaint. The Association sought a judicial determination the City is required to maintain the berm since it is located in the waterway.

    At trial, the Association cited section S.W.—109.2 of the SUP, which provides in relevant part: “The [C]ity shall accept interior waterways as fee lands for dedication and maintenance, including maintenance of the easement and right-of-way areas reserved by the developer. Maintenance shall include any redredging necessary in the future to maintain original dredged depths.”[2]

    The City denied any responsibility, arguing the following language from Map No. 6181 pertaining to dedications and reservations trumped section S.W.—109.2 of the SUP: “We also accept on behalf of the public all of lot C …, not including bulkheads, for use as public and navigable waterways … reserving however unto Coronado Cay Company, … the following severable and assignable easements and rights of way;… as to Lot 90-A and 90-B, easements and rights of way in, over, across, upon and through all of said Lots for the purpose of locating, constructing and maintaining, using and operating thereon, free of any rental charged by the City …, docks, wharfs, slips, ramps, rafts, beaches, navigational aids, piers, floats, landings, decks …, footings, pilings and ancillary structures for bulkheads and similar or related wharfage facilities.” (Italics added, some 607*607 capitalization omitted.) The City argued the berm falls within the definition of “ancillary structures” the Association must maintain.

    Evidence was presented that the mud line of the berm had dropped at a rate of about one foot per 10 years. Material eroding from the berm reduced the slope and raised the depth of the waterway, and the City had not maintained the waterway at its originally dredged depth. The Association argued the City should redredge the waterway to its original depth “and put[] the tailings back up where they came from,” meaning on the top of the sloped berm. There was also testimony that the berm is currently stable and the bulkheads are not in jeopardy of failing.

    In a statement of decision, the court concluded the City is responsible for maintaining the berm. The court relied on section S.W.—109.2 of the SUP, and rejected the argument the berm is an “ancillary structure” under Map No. 6181. Judgment was entered on December 3, 2009.

    DISCUSSION

    I

    Propriety of Declaratory Relief

    Preliminarily, we dispose of the City’s contention the court erred by granting declaratory relief because the evidence showed the berm is currently stable and needs no maintenance, and thus there was no actual controversy between the parties.

    Declaratory relief is available “in cases of actual controversy relating to the legal rights and duties of the respective parties.” (Code Civ. Proc., § 1060.) “`Whether a claim presents an “actual controversy” within the meaning of Code of Civil Procedure section 1060 is a question of law that we review de novo.’ [Citation.] When an actual controversy does exist, Code of Civil Procedure section 1061 gives the trial court discretion to determine whether it is `necessary’ and `proper’ to exercise the power to provide declaratory relief. (Code Civ. Proc., § 1061.) A trial court’s decision to exercise that power is reviewed under an abuse of discretion standard of review.” (American Meat Institute v. Leeman (2009) 180 Cal.App.4th 728, 741 [102 Cal.Rptr.3d 759].) Doubts about the propriety of the court’s decision are generally resolved in favor of granting relief. (Filarsky v. Superior Court (2002) 28 Cal.4th 419, 433 [121 Cal.Rptr.2d 844, 49 P.3d 194].)

    608*608 (1) “One purpose of declaratory relief is `”`to liquidate doubts with respect to uncertainties or controversies which might otherwise result in subsequent litigation.'”‘ [Citation.] `”`One test of the right to institute proceedings for declaratory judgment is the necessity of present adjudication as a guide for plaintiff’s future conduct… to preserve his legal rights.'”‘” (American Meat Institute v. Leeman, supra, 180 Cal.App.4th at pp. 741-742.) “`The “actual controversy” referred to in [Code of Civil Procedure section 1060] is one which admits of definitive and conclusive relief by judgment within the field of judicial administration, as distinguished from an advisory opinion upon a particular or hypothetical state of facts. The judgment must decree, not suggest, what the parties may or may not do.'” (Id. at p. 741.)

    (2) We conclude the dispute as to whether the Association or the City is responsible for maintaining the berm presented an “actual controversy” within the meaning of Code of Civil Procedure section 1060. While the berm does not currently need maintenance, the party with the maintenance responsibility will be required to monitor the situation. It was in the parties’ interest for the Association to take action now to determine the matter, as without the court’s guidance the parties’ roles would be unclear. The judgment is based on documents controlling the parties’ relationship; it is not merely an advisory opinion based on hypothetical facts. Further, the court properly exercised its discretion by not declining to entertain the declaratory relief claim under Code of Civil Procedure section 1061.

    (3) Contrary to the City’s position, the Association was not required to show a declaration of the parties’ rights would altogether avoid future litigation. In Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 647 [88 Cal.Rptr.3d 859, 200 P.3d 295], the court explained that one purpose of declaratory relief is the avoidance of future litigation. Further, the court’s ruling here may actually avoid future litigation. The court expressly rejected the City’s “argument regarding its concern over a multiplicity of lawsuits.”

    II

    Merits of Ruling

    A

    (4) “California courts have long recognized that the interpretation of a written instrument is a judicial function unless the interpretation turns upon the credibility of extrinsic evidence….” (The Lundin/Weber Co. v. Brea Oil Co., Inc. (2004) 117 Cal.App.4th 427, 433 [11 Cal.Rptr.3d 768].) The parties 609*609 presented no extrinsic evidence on the meaning of section S.W.—109.2 of the SUP. It unambiguously provides: “The [C]ity shall accept interior waterways as fee lands for dedication and maintenance, including maintenance of the easement and right-of-way areas reserved by the developer. Maintenance shall include any redredging necessary in the future to maintain original dredged depths.” As a matter of law, this provision requires the City to maintain the berm, as it is located within the waterway dedicated to the City (Lot C) and within the portion of Lot C reserved by the developer (Lot 90-A and 90-B).

    (5) The City cites the general rule that an easement owner is presumed to be responsible for its maintenance. The City relies on Rose v. Peters (1943) 59 Cal.App.2d 833, 835 [139 P.2d 983], which explains, “it [is] settled that ordinarily the owner of an easement is required to keep it in repair, but it is a monotonous truism that the parties may alter their legal obligations by contract.” Here, however, section S.W.—109.2 of the SUP rebuts any arguable presumption the developer or its successor assumed the responsibility for maintaining the berm.

    B

    The City’s argument is primarily based on language in Map No. 6181 pertaining to the developer’s responsibility to maintain in the reserved easement, Lot 90-A and 90-B, such things as docks, ramps, decks, landings and “ancillary structures for bulkheads and similar or related wharfage facilities.” The City asserts the term “ancillary structures” is ambiguous and the court erred by not construing it in favor of the City to include the berm.

    (6) “[P]arol evidence is properly admitted to construe a written instrument when its language is ambiguous. The test of whether parol evidence is admissible to construe an ambiguity is not whether the language appears to the court to be unambiguous, but whether the evidence presented is relevant to prove a meaning to which the language is `reasonably susceptible.'” (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165 [6 Cal.Rptr.2d 554].) “The decision whether to admit parol evidence involves a two-step process. First, the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions to determine `ambiguity,’ i.e., whether the language is `reasonably susceptible’ to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is `reasonably susceptible’ to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step—interpreting the [document].” (Ibid.)

    Based on the extrinsic evidence presented, the court found Map No. 6181 is not reasonably susceptible of the interpretation that the berm is an 610*610 “ancillary structure” whose maintenance was relegated to the developer.[3] The court explained: “The berm was not added and was not constructed. The berm existed before the bulkheads. The berm consists of native soil that was graded. This was probably of some significance in the terms of what was in the minds of the drafters of the [SUP] and the dedication and acceptance language in Map [No.] 6181.” The court also noted the term “berm” is not used anywhere in Map No. 6181.

    The threshold determination on the question of ambiguity is a question of law we review independently. (Winet v. Price, supra, 4 Cal.App.4th at p. 1165.) We agree with the court’s assessment. Contrary to the City’s position, Map No. 6181 is not ambiguous merely because it does not define the term “ancillary structures.” (Aerojet-General Corp. v. Commercial Union Ins. Co. (2007) 155 Cal.App.4th 132, 140 [65 Cal.Rptr.3d 803].) The adjective “ancillary” modifies the noun “structures,” and thus if the berm is not a structure it cannot be an ancillary structure. The term “structure” commonly means “something (as a building) that is constructed.” (Merriam-Webster’s Collegiate Dict. (11th ed. 2006) p. 1238.) The court found the berm is “not a structure.” The berm consists of native soil into which the bulkheads were imbedded before the waterway was dredged. While the berm is situated against the bulkheads and passively holds them in place, it is not a structure within the common meaning of the term.

    Alternatively, the City asserts the berm meets the SUP’s definition of the term “structure” as “[a]nything constructed or erected, the use of which requires more or less permanent location on the ground or attachment to the ground or attachment to something having a fixed location on the ground.” To any extent this definition applies to Map No. 6181, we are unpersuaded. Rather than being located on or attached to the ground, the berm itself was the ground when the bulkheads were constructed. We conclude Map No. 6181 is unavailing to the City.

    We also agree with the court’s finding the term “bulkheads” in the phrase “ancillary structures for bulkheads and similar or related wharfage facilities” cannot reasonably be interpreted to mean the bulkheads that are located on Lot 90. The court’s statement of decision explains: “If the map language was given to someone who did not know what the context was, the reading of the plain English would say that the ancillary structures refer to bulkheads related to wharfage, and not related to the berm or the bulkheads, which are the subject of this dispute.” In the City’s interpretation, the words “and similar or related wharfage facilities” are ignored. Map No. 6181 states the City accepted “all of Lot C …, not including bulkheads, for use as public and 611*611 navigable waterways,” and since the bulkheads in question are on Lot 90 rather than Lot C, the map must be referring to any bulkheads and ancillary structures that could be constructed in the developer’s reserved area of the waterway (on Lot 90-A and 90-B) for wharfage purposes.

    (7) The City argues the court was required to construe the language in Map No. 6181 in its favor under Civil Code section 1069, which provides: “A grant is to be interpreted in favor of the grantee, except that a reservation in any grant, and every grant by a public officer or body, as such, to a private party, is to be interpreted in favor of the grantor.” The statute’s directive, however, applies only if there is an ambiguity in the grant or reservation. (Red Mountain, LLC v. Fallbrook Public Utility Dist. (2006) 143 Cal.App.4th 333, 344 [48 Cal.Rptr.3d 875].) We have affirmed the court’s ruling that the map language is not reasonably susceptible of the interpretation the City urges. Civil Code section 1069 does not stand for the proposition that unambiguous grant or reservation language must be construed in a municipality’s favor. When no ambiguity exists, no construction is required.

    III

    Judgment Language

    The City also requests that we modify the judgment to conform to the statement of decision. The judgment provides: “The … City … has the responsibility for maintaining the berm located on lot C of Coronado Cays Two, as shown on Map No. 6181, … and the … Association is to maintain the bulkheads located adjacent thereto on Lot 90 of … Coronado Cays Two.” The City complains that the judgment does not include the following paragraph included in the statement of decision: “The Court’s ruling is limited to the determination of the responsibilities of the respective parties as to the maintenance of the berm on Lot C. While there was uncontradicted expert testimony that the berms have stabilized and are not in risk of failure, the Court makes no finding about what if any maintenance needs to be done now. Also, the Court makes no determination whether this ruling is limited to the [SUP] and thus makes no ruling about what happens in 2016 when the [SUP] expires.”

    (8) The City forfeited the issue by approving the judgment as to form. In any event, the judgment is proper because it sets forth the declaratory relief the court gave. A judgment should not include issues not decided. “That only is deemed to have been adjudged in a former judgment which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.” (Code Civ. Proc., § 1911.)

    612*612 DISPOSITION

    The judgment is affirmed. The Association is entitled to costs on appeal.

    Nares, J., and Irion, J., concurred.

    [1] The Association was originally named Coronado Cay Homeowners Association; the name was changed to Coronado Cays Homeowners Association.

    [2] The record indicates that in 2001 the City, at the Association’s request, adopted a specific plan for Coronado Cays to supplant the SUP, with the exception of section S.W.—109.2. The City also adopted a resolution to amend S.W.—109.2 of the SUP to define the term “waterway” as a “navigable body of water from the face of the bulkhead to the face of any other bulkhead.” The amended version also requires the City to maintain the waterway including “any re-dredging necessary in the future to maintain original dredged depths.” At trial, the court questioned whether the City could unilaterally amend section S.W.—109.2 of the SUP, and the City conceded that the operative documents were the original section S.W.—109.2 of the SUP and the assessor’s parcel map (Map No. 6181). Our holding would be the same under either the original or amended version of the provision.

    [3] The court’s statement of decision states: “The map language can be read the way the City reads it, but the City’s interpretation is not reasonable and is contradicted by other facts.”

    PV LITTLE ITALY, LLC, Cross-complainant and Appellant, v. METROWORK CONDOMINIUM ASSOCIATION et al., Cross-defendants and Respondents.

    PV LITTLE ITALY, LLC, Cross-complainant and Appellant,
    v.
    METROWORK CONDOMINIUM ASSOCIATION et al., Cross-defendants and Respondents.

    210 Cal.App.4th 132 (2012)
    148 Cal.Rptr.3d 168

     

    Court of Appeals of California, Fourth District, Division One.

    September 26, 2012.
    134*134 Vantage Law Group and Michael H. Riney for Cross-complainant and Appellant.

    Epsten Grinnel & Howell, Joyce J. Kapsal, Rian W. Jones and Lori F. Chotiner for Cross-defendant and Respondent MetroWork Condominium Association.

    English & Gloven, Donald A. English, Christy I. Yee and Rebecca A. Kurtz for Cross-defendants and Respondents India Street Venture and Howard Berkson.

    OPINION
    AARON, J. —

    I.
    INTRODUCTION
    This appeal is from an order of the trial court resolving a dispute between PV Little Italy, LLC (PV Little Italy), and India Street Venture, LLC (India 135*135 Street), over their respective rights in a mixed office and retail condominium development in downtown San Diego, known as MetroWork. India Street was the original owner and developer of MetroWork, the centerpiece of which is the retail space that ultimately became the live music and dining venue called “Anthology.” For India Street, Anthology was the most important feature of the development, and was the focal point of India Street’s efforts in bringing the MetroWork project to fruition. To protect its investment, and in particular, its interest in the retail space, India Street drafted a Declaration of Covenants, Conditions and Restrictions (CC&R’s) that grants to the “Declarant” (defined as, initially, India Street) certain rights to control the development and management of the property. Among those rights is a special membership in the MetroWork Condominium Association (Association) that entitles the Declarant to exercise enhanced “Class B” voting rights with respect to any units it owns. Those enhanced voting rights are at the center of the parties’ dispute.

    To finance MetroWork, India Street obtained a $21.5 million construction loan from KeyBank, N.A. (KeyBank). In connection with that loan, India Street entered into a Construction Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (Trust Deed) with KeyBank, pursuant to which it conveyed to KeyBank a security interest in the entire MetroWork project. The Trust Deed explicitly covered not only the real and personal property, but also India Street’s rights as Declarant under the CC&R’s, including the Class B voting rights.

    As construction neared completion, India Street was able to repay a portion of the loan, with the assistance of another loan provided by Pacific Western Bank (Pacific Western). In exchange for India Street’s satisfaction of a portion of its debt, KeyBank executed a Substitution of Trustee and Deed of Partial Reconveyance (Reconveyance Deed), releasing to India Street KeyBank’s security interest in the retail units of MetroWork, which housed Anthology. By its terms, however, the Reconveyance Deed covered only the retail units themselves and the common areas and personal property associated with those units. Unlike the original Trust Deed, the Reconveyance Deed did not mention the Declarant’s rights associated with the retail units.

    When India Street defaulted on the balance of the KeyBank loan, the trustee under the Trust Deed conveyed the remaining 16 unsold condominium units in MetroWork to Oreo Corp. (Oreo), an entity related to KeyBank, in a foreclosure sale. KeyBank specifically conveyed to Oreo any and all interest that it had in the Declarant’s rights. Oreo subsequently conveyed the remaining condominium units to PV Little Italy. At the same time, Oreo assigned to PV Little Italy all of the Declarant’s rights, “if any,” that Oreo possessed at that time, “without representation or warranty of any kind as to the existence of same.”

    136*136 After acquiring the property and rights in MetroWork, PV Little Italy informed the Association by letter that it was now the Declarant, and as such, held the right to exercise Class B voting rights. In its letter, PV Little Italy nominated its own slate of candidates for election to the Association’s board at the upcoming annual meeting. India Street also claimed to hold Declarant’s rights by virtue of the reconveyance from KeyBank, and in particular, maintained that it possessed the Class B voting rights as to the retail units. The Inspectors of Election, LLC (Inspectors), determined that in view of the dispute as to which entity held the Class B voting rights, neither party would be permitted to exercise the enhanced Class B voting rights in the upcoming election. Instead, both would have to vote as regular “Class A” members. In the election, two of PV Little Italy’s representatives were elected to the board, and India Street’s representative lost his position as president of the board.

    India Street sued, in part under Corporations Code section 7616 (section 7616),[1] seeking, among other things, a judicial declaration that it holds Class B voting rights as to the retail units. PV Little Italy intervened and cross-complained, contending that India Street had lost all of its Declarant’s rights in the foreclosure, and seeking a declaration that PV Little Italy obtained those rights, including the Class B voting rights, from Oreo. After a section 7616-mandated hearing, the trial court ruled that India Street held Class B voting rights as to the retail units, by virtue of the Reconveyance Deed. The court also determined that PV Little Italy acquired no Declarant’s rights upon its purchase of the remaining office units after India Street’s default because PV Little Italy had not acquired any rights by direct assignment from India Street, and instead, was an “unaffiliated owner.” Based on these findings, the trial court voided the 2010 board election results, and directed that the former board of directors be reinstated and a new election be held. PV Little Italy appealed.

    We are required in this appeal to interpret a number of different provisions in several written instruments, and how they interrelate, to determine which rights are held by whom, and in particular, which entity, if any, has the right to exercise Class B voting rights as the Declarant. Hewing closely to basic tenets that govern the interpretation of written instruments, and based on a straightforward reading of the documents before us, we conclude that India Street conveyed a security interest in all of its Declarant’s rights, including its Class B voting rights, to KeyBank in the Trust Deed, and that India Street did 137*137 not obtain release of KeyBank’s interest in any of those rights upon the partial reconveyance. Additionally, each of the conveyances after India Street’s default included all of the grantor’s right, title and interest in MetroWork, including the Declarant’s rights, as the CC&R’s expressly authorize. PV Little Italy thus simultaneously acquired the status of Declarant as well as any Declarant’s rights that were still in existence at the time of the conveyance from Oreo to PV Little Italy, including the Class B voting rights as to the remaining unsold condominium units. PV Little Italy therefore was not an “unaffiliated owner” within the meaning of the CC&R’s.

    Accordingly, we reverse the trial court’s order in its entirety.

    II.
    FACTUAL AND PROCEDURAL BACKGROUND
    A. The MetroWork CC&R’s and India Street’s rights thereunder
    MetroWork is a commercial common interest condominium development located in downtown San Diego. India Street purchased the property on which MetroWork was built in 1998, and was the original developer of that property. Berkson Realty, LLC (Berkson Realty), is the managing member of India Street, and Howard Berkson (Berkson) is the managing member of Berkson Realty. The nine-story MetroWork building consists of retail and office condominiums. The first and second floors currently house Anthology — a dining and live music venue (the Retail Units).[2]

    For India Street, the Anthology space represented the “crown jewel” of this development. To protect its planned substantial investment in the Retail Units, and to address the interrelationship between the Retail Units and the office units in the project, India Street drafted the CC&R’s in 2005 for the Association, a nonprofit corporation formed pursuant to California’s Nonprofit Mutual Benefit Corporation Law. (§ 7110 et seq.) The Association adopted an amended and restated version of the CC&R’s in 2007.

    Under the CC&R’s, the “Declarant” has a special status. The CC&R’s define “Declarant” in full, as follows: “`Declarant’ shall initially mean India Street Venture, LLC …, its successors, and any person to which it shall have assigned its rights hereunder, in whole or in part, by an express written assignment.” As the Declarant, India Street retained ownership of the Retail 138*138 Units. It also initially reserved ownership of units on the ninth floor for uses related to Anthology’s operations. In its capacity as Declarant, India Street was granted certain rights to control the development and management of MetroWork, until such time as all of the units in the project were sold. For example, India Street had the right to appoint and remove members of the Development Committee, which oversaw the plans, specifications and construction progress of MetroWork, until such time as all of the units were sold. (CC&R’s, §4.01.) It also reserved for itself certain rights of easement and entry which passed upon the last close of escrow for the sale of a unit from Declarant. (CC&R’s, § 6.01.) Finally, it possessed the right to develop the property only for as “long as any Condominium in the Project remains unsold.” (CC&R’s, § 7.01.) India Street acknowledged in the trial court that pursuant to the scheme created by the CC&R’s, once all of the units in the building were sold, the Declarant’s rights and privileges in the property would cease to exist, at least as to all units not owned by the Declarant (and it was anticipated that India Street or a related entity would continue to own the Retail Units).

    Section 1.28 of the CC&R’s defines an “[o]wner” of a unit as: “[T]he record Owner, whether one or more persons or entities, of a fee simple interest in a Condominium, including Declarant with respect to each Condominium owned by Declarant, and including sellers under executory contracts of sale, but excluding those persons holding title as security for the performance of an obligation.” Every unit owner automatically becomes a member of the Association, and remains a member until its ownership ceases. Additionally, the CC&R’s specify that “[a]ll memberships shall be appurtenant to the Condominium conveyed.” “There shall be no severance by sale, conveyance, encumbrance or hypothecation of an interest in any Unit from the concomitant membership in the Association,” as long as the CC&R’s remain in effect.

    The CC&R’s divide membership in the Association into different classes, the first two of which are relevant to this appeal. Class A members include “all Owners,” each of whom “shall be entitled to one (1) vote for each 1,000 Square Feet of floor area in such Owner’s Unit, rounded to the nearest thousand.” Most significantly for present purposes, the CC&R’s provide for a special Association membership with enhanced voting rights for the Declarant. Specifically, the CC&R’s state: “The Class B member shall be Declarant,” who is entitled to “ten (10) votes for each 1,000 Square Feet of floor area in any Units owned by Declarant.” The Declarant’s Class B membership would terminate “upon the date the Declarant no longer owns any Units in the Property.” Additionally, the CC&R’s provided that “[u]pon the sale of a Unit owned by Declarant to an unaffiliated third party, the Class B membership for that Unit shall be converted to a Class A Membership.”

    139*139 B. The KeyBank loan and India Street’s default
    Construction began on the MetroWork site in 2005. During the early phases of the project, Berkson negotiated with KeyBank to provide a construction loan to fund the project. India Street provided KeyBank a copy of the CC&R’s and the Association’s bylaws. The parties finalized the loan in January 2006. KeyBank promptly recorded the Trust Deed, as well as a “UCC Financing Statement” detailing the personal property that was part of the collateral for the loan. As security for the $21.5 million loan, India Street made the following conveyance, in pertinent part, to KeyBank as beneficiary under the Trust Deed:

    “1.1 Grant. For the purpose of securing payment and performance of the Secured Obligations defined [in the deed of trust], [India Street] hereby irrevocably and unconditionally grants, bargains, sells, conveys, mortgages and warrants to Trustee, in trust for the benefit of Beneficiary, with power of sale and with right of entry and possession, all estate, right, title and interest which Trustor now has or may later acquire in and to the following property (all or any part of such property, or any interest in all or any part of it, as the context may require, the `Property’):
    “(a) The real property … (the `Premises’); together with
    “(b) All buildings, structures and improvements now located or later to be constructed on the Premises (the `Improvements’); together with … [¶] … [¶]
    “(g) All of Trustor’s rights, title, interest and privileges whatsoever, as `Developer’; `Declarant’; `Subdivider’ or similar position or title pursuant to any `condominium declaration,’ `declaration of covenants, conditions and restrictions,’ or similar document recorded in the Official Records of the County in which the Premises is located….”
    The construction loan set forth the circumstances under which India Street could obtain a partial reconveyance “releasing from the lien of the Deed of Trust the applicable Condominium Units,” defined elsewhere in the loan as a “commercial condominium unit or units and all common areas associated therewith.” The loan specified as follows: “Releases of Condominium Units shall not affect or impair the lien of [Trust Deed] and Lender’s lien and security interests created by the other Loan Documents as to Condominium Units and other property encumbered by the [Trust Deed] and the other Loan Documents not previously released, and said liens and security interests shall continue in full force and effect as to the unreleased Condominium Units and other such property.”

    140*140 Construction of the MetroWork project was completed by June 15, 2007, when the notice of completion was recorded. The CC&R’s were recorded on July 3, 2007. India Street had closed escrow on approximately half of the office condominium units by the end of 2008. As the development neared completion, India Street began to take steps to obtain release of the Retail Units from KeyBank’s security interest. To that end, India Street negotiated the “Third Modification Agreement” with KeyBank, dated September 1, 2007, which extended the maturity date of the loan upon satisfaction of several conditions, including various payments for the release of the Retail Units, and India Street’s securing a Small Business Administration (SBA) loan in connection with the release of those units from the lien of the Trust Deed. India Street successfully obtained that SBA loan from Pacific Western. To perfect its new security interest in the Retail Units, Pacific Western recorded two deeds of trust and a UCC Financing Statement in October 2007, none of which explicitly mentions the Declarant’s rights, but all of which purport to cover, effectively, all of India Street’s “right, title and interest” in the Retail Units, including its “development rights.”[3]

    India Street successfully obtained release of the Retail Units from KeyBank’s security interest in December 2007, and the Reconveyance Deed was recorded in February 2008. That document substituted KeyBank as the trustee under the Trust Deed, and reconveyed “WITHOUT WARRANTY TO THE PERSONS LEGALLY ENTITLED THERETO A PORTION OF the estate” held by KeyBank, namely, “Units U-100 and U-200” (the Retail Units), together with the common area use rights associated with those units. There is no mention of Declarant’s rights or voting rights in that document. An amended UCC Financing Statement was also recorded at that time, and it, too, contained no mention of the Declarant’s rights.

    As of January 2008, India Street had defaulted on the balance of its loan from KeyBank. Negotiations for a forbearance agreement were unsuccessful, and KeyBank ultimately directed the trustee to foreclose on the Trust Deed as to the remaining unsold units in the MetroWork project. At the foreclosure sale in March 2009, the trustee conveyed to Oreo, an affiliate of KeyBank, “all of its right, title and interest in and to” the 16 remaining office units and related common areas, “[t]ogether with all of the property set forth on” the attached exhibit C, which included a description of the Declarant’s rights. Oreo conveyed the foreclosed units to PV Little Italy on November 9, 2009. On that same day, Oreo recorded an assignment and assumption of Declarant’s rights (the PVLI Assignment Agreement), by which Oreo conveyed to PV Little Italy, and the latter assumed, Oreo’s “right, title, and interest, if any, as the Declarant under the [CC&R’s] and all other documents, agreements and materials creating or governing the [MetroWork project], effective 141*141 from and after the date hereof, but without representation or warranty of any kind as to the existence of same.” The grant deed to PV Little Italy and the PVLI Assignment Agreement were both recorded on November 13, 2009.[4]

    C. The voting rights dispute and ensuing litigation
    At the annual Association meeting scheduled for July 7, 2009, the Association’s board of directors agreed to postpone the election of directors to January 2010, in order to coordinate with the Association’s budgeting activities. By letter dated November 23, 2009, PV Little Italy informed the Association that it had obtained the Declarant’s rights under the CC&R’s for the MetroWork project, and that India Street’s interest in those rights had been extinguished by the foreclosure sale. PV Little Italy announced its intention to seek the removal of the entire existing board of directors for the Association and to nominate a new slate of directors at the January meeting. On January 27, 2010, the Association informed its members that Inspectors had been retained to conduct the recall election and that there was “currently a dispute between two (2) owners … as to who is the Declarant of the [Association] project and therefore [sic] Class B voting rights.” The Association also notified members that Inspectors had determined that this dispute would have to be settled by arbitration or in the courts, and that to fulfill its statutory obligations, it would conduct the recall election on March 1, 2010, with “all members being considered as Class A members with the voting power” attendant to that class. The March election, at which neither PV Little Italy nor India Street was permitted to exercise the Class B voting rights, resulted in the election of two of PV Little Italy’s representatives, and the removal of Berkson as president of the Association’s board. Berkson remained a director.

    India Street filed its initial complaint in February 2010, and unsuccessfully sought a temporary restraining order to block the March recall election. On April 8, 2010, it filed its verified first amended complaint alleging five causes of action and requesting various forms of relief, including, under section 7616, a determination that India Street retained the Declarant’s voting rights under the CC&R’s. PV Little Italy intervened and promptly filed a cross-complaint, in which it also sought relief under section 7616.

    142*142 The trial court held the statutory section 7616 hearing on May 7, 2010. (See § 7616, subd. (c).) On May 18, 2010, the court issued a minute order in which it concluded that India Street “retained its `Declarant’ class B voting rights, and conversely cross-complainant [(PV Little Italy)] never obtained such rights.” With respect to the Retail Units, the essence of the trial court’s ruling was that the Class B voting rights were an inherent component of ownership of those units. The trial court concluded that despite the fact that the Reconveyance Deed did not mention the Class B voting rights, those rights were “within the penumbra of assets that were conveyed back to” India Street once KeyBank’s security interest in those units was terminated. The court thus concluded that Oreo obtained no such rights upon the foreclosure, and therefore, could have conveyed no such rights to PV Little Italy. Specifically, with respect to the office units on which India Street had defaulted, the trial court found that Oreo had obtained those units through a nonjudicial foreclosure sale and had subsequently sold them to PV Little Italy. The court concluded that because “PV Little Italy did not acquire its ownership rights via direct assignment” from India Street, pursuant to the CC&R’s, PV Little Italy was an “unaffiliated owner” with no Class B voting rights. (See CC&R’s, § 1.15, 2.05, subd. (b).) Consistent with this ruling, the trial court invalidated the March 1, 2010 election, ordered that a new election be held within 60 days, and reinstated the officers and board that existed prior to the March 1, 2010 election.

    III.
    DISCUSSION
    A. The trial court’s order is appealable as an injunction
    We first consider whether the trial court’s May 18, 2010 order — which on its face is not a “judgment” and did not purport to resolve all issues between the parties — is appealable. At our direction, the parties submitted supplemental briefing on this issue. We conclude that the order is appealable under Code of Civil Procedure section 904.1, subdivision (a)(6), in that it granted injunctive relief.

    (1) “A trial court’s order is appealable when it is made so by statute.” (Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 696 [107 Cal.Rptr.2d 149, 23 P.3d 43] (Griset).) The “one final judgment” rule, codified in Code of Civil Procedure section 904.1, subdivision (a)(6) allows appeals in a civil case to be taken not only from a “judgment,” but also from various types of orders, including orders granting or refusing to grant an injunction. Whether a particular order constitutes an appealable injunction depends not on its title or the form of the order, but on “`the substance and 143*143 effect of the adjudication.'” (In re The Clergy Cases I (2010) 188 Cal.App.4th 1224, 1234 [116 Cal.Rptr.3d 360] (Clergy Cases I).) An injunction is defined as “a writ or order requiring a person to refrain from a particular act.” (Code Civ. Proc., § 525.) Injunctions also may command a person to perform a particular act. (Luckett v. Panos (2008) 161 Cal.App.4th 77, 84 [73 Cal.Rptr.3d 745] (Luckett).)

    In its May 18, 2010 order, after finding that India Street retained the Class B voting rights and that PV Little Italy had never acquired those rights, the trial court ruled that the March 2010 election was void, and entered the following order: “[A] new election must be forthcoming within 60 days of the date of this order. The officers and board for the MetroWork Condominium Association that existed immediately prior to the March 1, 2010 election will immediately retake interim control of the Association pending the new election.” The plain language of this order constitutes a mandatory injunction, since it required the immediate turnover of control of the Association to the prior board and officers, and the holding of a new election. India Street disingenuously argues that the order is not appealable as an injunction because it “does not expressly grant an injunction.” (Italics added.) As noted, however, it is not the form, but the substance of an order that determines its appealability.[5]

    (2) Another key indicator of whether an order is final and appealable is that “`no issues in the action remain for further consideration….'” (Clergy Cases I, supra, 188 Cal.App.4th at p. 1234; see Canandaigua Wine Co., Inc. v. County of Madera (2009) 177 Cal.App.4th 298, 303 [99 Cal.Rptr.3d 264] [“[A]n order constitutes a final judgment despite other causes of action remaining if the order effectively disposes of the entire case. For example, an order is appealable if it resolves an allegation that is essential to all of the causes of action.”].) The May 18, 2010 order resolved the core conflict between the parties by determining on the merits which party possesses the Declarant’s rights, and in particular, the Class B voting rights. India Street’s complaint sought declaratory and injunctive relief, specific performance, and reformation of the CC&R’s. The gist of the action was India Street’s effort to have itself declared the party that held the right to exercise the Class B voting rights attached to the Retail Units. PV Little Italy intervened for the express 144*144 purpose of resolving whether it, and not India Street, is the Declarant and holds Class B voting rights. PV Little Italy therefore sought a judicial determination of the voting rights of the parties and the related issues of the validity of the March 2010 board election. Like India Street, PV Little Italy requested relief under section 7616 to resolve these issues.

    The order appealed from accomplished that goal, and neither party has indicated that anything more of substance remains to be done in the litigation, except entry of judgment. Indeed, as India Street acknowledges, it has since voluntarily dismissed its causes of action pertaining to issues other than those raised pursuant to section 7616. (See Griset, supra, 25 Cal.4th at p. 698 [a decree generally may be considered final “where no issue is left for future consideration”]; see also Abatti v. Imperial Irrigation Dist. (2012) 205 Cal.App.4th 650, 667 [140 Cal.Rptr.3d 647] [holding that appellate jurisdiction exists even where claims have been dismissed without prejudice to enable entry of judgment, unless the parties also have stipulated to facilitating future litigation of the dismissed claims].)

    For the foregoing reasons, the trial court’s May 18, 2010 order is appealable. We turn now to the merits of PV Little Italy’s appeal.[6]

    B. Applicable standard of review
    This appeal presents two issues. First, did the Reconveyance Deed release KeyBank’s security interest not only in the Retail Units themselves, but also in all of the Declarant’s rights, including the Class B voting rights as to Retail Units? Second, did PV Little Italy become the Declarant upon its purchase of the 16 units from Oreo, and thus gain Class B voting rights as to those units? The trial court’s determination of these questions turned primarily on the court’s review and interpretation of various written documents — in particular, the CC&R’s, the Trust Deed, and the Reconveyance Deed.

    “The interpretation of a written instrument, even though it involves what might properly be called questions of fact… is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect.” (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [44 Cal.Rptr. 767, 402 P.2d 839], citation omitted (Parsons).) An appellate court reviews such instruments independently, “unless the interpretation turns upon the credibility of extrinsic evidence.” (Ibid.; see Harvey v. The Landing Homeowners Assn. (2008) 162 Cal.App.4th 809, 817 [76 Cal.Rptr.3d 41] (Harvey) [“Where, as 145*145 here, the trial court’s interpretation of the CC&R’s does not turn on the credibility of extrinsic evidence, we independently interpret the meaning of the written instrument.”].)

    Although India Street submitted some extrinsic evidence to aid in the trial court’s interpretation of the relevant documents, the trial court did not rest its ruling on any of the extrinsic evidence. Moreover, while PV Little Italy attempted to impeach the credibility of India Street’s witnesses, it offered no directly conflicting extrinsic evidence of the parties’ intent or of their understanding of the documents under consideration. Instead, PV Little Italy argued that the documents speak for themselves. Because the trial court did not rely on extrinsic evidence, and because the extrinsic evidence that the parties presented was not in conflict, in this appeal “we must make an independent determination of the meaning of” the written instruments before us. (Parsons, supra, 62 Cal.2d at p. 866; see Home Federal Savings & Loan Assn. v. Ramos (1991) 229 Cal.App.3d 1609, 1613 [284 Cal.Rptr. 1] [“Here, because the parties presented little relevant and no conflicting extrinsic evidence [citation], the trial court properly refused to submit the interpretation of the written guaranty to the jury. [Citation.] Likewise, however, we as the reviewing court consider the evidence and interpret the guaranty de novo.”].)

    C. The trial court erred in finding that India Street, as owner of the Retail Units, retained the Declarant’s Class B voting rights
    1. The plain language of the CC&R’s, the Trust Deed, and the Reconveyance Deed, all indicate that the Class B voting rights associated with the Retail Units were not reconveyed to India Street.
    (3) In determining whether the Reconveyance Deed released KeyBank’s security interest in India Street’s Declarant’s rights and the Class B voting membership, we are guided by familiar rules that govern the interpretation of written instruments. “The fundamental goal of contract interpretation is to give effect to the mutual intention of the parties as it existed at the time they entered into the contract.” (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1385 [137 Cal.Rptr.3d 293] (Klein).) “When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible….” (Civ. Code, § 1639; see Klein, supra, at p. 1385; see also Starlight Ridge South Homeowners Assn. v. Hunter-Bloor (2009) 177 Cal.App.4th 440, 447 [99 Cal.Rptr.3d 20] (Starlight Ridge).) (4) “`We consider the contract as a whole and construe the language in context, rather than interpret a provision in isolation.'” (Starlight Ridge, supra, at p. 447.) When the language of the instrument is unambiguous, we 146*146 determine the parties’ intent solely by reference to that language. (Ibid.; Klein, supra, 202 Cal.App.4th at p. 1385; see Civ. Code, § 1638 [“language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity”].)

    We begin our analysis with the CC&R’s, the key document that defines the scope of the Declarant’s rights, the nature of Class B Association membership, the ability of the Declarant to transfer its rights, and the consequences of doing so. At the time the CC&R’s were created, India Street was the original Declarant, and as such, initially possessed Class B voting rights as to the entire MetroWork project. (See CC&R’s, § 1.15, stating “Declarant shall initially mean [India Street].”) In addition to the Class B voting rights, as Declarant, India Street also possessed a number of rights under the CC&R’s that enabled it to control management of the project during development, and to protect its investment in Anthology, including the enhanced Class B voting rights. (See CC&R’s, §§ 2.05, 4.01, 7.01-7.04, 8.02.) Importantly, India Street had the power to assign its rights under the CC&R’s to another person or entity. CC&R’s section 1.15 reads, in full: “`Declarant’ shall initially mean [India Street], its successors, and any person to which it shall have assigned its rights hereunder, in whole or in part, by an express written assignment.” (Italics added; see CC&R’s, § 7.03 [providing that Declarant’s rights “may be assigned by Declarant to any successor in interest to any portion of Declarant’s interest in any portion of the property by a recorded written assignment”].)

    There is no dispute that, pursuant to CC&R’s section 1.15, India Street assigned its Declarant’s rights, including the Class B voting rights, in their entirety, to KeyBank, as security for a construction loan to finance the MetroWork project. The Trust Deed of which KeyBank is the beneficiary provided that, as security for the loan, India Street, as trustor, “hereby irrevocably and unconditionally grants, bargains, sells, conveys, mortgages and warrants to Trustee, in trust for the benefit of [KeyBank], with power of sale and with right of entry and possession, all estate, right, title and interest which [India Street] now has or may later acquire” to the MetroWork property. (Trust Deed, § 1.1.) That grant explicitly included “[a]ll of Trustor’s rights, title, interest and privileges whatsoever, as `Developer’, `Declarant’, `Subdivider’ or similar position or title pursuant to any `condominium declaration,’ `declaration of covenants, conditions and restrictions,’ or similar document recorded in the Official Records of the County in which the Premises is located….” (Trust Deed, § 1.1, subd. (g), italics added.)

    The parties agree that the effect of this conveyance was to lodge with the trustee, for the benefit of KeyBank, legal title to the property transferred, but that the transfer did not alter India Street’s ability to develop and manage the 147*147 MetroWork project, or to exercise its Declarant’s rights (including Class B voting rights as to any units it owned), as long as there was no default. (See 4 Witkin, Summary of Cal. Law (10th ed. 2005) Security Transactions in Real Property, § 5, p. 795 [with a deed of trust that includes the power of sale, “title passes to the trustee, who holds it until default; then, after sale, it goes from the trustee to the purchaser”]; see also id., § 6, p. 796 [deed of trust “actually gives the trustee only the interest that is necessary to carry out the trust,” taking “legal title for security only, leaving a legal estate and the ordinary rights of ownership in the trustor”].) Thus, up to the time of its default, India Street was able to exercise all of its Declarant’s rights, including voting rights.[7]

    In 2008, India Street successfully obtained release of the Retail Units from the lien of the Trust Deed. However, unlike the original deed of trust, the Reconveyance Deed made no reference to the Declarant’s rights. India Street contends that the language of the Reconveyance Deed “completely released KeyBank’s security interest in the `owner’s entire estate’ consisting of the Retail Units.” However, that is not what the document says. Rather, the Reconveyance Deed reconveyed only “A PORTION OF the estate now held by it under the Deed of Trust as specifically described on Exhibit `A’ attached hereto.” (Original capitalization, italics added.) Exhibit A describes only the Retail Units themselves, plus the associated common areas. There is no mention of the Declarant’s rights. In its brief, India Street concedes, albeit implicitly, that there is no express release of the Declarant’s rights in the Reconveyance Deed. In depositions, Berkson could recall no specific discussion about voting rights with KeyBank during negotiations over the reconveyance, and Lorne Polger (Polger), the attorney who negotiated the terms of the reconveyance on behalf of India Street, acknowledged that there had been no such discussions.

    Our conclusion that there was no reconveyance of the Declarant’s rights is further buttressed by the language of the original construction loan from KeyBank, which specifically provides that a partial reconveyance “shall not affect or impair the lien of the Deed of Trust and Lender’s Lien and security interests created by the other Loan Documents as to the Condominium Units and other property encumbered by the [Trust Deed] and the other Loan 148*148 Documents not previously released, and said liens and security interests shall continue in full force and effect as to the unreleased Condominium Units and other such property.”[8] Additionally, the trustee’s deed that was recorded after the foreclosure sale evidences that the trustee conveyed to Oreo not only the remaining real and personal property of MetroWork, but also, explicitly, the Declarant’s rights. It is thus clear that KeyBank knew how to reconvey the Declarant’s rights to India Street, if that had been what the parties intended. However, no language of reconveyance or release of the Declarant’s rights, insofar as applicable to the Retail Units, appears in the Reconveyance Deed or in any other document filed in connection therewith.

    The trial court acknowledged that the Reconveyance Deed contained no language releasing the Declarant’s rights, but nonetheless held that the reconveyance included the Declarant’s rights. In reaching this conclusion, the court observed that the rights (including the Class B voting rights) granted to the Declarant in the CC&R’s were designed to ensure that India Street, as original owner and operator of the project, could exercise “control over building management,” particularly with respect to the Retail Units. The court reasoned that “it is counter-intuitive to presume that these Declarant’s rights [(including the voting rights)] could be separated from the ownership interest in the retail units.” Accordingly, the court held that although the Reconveyance Deed “did not expressly list Declarant rights, they are within the penumbra of assets that were conveyed back to [India Street].” We disagree, and conclude that the trial court’s interpretation of the Reconveyance Deed is not supported by the express terms of that document, nor by any of the documents that were executed in connection with the KeyBank loan.

    The trial court’s fundamental error lay in its misapprehension of the relationship between the Declarant’s Class B voting rights and ownership of the Retail Units. We agree with PV Little Italy that while membership in the Association, in general, is “appurtenant” to ownership of any unit in MetroWork, the Declarant’s enhanced voting rights do not automatically attach to ownership of the Retail Units, nor to any other unit, nor are they inseparable therefrom.

    It is true, as India Street contends, that ownership of a unit automatically carries with it membership in the Association, for as long as the unit is owned. Section 2.03 of the CC&R’s states as much, and further provides that “All memberships shall be appurtenant to the Condominium conveyed….” 149*149 The CC&R’s also specify, in section 13.01, that “[t]here shall be no severance by sale, conveyance, encumbrance or hypothecation of an interest in any Unit from the concomitant membership in the Association.” However, these provisions merely illustrate that membership in the Association is solely a function of unit ownership. (See CC&R’s, § 2.03 [“Ownership of a Condominium shall be the sole qualification for membership in the Association.”].)

    By contrast, Class B membership is not determined solely by being an owner, but rather, by being a particular owner — i.e., the Declarant. (CC&R’s, §§ 1.15, 2.05, subd. (b), 7.03.) In other words, the unique status and rights of the Declarant do not result from ownership of a condominium, but rather, from specific grants in the CC&R’s to the Declarant. (See, e.g., CC&R’s, art. VII, §§ 7.01, 7.02, 8.02, subd. (b).) The “Declarant” is defined in the CC&R’s not in terms of ownership of a unit, but rather, as “initially” being India Street, its successors, and assignees. (CC&R’s, § 1.15.) Importantly, the Declarant is not necessarily India Street, because the CC&R’s permit the Declarant to assign its rights to another, “in whole or in part,” to any number of assignees. (CC&R’s, § 1.15, italics added; see § 7.03 [“The rights of Declarant hereunder and elsewhere in these Restrictions may be assigned by Declarant to any successor in interest to any portion of Declarant’s interest in any portion of the property by a recorded written assignment.” (italics added)].)

    Contrary to India Street’s contentions and the trial court’s conclusions, nothing in the CC&R’s binds the Retail Units irrevocably to the Declarant (whether Declarant is India Street or some other entity) or to the Declarant’s Class B voting rights. Those units are not defined as “units owned by the Declarant” or “units owned by India Street.” Rather, the “Retail Parcel” is defined in the CC&R’s only as “Those units on floors 1-2 as set forth on the Condominium Plan.” Even the so-called “Declarant Units” are not defined as “units owned by the Declarant,” or as “units owned by India Street,” but rather, merely as “those units comprising floors 1, 2 and 9 as described in the Condominium Plan.”[9] (CC&R’s, § 1.16.) India Street identifies no language in the CC&R’s stating that the first and second floors of MetroWork must always be owned by an entity deemed to be the Declarant. Absent such language, nothing in the CC&R’s prevents ownership of the Retail Units from being separated from the status of Declarant and its concomitant voting rights. Indeed, the very provision that grants the enhanced voting rights as to any unit owned by the Declarant anticipates the possibility that those rights 150*150 could be terminated upon sale of the unit to an unaffiliated entity. In that case, the special Class B membership is converted to the standard Class A membership.[10] (CC&R’s, § 2.05.)

    For these reasons, the plain language of the CC&R’s belies the trial court’s conclusion that the Class B voting rights cannot be separated from the Retail Units. The combined effect of CC&R’s sections 2.03, 2.05, subd. (b), and 13.01, summarized above, is that Class B voting rights may not be separated from any units owned by the Declarant — but that merely begs the question: which entity is the Declarant? When India Street assigned a security interest in its Declarant’s rights to KeyBank, and did not obtain a release of those rights as to the Retail Units in the reconveyance, upon India Street’s default, the status of Declarant, and the concomitant enhanced voting rights, became separated from ownership of the Retail Units. By operation of the CC&R’s, India Street was no longer the Declarant; it had become just like any other owner, with Class A membership in the Retail Units.

    Despite acknowledging that the Declarant’s rights had not been expressly reconveyed to India Street, the trial court reasoned that it was “counter-intuitive to presume that these Declarant’s rights could be separated from the ownership interest in the [Retail Units],” since the CC&R’s had been drafted with the intention of allowing India Street to maintain control over management of those units. The court concluded that those rights therefore must have been “within the penumbra” of assets reconveyed to India Street. We do not disagree with the trial court’s interpretation of what India Street subjectively intended in drafting the provisions in the CC&R’s pertaining to the Declarant’s rights. The record appears to substantiate India Street’s assertions that its focus, from the beginning, was to make Anthology the “crown jewel” 151*151 of MetroWork. India Street undoubtedly envisioned that only it, or a related entity or direct assignee, would be the owner of the Retail Units as Declarant. India Street structured the CC&R’s in a manner that would preserve India Street’s ability to use the Retail Units for Anthology or a similar purpose well into the future. Thus, although many of the Declarant’s powers would terminate once MetroWork was fully developed and all other units of MetroWork were sold, the Declarant’s right to use the Retail Units for a restaurant or nightclub venue was protected in perpetuity, and all other owners purchased their units subject to those uses, for as long as the Declarant owned the space. (Compare CC&R’s, § 7.01 [protecting the right of Declarant to develop MetroWork as it “deems advisable” for “so long as any Condominium in the Project remains unsold”], with § 7.02 [allowing Declarant to use the “Declarant Units” for any use allowed by law, including restaurant and club uses].) Further, pursuant to CC&R’s section 2.05 the enhanced Class B membership survives for as long as Declarant owns a unit.

    That said, we are bound to interpret written instruments according to the parties’ intent as manifested in the written instrument, if that language is clear and explicit. (See, e.g., Parsons, supra, 62 Cal.2d at p. 866; Starlight Ridge, supra, 177 Cal.App.4th at p. 447.) While it may have seemed “counter-intuitive” to the trial court that KeyBank would release its security interest in the Retail Units without also releasing the Declarant’s rights associated with those units, India Street drafted the CC&R’s and negotiated the loan agreement and various deeds in a manner that did not foreclose that possibility. It is not for the trial court, or this court, to inject our own “intuition” into the analysis of the parties’ intent when the language of the instruments is clear. (See, e.g., Klein, supra, 202 Cal.App.4th at p. 1385 [the contracting parties’ intent is interpreted according to objective, rather than subjective, criteria].)

    Our conclusion that the Reconveyance Deed did not release KeyBank’s security interest in the Declarant’s rights as to the Retail Units is based on the express and unambiguous language of the Reconveyance Deed itself, the CC&R’s, and other instruments. (Harvey, supra, 162 Cal.App.4th at p. 817 [“The language of the CC&R’s governs if it is clear and explicit…. The parties’ intent is to be ascertained from the writing alone if possible.”].) Notwithstanding the manifest intention of the CC&R’s to protect India Street’s investment in the Retail Units, the CC&R’s also expressly permit the Declarant to assign all or a portion of its rights. This right of assignment, together with the original Trust Deed’s express conveyance of a security interest in the Declarant’s rights to KeyBank, and the lack of any language releasing that interest in the Reconveyance Deed, all indicate, under the usual rules of interpretation, an intent to exclude the Declarant’s rights from the reconveyance. (Cf. White v. Western Title Ins. Co. (1985) 40 Cal.3d 870, 881-882, fn. 4 [221 Cal.Rptr. 509, 710 P.2d 309] [the familiar maxim, 152*152 expressio unius est exclusio alterius (the inclusion of one thing implies exclusion of others), applies to contract interpretation].)

    (5) If the plain language of the instrument is unambiguous, a court may not “read into” the document additional terms in order to conform its meaning to what the court’s “intuition” tells it the parties must have intended. Rather, the court “is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted….” (Code Civ. Proc., § 1858; see Klein, supra, 202 Cal.App.4th at pp. 1385-1386.) There are, of course, instances when the parties mutually intend one thing, but due to mistake or inadvertence, the written document does not reflect that intent. In that instance, the law permits the court to reform the document consistent with the parties’ intent. (See, e.g., 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, §§ 276 [discussing reformation remedy generally], 279, pp. 306, 309 [noting that a deed may be reformed]; Civ. Code, § 3399 [permitting “revision” of contract that “does not truly express the intention of the parties”].) Although India Street initially included in its complaint a claim for reformation, it voluntarily dismissed that claim after the section 7616 hearing, and it makes no argument on appeal that the absence of an express release of the Declarant’s rights in the Reconveyance Deed was due to mistake or inadvertence.

    2. The other documents and extrinsic evidence on which India Street relies are insufficient to demonstrate that KeyBank released the Declarant’s rights as to the Retail Units by means of the Reconveyance Deed.
    (6) In determining the meaning of a written instrument, we are permitted to consider not only its language, but also “`the circumstances under which [it] was made and the matter to which it relates.'” (Starlight Ridge, supra, 177 Cal.App.4th at p. 447, citations omitted.) India Street urges us to look at the broader context in which the reconveyance was accomplished, and to consider other evidence indicating that the intention underlying that conveyance was to restore to India Street not only the Retail Units themselves, but all of the Declarant’s rights associated with those units. In our view, however, these other documents and the extrinsic evidence of intent that India Street proffers are unhelpful and fail to demonstrate any intent other than that revealed by the plain language of the CC&R’s and the Reconveyance Deed.

    For example, India Street contends that the third modification to the original loan agreement, combined with other documents executed in anticipation of the reconveyance, released all of KeyBank’s interests in the lien on the Retail Units. By definition, this language covered only “Condominium Units 1A and 2A” themselves, and nothing else. India Street points to no language in the Third Modification Agreement that would indicate otherwise.

    153*153 As an additional condition of the release of the Retail Units, India Street agreed to execute a second deed of trust that encumbered only the Retail Units, but that was otherwise identical to the original Trust Deed. This second deed was additional consideration for the Third Modification Agreement, was intended to “be subordinate only to the lien of the deed or deeds of trust securing repayment of the [Pacific Western SBA] loan,” and was to be returned to India Street upon the fulfillment of certain conditions, absent any default. In the trial court, India Street maintained that this second deed, which was never recorded, “would have been unnecessary” if the release of the Retail Units was not intended to be a complete release of all of KeyBank’s interest.

    The purpose of this second deed is unclear, and in any event, India Street has not explained how the deed demonstrates that the KeyBank reconveyance released the Declarant’s rights. Nothing on the face of the second deed supports India Street’s argument. On the contrary, the second deed serves merely to reinforce that KeyBank held a security interest in the Declarant’s rights associated with the Retail Units. In our view, the absence of specific language in the Reconveyance Deed releasing that interest, notwithstanding the language of the second deed, only reaffirms that there was no release of the Declarant’s rights as to the Retail Units by KeyBank in the Reconveyance Deed.

    India Street emphasized in the trial court, and does so again on appeal, the fact that before obtaining the reconveyance, it obtained a second loan on the Retail Units from Pacific Western, and in exchange for that loan, gave Pacific Western a security interest in those Units and in “any and all … rights … relating to … the development or occupancy” of the Retail Units. This presumably demonstrates, in India Street’s view, that it was India Street’s intention to regain the Declarant’s rights as to the Retail Units, unencumbered by any KeyBank interest, so that it could convey a new security interest in those rights to Pacific Western.

    There are several flaws in this argument. First, regardless of what India Street may have intended in terms of a reconveyance of Declarant’s rights, as we have explained, the language of the reconveyance does not manifest that intention. Second, the Pacific Western deed makes no explicit reference to “Declarant’s rights,” which are dealt with separately in the CC&R’s, and which, in the original Trust Deed, were listed separately from other “Developer” rights that India Street may have possessed. As such, the Pacific Western deed does not demonstrate that India Street conveyed to that lender any security interest in the Declarant’s rights.

    Third, even if the conveyance to Pacific Western of “all of [India Street’s] right, title, and interest in … all other rights … relating to the real 154*154 property,” including “development rights,” could be construed broadly to include the Declarant’s rights, such a conveyance would not necessarily be inconsistent with KeyBank retaining its own security interest in the Declarant’s rights, since two deeds of trust may cover the same property. (See Davidow v. Corporation of America (1936) 16 Cal.App.2d 6 [60 P.2d 132] [upholding validity of foreclosure sale on second deed of trust on property already covered by first deed of trust]; 4 Witkin, Summary of Cal. Law, supra, Security Transactions in Real Property, § 6, pp. 796-797 [noting that, because a deed of trust conveys only an interest sufficient to carry out the trust, and does not vest the trustee with the entire estate in the property, it is possible to have a second deed of trust covering the same property].) India Street can have conveyed to Pacific Western only whatever title it had, subject to the rights of KeyBank, which claimed an interest under the first deed of trust. (Davidow, supra, at p. 12.) Additionally, Pacific Western recorded its deeds of trust on October 31, 2007, before KeyBank had recorded or even executed the reconveyance (on Feb. 19, 2008, and Dec. 10, 2007, respectively). Pacific Western thus presumably took its security interest subject to KeyBank’s interest, which was prior in time. (See, e.g., Trust Deed, § 1.2, subd. (b) [providing that all persons acquiring an interest in the property “will be considered to have notice of, and will be bound by, the … Secured Obligations” created by the KeyBank loan and related documents].)[11]

    India Street also references a “Subordination Agreement” pursuant to which KeyBank subordinated the lien of the Trust Deed to the CC&R’s. However, India Street fails to explain the relevance or significance of the Subordination Agreement to the issues before us. To the extent that India Street is suggesting that this agreement essentially “nullified” the conveyance of a security interest in the Declarant’s voting rights under the Trust Deed, we reject that assertion as without foundation and entirely contrary to the explicit intent to convey such an interest to KeyBank by means of that deed. To the extent that India Street is suggesting only that this language required KeyBank to allow India Street to continue to exercise rights as the Declarant, including enhanced voting rights, notwithstanding the security interest created by the Trust Deed, the subordination language adds nothing to our analysis. As noted previously, a deed of trust does not prevent the trustor — in this case, India Street — from continuing to exercise all of the ordinary rights of ownership.[12] (See discussion, ante, at pt. III.C.1.)

    155*155 Contrary to the trial court’s conclusion, in our view, none of the UCC Financing Statements included in the record supports the trial court’s conclusion that the reconveyance necessarily included the Class B voting rights. PV Little Italy contends that any mention of the Declarant’s rights in these statements is surplusage, because UCC Financing Statements pertain only to personal property, and the provisions of the CC&R’s are deemed to create equitable servitudes, which are real property rights and obligations. (See Civ. Code, § 1354; CC&R’s, preamble, ¶ D.) Moreover, PV Little Italy argues, UCC Financing Statements do not, in themselves, convey security interests. Rather, they provide notice of the collateral covered by a security agreement. (Compare Cal. U. Com. Code, § 9102, subd. (a)(73) [defining “security agreement” as “an agreement that creates or provides for a security interest”] with Cal. U. Com. Code, § 9310, subd. (a) [“a Financing Statement must be filed to perfect all security interests …”].) India Street does not respond to these arguments.

    In any event, the UCC Financing Statements are consistent with the plain language of the Trust Deed and the Reconveyance Deed, as we have interpreted that language. Like the Trust Deed, the original UCC Financing Statement covered all buildings, goods, rents and materials located on the MetroWork property, but also separately and explicitly mentioned “All of Debtor’s rights, title, interest and privileges, whatsoever, as `Developer,’ `Declarant,'” or other position pursuant to the CC&R’s. The amendment to that financing statement recorded at the time of the reconveyance, like the Reconveyance Deed itself, notably does not include that same language in the release of collateral. Rather, it states only: “That portion of the real property described on Attachment 1 hereto [(a description of the Retail Units)] is hereby deleted from the definitions of `Improvements,’ `Premises’ and `Condominium Units’ set forth in the initial Financing Statement and Secured Party’s interest therein is released.” The Declarant’s rights were not included either within the legal description included as attachment 1, or within the defined terms listed in the amendment. Finally, as previously noted, upon the foreclosure sale, the trustee conveyed to Oreo all of its remaining “right, title and interest” in unsold units of MetroWork, as set forth not only in the legal description of the physical property attached to the trustee’s deed of sale, but also as set forth in the initial UCC Financing Statement annexed to that deed, which explicitly mentioned the Declarant’s rights, and which was attached as an exhibit to the trustee’s deed upon sale. This evidences in plain language that the trustee still held a security interest in the Declarant’s rights at the time of foreclosure, and that it intended to include those rights in the conveyance to Oreo after the foreclosure.

    156*156 India Street’s reliance on Civil Code section 1358 is misplaced. That statute provides that any “conveyance … of the owner’s entire estate also includes the owner’s membership interest in the association.” (Id., subd. (b).) We agree with PV Little Italy that because India Street did not raise this argument in the trial court, it may not properly raise it for the first time on appeal. (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2011) ¶ 8.229, p. 8-155 (rev. # 1, 2011), and cases cited therein.) In any event, the argument is unavailing. As we have explained, the CC&R’s were not written in a way that makes Declarant’s enhanced voting rights appurtenant to ownership of the Retail Units. Whether a transferee of a unit obtains Class B membership of the Declarant, or instead, the same Class A membership as any other owner receives, depends solely on whether that transferee is the “Declarant.” When KeyBank released its security interest in the Retail Units without simultaneously releasing its interest in the Declarant’s rights, and India Street subsequently defaulted, India Street lost the status of Declarant and thus could no longer exercise Class B voting rights as to those units — although it could exercise Class A membership. The directive of Civil Code section 1358 is therefore observed: India Street’s ownership of the Retail Units includes membership rights in the Association, albeit not the membership that India Street had perhaps planned to possess.

    (7) Because the language of the relevant instruments is clear and unambiguous, resort to extrinsic evidence of the parties’ intent is unnecessary and even inappropriate. (Parsons, supra, 62 Cal.2d at p. 865; see Civ. Code, § 1639; Code Civ. Proc., § 1856, subd. (b).) The trial court thus erred in looking to the Berkson and Polger declarations to bolster its conclusion that India Street possessed Class B voting rights as a function of its ownership of the Retail Units. However, even if the Reconveyance Deed were susceptible of more than one interpretation (and we do not believe that it is), reliance on these declarations as evidence of the parties’ intent would be improper. (See Winet v. Price (1992) 4 Cal.App.4th 1159, 1165 [6 Cal.Rptr.2d 554] (Winet) [court may consider extrinsic evidence of the parties’ intent, as long as that evidence is “relevant to prove a meaning to which the language is `reasonably susceptible.’ [Citation.]”].) The Berkson and Polger declarations merely confirm what the language of the CC&R’s already makes clear — namely, that India Street wanted to protect its “crown jewel” investment in the Retail Units. Moreover, Berkson avers only that it was his “understanding” that the release of the Retail Parcel from the lien of the deed of trust was to be a full release, and states that he would not have entered into the reconveyance “if KeyBank had expressed an intention to reserve any rights related to the Retail Parcel.” Similarly, Polger states that he “understood” that between the Reconveyance Deed and the amended UCC Financing Statement, all real and personal property collateral in the Retail Units would be released, including 157*157 any Declarant’s voting rights “to the extent that such voting rights were attached to the realty” or “were deemed a personal property interest.”

    Such subjective statements of “understanding” are irrelevant, however, particularly where there is no evidence that KeyBank had the same understanding. As PV Little Italy notes, the deposition testimony of both Berkson and Polger indicates that they never discussed the Declarant’s rights with KeyBank in connection with the reconveyance. (See, e.g., Reigelsperger v. Siller (2007) 40 Cal.4th 574, 579-580 [53 Cal.Rptr.3d 887, 150 P.3d 764] [the “uncommunicated subjective intent” of one party cannot be used to contradict the objective manifestation of the parties’ intent]; Winet, supra, 4 Cal.App.4th at p. 1166, fn. 3 [evidence of the undisclosed subjective intent of the parties is irrelevant to determining the meaning of contractual language].)[13]

    (8) While it is fundamental that the court should avoid interpreting a writing in a manner that results in an absurdity (see Civ. Code, § 1638 [language of instrument controls if it “does not involve an absurdity”; see also Starlight Ridge, supra, 177 Cal.App.4th at p. 447), India Street makes no argument that any interpretation other than the trial court’s would be “absurd,” and our interpretation does not lead to an absurd result. The CC&R’s were evidently drafted with the intention of giving India Street a great deal of flexibility to exercise or assign its Declarant’s rights as it saw fit, and as its business needs required, even if that meant conveying the status of Declarant to another entity. It is not unreasonable to presume, as PV Little Italy contends, that KeyBank would want to retain its security interest in the Declarant’s rights while the substantial balance of its loan to India Street remained outstanding, so that in the event of a default, it would have the greatest possible degree of control over the project’s management pending the sale of the remaining units. Polger, India Street’s attorney, acknowledged as much during his deposition.

    For the foregoing reasons, we conclude that the Reconveyance Deed did not release KeyBank’s lien on the Declarant’s rights, including the enhanced voting rights associated with the Retail Units.

    158*158 D. Oreo expressly conveyed to PV Little Italy any remaining Declarant’s rights that it may have possessed at the time of the sale; accordingly, PV Little Italy holds Declarant’s rights, including Class B voting rights, as to any units that it still owns
    After India Street’s default, KeyBank foreclosed on the remaining 16 unsold units in the MetroWork project, and these units were promptly sold to Oreo at the trustee’s sale. The trustee’s deed upon sale conveyed all the real and personal property covered by the Trust Deed (with the exception of the Retail Units already reconveyed), and specifically identified the Declarant’s rights as among the property conveyed to Oreo. On November 13, 2009, Oreo sold these units to PV Little Italy. On that same day, Oreo entered into an assignment and assumption agreement pursuant to which it transferred to PV Little Italy its “right, title, and interest, if any, as the Declarant” under the CC&R’s, specifying that the transfer was “without representation or warranty of any kind as to the existence of same.” We now address whether, by virtue of this assignment, PV Little Italy became the Declarant and obtained the Declarant’s Class B voting rights as to the units that it purchased from Oreo. Relying once again primarily on the plain language of each of the conveyances after India Street’s default, we conclude that PV Little Italy did acquire those rights. Accordingly, we reverse the trial court’s ruling to the contrary.

    The terms of the Trust Deed granted to KeyBank the power, upon India Street’s default, to enter and take possession of the property covered by the Trust Deed, to “manage and operate all or any part of the Property,” and “do any and all other things in connection with those actions that Beneficiary may in its sole discretion consider necessary and appropriate to protect the security of” the Trust Deed. (Trust Deed, § 6.3 subd. (c).) As PV Little Italy contends, the express inclusion of the Declarant’s rights in the conveyance in the Trust Deed demonstrates an intention that, upon any default by India Street, KeyBank would be able to step into India’s Street’s shoes as Declarant and exercise the Declarant’s rights to manage and protect the development, thereby maximizing its recovery on the loan at any future sale. India Street does not dispute this. Upon India Street’s default, and by virtue of the express conveyance in the Trust Deed, title to all the tangible and intangible property covered by the Trust Deed (excluding the Retail Units but including all Declarant’s rights) vested with the trustee, for the benefit of KeyBank. (See CC&R’s, § 1.15; Trust Deed, § 1.1, subd. (g).)[14]

    159*159 We next consider whether the trustee had the authority under the CC&R’s to convey the Declarant’s rights to Oreo, and if so, whether Oreo effectively passed those rights on to PV Little Italy. The trial court first found that, by virtue of KeyBank having reconveyed the Declarant’s rights to India Street, Oreo had “no such rights to convey” to PV Little Italy after the foreclosure sale. The trial court did not expressly limit this finding only to those Declarant’s rights associated with the Retail Units, but rather, appears to have concluded that Oreo acquired “no such rights” — even those associated with the units as to which India Street had defaulted. However, as we have explained, the Reconveyance Deed did not transfer back to India Street any of the Declarant’s rights. Thus, even under the trial court’s reasoning, at a minimum, the Declarant’s rights as to the unsold units remained “in play” at the time of the foreclosure sale.[15]

    In its briefing in the trial court, India Street acknowledged that upon the foreclosure sale, Oreo acquired those rights because it is affiliated with KeyBank. According to India Street, it was only upon the subsequent sale to PV Little Italy — an “unaffiliated third party” — that the Class B voting rights associated with the foreclosed condominium units were terminated and converted to Class A rights, pursuant to section 2.05, subdivision (b) of the CC&R’s. At the section 7616 hearing, however, India Street shifted its position, arguing that because it was the trustee that held title to all of the property, and there had been no conveyance to KeyBank, the foreclosure sale to Oreo was itself a sale to an “unaffiliated third party,” and thus, Oreo acquired no Declarant’s rights. The trial court adopted the “unaffiliated third party” approach in evaluating the nature of PV Little Italy’s rights, and concluded that because PV Little Italy “did not acquire its ownership rights via direct assignment from [India Street] and was instead an unaffiliated owner,” PV Little Italy acquired no Declarant’s rights. Not surprisingly, on appeal, India Street agrees with the trial court, arguing both that Oreo “did not acquire” India Street’s Class B membership and voting rights upon the foreclosure sale and thus had no rights to convey to PV Little Italy, and also that PV Little Italy, an entity neither affiliated with, nor a direct assignee of, India Street, could not have acquired Class B voting rights as a result of its purchase from Oreo.

    160*160 The analytical flaw in the trial court’s and India Street’s reasoning is that it improperly conflates section 1.15 of the CC&R’s with section 2.05, subdivision (b). Section 1.15 defines the term “Declarant.” The reference to PV Little Italy as an “unaffiliated owner” presumably stems from section 2.05, subdivision (b) of the CC&R’s, which provides for the conversion of Class B voting rights to Class A rights upon the sale of a unit owned by Declarant to an “unaffiliated third party.” In order to determine whether the Declarant’s rights — including the Class B voting rights — in the foreclosed units were effectively transferred to Oreo, and in turn to PV Little Italy, we must first determine, under section 1.15 of the CC&R’s, who may become the Declarant, and specifically, whether a Declarant other than India Street may effectively assign the status of Declarant and the Declarant’s rights to another person or entity. The answer to that question determines whether CC&R’s section 2.05’s treatment of the Class B voting rights comes into play at all.

    CC&R’s section 1.15 provides that “`Declarant’ shall initially mean [India Street] … its successors, and any person to which it shall have assigned its rights hereunder, in whole or in part, by an express written assignment.” (Italics added.) This sentence arguably may be interpreted in two different ways. Consistent with the narrow interpretation adopted by the trial court and urged by India Street, the definition may be construed to mean the following: “`Declarant’ shall initially mean India Street, and thereafter only its direct successors or assigns.” This approach construes the word “initially” as applying only to India Street. However, there is another reasonable interpretation pursuant to which “initially” modifies the entire remainder of the sentence, such that the definition would have the following meaning: “`Declarant’ shall initially mean India Street, its successors and assigns, but thereafter, `Declarant’ could be other entities as yet unnamed.” This interpretation contemplates a potentially unlimited universe of Declarants in the future, who could exercise the Declarant’s rights as set forth in the CC&R’s for as long as MetroWork remained in its developmental stages, and — specifically with respect to the enhanced voting rights — for as long as the person or entity that has the status of Declarant owns units in the property.

    To resolve the arguable ambiguity in this phrase, we consider not just the language of this provision, but the larger context in which it appears, as well as the apparent purposes underlying the designation of “Declarant.” (Starlight Ridge, supra, 177 Cal.App.4th at p. 447 [“`We consider the contract as a whole and construe the language in context, rather than interpret a provision in isolation. [Citation.]'”]; Civ. Code, § 1647 [permitting court to consider circumstances under which contract was made and the matter to which it relates].) We also may consider any extrinsic evidence bearing on the interpretation of this provision, but there is virtually none relevant to this specific issue. (Winet, supra, 4 Cal.App.4th at p. 1165.)

    161*161 We conclude that the language and structure of CC&R’s section 1.15 supports the second interpretation, not the more restrictive one that the trial court adopted. First, if the intent of the CC&R’s was to restrict the status of “Declarant” only to India Street or its direct assignees, then the inclusion of the word “initially” would have been superfluous; “Declarant” could simply have been defined as “India Street, its successors and its assignees.” The term “initially” is a specific modifier that was presumably included for a reason. (See, e.g., Civ. Code, § 1641 [contract should be read as whole “so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other”]; Advanced Network, Inc. v. Peerless Ins. Co. (2010) 190 Cal.App.4th 1054, 1063-1064 [119 Cal.Rptr.3d 17] (Advanced Network) [“`We must give significance to every word of a contract, when possible, and avoid an interpretation that renders a word surplusage.’ [Citation.]”].) As written, nothing in the definition limits the application of “initially” only to “India Street.” If the latter was intended, one reasonably might have expected the definition to state, “… initially India Street, and thereafter, its successors, and any person to which it shall have assigned its rights.”

    Second, another provision in the CC&R’s clarifies that the status of Declarant may be conveyed to entities other than a direct assignee of India Street. CC&R’s section 7.03 provides that “[t]he rights of Declarant hereunder and elsewhere in these Restrictions may be assigned by Declarant to any successor in interest to any portion of Declarant’s interest in any portion of the property by a recorded written assignment.” (Italics added.) This language, although somewhat dense and cumbersome, specifies that the “Declarant” (and not solely India Street) may assign the Declarant’s rights to any successor in interest. In our view, this provision, read together with CC&R’s, section 1.15, shows that the status of Declarant could be held by direct assignees of India Street, or by assignees of an assignee of India Street. As long as the assignor is itself the Declarant, then the Declarant’s rights may be conveyed consistent with the CC&R’s.

    Third, this broader interpretation is consistent with the purposes of the position of Declarant and the role that the person or entity holding that position would play in the successful development of MetroWork. The apparent purpose for initially making India Street the Declarant was to allow it to manage and operate MetroWork during the developmental stages, and to maximize the return on its investment until all of the condominium units were sold to others. It is reasonable that a lender providing financing for the project would want the deed to include the Declarant’s rights so that, in the event of a default, the lender would be in a position to protect, and maximize the value of, its collateral pending the further sale of the foreclosed units. Polger, India Street’s attorney, acknowledged as much. The lender, a bank, is principally concerned with recouping the loan on which the debtor has defaulted, and may not be in a position to manage a large development on a 162*162 day-to-day basis after a default. Accordingly, as happened here, the bank would logically want to sell the collateral as quickly as possible, and for as great a return as possible, perhaps before the development is completed. For these reasons, it is reasonable for the CC&R’s to authorize the transfer of the Declarant’s powers and rights to an entity other than a direct assignee of India Street, to assure that the Declarant’s role is filled for as long as might be necessary to ensure the successful completion of the project.

    Having determined that the CC&R’s authorize the assignment of the Declarant’s rights to entities other than a direct assignee of India Street’s, we next address whether PV Little Italy in fact acquired the Declarant’s rights, including Class B voting rights, from Oreo, or whether, as the trial court concluded, PV Little Italy could not have acquired Class B voting rights because it was “an unaffiliated owner.”

    PV Little Italy contends that because the transfer from the trustee to Oreo included all of the Declarant’s rights, and Oreo in turn assigned any and all such rights to PV Little Italy, PV Little Italy became the Declarant. In other words, PV Little Italy maintains that the status of Declarant, and all of the Declarant’s rights, including Class B voting rights, were simultaneously transferred to Oreo, and then to PV Little Italy, so there was no sale of any unit by the Declarant to an “unaffiliated” third party. India Street does not address PV Little Italy’s “simultaneous transfer” theory at all. Rather, it simply parrots the trial court’s conclusion that because PV Little Italy is neither affiliated with, nor an express assignee of, India Street, it could not have acquired any Declarant’s rights.

    PV Little Italy has the better argument. First, we have concluded that the trustee obtained the Declarant’s rights upon foreclosure after India Street’s default, and that the CC&R’s authorize the assignment of the Declarant’s rights by the Declarant — whichever entity that might be — to future successors in interest. That is precisely what occurred here, in the successive transfers after the foreclosure. At KeyBank’s direction, at the trustee’s sale, the trustee conveyed to Oreo “all of its right, title and interest” in the foreclosed units of MetroWork, “[t]ogether with all of the property set forth” in an attachment to the trustee’s deed upon sale, which specifically included a description of the Declarant’s rights. This conveyance was a “unified sale,” meaning it was intended to include “all real property and personal property” covered by the security interest created by the Trust Deed. (See Cal. U. Com. Code, § 9604, subd. (a)(1)(B) [authorizing unified sale].) Thereafter, Oreo conveyed to PV Little Italy by grant deed all of its rights in the foreclosed units, and separately but simultaneously assigned to PV Little Italy, all of its Declarant’s rights. Consequently, PV Little Italy was not a third party purchaser of the foreclosed units, but rather, an assignee of the Declarant. As such, it acquired rights and property from Oreo as the Declarant.

    163*163 As we have explained, the conveyance by the existing Declarant to another entity of all units owned by the Declarant, together with all of the Declarant’s rights, is a transaction that section 7.03 of the CC&R’s expressly authorizes. In our view, this is an entirely different type of transaction from that discussed in CC&R’s section 2.05, which concerns only the sale of a unit owned by Declarant to an “unaffiliated third party.” We must view CC&R’s section 2.05 in the context of the entire agreement, and construe the instrument in a manner that gives effect to all of its provisions. (See Jones v. Jacobson (2011) 195 Cal.App.4th 1, 18 [125 Cal.Rptr.3d 522] [“`We must view the language of a contract as a whole … [and] we should give effect to every provision and avoid rendering any part of an agreement surplusage.'”].) The term “unaffiliated third party” in CC&R’s section 2.05 logically cannot mean “unaffiliated with India Street.” Rather, it must mean “unaffiliated with the Declarant.” Otherwise, the power of assignment in CC&R’s section 7.03 (and § 1.15 as well, as we have interpreted it here) would be rendered a nullity.

    For these reasons, CC&R’s section 2.05 does not come into operation when the Declarant is conveying all of the units that it owns to another entity that will itself become the Declarant as a result of the conveyance. If, for example, Oreo had conveyed 12 of the foreclosed units to PV Little Italy, together with the Declarant’s rights, but sold the remaining four foreclosed units to some other entity that had no affiliation to Oreo, no Declarant’s rights, and no Class B voting rights, would attach to those latter four units. Rather, the new owner of those units would have Class A membership in the Association only, pursuant to CC&R’s section 2.05. But PV Little Italy would be the new Declarant, and would possess Class B voting rights, as Declarant, to the 12 units it acquired.

    The fatal flaw in India Street’s argument is that it attempts to rewrite the CC&R’s so that only India Street or its direct assignee can be “Declarant.” This is reflected in India Street’s brief on appeal, where it states, “The CC&Rs expressly granted Class B membership voting rights exclusively to India Street (or its affiliate or direct assignee).” (Italics added.) Section 7.03 of the CC&R’s proves that statement to be inaccurate. Similarly, India Street claims that “India Street’s Class B membership voting … rights” would terminate either upon “India Street’s divestiture of its entire ownership in its units or (2) India Street’s sale of a unit to an `unaffiliated third party.'” (Italics added.) However, CC&R’s section 2.05 nowhere mentions the words “India Street.” Rather, it uses the term “Declarant,” and as we have seen, the “Declarant” can be India Street, its direct assignees, or the assignees of its assignees.

    (9) Accordingly, when Oreo simultaneously conveyed all of its Declarant’s rights to PV Little Italy, PV Little Italy acquired those rights, 164*164 including the Class B voting rights, pursuant to sections 1.15 and 7.03 of the CC&R’s. The consequences that arise when a Declarant sells a unit to an unaffiliated third party, as set forth in CC&R’s section 2.05, thus never arose on that transaction. For this reason, the trial court’s ruling that PV Little Italy acquired no Declarant’s rights, and no Class B voting rights as the Declarant, was erroneous.

    IV. CONCLUSION
    The order of the trial court is reversed. PV Little Italy shall recover its costs on appeal.

    Huffman, Acting P. J., and Haller, J., concurred.

    [1] Further statutory references are to the Corporations Code unless otherwise specified.

    Section 7616, subdivision (a) requires that “[u]pon the filing of an action therefor by any director or member or by any person who had the right to vote in the election at issue, the superior court of the proper county shall determine the validity of any election or appointment of any director of any corporation.”

    [2] We use the term “Retail Units” to readily distinguish the Anthology units from the office condominium units in the project, and to be consistent with the trial court’s usage of that term. In doing so, we do not attach any particular legal significance to that terminology.

    [3] No explanation is given for why two deeds of trust were recorded for this transaction.

    [4] The PVLI Assignment Agreement recites that Oreo first entered into a purchase agreement for the foreclosed units with PacVentures, Inc., the managing member of PV Little Italy, which in turn assigned that agreement to PV Little Italy. PV Little Italy denies that this was a two-step sale, and the grant deed to PV Little Italy suggests that whatever transactions may have taken place were intended to be part of a single conveyance from Oreo to PV Little Italy. Since India Street did not raise a legal issue in the trial court based on whether this conveyance occurred in one or two transactions, and does not do so on appeal, we accept on this record PV Little Italy’s representation that it simultaneously acquired both the foreclosed units and assignment of the Declarant’s rights directly from Oreo.

    [5] India Street also asserts that the order is not appealable as an injunction because it was merely a “determination as to the rights of parties to exercise Class B voting rights” and did not “prohibit or mandate action by any party.” Plainly, that is not the case. The order required the prior board members to reassume control and directed the Association to hold a new election. India Street further suggests that the order is not an injunction because it did not “prohibit or mandate action on the part of [PV Little Italy].” However, the law defines injunctions as orders requiring “a person” to do or not to do something. (Code Civ. Proc., § 525; Luckett, supra, 161 Cal.App.4th at p. 84.) There is no requirement that the “person” whom the order directs to act be a particular party.

    [6] Although the Association was a party defendant in the proceedings in the trial court, it expressly took no position as to whether India Street or PV Little Italy possesses the Declarant’s rights.

    [7] For this reason, India Street’s assertion that KeyBank never objected to any exercise by India Street of the Declarant’s rights is not relevant to determining whether those rights were reconveyed. Prior to the foreclosure sale, KeyBank had no basis for objecting to India Street’s exercise of those rights in the normal course of its role as Declarant, as long as doing so did not impair KeyBank’s security interest. (See, e.g., Trust Deed, §§ 2.6, 5.6) Although India Street also claims that KeyBank raised no objection to India Street’s exercise of Class B voting rights or Declarant’s rights after the foreclosure sale, there is no evidence that India Street actually exercised those rights after April 10, 2009, the date on which the trustee’s deed upon sale was recorded.

    [8] India Street’s assertion that KeyBank did not expressly “reserve” any security interest in the Declarant’s rights upon reconveyance is, therefore, beside the point. It is undisputed that all of those rights were conveyed to KeyBank in the Trust Deed. Under the terms of the KeyBank loan, any part of that security interest that is not released is retained by KeyBank. No “reservation” of rights was necessary.

    [9] The CC&R’s make clear that no particular meaning or significance may be separately attributed to the mere use of the word “Declarant” in the term “Declarant Units.” (See CC&R’s, § 14.03 [“The Article and Section headings, titles and captions have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction.”].)

    [10] We have found only two uses of the term “Declarant Units” in the CC&R’s. Both provide, in pertinent part, that “the Declarant” and/or its successors and assigns may utilize the Declarant Units for any use permitted by law, including retail, restaurant and club uses. (CC&R’s, §§ 7.02, 8.02, subd. (b).) It may well be that India Street drafted these provisions intending to preserve for itself the right to use, as Declarant, the Retail Units for Anthology or a similar use in perpetuity, but that is not what these provisions say. Rather, these provisions protect the right of the “the Declarant” — whichever entity that might be — to use the Declarant Units in this manner.

    India Street presented no evidence that KeyBank shared India Street’s understanding that Declarant rights always had to attach to the Retail Units, or that ownership of those units was to be reserved solely for India Street and solely in its capacity as Declarant. India Street asserts that KeyBank “agreed that ownership of the Retail Parcel for Anthology’s operations would be reserved solely for India Street or its related entities” (italics added), but points to no language in the CC&R’s, the construction loan, or in the Trust Deed that would substantiate that statement. Even if it is true, nothing in that “agreement” indicates that KeyBank made any representations about the future of the Declarant’s rights, and in any event, the current status of ownership of the Retail Units is consistent with India Street’s assertion: India Street (or an affiliate) owns the Retail Units and is using them for Anthology. However, it does not own them as the Declarant.

    [11] Because the issue is not before us, we express no opinion on the nature of any security interest that Pacific Western may have obtained in the Declarant rights, or what may have happened to that interest once India Street defaulted on the KeyBank loan and the latter foreclosed on its remaining security interests.

    [12] India Street also points to similar subordination language in the Pacific Western deeds of trust. But the effect of such language would have been no different than the effect of the Subordination Agreement with KeyBank. Until such time as India Street defaulted on the KeyBank loan, India Street was free to exercise its Declarant rights in the MetroWork project, as explained above, without interference by either KeyBank or Pacific Western.

    [13] Polger stated in his declaration that he and KeyBank’s representatives discussed the release and “reallocation” of KeyBank’s “collateral,” but he does not state that the release of voting rights was discussed, and in fact, in his deposition testimony, he acknowledged that there was no such specific discussion. He further testified that he “[did not] believe that the bank reconveyed its collateral interest in the declarant rights by virtue of the reconveyance of the deed of trust.”

    [14] To be clear, legal title vested not with KeyBank per se, but with the trustee, for the benefit of KeyBank. In a deed of trust, title passes to the trustee “at the time the instrument is originally executed.” (4 Witkin, Summary of Cal. Law, supra, Security Transactions in Real Property, § 169, p. 969.) Thus, the only entity with the power to convey title to a purchaser at a foreclosure sale is the trustee. (1 Bernhardt et al., Cal. Mortgages, Deeds of Trust, and Foreclosure Litigation (Cont.Ed.Bar 4th ed. 2012) § 2.98, p. 133 (rev. 1/12).) Because KeyBank was not substituted as the trustee after the default, as it was for purposes of the reconveyance, and because it did not receive a deed in lieu of foreclosure (id., § 7.2, pp. 516-517 (rev. 1/12)), it remained only the beneficiary under the Trust Deed, with the power to direct the trustee to sell the property. (See Trust Deed, § 6.3, subd. (g).)

    [15] The CC&R’s, by their terms, contemplate that there could be more than one Declarant at any given time. Specifically, the CC&R’s permit assignment of the Declarant’s rights “in whole or in part.” (CC&R’s, § 1.15, italics added; see § 7.03 [allowing the Declarant to assign its rights “to any successor in interest to any portion of Declarant’s interest in any portion of the property”].) PV Little Italy does not contend that it gained any Declarant rights as to the Retail Units.

    Rick Fowler v. Golden Pacific Bancorp, Inc.

     

    RICK FOWLER, Plaintiff and Respondent, v. GOLDEN PACIFIC BANCORP, INC., Defendant and Appellant.

     

    Summary by Rian W. Jones, Esq.

    Facts

    A corporate director petitioned the court to compel an inspection of corporate books and records pursuant to Corporations Code §§ 1600, et seq.  The corporation opposed the petition arguing that because the director was involved in ongoing litigation with the corporation, the court should curtail his inspection rights because the director could use the information against the corporation in the ongoing litigation. The trial court granted the director’s petition and the corporation appealed.

    Holding

    The court of appeal, in upholding the trial court’s ruling, found that the mere possibility that information could be used adversely to the corporation is not by itself sufficient to defeat a director’s inspection rights found in Corporations Code § 1602. Rather, any exception to the general rule favoring unfettered access must be limited to extreme cases, where enforcing an ‘absolute right of inspection would produce an absurd result, such as when the evidence establishes the director’s clear intent to use the information to breach fiduciary duties or otherwise commit a tort against the corporation.

    California has a strong public policy favoring a broad right of access to corporate records to assist directors in performing their duties in an intelligent and fully informed manner. The statutory scheme gives every director the absolute right to inspect and copy all books, records and documents of every kind, and imposes no “proper purpose” requirement. (Citation omitted.) Because the denial of access to corporate records may operate to deny a director the ability meaningfully to participate in management, any exception to the policy of “absolute” access must be construed narrowly, limited to the most extreme cases where applying the literal meaning of the words would frustrate the manifest purpose of the law.

    ***End Summary*

    No. C092179.
    Court of Appeals of California, Third District, Sacramento.
    Filed June 23, 2022.

    APPEAL from a judgment of the Superior Court of Sacramento County, Super. Ct. No. 34-2019-80003150-CU-WM-GDS, James P. Arguelles, Judge. Reversed with directions.

    Law Office of Stephanie J. Finelli and Stephanie J. Finelli for Defendant and Appellant.

    Tisdale & Nicholson and Michael D. Stein for Plaintiff and Respondent.

     

    CERTIFIED FOR PUBLICATION

     

    KRAUSE, J.

    This is an action to compel an inspection of books and records pursuant to Corporations Code section 1600 et seq.[1] Plaintiff Rick Fowler (Fowler) sought a writ of mandate against defendant Golden Pacific Bancorp, Inc. (Bancorp), to enforce his statutory rights as a director and majority shareholder to inspect corporate books and records. Bancorp opposed the petition, arguing that the trial court should curtail Fowler’s inspection rights because he is involved in ongoing litigation with Bancorp and could use the information to undermine Bancorp’s position in the lawsuit. Unpersuaded that Bancorp met the heavy burden necessary to curtail Fowler’s inspection rights, the trial court granted Fowler’s writ petition.

    Bancorp appealed, contending that the trial court erred by (1) allowing Fowler to submit additional evidence on reply without permitting Bancorp an adequate opportunity to respond; and (2) granting the writ petition and permitting Fowler to have unfettered access to Bancorp’s corporate books and records.

    After we issued an oral argument waiver notice, Bancorp moved to dismiss the appeal as moot. Bancorp asserted that due to the recent acquisition of Bancorp by Social Finance, Inc., Fowler is no longer a Bancorp board member, and therefore it is impossible for this court to grant effective relief. Fowler requested oral argument. We deferred ruling on the motion until after oral argument.

    We shall conclude that the primary issue raised in this appeal is moot because Fowler is no longer a member of Bancorp’s board of directors and therefore has no director’s inspection rights. Nevertheless, we exercise our discretion to reach the merits because it presents an issue of substantial and continuing public interest: whether a director’s “absolute” right of inspection under section 1602 may be curtailed because the director and corporation are involved in litigation and there is a possibility the documents could be used to harm the corporation.

    We shall conclude the mere possibility that information could be used adversely to the corporation is not by itself sufficient to defeat a director’s inspection rights. Rather, any exception to the general rule favoring unfettered access must be limited to extreme cases, where enforcing an “absolute” right of inspection would produce an absurd result, such as when the evidence establishes the director’s clear intent to use the information to breach fiduciary duties or otherwise commit a tort against the corporation.

    We decline to reach the other question referenced in the parties’ briefs concerning Fowler’s inspection rights as a shareholder, because that issue was not resolved by the trial court and the record is insufficiently developed for us to determine whether it is moot. Thus, we shall remand this matter for the trial court to consider whether that issue is moot and, if not, to resolve any remaining disputes in the first instance.

     

    FACTUAL AND PROCEDURAL BACKGROUND

     

    Bancorp was a bank holding company conducting business through its wholly owned subsidiary, Golden Pacific Bank, N.A. Fowler was a member of Bancorp’s board of directors and its largest individual shareholder, holding over 19 percent of the outstanding stock. Fowler also is the chief operating officer of a law firm, Kronick, Moskovitz, Tiedemann & Girard (KMTG).

    In July 2018, Bancorp filed a lawsuit in the Sacramento County Superior Court (case No. 34-2018-00236905) against KMTG, an individual attorney at KMTG, and Fowler (the malpractice lawsuit). The lawsuit arose out of KMTG’s representation of Bancorp in prior litigation against a company called BillFloat, Inc. (the BillFloat litigation). Bancorp’s amended complaint alleges claims against KMTG and its attorney for breach of contract, breach of professional duties, professional negligence, and breach of fiduciary duties in connection with the prosecution and eventual settlement of the BillFloat litigation. Among other things, the complaint alleges that KMTG and the attorney overbilled for services, negligently failed to evaluate and prepare the case for trial, and caused Bancorp to accept a grossly inadequate settlement amount.

    The complaint also alleges claims against Fowler for negligence, breach of fiduciary duty, concealment, and fraud based on his actions as a Bancorp director. Specifically, it asserts that Fowler breached his fiduciary duties by persuading Bancorp to hire KMTG for the BillFloat litigation despite knowing that KMTG was not competent to handle the litigation. It further alleges that Fowler used his position as director to persuade Bancorp to settle the BillFloat litigation for a grossly inadequate amount because Fowler knew KMTG had failed to conduct sufficient discovery and investigation to prepare the case for trial.

    In September 2018, two months after Bancorp filed the malpractice lawsuit, Fowler delivered to Bancorp a written demand to inspect and copy the following books and records pursuant to section 1600 et seq.:
    1. A list of the names, addresses, e-mail addresses, and holdings of all Bancorp shareholders;

    2. A breakdown of the expense and income balance sheet items labeled “Other” for Bancorp and its wholly owned subsidiary bank;

    3. A breakdown of where on the 2017 and 2018 consolidated financial statements the BillFloat settlement payment was booked, and where KMTG’s legal fees for 2016, 2017, and 2018 were booked;
    4. Any change in control/severance/golden parachute agreements for Bancorp-affiliated parties;

    5. Any resolutions approving change in control agreements or an increase in director fees and/or bonuses for 2016, 2017, and 2018;

    6. Any documents evidencing payment of the personal legal fees of Bancorp president and chief executive officer, Virginia Varela, in 2016, 2017, and 2018;

    7. The loan file pertaining to the Axis Energy SBA loan; and

    8. The bank’s accounting books and records, and meeting minutes for its board and committees from September 2017 through the date of the request.

    Fowler asserted that, as a director, he had an “absolute right” to inspect the records under section 1602. Bancorp, however, refused to permit inspection, citing conflicts of interest and concerns that Fowler was seeking the records for an improper purpose, namely, to undermine Bancorp’s position in the malpractice lawsuit.

    Fowler did not immediately seek a peremptory writ to enforce his statutory inspection right. Instead, in November 2018, Fowler served Bancorp with a request for production of documents in the malpractice lawsuit seeking records substantially similar to those sought in his inspection demand letter.

    When Bancorp refused to produce the requested documents, Fowler filed a motion to compel. In support of his motion, Fowler argued that the requested documents were relevant to Bancorp’s claims and his defenses in the malpractice lawsuit. Bancorp opposed the motion, asserting, inter alia, that most of the records Fowler requested were irrelevant to the lawsuit and would only be of interest in his capacity as a “disgruntled shareholder/director.” The court agreed with Bancorp. It denied the motion to compel, concluding that the document requests were overbroad, invaded third party privacy rights, and sought information that was not relevant.

    Shortly thereafter, Fowler filed this action for a peremptory writ of mandate to enforce his statutory right to inspect Bancorp’s books and records. His amended petition alleges that he has an “absolute right” as a director and shareholder to inspect and copy the records pursuant to sections 1600 and 1602. In a supporting declaration, Fowler stated that he requested the inspection to protect his interests as Bancorp’s single largest shareholder and to fulfill his fiduciary duty as a director to stay informed about Bancorp’s financial condition and operations.

    Bancorp opposed the writ petition, asserting that inspection should be denied because Fowler is not a disinterested director and his only motive in requesting the records is to “dismantle and undermine” Bancorp’s lawsuit against him and the law firm for which he works. Bancorp characterized the petition as an attempted “end-run” around the adverse discovery ruling in the malpractice lawsuit.

    To support its claim that Fowler was requesting the documents for an improper purpose, Bancorp submitted a declaration from Bancorp board member David Roche.[2] Roche declared, inter alia, that (1) Fowler is a party to ongoing litigation with Bancorp in which it is alleged Fowler breached his fiduciary duties; (2) Fowler repeatedly stated his desire to have the litigation dismissed; (3) Bancorp’s board believes that allowing Fowler to inspect and copy the requested records would “severely undermine” its position in the litigation; (4) Fowler previously sought to compel discovery of the same records in the lawsuit, but his request was denied; (5) it was only after the adverse discovery ruling that Fowler filed the writ petition; and (6) Fowler never previously made a demand to inspect Bancorp’s corporate records.

    In reply, Fowler filed a supplemental declaration responding to the factual assertions made in Bancorp’s opposition papers. Fowler declared, “Contrary to [Bancorp’s] supposition about my purpose in filing the Petition, I want to inspect the subject corporate records, especially the financial statements and working papers for these records, among other things, to learn how certain expenses and income items were calculated and what certain large numbers consist of, as well as how the compensation for [Bancorp’s] Chief Executive Officer and its directors is being determined and the basis for and calculations of certain stock transactions with [Bancorp’s] preferred shareholder.”

    In his supplemental declaration, Fowler also addressed why he never previously invoked his statutory right to inspect Bancorp’s corporate records. He explained that before July 2017, he regularly received reports, had frequent exchanges with the chief executive officer and committee chairs, and had unrestricted access to most corporate documents through an online platform. It was only when Bancorp “cut off” his ability to contact employees and access corporate records online that it became necessary for him to invoke his statutory inspection rights.

    The writ petition was heard on March 6, 2019. On the morning of the hearing, Bancorp filed a declaration of Virginia Varela, Bancorp’s president and chief executive officer, which sought to refute various statements in Fowler’s supplemental declaration, including his assertions that (1) he previously had online access to the records discussed in his September 2018 demand; and (2) he was wrongfully denied access to the basic financial information necessary for him to carry out his duties as a board member. The court agreed to consider the Varela declaration to the extent it responded to the factual assertions in Fowler’s supplemental declaration, but refused to consider any new grounds for denying inspection.

    After a hearing, the trial court granted the writ petition. In its ruling, the court agreed with Bancorp that Fowler’s statutory inspection rights are not “absolute.” However, the court ruled that a director’s inspection rights can be curtailed only in “`extreme circumstances'” in which the corporation establishes by a preponderance of the evidence the director’s intent to commit an irremediable tort against the corporation. The court ruled that, notwithstanding the inherent conflict raised by the malpractice lawsuit, “[t]he preponderance of the evidence in this action does not establish Fowler’s intent to commit a tort against [Bancorp], much less one that is irremediable in damages.” The court thus enforced Fowler’s right to inspect the corporate books and records under section 1602.

    Judgment was entered on March 17, 2020. Bancorp filed a timely notice of appeal.

    While the appeal was pending, Bancorp was acquired by Social Finance, Inc. (SoFi), by and through a merger with Gemini Merger Sub, Inc. (Gemini), a temporary subsidiary of SoFi formed solely for that purpose. Pursuant to the terms of the agreement, Gemini was merged into Bancorp, with Bancorp as the surviving corporation. Further, under the agreement, the directors of Gemini became the directors of the surviving corporation. SoFi completed the acquisition of Bancorp on or about February 2, 2022.

     

    DISCUSSION

     

     

    I

    Mootness

     

    As a threshold issue, we consider whether the appeal is moot due to SoFi’s acquisition of Bancorp.

    An appeal becomes moot when the occurrence of an event makes it impossible for the appellate court to grant any effective relief. (Newsom v. Superior Court (2021) 63 Cal.App.5th 1099, 1109.) “`[A]n action which originally was based upon a justiciable controversy cannot be maintained on appeal if the questions raised therein have become moot by subsequent acts or events.'” (Id. at p. 1110.)

    Bancorp argues that this appeal is moot and must be dismissed because, as a result of the acquisition, Fowler is no longer a shareholder or member of Bancorp’s board of directors, and therefore no longer has standing to assert any inspection rights.

    Fowler opposes Bancorp’s motion to dismiss. He argues the case is not moot for several reasons, including that he filed a “dissenter’s right” lawsuit challenging SoFi’s acquisition of Bancorp and seeking a determination of the fair market value of his shares. Further, even if the case has been rendered technically moot, Fowler argues the appeal still should be decided because it concerns an issue of public importance that is likely to recur.

    We agree with Bancorp that the issue of Fowler’s inspection rights as a director is now moot. It is well established that a director’s right to inspect corporate books and records ends upon his or her removal from office. (Chantiles v. Lake Forrest II Master Homeowners Assn. (1995) 37 Cal.App.4th 914, 920 (Chantiles).) A former director has no right to an ongoing and enforceable right to inspect corporate records. (Wolf v. CDS Devco (2010) 185 Cal.App.4th 903, 919 (Wolf).) Here, it is undisputed that, as a result of SoFi’s acquisition, Fowler is no longer a Bancorp director. Thus, Fowler can no longer assert rights as a director to inspect Bancorp’s books and records, rendering the issue moot. (Chantiles, supra, at p. 920; Wolf, supra, at p. 919.)

    Nevertheless, we may exercise our discretion to retain and decide an issue which is technically moot where the issue is of substantial and continuing public interest. (Chantiles, supra, 37 Cal.App.4th at p. 921; accord, La Jolla Cove Motel & Hotel Apartments, Inc. v. Superior Court (2004) 121 Cal.App.4th 773, 781-782.) We do so here. The scope of a director’s inspection rights is one of public importance which we should decide, even if it is technically moot.

    We reach a different conclusion, however, regarding Fowler’s claim to shareholder inspection rights under section 1600, subdivision (a). This issue was not resolved by the trial court and the additional facts before us are inadequate for us to determine whether subsequent events have rendered the issue moot. Accordingly, we shall remand this matter for the trial court to consider whether subsequent events have rendered this issue moot and, if not, to resolve any remaining disputes in the first instance.

     

    II

    Bancorp’s Request for Additional Briefing

     

    Turning to the merits, we first address Bancorp’s argument that the trial court erred by allowing Fowler to provide additional evidence in his reply papers while denying Bancorp a fair opportunity to respond.

    As described above, in reply to Bancorp’s opposition, Fowler submitted a supplemental declaration giving his reasons for demanding an inspection and explaining why he had not made similar demands in the past. Bancorp objected to the additional evidence and, in the alternative, requested additional time to file a sur-reply brief addressing Fowler’s new evidence. The court overruled Bancorp’s objections and denied its request to file a sur-reply brief.

    We review the trial court’s ruling for an abuse of discretion (Alliant Ins. Services, Inc. v. Gaddy (2008) 159 Cal.App.4th 1292, 1299), and find no abuse here. As the trial court held, “Although Fowler is the petitioner in this proceeding, it was not his initial burden to provide reasons for the inspection.” Unlike director inspection rights in other states, “[t]he California statutory scheme does not impose a `proper purpose’ requirement. . . .” (Havlicek v. Coast-to-Coast Analytical Services, Inc. (1995) 39 Cal.App.4th 1844, 1851 (Havlicek); cf. Del. Code Ann. tit. 8, § 220.) Thus, Fowler was not required in his moving papers to articulate a proper purpose for the inspection reasonably related to his interests as a director. He merely needed to show that he was a director and that he made a demand for inspection, which was refused. (§§ 1602, 1603.)

    When Fowler made that showing, the burden shifted to Bancorp to show why the inspection should be curtailed by “just and proper conditions.” (§ 1603; Havlicek, supra, 39 Cal.App.4th at p. 1856; Saline v. Superior Court (2002) 100 Cal.App.4th 909, 915 (Saline).) In attempting to meet that burden, Bancorp presented evidence to show that Fowler was seeking the documents for an improper purpose. The trial court correctly ruled that Fowler was entitled to respond with countervailing evidence in his reply.

    Bancorp argues that because the court allowed Fowler to refute the evidence presented in the opposition, the court was obliged to give Bancorp the same opportunity. But Bancorp was given an opportunity to refute the additional evidence presented in the reply. On the morning of the hearing, Bancorp filed the Varela declaration to “refute many of the misstatements and omissions” in Fowler’s supplemental declaration. The court considered that declaration to the extent it responded to the factual assertions in the supplemental declaration. The record shows that Bancorp had a fair opportunity to respond. Bancorp has failed to demonstrate that the trial court abused its discretion in refusing to allow it additional time to file a sur-reply, much less that it was prejudiced by the refusal.

     

    III

     

    Fowler’s Right to Inspect Corporate Records

     

    Bancorp next argues that the trial court erred in granting the petition to enforce Fowler’s right to inspect corporate books and records under section 1602. We disagree.

     

    A. The scope of a director’s inspection rights

     

    In reviewing the trial court’s judgment granting a petition for writ of mandate, we apply the substantial evidence test to the trial court’s factual findings. (Vasquez v. Happy Valley Union School Dist. (2008) 159 Cal.App.4th 969, 980.) Legal issues, such as statutory interpretation, are reviewed de novo. (Ibid.) The scope of a director’s right to inspect corporate documents is a question of law subject to de novo review. (Saline, supra, 100 Cal.App.4th at p. 913.)

    In construing section 1602, as with any statute, our task is to ascertain the intent of the lawmakers so as to effectuate the purpose of the law. (Sierra Club v. Superior Court (2013) 57 Cal.4th 157, 165.) We begin “with the words of the statute because they generally provide the most reliable indicator of legislative intent.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 871.) If the language contains no ambiguity, we generally presume the Legislature meant what it said, and the plain meaning controls. (Garcetti v. Superior Court (2000) 85 Cal.App.4th 1113, 1119.)

    Section 1602, which governs the right of inspection, provides in relevant part: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director and also of its subsidiary corporations, domestic or foreign.” (§ 1602.) By its plain terms, section 1602 establishes a broad right of inspection. (Havlicek, supra, 39 Cal.App.4th at p. 1852.) The Legislature’s choice of the word “absolute” suggests a right “having no restriction, exception, or qualification.” (Merriam-Webster Unabridged Dict. Online (2022) [as of June 10, 2022], archived at .) This “absolute” right reflects a legislative judgment that directors are better able to discharge their fiduciary duties to the corporation and its shareholders “if they have free access to information concerning the corporation.” (Havlicek, at p. 1852; Hartman v. Hollingsworth (1967) 255 Cal.App.2d 579, 581-582.)

    Nevertheless, decisional authority establishes that a director’s right to inspect documents is subject to exceptions. (Havlicek, supra, 39 Cal.App.4th at p. 1855.) While the “absolute right” to inspect documents is the general rule in California, courts have held that the literal meaning of the words of the statute may be disregarded where necessary to avoid absurd results. (Havlicek, at p. 1856; see also Anderson Union High School Dist. v. Shasta Secondary Home School (2016) 4 Cal.App.5th 262, 279 [the language of a statute should not be given a literal meaning if doing so would result in absurd consequences].) Thus, a trial court may impose “just and proper conditions” upon a director’s inspection rights in appropriate cases. (§ 1603, subd. (a);[3] Havlicek, at p. 1856; Saline, supra, 100 Cal.App.4th at p. 914.)

    The full scope of exceptions to a director’s “absolute” inspection rights remains unsettled. But our colleagues in other appellate districts have identified certain circumstances in which inspection rights may be curtailed.

    In Chantiles, supra, 37 Cal.App.4th 914, the Fourth Appellate District, Division Three, held that the “absolute” right of a homeowners association director to access records may be limited to preserve the constitutional rights of members to keep their voting decisions private. (Id. at pp. 918, 926.) In Chantiles, a director who believed that he had been shortchanged in the tabulation of proxy votes, filed a petition to inspect and copy all the ballots cast in the association’s annual election. (Id. at p. 919.) But the trial court refused to permit the director unfettered access to the ballots. Instead, the court established a procedure whereby the director’s attorney could inspect the ballots while preserving the secrecy of how each individual member voted. (Id. at pp. 920, 926.) The appellate court affirmed. It held that the trial court had properly balanced the competing interests and determined that the director’s statutory right to an unqualified inspection must yield to the members’ constitutional right of privacy. (Id. at pp. 925-926; but see conc. opn. of Crosby, J. at pp. 927-929 [concluding damages, rather than a rejection of inspection rights, is the appropriate remedy for misapplication of corporate records].)

    In Havlicek, the Second Appellate District, Division Six, considered whether the trial court properly denied inspection of corporate books and records by two dissident directors who were opposed to a corporation’s pending merger. (Havlicek, supra, 39 Cal.App.4th at pp. 1848-1850.) The directors asserted an absolute right to inspect the records, but the corporation refused to permit access because it suspected the directors might use the documents to establish a competing business. (Id. at pp. 1849-1850.) The directors filed a lawsuit to enforce their inspection rights, which the trial court denied. (Id. at p. 1850.) The appellate court reversed and remanded. (Id. at pp. 1856-1857.) It concluded that the trial court erred in refusing to grant the directors, “at the very least, an `inspection with just and proper conditions.'” (Id. at p. 1848.)

    For guidance on remand, the court explained that because the right of inspection arises out of a director’s fiduciary duty—a duty to act with honesty, loyalty, and good faith in the best interests of the corporation (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1037)—courts may limit inspection rights when a director intends to misuse those rights to harm the corporation. (Havlicek, supra, at pp. 1852, 1855-1856.) The court offered the following hypothetical to illustrate the point: “A disgruntled director unambiguously announces his or her intention to violate his or her fiduciary duties to the corporation and the shareholders by using inspection rights to learn trade secrets, gain access to confidential customer lists, and compete with the corporation. In this situation, does the Legislature want the judiciary to come to the aid of the disgruntled director, enforce the `absolute right’ to inspect and help the director commit a tort against the corporation? No.” (Id. at pp. 1855-1856.) Thus, the court concluded, when the evidence shows an unfettered inspection will result in a tort against the corporation, the trial court may “exercise its broad discretion under section 1603, subdivision (a) to fashion a protective order imposing just and proper conditions on the inspection.” (Id. at p. 1856.)

    In Saline, supra, 100 Cal.App.4th 909, the Fourth Appellate District, Division Three, followed Havlicek in concluding that a court may place restrictions on a director’s access to corporate records when there is evidence the director intends to use the documents to commit a tort against the corporation. (Saline, at p. 914.) However, the court clarified that this principle should “only be applied in extreme circumstances where a preponderance of the evidence establishes the director’s clear intent to use the documents to commit an egregious tort—one that cannot be easily remedied by subsequent monetary damages—against the corporation.” (Id. at p. 915.)

    The Saline court refused to limit the inspection rights of a director despite evidence that the director had a conflict of interest, breached fiduciary duties, breached a confidentiality agreement, and publicly defamed management, because there was no evidence to show the director intended to use the documents obtained to “disclose trade secrets, compete with or otherwise harm” the corporation.[4] (Saline, supra, 100 Cal.App.4th at pp. 912, 914.) The court reasoned: “Only issues related to the prevention of a tort resulting from [the director’s] inspection of the documents—not the entirety of his conduct as a director—are relevant to the question of whether limiting [his] access to corporate documents was appropriate.” (Id. at p. 914.) Without evidence that the director intended to use the documents to commit a tort against the corporation, the court held it was improper to limit the director’s access. (Id. at pp. 914-915.)

    In Tritek Telecom, Inc. v. Superior Court (2009) 169 Cal.App.4th 1385 (Tritek), a different division of the Fourth District (Division One) considered a related question: whether a director’s right to inspect corporate records should include attorney-client communications generated in defense of the director’s own suit for damages against the corporation. (Id. at p. 1387.) The court decided it should not. (Id. at pp. 1391-1392.) In that case, a disgruntled director sought to enforce his inspection rights after suing the corporation to vindicate his individual rights as a shareholder. (Id. at pp. 1387-1388.) The corporation did not dispute the director’s right to inspect corporate documents generally, but objected that the right of inspection should not include documents protected by the attorney-client privilege. (Id. at p. 1391.) The Court of Appeal agreed, concluding that a director’s inspection rights may be restricted when the director intends to misuse those rights to access privileged documents that were generated in defense of a suit for damages that the director filed against the corporation. (Id. at pp. 1391-1392.)

    Here, in ruling on Fowler’s petition, the trial court followed Saline, supra, 100 Cal.App.4th 909, and concluded that a director’s right to inspect corporate records generally may be curtailed only in “extreme circumstances” in which the corporation establishes by a preponderance of the evidence the director’s intent to use the information to commit a tort against the corporation that cannot easily be remedied in a damages action. The trial court rejected Bancorp’s claim that the mere fact Fowler was involved in litigation with the corporation should defeat his inspection rights.

    Bancorp argues that the trial court interpreted the scope of a director’s inspection rights too broadly. Bancorp argues that a court may deny access to corporate records whenever the director has a conflict of interest and there is a mere possibility the documents could be used to harm the corporation. We disagree.

    Like the trial court, we conclude that exceptions to the general rule favoring unfettered access should only be applied in “extreme” cases where enforcing the “absolute” right of inspection would otherwise produce an absurd result. (Saline, supra, 100 Cal.App.4th at p. 915; Havlicek, supra, 39 Cal.App.4th at p. 1856.) We reach this conclusion for several reasons.

    California has adopted a strong public policy favoring a broad right of access to assist directors in performing their duties in an intelligent and fully informed manner. (Saline, supra, 100 Cal.App.4th at p. 914; see also Chantiles, supra, 37 Cal.App.4th at p. 929 (conc. opn. of Crosby, J.).) The statutory scheme gives “`[e]very director . . . the absolute right . . . to inspect and copy all books, records and documents of every kind,’ “and imposes no “`proper purpose'” requirement. (Havlicek, supra, 39 Cal.App.4th at p. 1851; § 1602.) Because the denial of access to corporate records may operate to deny a director the ability meaningfully to participate in management, any exception to the policy of “absolute” access must be construed narrowly, limited to the most extreme cases where applying the literal meaning of the words would frustrate the manifest purpose of the law. (Havlicek, at pp. 1855-1856; see also Anderson Union High School Dist. v. Shasta Secondary Home School, supra, 4 Cal.App.5th at p. 279 [absurdity exception should be used only in extreme cases].)

    Second, to construe the exception broadly would risk allowing the exception to swallow the rule. Differences of opinion invariably will arise among corporate directors. If a minority director can lose access to corporate records merely because the director is deemed hostile or adverse to management, the exception could remove the very protections that the “absolute right” of inspection was intended to supply. This invariably would impede inspections pursued for indisputably proper purposes, such as ascertaining the condition of corporate affairs or investigating possible mismanagement. (See, e.g., Henshaw v. American Cement Corp. (Del.Ch. 1969) 252 A.2d 125, 129.)

    Third, applying the exception narrowly does not generally leave the corporation unprotected. If a director abuses a right of inspection to the detriment of the corporation, the corporation normally will have an adequate remedy in the form of an action against the director for breach of fiduciary duty. (Saline, supra, 100 Cal.App.4th at p. 916; Chantiles, supra, 37 Cal.App.4th at p. 929 (conc. opn. of Crosby, J.).)

    We therefore agree with the Court of Appeal in Saline that the mere possibility that the information could be used to harm the corporation is not sufficient to defeat a director’s otherwise “absolute” inspection rights. (Saline, supra, 100 Cal.App.4th at p. 914.) While inspection rights may be curtailed when the corporation adduces evidence that a director intends to use those rights to violate his or her fiduciary duties or otherwise commit a tort against the corporation, we are not persuaded that a director’s right of inspection must be denied solely because the director has a conflict of interest or is embroiled in litigation with the corporation. Allowing a director to inspect records under such circumstances does not necessarily lead to an absurd result. To conclude otherwise would defeat the purpose of section 1602.

    The cases on which Bancorp relies, Wolf, supra, 185 Cal.App.4th 903, and Tritek, supra, 169 Cal.App.4th 1385, are easily distinguishable. Wolf involved an inspection demand by a plaintiff who formerly served as a director of the defendant corporation. (Wolf, at pp. 906-907, 919.) Because the plaintiff was no longer a director, the appellate court held that the plaintiff did not have standing to enforce any inspection rights.[5] (Id. at p. 919.) The language in Wolf stating that the plaintiff’s threat to sue the corporation “severely undermined” his inspection rights was unsupported dictum, which we find neither compelling nor persuasive. (Ibid.)

    Bancorp similarly points to a statement in Tritek suggesting that a court may limit a director’s inspection rights whenever “the director’s loyalties are divided and documents obtained by a director in his or her capacity as a director could be used to advance the director’s personal interest in obtaining damages against the corporation.” (Tritek, supra, 169 Cal.App.4th at p. 1391.) But Bancorp’s argument takes this language out of context and ignores the holding of the case, which is that a director does not have the right to access privileged documents generated in defense of a suit for damages that the director filed against the corporation. (Id. at pp. 1391-1392.) In such a scenario, the director’s intent to misuse the information to harm the corporation is self-evident. Therefore, consistent with the holdings in Havlicek, supra, 39 Cal.App.4th at pages 1855-1856, and Saline, supra, 100 Cal.App.4th at pages 914-915, it was proper to limit the director’s inspection rights to exclude the privileged documents. There has been no similar showing here—that Fowler is seeking access to documents protected by the attorney-client privilege. Thus, Tritek‘s holding simply does not apply under the facts of this case.

    Bancorp also argues the trial court interpreted Fowler’s inspection rights too broadly by requiring Bancorp to show Fowler intended to use the information to commit “irremediable” harm. It contends that a threatened “irremediable” tort against the corporation is merely an “example of when a director’s inspection may be curtailed,” and not a requirement to curtail a director’s inspection rights. Bancorp argues the court should have asked only whether Fowler intended to use the information to harm the corporation.

    We find it unnecessary to reach this issue because the trial court expressly found that the “preponderance of the evidence in this action does not establish Fowler’s intent to commit a tort against [Bancorp,] much less one that is irremediable in damages.” Thus, even under a more lenient standard, Bancorp failed to carry its burden.

    In sum, this is not a case in which the director’s right to inspect corporate records was alleged to conflict with constitutional or other statutory protections, as in Chantiles, supra, 37 Cal.App.4th 914. Nor is it a case involving access to privileged documents generated in defense of a suit for damages that the director filed against the corporation, as in Tritek, supra, 169 Cal.App.4th 1385. The only accusation in this case was that Fowler intended to breach his fiduciary duties in some fashion by using the records sought adversely to the corporation in the malpractice lawsuit. Under these circumstances, the trial court properly considered whether Bancorp showed by a preponderance of the evidence that a protective order was necessary to prevent Fowler from breaching his fiduciary duties or otherwise committing a tort against the corporation. (Saline, supra, 100 Cal.App.4th at p. 915; Havlicek, supra, 39 Cal.App.4th at p. 1856.)

     

    B. Sufficiency of the evidence for the trial court’s ruling

     

    We next consider the trial court’s finding that Bancorp failed to make a sufficient evidentiary showing to justify restrictions in this case. This presents a question of fact. (Saline, supra, 100 Cal.App.4th at p. 913; Hall v. Regents of University of California (1996) 43 Cal.App.4th 1580, 1586; Hartman v. Bandini Petroleum Co. (1930) 107 Cal.App. 659, 661.)

    Bancorp argues that it submitted significant evidence demonstrating Fowler intended to harm the corporation by using the documents to undermine the claims against him in the malpractice litigation. The trial court disagreed, finding that Bancorp failed to carry its burden. Although the court acknowledged the divergence of interests between Fowler and Bancorp with respect to the malpractice lawsuit,[6] the court was not persuaded that Fowler’s inspection was motivated by an improper purpose or that he intended to breach fiduciary duties or otherwise commit a tort against the corporation.

    It is not our function on appeal to reexamine whether a preponderance of the evidence supports Bancorp’s position. We are bound by the fundamental appellate rule that the judgment of the lower court is presumed correct and that all intendments and presumptions will be indulged in favor of its correctness. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) The appellant has the burden to overcome that presumption and show reversible error. (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610.) Where, as here, the issue on appeal turns on a failure of proof, the question for a reviewing court is whether the evidence compels a finding in favor of the appellant as a matter of law, i.e., whether the evidence was “`”of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.”‘” (Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 466; accord, Almanor Lakeside Villas Owners Assn. v. Carson (2016) 246 Cal.App.4th 761, 769.) Bancorp falls well short of that standard.

    In opposing the petition, Bancorp relied primarily on evidence that Fowler (1) previously breached his fiduciary duties in connection with the BillFloat litigation; and (2) unsuccessfully sought to obtain the same corporate records as part of his discovery in the malpractice lawsuit. The first category of “evidence,” consisting largely of unsupported allegations, had little persuasive value on the question whether Fowler was likely to use the requested corporate records to breach his fiduciary duties or otherwise commit a tort against the corporation. (Saline, supra, 100 Cal.App.4th at p. 914 [only the director’s likely use of the information is relevant, not the entirety of his or her conduct as a director].)

    As to the second category of evidence, Bancorp argues that it proved Fowler’s intent to harm the corporation by using the information to undermine Bancorp’s lawsuit. The trial court, however, found otherwise. It credited Fowler’s declarations that the purpose of the inspection was related to his continuing duties as a member of Bancorp’s board of directors.”[W]e must defer to the trial court’s determinations of credibility.” (Harris v. Stampolis (2016) 248 Cal.App.4th 484, 498.)

    Moreover, even if we were to find that Fowler had an ulterior motive, Bancorp argued, and the trial court in the malpractice lawsuit agreed in its discovery ruling, that the documents Fowler sought were irrelevant to the litigation. Thus, regardless of Fowler’s motives, there is no support for Bancorp’s vague assertion that allowing Fowler access to the records would “severely undermine” its position in the lawsuit. (See Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 357 [doctrine of judicial estoppel prohibits a party from asserting a position that is contrary to a position successfully asserted in the same or some earlier proceeding].)

    On this record, we conclude the trial court did not err in finding Bancorp’s evidence insufficient to curtail Fowler’s “absolute” right to inspect corporate records.

     

    DISPOSITION

     

    Bancorp’s request for judicial notice is granted. Bancorp’s motion to dismiss is denied. The judgment is reversed as moot. This reversal does not imply that the judgment was erroneous on the merits, but is solely for the purpose of returning jurisdiction over the case to the trial court by vacating the otherwise final judgment solely on the ground of mootness. On remand, the trial court is directed to dismiss Fowler’s claim to a director’s right of inspection under section 1602 as moot. The trial court is directed to consider whether Fowler’s claim to a shareholder’s right of inspection under section 1600, subdivision (a) is also moot and, if not, to resolve any remaining disputes between the parties relating to that issue. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

    ROBIE, Acting P. J. and HULL, J., concurs.

    [1] Undesignated statutory references are to the Corporations Code.

    [2] The trial court sustained evidentiary objections to the Roche declaration. The rulings on those objections are not challenged in this appeal.

    [3] Section 1603, subdivision (a) provides, in part: “Upon refusal of a lawful demand for inspection, the superior court of the proper county, may enforce the right of inspection with just and proper conditions or may, for good cause shown, appoint one or more competent inspectors or accountants to audit the books and records kept in this state and investigate the property, funds and affairs of any domestic corporation or any foreign corporation keeping records in this state . . . and to report thereon in such manner as the court may direct.”

    [4] The trial court’s order refused the director access to documents protected by the attorney-client privilege and work product doctrine, and the director did not challenge that condition. (Saline, supra, 100 Cal.App.4th at pp. 912-913.)

    [5] In the course of explaining the plaintiff’s lack of standing, the court in Wolf suggested that a director’s inspection rights may be denied if the director is not “disinterested.” (Wolf, supra, 185 Cal.App.4th at p. 919.) We find this language to be erroneous dictum to the extent it suggests a director’s inspection rights may be denied based merely on the existence of a conflict of interest or adversarial relationship between the director and the corporation.

    [6] We grant Bancorp’s request to take judicial notice that on September 21, 2021, Fowler filed a lawsuit against Bancorp challenging the proposed SoFi merger/acquisition, but we take notice of it only for purposes of the mootness claim, and not for purposes of judging the sufficiency of the evidence. (California School Bds. Assn. v. State of California (2011) 192 Cal.App.4th 770, 803; Duronslet v. Kamps (2012) 203 Cal.App.4th 717, 737.)

    Using Drones for Inspections

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    By Lindsay J. Anderson, Esq.

    Four Considerations Before Using Drones for Community Association Inspections

    Drones, also known as unmanned aircraft systems, are nearly everywhere. Advances in technology have made drones smaller, cheaper, and easier to use, and therefore more accessible to average users.  As drones become more accessible, community associations may wonder whether drones may be used to help conduct inspections of common area components. Drones can provide a host of benefits for associations including, but not limited to, lowered costs because inspections can be completed more quickly, fewer accidents in inspections, and better-quality documentation in the form of video footage.  However, before moving forward with using drones for inspections, boards should contemplate the following considerations and consult with the association’s legal counsel.

    First, laws are still developing in the drone realm.  As of now, drones are primarily regulated by the Federal Aviation Administration (“FAA”).  The FAA requires pilot certification, registration of drones, and a minimum age of pilots if the drone is used for commercial purposes.  There are also strict requirements regarding speed and altitude. The state and municipalities may impose additional requirements.  Associations should be sure to abide by all federal, state, and local requirements for drones.

    Second, associations should craft appropriate policies regarding the use of drones.   Since drones are a relatively new phenomenon, an association’s governing documents may not address the use of drones.  Consultation with the association’s legal counsel is recommended to craft appropriate policies regarding the use of drones, including with respect to notice requirements for inspections.

    Third, using drones for inspections of common area components may give rise to privacy concerns.  In California, laws prohibit entering the airspace of another in order to capture an image or recording of that individual engaging in a private, personal or familial activity without permission.  While an association may intend to use a drone for an inspection of a common area component only, the drone may inadvertently capture a private or family activity which could open the association up to liability.  Rules and policies should be carefully tailored in order to protect the association from liability and owners from unintentional privacy intrusions.  Consultation with legal counsel is also imperative with respect to addressing privacy concerns.

    Fourth, since drone use is still a relatively new endeavor for associations, associations should be sure to consult with their insurance providers to make sure that the association’s policies cover claims arising out of the association’s use of drones.

    While drones may be the wave of the future, associations should proceed with caution before using them for common area inspections.  A careful and thorough examination of the considerations outlined above, coupled with consultation with association counsel and the association’s insurance professional, may help to protect associations from potential liability.

     


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    *This article was originally published in San Diego Community Insider in the Fall 2022 edition and was adapted from the original article, Using Drones For Inspections) as authored by Lindsay J. Anderson, Esq.