Foxgate Homeowners Association v. Bramalea

108 Cal.Rptr.2d 642 (2001)

644*644 Law Offices of Ivan K. Stevenson, Ivan K. Stevenson, Rollin Hills Estate, Jeffrey L. Boyle; Horvitz & Levy, Encino, Barry R. Levy and Jon B. Eisenberg, Oakland, for Defendants and Appellants and for Objector and Appellant.

Robie & Matthai, Pamela E. Dunn, Los Angeles, and Daniel J. Koes for Association of Southern California Defense Counsel as Amicus Curiae on behalf of Defendants and Appellants.

Steiner & Libo, Leonard Steiner and James T. Perez, for Plaintiff and Respondent.

Nancy E. Spero, Topanga; Greines, Martin, Stein & Richland and Marc J. Poster, Beverly Hills, for Beverly Hills Bar Association as Amicus Curiae.

Greines, Martin, Stein & Richland, Beverly Hills, and Robin Meadow for Los Angeles County Bar Association and Dispute Resolution Services, Inc., as Amici Curiae.

James R. Madison, Menlo Park, for California Dispute Resolution Council as Amicus Curiae.

Joel Zebrack, Oakland, for Ron Kelly, Mediator, as Amicus Curiae.

643*643 BAXTER, J.

Summary by Mary M. Howell, Esq.:

Mediator’s disclosure to trial court of defendant’s bad faith actions during mediation was improper given mediation’s statutory guarantee of confidentiality.    Neither a mediator nor a party may reveal communications made during mediation.

**End Summary**

The questions we address here are independent of the issues in the underlying lawsuit. Instead, we face the intersection between court-ordered mediation, the confidentiality of which is mandated by law (Evid.Code, §§ 703.5, 1115-1128),^[1] and the power of a court to control proceedings before it and other persons “in any manner connected with a judicial proceeding before it” (Code Civ. Proc, § 128, subd. (a)(5)), by imposing sanctions on a party or the party’s attorney for statements or conduct during mediation. (See Code Civ. Proc, §§ 128.5, 1209; Bus. & Prof.Code, § 6103.)

The Court of Appeal held that, notwithstanding section 1119, which governs confidentiality of communications during mediation and section 1121, which limits the content of mediators’ reports, the mediator may report to the court a party’s failure to comply with an order of the mediator and to participate in good faith in the mediation process. In doing so, the mediator may reveal information necessary to place sanctionable conduct in context, including communications made during mediation. The court concluded, however, that in this case the report included more information than necessary. It therefore reversed a trial court order imposing sanctions on defendants and defendants’ attorney. We granted review to consider whether sections 1119 and 1121 are subject to any exceptions.

We conclude that there are no exceptions to the confidentiality of mediation communications or to the statutory limits on the content of mediator’s reports. Neither a mediator nor a party may reveal communications made during mediation. The judicially created exception fashioned by the Court of Appeal is inconsistent with 645*645the language and the legislative intent underlying sections 1119 and 1121. We also conclude that, while a party may do so, a mediator may not report to the court about the conduct of participants in a mediation session. We nonetheless affirm the judgment of the Court of Appeal, as that judgment sets aside the order imposing sanctions.

I

Background

The underlying litigation is a construction defects action in which the defendants are the developers Bramalea, Ltd. (now Bramalea, Inc.), a Canadian corporation, and its subsidiary Bramalea California, Inc., a California corporation (collectively Bramalea), and various subcontractors. The plaintiff is a homeowners association made up of the owners of a 65 unit Culver City condominium complex developed and constructed by defendants. In a comprehensive January 22, 1997 case management order (CMO), made pursuant to Code of Civil Procedure section 638 et seq.,^[2] the superior court appointed Judge Peter Smith, a retired judge, as a special master to act as both mediator and special master for ruling on discovery motions. Judge Smith was given the power to preside over mediation conferences and to make orders governing attendance of the parties and their representatives at those sessions. The CMO specifically provided that Judge Smith was to “set such … meetings as [he] deems appropriate to discuss the status of the action, the nature and extent of defects and deficiencies claimed by Plaintiffs, and to schedule future meetings, including a premediation meeting of all experts to discuss repair methodology and the mediation….” Defendants were ordered to serve experts’ reports on all parties prior to the first scheduled mediation session. The order confirmed that privileges applicable to mediation and settlement communications applied.^[3] The parties were ordered to make their best efforts to cooperate in the mediation process.

Bramalea, Ltd. was (and continues to be) represented by Ivan K. Stevenson who also acted as cocounsel for Bramalea California, Inc. The record reflects that, on the morning of September 16, 1997, the first day of a five-day round of mediation sessions of which the parties had been notified and to which the court’s notice said they should bring their experts and claims representatives, plaintiffs attorney and nine experts appeared for the session. Stevenson was late and brought no defense646*646 experts. Subsequent mediation sessions were cancelled after that morning session because the mediator concluded they could not proceed without defense experts.

Plaintiff filed its first motion under Code of Civil Procedure section 128.5, for the imposition of sanctions of $24,744.55 on Bramalea and Stevenson (Bramalea/Stevenson) for their failure to cooperate in mediation. The sanctions sought reflected the cost to plaintiff of counsel’s preparation for the sessions, the charges of plaintiffs nine experts for preparation and appearance at the mediation session, and the payment to the mediator, which was no longer refundable. Plaintiffs memorandum of points and authorities and declaration of counsel in support of the motion for sanctions recited a series of actions by Bramalea and Stevenson that, plaintiff asserted, reflected a pattern of tactics pursued in bad faith and solely intended to cause unnecessary delay. The actions described included objections to the schedule and attempts to postpone the mediation sessions, and culminated with Stevenson’s appearance without experts at the mediation session at which architectural and plumbing issues were to be discussed. The motion recited that when asked by plaintiffs counsel if he would have expert consultants present for the future mediation sessions, Stevenson replied that “I can’t answer that.” When asked why he had arrived without expert consultants, Stevenson replied: “This is your mediation, you can handle it any way you want. I’m here, you can talk to me.” In an ensuing conversation Stevenson said that regardless of settlement between plaintiff and the subcontractors, who had not appeared in the case, Bramalea would not allow the subcontractors to get out of the case and, in a cross-complaint, sought indemnity from them.

On September 18, two days after the aborted mediation session, Judge Smith filed the report that is the object of this dispute with the superior court. The report recited that on June 13, 1997, plaintiffs counsel requested that the mediation be continued to a later date to accommodate Stevenson. It was then continued to the September 16-22 dates. On July 16, 1997, the mediator denied as untimely a request by Stevenson for changes to the CMO and for another postponement. On August 15, 1997, Stevenson challenged the mediator pursuant to Code of Civil Procedure section 170.6. The superior court struck the challenge on September 8, 1997, and on September 15, 1997, Stevenson sought a writ of mandate in the Court of Appeal. That court denied Stevenson’s request for stay two days later and subsequently summarily denied the petition.

The report of the mediator stated: “Mr. Stevenson has spent the vast majority of his time trying to derail the mediations scheduled for September 16 through 22, 1997. [¶] Mr. Stevenson has refused to make demands on the sub-contractor/cross-defendants who were sued by Bramalea defendants, [¶] On September 16,1997, Mr. Stevenson arrived 30 minutes late. Even though the purpose of the mediation session was to have Bramalea’s expert witnesses interact with plaintiffs experts on construction defect issues, Mr. Stevenson refused to bring his experts to the mediation. Mr. Stevenson stated on several occasions that he did not need experts because of his vast knowledge in the field of construction defect litigation.

“Mr. Stevenson also stated that `he was not going to dump on the subs’ (subcontractors), nor did his client Bramalea have any responsibility for the construction of the project since they did not `pound any nails or swing any hammers.’ [¶] Mr. Stevenson claims to have express indemnity 647*647 agreements with all the sub-contractors/cross-defendants. If this is correct, no sub-contractor can settle with plaintiff without the consent of Bramalea. [¶] Towards the end of the morning of the first mediation session of September 16, 1997, it became apparent that Mr. Stevenson’s real agenda was to delay the mediation process so he can file a Motion for Summary Judgment. Mr. Stevenson asserted that he has a valid Statute of Limitations defense to plaintiffs entire claim. Mr. Stevenson wants to open discovery in order to bolster his position. The special master has no idea whether Mr. Stevenson’s Statute of Limitation contention is valid. However, it has been the experience of the mediator, in past mediations, that this tactic can be used to cut the amount of plaintiffs claims.

“Mr. Stevenson has had adequate time to file a Motion for Summary Judgment since the case was filed around May 18, 1993.

“As a result of Mr. Stevenson’s obstructive bad faith tactics, the remainder of the mediation sessions were canceled at a substantial cost to all parties….”

The mediator’s report recommended, inter alia, that Bramalea/Stevenson be ordered to reimburse all parties for expenses incurred as a result of the cancelled September 16-22 mediation sessions.^[4]

Bramalea/Stevenson opposed the motion on numerous grounds, advising that a new mediator had been agreed upon, but in claiming that the motion was improper did not assert confidentiality of the mediation sessions as a basis for the opposition. They objected to the declaration of plaintiffs counsel regarding events during the mediation session on grounds of hearsay (§ 1200) and on the basis that the declarant offered no foundation for how he was able to recall the statements exactly. They objected to the content of the report of the mediator, but again did not assert the confidentiality of mediation, instead giving their own version of the events during mediation. The confidentiality provisions of former section 1152.6 (now § 1121; see post, 108 Cal.Rptr.2d pp. 649-650, 25 P.3d pp. 1123-1124) were not asserted.^[5]

The superior court denied this first motion without prejudice, as Bramalea, Ltd., was then in a Canadian bankruptcy proceeding. After one mediation session, the new mediator advised the court that further mediation would not be constructive and recommended that the discovery stay be lifted. Bramalea filed a motion seeking return of mediation fees to be paid to Judge Smith, asserting that the mediator was biased and had done nothing during the mediation process to further the mediation, again describing events during the mediation. A new declaration by Judge Smith was offered in support of an opposition to that motion. This declaration stated that Stevenson had aborted the September 1997 mediation session by refusing to participate in good faith.

648*648 Plaintiff filed a new motion for sanctions in May 1998, seeking $30,578.43, based on the same grounds as the first motion and supported by the same declaration of its counsel and the initial report of Judge Smith.

In their opposition to this motion Bramalea/Stevenson asserted the same reasons put forth in the original opposition, adding an objection based on section 1121. Bramalea/Stevenson’s opposition to this motion objected that “under mediation statutes, which became effective as of the first of this year, this motion and the events that occurred at the mediation which plaintiff is revealing in its moving papers, are not admissible and not a proper basis for seeking and/or imposing sanctions.” They also argued that the “act” of Judge Smith was “especially inappropriate in that the Legislature recently enacted Evidence Code, Section 1121, which provides: ‘Neither a mediator nor anyone else may submit to a court … and a court … may not consider, any report, assessment, evaluation, recommendation, or finding of any kind by the mediator concerning a mediation conducted by the mediator, other than a report that is mandated by court rule or other law….'” They also objected on the basis of “section 1115 et seq.” to consideration of the statements attributed to Stevenson by plaintiffs attorney.

Plaintiffs second motion for sanctions was granted by the superior court on May 26, 1998. Bramalea/Stevenson filed a timely notice of appeal.

II

Court of Appeal

On appeal, Bramalea/Stevenson contended, inter alia, that the superior court violated the confidentiality of mediation when the judge considered the report of the mediator in assessing the events and communications that occurred during the September 1997 mediation in imposing sanctions on them.

The Court of Appeal reversed the sanctions order and remanded the matter to the superior court because that court had not complied with the requirement of Code of Civil Procedure section 128.5, subdivision (c), that the court enter an order that “recite[s] in detail the conduct or circumstances justifying the order.” Because the issue was one of great importance whose determination was necessary to a final resolution of the matter, and to give guidance to the superior court as to the matters it could properly consider on remand, the Court of Appeal addressed and rejected appellant’s claim that the mediator was barred by section 1121, which prohibits most reports regarding mediation and consideration by the court of such reports, from reporting conduct during mediation to the court.

The Court of Appeal concluded that the rule precluding judicial construction of an unambiguous statute (Code. Civ. Proc, § 1858; Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763, 775, 72 Cal.Rptr.2d 624, 952 P.2d 641) should not apply here. It invoked instead the rule that permits judicial construction of an apparently unambiguous statute where giving literal meaning to the words of the statute would lead to an absurd result or fail to carry out the manifest purpose of the Legislature. (Times Mirror Co. v. Superior Court (1991) 53 Cal.3d 1325, 1334, fn. 7, 283 Cal.Rptr. 893, 813 P.2d 240.) With regard to the latter, the court acknowledged that the purpose of the confidentiality mandated by section 1119, which makes evidence of anything said during mediation inadmissible and undiscoverable, is to promote mediation as an alternative to judicial proceedings and that confidentiality is essential to mediation. 649*649 The Court of Appeal reasoned, however, that it should balance against that policy recognition that, unless the parties and their lawyers participate in good faith in mediation, there is little to protect. It concluded that the Legislature did not intend statutory mandated confidentiality to create an immunity from sanctions that would shield parties who disobey valid orders governing the parties’ participation. The Court of Appeal also expressed doubt that section 1121 was intended to preclude a report to the trial court if the parties engaged in improper conduct by attacking or threatening to attack an opposing party. In sum, section 1121 was not intended to shield sanctionable conduct.

Relying on the statement of purpose offered by the California Law Revision Commission at the time the section was proposed, the Court of Appeal concluded that section 1121 served to preserve mediator neutrality and prevent coercion of the parties. The Law Revision Commission Comment on Evidence Code section 1121 to which the Court of Appeal referred states in pertinent part: “As Section 1121 recognizes, a mediator should not be able to influence the result of a mediation or adjudication by reporting or threatening to report to the decisionmaker on the merits of the dispute or reasons why mediation failed to resolve it. Similarly, a mediator should not have authority to resolve or decide the mediated dispute and should not have any function for the adjudicating tribunal with regard to the dispute, except as a nondecisionmaking neutral.” (Rep. On Chapter 772 of the Statutes of 1997 (Assembly Bill 939), com. on Evid.Code, § 1121, 27 Cal. Law Revision Com. Rep. (1997) 595, 602.)

The Court of Appeal acknowledged that it was creating a nonstatutory exception to the confidentiality requirements. The court described the exception as narrow, permitting a mediator or party to report to the court only information that is reasonably necessary to describe sanctionable conduct and place that conduct in context. The report in this case was not so limited. It included extraneous information, recommendations, conclusions, and characterized the conduct and statements reported, all matters for argument by the parties, not a report by a neutral. The Court of Appeal cautioned: “The report should be no more than a strictly neutral account of the conduct and statements being reported along with such other information as required to place those matters in context.” The Court of Appeal directed the trial court to disregard any portions of the report or the declarations submitted by the parties that did not conform to this limitation.

Bramalea/Stevenson claim that any exception that permits reporting to the court and sanctioning a party on the basis of a mediator’s report of conduct or statements allegedly undertaken in bad faith during mediation violates the statutes that guaranty confidentiality of mediation.^[6] And, notwithstanding the limited scope of the exception the Court of Appeal believed it had created, numerous amici curiae with an interest in alternative dispute resolution urge the court to enforce the statutory rule of absolute confidentiality.

III

Discussion

At the time Judge Smith submitted his September 18, 1997 report to the superior 650*650court, former section 1152.6 (Stats.1995, ch. 576, § 8) provided: “A mediator may not file, and a court may not consider, any declaration or finding of any kind by the mediator, other than a required statement of agreement or nonagreement, unless all parties in the mediation expressly agree otherwise in writing prior to commencement of the mediation. However, this section shall not apply to mediation under Chapter 11 (commencing with Section 3160) of Part 2 of Division 8 of the Family Code.”

The report was not authorized by former section 1152.6, but, as noted above, no party objected, either before or at the hearing on plaintiffs first motion for sanctions, to the superior court’s consideration of the report.^[7]

When the motion for sanctions at issue here was heard, former section 1152.6 had been repealed and replaced by section 1121 (Stats.1997, ch. 772, § 3), which retains and enlarges the substance of former section 1152.6. Section 1121 provides: “Neither a mediator nor anyone else may submit to a court or other adjudicative body, and a court or other adjudicative body may not consider, any report, assessment, evaluation, recommendation, or finding of any kind by the mediator concerning a mediation conducted by the mediator, other than a report that is mandated by court rule or other law and that states only whether an agreement was reached, unless all parties to the mediation expressly agree otherwise in writing, or orally in accordance with Section 1118.”

Section 1119, subdivision (c), enacted at the same time (Stats.1997, ch. 772, § 3) provides: “All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.” Sections 1119 and 1121 became effective on January 1, 1998. (Cal. Const., art. IV, § 8, subd. (c).)

The language of sections 1119 and 1121 is clear and unambiguous, but the Court of Appeal reasoned that the Legislature did not intend these sections to create “an immunity from sanctions, shielding parties to court-ordered mediation who disobey valid orders governing their participation in the mediation process, thereby intentionally thwarting the process to pursue other litigation tactics.” The court therefore crafted the exception in dispute here. As stated and as applied, the exception created by the Court of Appeal permits reporting to the court not only that a party or attorney has disobeyed a court order governing the mediation process, but also that the mediator or reporting party believes that a party has done so intentionally with the apparent purpose of derailing the court-ordered mediation and the reasons for that belief.

Appellants contend that the legislative policies codified in sections 1119 and 1121 are absolute except to the extent that a statutory exception exists. The only such exception they acknowledge is the authority of a mediator to report criminal conduct.^[8] They argue that the report of the 651*651 mediator, which plaintiff submitted to the court with its motion for sanctions and which the court considered, was a form of testimony by a person made incompetent to testify by section 703.5,^[9] and violated the principle that mediators are to assist parties in reaching their own agreement, but ordinarily may not express an opinion on the merits of the case. In permitting consideration of any part of the report, the Court of Appeal has created a vague and inconsistent exception to the mandate of confidentiality, one that the Legislature did not authorize.^[10]

Respondent Foxgate Homeowners’ Association, Inc., which has elected to rely on the brief it filed in the Court of Appeal (see Cal. Rules of Court, rule 29.3(a)), argues that section 1119 is inapplicable inasmuch as Judge Smith submitted his report to the superior court in 1997, prior to the date on which section 1119 went into effect.Foxgate also argues that section 1152, on which Bramalea/Stevenson relies, is inapplicable as it governs only offers to compromise, and that an exception found in former section 1152.5 did apply. Subdivision (a)(4) of former section 1152.5 (Stats.1996, ch. 174, § 1, see now § 1122, subd. (a)(1)) created an exception to the confidentiality requirements governing mediation when all of the parties who conducted the mediation or participated in it consented. Foxgate claims that this exception was made applicable by the parties’ agreement that Judge Smith was to “have the authority to establish discovery stays, revise discovery stays in place, hear and determine any and all motions seeking to revise the Case Management Order, report his finding to the Court, and make recommendations to the Court.” It also contends that the report was exempted from section 1119, barring submission to, or consideration by, the court of a mediator’s findings or recommendations, by the652*652 introductory clause of that section making its provisions applicable to mediation “[e]xcept as otherwise provided in this chapter,” a provision that brings into play the consent exception of section 1121.

Regardless of whether it would have been proper for the court to consider the report of Judge Smith when it was initially transmitted to the court, it was not proper when submitted by plaintiff in support of the second motion for sanctions. We reject Foxgate’s assumption that the date on which Judge Smith submitted his report to the superior court is relevant. The motion for sanctions made at that time was denied. At the time Foxgate made its May 1998 motion for sanctions, submitting therewith a copy of that report and a declaration by its attorney about the mediation session in issue, section 1121 was in effect and barred both a mediator from submitting any report like that of Judge Smith and anyone else from submitting a document that revealed communications during mediation and barred the court from considering them. Bramalea objected to consideration of the report and the declaration of Foxgate’s attorney, citing sections 1119 and 1121.

Foxgate also argued below that the parties’ agreement to the CMO giving the mediator the power to report to the court encompassed the report sent by Judge Smith. The Court of Appeal rejected that argument because the parties had also expressly reserved all mediation privileges. We agree with the Court of Appeal’s interpretation of the parties’ agreement. Other than a report regarding the success of the mediation or lack thereof and findings related thereto, reports to the trial court concerning the events, communications, and occurrences during the mediation retained their confidential status.

Thus, we consider only the second motion and must determine if the mediation confidentiality statutes then applicable admit of any exceptions.

We do not agree with the Court of Appeal that there is any need for judicial construction of sections 1119 and 1121 or that a judicially crafted exception to the confidentiality of mediation they mandate is necessary either to carry out the purpose for which they were enacted or to avoid an absurd result. The statutes are clear. Section 1119 prohibits any person, mediator and participants alike, from revealing any written or oral communication made during mediation. Section 1121 also prohibits the mediator, but not a party, from advising the court about conduct during mediation that might warrant sanctions. It also prohibits the court from considering a report that includes information not expressly permitted to be included in a mediator’s report. The submission to the court, and the court’s consideration of, the report of Judge Smith violated sections 1119 and 1121.

Because the language of sections 1119 and 1121 is clear and unambiguous, judicial construction of the statutes is not permitted unless they cannot be applied according to their terms or doing so would lead to absurd results, thereby violating the presumed intent of the Legislature. (Diamond Multimedia Systems, Inc. v. Superior Court (1999) 19 Cal.4th 1036, 1047, 80 Cal.Rptr.2d 828, 968 P.2d 539; California School Employees Assn. v. Governing Board (1994) 8 Cal.4th 333, 340, 33 Cal.Rptr.2d 109, 878 P.2d 1321.) Moreover, a judicially crafted exception to the confidentiality mandated by sections 1119 and 1121 is not necessary either to carry out the legislative intent or to avoid an absurd result.

The legislative intent underlying the mediation confidentiality provisions of the Evidence Code is clear. The parties and all amici curiae recognize the purpose of confidentiality 653*653 is to promote “a candid and informal exchange regarding events in the past …. This frank exchange is achieved only if the participants know that what is said in the mediation will not be used to their detriment through later court proceedings and other adjudicatory processes.” (Nat. Conf. of Comrs. on U. State Laws, U. Mediation Act (May 2001) § 2, Reporter’s working notes, ¶ 1; see also Note, Protecting Confidentiality in Mediation (1984) 98 Harv. L.Rev. 441, 445. [“Mediation demands … that the parties feel free to be frank not only with the mediator but also with each other…. Agreement may be impossible if the mediator cannot overcome the parties’ wariness about confiding in each other during these sessions.”].)

As all parties and amici curiae recognize, confidentiality is essential to effective mediation, a form of alternative dispute resolution encouraged and, in some cases required by, the Legislature. Implementing alternatives to judicial dispute resolution has been a strong legislative policy since at least 1986. In that year the Legislature enacted provisions for dispute resolution programs, including but not limited to mediation, conciliation, and arbitration, as alternatives to formal court proceedings which it found to be “unnecessarily costly, time-consuming, and complex” as contrasted with noncoercive dispute resolution. (Bus. & Prof.Code, §§ 465, 466.) Thereafter, by a 1988 amendment of Evidence Code section 703.5 (Stats.1988, ch. 281, § 1, p. 977), the Legislature made arbitrators as well as judges incompetent to testify about proceedings over which they presided, and, as noted above, a 1993 amendment added mediators as persons incompetent to testify. (Stats.1993, ch. 114, § 1, p. 1194.) In 1993 the Legislature gave further impetus to the policy of encouraging mediation when it enacted Code of Civil Procedure section 1775 et seq. (Stats.1993, ch. 1261, § 4, p. 7323), which created a mandatory arbitration or mediation pilot project for Los Angeles County. Statements made by parties during mediation were expressly made subject to the confidentiality provisions of the Evidence Code. (Code Civ. Proc, § 1775.10.) The Legislature extended the same confidentiality to statements made during mediation provided for in a recently enacted early mediation pilot program. (Code Civ. Proc, §§ 1730, 1738.)^[11]

To carry out the purpose of encouraging mediation by ensuring confidentiality, the statutory scheme, which includes sections 703.5, 1119, and 1121, unqualifiedly bars disclosure of communications made during mediation absent an express statutory exception.^[12]

Heretofore the only California case upholding admission, over objection, of statements made during mediation in which no statutory exception to confidentiality applied, was Rinaker v. Superior Court (1998) 62 Cal.App.4th 155, 74 Cal.Rptr.2d654*654 464, a case that is clearly distinguishable. There, a juvenile court judge conducting a jurisdictional hearing in a delinquency matter (Welf. & Inst.Code, § 602) ordered disclosure by a volunteer who had mediated a civil harassment action between the victim and juveniles who had engaged in a rock throwing incident. The minors who were the subject of the hearing claimed that the victim’s statements at the mediation session differed from his testimony at the delinquency hearing. The Court of Appeal held that, although a delinquency proceeding is a civil action within the meaning of Evidence Code section 1119 and the confidentiality provisions were applicable, that statutory right must yield to the minor’s due process rights to put on a defense and confront, cross-examine, and impeach the victim witness with his prior inconsistent statements. (Pennsylvania v. Ritchie (1987) 480 U.S. 39, 51-52,107 S.Ct. 989, 94 L.Ed.2d 40; Davis v. Alaska (1974) 415 U.S. 308, 315-319, 94 S.Ct. 1105, 39 L.Ed.2d 347.) To maintain confidentiality to the extent possible, however, the Court of Appeal stated that the juvenile court judge should first have held an in camera hearing to weigh the minors’ claim of need to question the mediator against the statutory privilege to determine if the mediator’s testimony was sufficiently probative to be necessary. (Rinaker, supra, 62 Cal.App. 4th at pp. 169-170, 74 Cal. Rptr.2d 464.)

Although criticized (see Reuben, Strictly in Confidence, Cal. Law. (Sept.2000) p. 31),Rinaker is consistent with our past recognition and that of the United States Supreme Court that due process entitles juveniles to some of the basic constitutional rights accorded adults, including the right to confrontation and cross-examination. (SeeAlfredo A. v. Superior Court (1994) 6 Cal.4th 1212, 1225, 26 Cal.Rptr.2d 623, 865 P.2d 56, and cases cited.) In this matter, however, plaintiffs have no comparable supervening due-process-based right to use evidence of statements and events at the mediation session.

In the only other reported case arising in California in which a mediator’s testimony about events during mediation was compelled and admitted, a federal magistrate judge, Wayne Brazil, an expert in mediation law, ruled that the testimony of a mediator could be compelled notwithstanding sections 703.5 and 1119, which were held to be applicable (Fed. Rules Evid., rule 501, 28 U.S.C.), because the evidence was necessary to establish whether a defaulting party had been competent to enter into a settlement that another party sought to enforce. (Olam v. Congress Mortgage Company (N.D.Cal.1999) 68 F.Supp.2d 1110.) There the plaintiff had waived confidentiality and the defendant had agreed to a limited waiver of confidentiality, and the agreement in question fell within the exception of section 1123 for settlement agreements resulting from mediation if the agreement provided that it was enforceable. Nonetheless, the magistrate judge was not satisfied that the waivers were an adequate basis on which to compel the mediator’s testimony, as the mediator had not waived the mediation privilege. After considering Rinaker, in which the magistrate judge noted the mediator had not invoked section 703.5, the magistrate judge concluded that a similar weighing process should be used to determine if the parties’ interest in compelling the testimony of the magistrate outweighed the state’s interest in maintaining confidentiality of the mediation. After doing so, the magistrate judge concluded that the testimony was the most reliable and probative evidence on the issue, and there was no likely alternative source, the testimony was crucial if the court was to be able to resolve the dispute and was 655*655essential to doing justice in the case before him. (Olam, at p. 1139.)

That case, too, is distinguishable as Bramalea/Stevenson have not waived confidentiality.

The mediator and the Court of Appeal here were troubled by what they perceived to be a failure of Bramalea to participate in good faith in the mediation process. Nonetheless, the Legislature has weighed and balanced the policy that promotes effective mediation by requiring confidentiality against a policy that might better encourage good faith participation in the process. Whether a mediator in addition to participants should be allowed to report conduct during mediation that the mediator believes is taken in bad faith and therefore might be sanctionable under Code of Civil Procedure section 128.5, subdivision (a), is a policy question to be resolved by the Legislature. Although a party may report obstructive conduct to the court, none of the confidentiality statutes currently makes an exception for reporting bad faith conduct or for imposition of sanctions under that section when doing so would require disclosure of communications or a mediator’s assessment of a party’s conduct although the Legislature presumably is aware that Code of Civil Procedure section 128.5 permits imposition of sanctions when similar conduct occurs during trial proceedings.^[13]

Therefore, we do not agree with the Court of Appeal that the court may fashion an exception for bad faith in mediation because failure to authorize reporting of such conduct during mediation may lead to “an absurd result” or fail to carry out the legislative policy of encouraging mediation. The Legislature has decided that the policy of encouraging mediation by ensuring confidentiality is promoted by avoiding the threat that frank expression of viewpoints by the parties during mediation may subject a participant to a motion for imposition of sanctions by another party or the mediator who might assert that those views constitute a bad faith failure to participate in mediation. Therefore, even were the court free to ignore the plain language of the confidentiality statutes, there is no justification for doing so here.

Plaintiffs motion for sanctions and the trial court’s consideration of the motion and attached documents violated both sections 1119 and 1121. The motion had attached both the report of Judge Smith and a declaration by plaintiffs counsel reciting statements made during the mediation session. Section 1121 prohibits the submission by anyone to a court and consideration by the court of “any report, assessment, evaluation, recommendation, or finding of any kind by the mediator concerning a mediation conducted by the mediator.” Plaintiff violated this section as did the court. Plaintiff also violated subdivision (c) of section 1119 in counsel’s declaration and by submitting the report. Both documents included communications656*656 in the course of the mediation.^[14] The court violated subdivision (a) of section 1119 when it admitted in evidence at the sanctions hearing “anything said … in the course of … mediation.”

The remedy for violation of the confidentiality of mediation is that stated in section 1128: “Any reference to a mediation during any subsequent trial is an irregularity in the proceedings of the trial for purposes of Section 657 of the Code of Civil Procedure. Any reference to a mediation during any other subsequent noncriminal proceeding is grounds for vacating or modifying the decision in that proceeding, in whole or in part, and granting a new or further hearing on all or part of the issues, if the reference materially affected the substantial rights of the party requesting relief.”^[15]

Inasmuch as the superior court’s sole basis for imposing sanctions on Bramalea/Stevenson was allegations in and the material offered in support of the motion for sanctions,^[16] it is clear that reference to the mediation materially affected their rights and that the Court of Appeal did not err in setting aside the order imposing sanctions. If, on remand, plaintiff elects to pursue the motion, the trial court may consider only plaintiffs assertion and evidence offered in support of the assertion that Bramalea engaged in conduct that warrants sanctions. No evidence of communications made during the mediation may be admitted or considered.

IV

Disposition

The judgment of the Court of Appeal is affirmed.

GEORGE, C.J., and KENNARD, J., WERDEGAR, J., CHIN, J., BROWN, J., concur.

[1] All statutory references are to the Evidence Code unless otherwise specified.

[2] Code of Civil Procedure section 638 now provides in part: “A referee may be appointed upon the agreement of the parties filed with the clerk, or judge, or entered in the minutes or in the docket, or upon the motion of a party to a written contract or lease that provides that any controversy arising therefrom shall be heard by a referee if the court finds a reference agreement exists between the parties:

“(a) To hear and determine any or all of the issues in an action or proceeding, whether of fact or of law, and to report a statement of decision thereon.

“(b) To ascertain a fact necessary to enable the court to determine an action or proceeding.”

Code of Civil Procedure section 639, subdivision (a)(5) permits the court, without agreement of the parties, “to appoint a referee to hear and determine any and all discovery motions and disputes relevant to discovery in the action and to report findings and make a recommendation thereon.”

[3] The order stated: “Any and all documents and/or communications to which a privilege may be claimed or may attach in regard to mediation and settlement negotiations shall be subject to California Evidence Code, §§ 1152 and 1152.5, and any other applicable law.”

[4] The mediator also recommended that the court grant leave to any aggrieved party to file a motion for sanctions; that Stevenson be ordered to serve written demands for contributions on all subcontractors forthwith; that Bramalea and Stevenson be ordered to have its experts attend mediation sessions if so ordered by the mediator; that a new mediator/special master be appointed as Judge Smith was no longer willing to serve; and that an existing stay of discovery be maintained until a new mediator was appointed. Judge Smith then resigned as of the September 18, 1997, date of his report.

[5] Plaintiff noted the confidentiality guaranteed by section 1152 and former section 1152.5 “(repealed by Stats.1997, ch. 772, § 5), in asserting lack of merit in Bramalea’s attempt to assert the work product privilege as justification for failing to produce experts.

[6] The parties do not argue that Code of Civil Procedure section 128.5 is inapplicable to conduct during court-ordered mediation. We therefore assume, without deciding, that the court that ordered mediation may impose sanctions under that section based on conduct during the mediation.

[7] Failure to object to admission of evidence of events occurring during a prior mediation has been held to constitute a waiver. (Regents of University of California v. Sumner (1996) 42 Cal.App.4th 1209, 50 Cal.Rptr.2d 200.)

[8] Amici curiae Beverly Hills Bar Association and Ron Kelly, a mediator, suggest that the trial court and Court of Appeal need not have considered Judge Smith to be acting as a mediator when he submitted his report. Had he been classified as a special master ordered to report to the court, his report would not have been subject to the mediation confidentiality statutes and would be governed by the parties’ agreement to the CMO provision for reporting. The superior court CMO states: “Judge Peter Smith … is appointed as Special Master pursuant to Code of Civil Procedure § 638 et seq., and shall act as mediator for settlement conferences and as discovery referee. The Special Master shall rule on all discovery disputes, shall assist in the implementation of this Order and shall preside over mediation conferences and make any orders governing the attendance of parties and their representatives thereat.” (Italics added.)

Amicus curiae Association of Southern California Defense Counsel suggests that Judge Smith acted as though he was conducting a settlement conference and asks this court to clarify the differences between a settlement conference at which a court may, on its own motion, sanction a party for not participating (Code Civ. Proc, § 177.5) and mediation, as does amicus curiae California Dispute Resolution Council. We have no occasion to do so here. It seems clear from the record, and the parties appear to agree, that the proceeding about which Judge Smith reported was a mediation proceeding and the judge was acting as a mediator.

[9] Section 703.5: “No person presiding at any judicial or quasi-judicial proceeding, and no arbitrator or mediator, shall be competent to testify in any subsequent civil proceeding, as to any statement, conduct, decision, or ruling, occurring at or in conjunction with the prior proceeding, except as to a statement, or conduct that could (a) give rise to civil or criminal contempt, (b) constitute a crime, (c) be the subject of investigation by the State Bar or Commission on Judicial Performance, or (d) give rise to disqualification proceedings under paragraph (1) or (6) of subdivision (a) of Section 170.1 of the Code of Civil Procedure. However, this section does not apply to a mediator with regard to any mediation under Chapter 11 (commencing with Section 3160) of Part 2 of Division 8 of the Family Code.”

[10] Appellants also contend that the decision of the Court of Appeal violated the separation of powers doctrine (Cal. Const., art. III, § 3), and that, even if the mediation privilege is disregarded, the trial court abused its discretion in imposing sanctions on them. These claims are not reasonably encompassed within the issues stated in the petition for review on which review was granted and will not be addressed for that reason. (See Cal. Rules of Court, rule 29.2(b).)

[11] Corresponding confidentiality provisions may be found in Business and Professions Code section 6200, subdivision (h) (attorney fee dispute arbitration); Code of Civil Procedure section 1297.371 (conciliation in international commercial disputes); Food and Agricultural Code section 54453, subdivision (b) (agricultural cooperative bargaining associations); Government Code sections 11420.10-11420.30 (administrative adjudication), 12984-12985 (conciliation, etc., in housing discrimination complaint), 66032-66033 (land use mediation); Insurance Code section 10089.80 (earthquake claim mediation); and Labor Code section 65 (labor dispute mediation).

[12] The request of amici curiae that the court take judicial notice of documents they describe as legislative history of Assembly Bill No. 1757 (1993-1994 Reg. Sess.), which added mediations to the testimonial immunity privilege of section 703.5, is granted.

[13] The conflict between the policy of preserving confidentiality of mediation in order to encourage resolution of disputes and the interest of the state in enforcing professional responsibility to protect the integrity of the judiciary and to protect the public against incompetent and/or unscrupulous attorneys has not gone unrecognized. (See Kentra, Hear No Evil, See No Evil, Speak No Evil: The Intolerable Conflict for Attorney Mediators Between the Duty to Maintain Mediation Confidentiality and the Duty to Report Fellow Attorney Misconduct (1997) BYU L.Rev. 715; Irvine, Serving Two Masters: The Obligation under the Rules of Professional Conduct to Report Attorney Misconduct in a Confidential Mediation (1994) 26 Rutgers L.J. 155.) As noted, however, any resolution of the competing policies is a matter for legislative, not judicial, action.

[14] To the extent that the declaration of counsel stated that the mediator had ordered the parties to be present with their experts, there was no violation. As noted earlier, neither section 1119 nor section 1121 prohibits a party from revealing or reporting to the court about noncommunicative conduct, including violation of the orders of a mediator or the court during mediation.

[15] See also Code of Civil Procedure section 1775.12: “Any reference to the mediation or the statement of nonagreement filed pursuant to Section 1775.9 during any subsequent trial shall constitute an irregularity in the proceedings of the trial for the purposes of Section 657.”

[16] The superior court stated at the hearing on the second sanctions motion: “It appears to me that the breakdown in the first arbitration-mediation attempts are directly tied to the non-attendance of the experts of the defendants and the factual basis as alleged by the moving party.”

Keywords: ADR, IDR

Cabrini Villas Homeowners Association v. Haghverdian

4 Cal.Rptr.3d 192 (2003)

194*194 Lightfoot & Northup, and Robert W. Northup, Jr., and Stephen K. Lightfoot, Pasadena, for Defendant and Appellant.

195*195 Maxie Rheinheimer Stephens & Vrevich, and Darin L. Wessel, San Diego, and Nick M. Campbell for Plaintiff and Respondent.

193*193 RUBIN, J.

Summary by Mary M. Howell, Esq.:

A request for ADR made pursuant to the Davis-Stirling Act may properly be served by a form of mail providing for a return receipt and that, to the extent owner did not sign the return receipt, she waived that defect in the service.   [NOTE:  Civil Code §5935 provides that service of an ADR offer “shall be by personal delivery, first-class mail, express mail, facsimile transmission, or other means reasonably calculated to provide the other party actual notice of the offer.”]

**End Summary**

Defendant and appellant Sonia Haghverdian appeals from the issuance of an injunction requiring her to remove a room air-conditioning unit she installed in an exterior wall of her condominium without prior approval from plaintiff and respondentCabrini Villas Homeowners Association (the association or respondent). Appellant contends: (1) the injunction must be reversed because respondent did not serve her with a “Request for Resolution,” a condition precedent to bringing an action for injunction pursuant to Civil Code section 1354 (section 1354); (2) the architectural control provisions of the CC & R’s were not enforceable equitable servitudes under section 1354; and (3) the trial court “improperly rejected important evidence with respect to balancing the hardships.” After review, we affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

Cabrini Villas is a common interest development comprised of 863 town homes (units) located on 77 acres in Burbank. It is governed by a condominium plan, a declaration of covenants, conditions and restrictions (CC & R’s), supplemental CC & R’s, association rules and regulations, and a policy on architectural control. Article VII, section 4 of the CC & R’s proscribes homeowners from making any alterations “affecting the structural integrity of the unit without the prior written approval of the Architectural Committee. Detailed plans and specifications prepared by a qualified person must be submitted with the waiver request form.” Article VII, section 5 requires homeowners to obtain the prior written approval of the architectural committee for the “installation of any awnings, sunshades or screen doors, and shall also be required in connection with the construction, erection or placement of any such improvements (including landscaping) upon the Common Area or the Recreation Area.” Article VII, section 16 provides that “no … machines, equipment, or similar objects [or] unsightly objects of any kind shall be allowed on the exterior … of the buildings …, nor shall any such objects be allowed to protrude through … the walls of any building….”

In 1987, appellant purchased a unit at Cabrini Villas and has lived there ever since. Appellant’s residence, like all of the other units in the complex, has central air conditioning. In October 1999, while extensive earthquake repairs were being made to the common areas at Cabrini Villas, appellant decided to hire a contractor to add a bathroom window and install a 20-inch-wide-wall mounted air-conditioning unit through an exterior wall in her unit. Appellant did not obtain prior written approval from the association, its board of directors, or the Architectural Committee.

On December 22, the general manager and the engineer responsible for overseeing the earthquake repairs were at appellant’s unit to inspect the new window.^[1] It 196*196was at this time they first became aware that appellant had installed an air conditioner through the exterior wall of her unit.^[2] The engineer and general manager were concerned that the installation of the air conditioner may have compromised the structural integrity of the load-bearing wall and/or the watertightness of the building. That day, the general manager wrote a memorandum to the association’s board of directors informing them that appellant had installed an air conditioner through an exterior wall without prior approval.

In February 2000, appellant wrote to the general manager to request a meeting with the board of directors on February 22. At appellant’s request, the general manager arranged the meeting at which the entire board, the general manager and the engineer were in attendance. Appellant understood the purpose of the meeting was for her to tell the board of her concerns regarding the inadequacy of the earthquake repairs being made to her unit. The board understood the purpose of the meeting was to discuss appellant’s installation of the window and air conditioner. The subject of the air conditioner was discussed only briefly before the meeting ended abruptly when appellant left after becoming upset that the focus of the meeting was not on her concerns.

The issue of the window appears to have been resolved some time after the February 22 meeting, as evidenced by the fact that subsequent communications with appellant addressed only the air conditioner. In a letter dated March 28, the general manager warned appellant that failure to remove the air conditioner within 15 days would “compel the association to turn this situation over to the attorneys for legal relief.” Appellant claims she did not receive this letter.

In written correspondence dated May 23, the general manager invited appellant to discuss the matter of her air conditioner at a meeting of the association’s judicial committee on June 21. The letter advised appellant that failure to appear would be “construed as a refusal to amicably settle the issue….” Appellant claims she did not receive this correspondence, either. She did not appear at the meeting. After considering the issue, the judicial committee concluded the air conditioner must be removed. It recommended that appellant be fined $50 if she failed to remove the air conditioner within 30 days, an additional $100 if she failed to do so within 60 days and an additional $150 if she failed to do so within 90 days. The committee recommended reviewing the matter after 90 days.

Subsequent to the judicial committee meeting, the board of directors unanimously decided to file suit against appellant for violation of the CC & R’s. Accordingly, the instant action was filed on July 7, 2000. In pertinent part, the operative first amended complaint alleged causes of action for breach of the CC & R’s arising out of, among other things, appellant’s installation of an air-conditioning unit to a common area wall without prior written consent; sought declaratory relief regarding the respective rights and duties of appellant and the association under the CC & R’s; and sought an injunction compelling appellant to, among other things, remove the air 197*197 conditioner and repair the affected wall.^[3] The trial court overruled appellant’s demurrer to the complaint, a demurrer based on the association’s alleged failure to file a certificate that the association had complied with alternative dispute resolution (ADR) procedures as required by section 1354.^[4] The trial court subsequently denied the association’s motion for summary judgment/summary adjudication made on the grounds that installation of the air conditioner through a common area exterior wall constituted a breach of the CC & R’s.

Trial of the bifurcated injunction portion of the case commenced on January 28, 2002. After hearing the evidence, the trial court issued an injunction requiring appellant to remove the air conditioner and repair the wall within 60 days. The trial court found the association did not selectively enforce the CC & R’s against appellant; appellant violated the CC & R’s by cutting through an exterior wall of the building in order to install the air conditioner; doing so affected the integrity of the building structure and moisture sealing; appellant did not obtain the requisite waiver from the board of directors or architectural committee to install the air conditioner; appellant knew she was not authorized to cut into the wall in such a way that studs were compromised; appellant received notice of the judicial committee meeting at which the air conditioner was discussed; appellant did not comply with the CC & R’s in installing the air conditioner; installation had a significant effect on the structure of the building; and appellant failed to demonstrate that she needed the air conditioner for her health.

Appellant filed a timely notice of appeal.

DISCUSSION

Standard of Review

An order granting a permanent injunction is appealable as a final judgment on the merits. (Code Civ. Proc., § 904.1, subd. (a)(6)). It is reviewed on appeal for the sufficiency of the evidence to support the judgment. (Art Movers, Inc. v. Ni West, Inc.(1992) 3 Cal.App.4th 640, 646, 4 Cal.Rptr.2d 689, citing 6 Witkin, Cal. Procedure (3d ed. 1985) Provisional Remedies, §§ 250, 251, pp. 216-218.) Generally, in reviewing a permanent injunction, we resolve all factual conflicts and questions of credibility in favor of the prevailing party and indulge all reasonable inferences that support the trial court’s order. (Schild v. Rubin (1991) 232 Cal.App.3d 755, 762, 283 Cal.Rptr. 533.) However, where the ultimate facts are undisputed, whether a permanent injunction should issue becomes a question of law, in which case the appellate court may determine the issue without regard to the conclusion of the trial court. (Dawson v. East Side Union High School Dist. (1994) 28 Cal.App.4th 998, 1041, 34 Cal.Rptr.2d 108.)

Here, the parties stipulated to many of the underlying the facts, including that the 20 by 14 inch air conditioner at issue was 198*198 mounted in a hole cut through an exterior wall of the building, and that appellant did not obtain permission or approval from the association or the architectural committee to install it. They further stipulated that the CC & R’s, the association’s rules and regulations, and the architectural control policy govern the dispute.

Appellant Waived the Defect in Service of the Request for ADR

Appellant contends the trial court lacked subject matter jurisdiction to issue an injunction. As we understand appellant’s argument, it is that section 1354 requires a party filing an action to enforce CC & R’s to serve personally a request for ADR; failure properly to serve a request for ADR constitutes a failure to submit the dispute to ADR; in turn, that constitutes a failure to exhaust an administrative remedy; and, thus, deprives the court of subject matter jurisdiction.^[5] We conclude a request for ADR made pursuant to section 1354 may properly be served by a form of mail providing for a return receipt and that, to the extent appellant did not sign the return receipt, she waived that defect in the service.

In construing a statute, “a court must look first to the words of the statute themselves, giving to the language its usual, ordinary import and according significance, if possible, to every word, phrase and sentence in pursuance of the legislative purpose. A construction making some words surplusage is to be avoided. The words of the statute must be construed in context, keeping in mind the statutory purpose, and statutes or statutory sections relating to the same subject must be harmonized, both internally and with each other, to the extent possible. [Citations.] Where uncertainty exists consideration should be given to the consequences that will flow from a particular interpretation. [Citation.]” (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386-1387, 241 Cal.Rptr. 67, 743 P.2d 1323; see also Kobzoff v. Los Angeles County Harbor/UCLA Medical Center (1998) 19 Cal.4th 851, 860, 80 Cal.Rptr.2d 803, 968 P.2d 514.)

Section 1354, subdivision (b) provides that service of a request for ADR “shall be in the same manner as prescribed for service in a small claims action as provided in199*199 Section 116.340 of the Code of Civil Procedure….” Code of Civil Procedure section 116.340 (section 116.340) provides for service of a small claims action by the following methods: “(1) The clerk may cause a copy of the claim and order to be mailed to the defendant by any form of mail providing for a return receipt. [¶] (2) Theplaintiff may cause a copy of the claim and order to be delivered to the defendant in person. [¶] (3) The plaintiff may cause service of a copy of the claim and order to be made by substituted service as provided in subdivision (a) or (b) of Section 415.20 without the need to attempt personal service on the defendant….^[6] [¶] (4) The clerkmay cause a copy of the claim to be mailed, the order to be issued, and a copy of the order to be mailed as provided in subdivision (b) of Section 116.330.”^[7] (Code Civ. Proc., § 116.340, subd. (a), italics added.) Service in the manner provided by subdivision (a)(1) and (4) is deemed complete on the date the defendant signs the mail return receipt “or as established by other competent evidence, whichever applies to the method of service used.” (Id., 116.340, subd. (c).)

Here, on May 20, counsel for the association sent appellant a letter by regular and certified mail, return receipt requested, in which counsel advised appellant that the installation of the air conditioner violated the CC & R’s, and that the association was requesting she participate in ADR under section 1354. At trial, appellant testified she never received the letter either by regular or certified mail, although she did receive the “little certified sticker in my mailbox under my door.”^[8]

Two issues are presented by this evidence: First, was it significant that counsel rather than a court clerk served appellant, and second, was appellant’s failure to sign the return receipt fatal to the association’s compliance with the statute. As to the former, the fact that the certified mail was at the direction of counsel for a party rather than a court clerk, as required by the literal language of section 116.340, is of no consequence considering the interplay between that statute and section 1354. The legislative purpose of section 1354 is to encourage parties in a condominium CC & R’s dispute, involving minimal monetary 200*200 damages, to resolve their differences by ADR. Accordingly, subdivision (b) of section 1354 requires the parties to “endeavor” to submit their dispute to ADR prior to the filing of the action. Because no action has yet been filed at the time a request for ADR is required to be served, there is no court clerk involved who could serve the request for ADR in the manner prescribed by section 116.340(a)(1) and (4). In establishing the means to serve a request for ADR, however, the Legislature referred to and incorporated section 116.340 in its entirety. It did not, as it could have, specify that only those provisions detailing the manner in which a plaintiff may serve a claim, and not those provisions detailing the manner in which a clerk may do so, were applicable to service of a request for ADR. We recognize that, by allowing a party to effect service under section 116.340(a)(1), we necessarily ignore the word “clerk” in the subdivision. However, a contrary construction would require treating as surplusage subdivisions (a)(1) and (4) of that statute in their entirety. Given the command that the court should avoid treating any portion of a legislative enactment as surplusage, our interpretation is preferable.^[9]

The legislative history relied upon by appellant supports our conclusion. In amending section 1354, the Legislature decided that merely mailing the request for ADR was insufficient and so included the reference to section 116.340 to provide for a more formal method of service, namely, the return receipt.

Moreover, the reasons service by mail of a small claims court claim is reserved to the court clerk are not applicable to service of a request for ADR. Service of a small claims court action subjects the defendant to the court’s jurisdiction. Having obtained jurisdiction over the defendant, the court has the power to enter a judgment against the defendant, with all the attendant legal ramifications. To assure that a defendant in a small claims court action has notice and an opportunity to be heard before such a judgment can be entered, the Legislature has seen fit to require personal or substituted service if the service is made by the plaintiff, an interested party, or by mail if accomplished by a neutral party, the clerk. By contrast, a request for ADR merely offers the other party an opportunity to resolve the dispute by ADR, rather than litigation. Failure to receive a request for ADR does not subject the other party to the significant consequences of a failure to receive notice of, and opportunity to be heard in, a judicial action.

For these reasons, we conclude the Legislature intended to allow a party to an action to enforce CC & R’s pursuant to section 1354 to serve a request for ADR by the more informal but still reliable method of service — namely service by any form of mail requiring a return receipt — prescribed in section 116.340, subdivision (a)(1) and (4). Accordingly, the association complied with section 1354 when it served the request for ADR in that manner. This, however, does not end our inquiry. The question remains whether service was complete despite the fact appellant did not sign the mail return receipt. (§ 116.340, subd. (c).)

According to subdivision (c) of section 116.340, “Service by the methods described in subdivision (a) shall be deemed complete on the date that the defendant 201*201 signs the mail return receipt….”^[10] Here, it is undisputed that appellant did not sign the return receipt. Accordingly, service of the ADR request was not complete pursuant to section 1354. However, we find appellant has waived this error by raising it for the first time in her reply brief and failing to raise it in the court below.

“`An appellate court will not consider procedural defects or erroneous rulings where an objection could have been, but was not, raised in the court below.’ [Citation.] It is unfair to the trial judge and to the adverse party to take advantage of an alleged error on appeal where it could easily have been corrected at trial. [Citations.]” (Children’s Hospital & Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 776-777, 118 Cal.Rptr.2d 629.)

Here, appellant’s demurrer focused entirely on the proposition that respondent failed to file a certificate stating that ADR had been completed or to certify in writing that appellant had refused ADR prior to the filing of the complaint. The association’s opposition papers included a declaration from counsel setting forth what the association had done to comply with section 1354, including service by mail with return receipt. Appellant did not raise any defect in the certified mail/return receipt procedure in reply to respondent’s opposition to the demurrer. On appeal, her opening brief focused exclusively on the proposition that personal service rather than service by mail was required by section 1354. For the first time in her reply brief, appellant suggests that, assuming service by a form of mail requiring return receipt was proper, service in this case was not complete because appellant never signed the return receipt.

If appellant had raised the objection that service of the ADR request was defective because there was no signed return receipt, the trial court could have sustained the demurrer with leave to amend, in which case respondent could have complied with section 1354 and filed an amended complaint. Even if leave were denied, the association could have properly served a new ADR request and commenced a new action. Alternatively, the trial court would have been in a position to consider the provisions of section 1354, subdivision (c) and overrule the demurrer on that basis. Subdivision (c) authorizes the trial court to ignore noncompliance with section 1354 when “dismissal of the action for failure to comply with subdivision (b) would result in substantial prejudice to one of the parties.” The trial court might have exercised its discretion to permit the litigation to go forward. By not raising the lack of a return receipt issue first with the trial court, appellant precluded that court from taking appropriate curative action. (Children’s Hospital & Medical Center v. Bonta, supra, 97 Cal.App.4th at pp. 776-777, 118 Cal.Rptr.2d 629.) Under these circumstances, appellant has waived any error.^[11]

202*202 The Architectural Controls Provisions are Enforceable

Appellant contends the architectural control provisions should not have been enforced as equitable servitudes under section 1354. As we understand her argument, it is that the association failed to follow its own procedures and policies because the architectural committee did not review the air conditioner to determine whether it was “unsightly”; the board had no information concerning whether installation of the air conditioner lessened the structural integrity of the building; and the association did not exercise its authority in a fair and nondiscriminatory way. We disagree.

“… Generally, courts will uphold decisions made by the governing board of an owners association so long as they represent good faith efforts to further the purpose of the common interest development, are consistent with the development’s governing documents, and comply with public policy.” (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 373, 33 Cal.Rptr.2d 63, 878 P.2d 1275 (Nahrstedt).)

Appellant is incorrect in her assertion that there was no evidence the architectural committee ever considered appellant’s air conditioner. Article VIII, section 1 of the CC & R’s provides that the architectural committee “shall be composed of the Board of Directors of the Association or of three (3) or more representatives appointed by the board.” The president of the association’s five-member board of directors, Gina Phelps, testified that, at the relevant time, the board acted as the architectural review committee and that the matter of appellant’s air conditioner was referred to the board acting as the architectural review committee.^[12] After discussing it with the general manager, the board concluded installation of the air conditioner constituted a violation of the association’s architectural restrictions. Thus, there was evidence that the board, acting in this case as the architectural committee, considered appellant’s air conditioner. (Nahrstedt, supra, 8 Cal.4th at p. 373, 33 Cal.Rptr.2d 63, 878 P.2d 1275.)

The evidence is also contrary to appellant’s assertion that the board had no information concerning whether installation of the air conditioner lessened the structural integrity of the building. Because the air conditioner was 20 inches wide and there was evidence that the clear distance between two studs was 14 and one-half inches, it would have been necessary to cut into a stud in order to install appellant’s air conditioner. The engineer testified: “[T]o penetrate the opening or to cut an opening into an exterior wall would entail diminishing, although not to a great extent, to some extent, the structural integrity of the lateral load resisting system and, therefore, degrading the quality of the building structure. Again, not to a great extent.” The engineer expressed these concerns to the general manager. In a letter to the general manager dated January 12, 2000, the engineer stated the air conditioner was installed “through the balcony exterior wall…. This work was done without … proper wall penetration detail.” The engineer was present at the February 22 meeting at which the subject of the air conditioner was briefly discussed. From this evidence, it can reasonably be inferred that both the general manager and the engineer informed the board of their concerns that installation of 203*203 the air conditioner diminished the structural integrity and watertightness of the building.

We are also not persuaded by appellant’s assertion that the association discriminated against her based upon her disability in violation of the Unruh Act (Civ.Code, § 51) because it “was advised of appellant’s health condition and ignored her disability in connection with its attempt to enjoin appellant’s conduct.” The evidence was to the contrary. The evidence adduced at trial established the condominium had central air conditioning. Appellant installed a wall-mounted air conditioner in a walk-in closet for the purpose of alleviating the heat in that closet, which she believed was having an adverse effect on the things she stored there. The new air conditioner did not affect any of the living areas. There was no evidence that the new air conditioner was in any way ameliorative of appellant’s health problems. Thus, there was no evidence from which it could reasonably be inferred that the association’s decision to have appellant remove the air conditioner was somehow discriminatory. Accordingly, there was no evidence that the board’s decision was violative of public policy. (Nahrstedt, supra, 8 Cal.4th at p. 373, 33 Cal.Rptr.2d 63, 878 P.2d 1275.)

Finally, we are not persuaded by appellant’s assertion that, pursuant to Civil Code section 3422,^[13] the association had an adequate remedy at law, such as the imposition of a fine for appellant’s violation of the CC & R’s. “One significant factor in the continued popularity of the common interest form of property ownership is the ability of homeowners to enforce restrictive CC & R’s against other owners (including future purchasers) of project units…. [¶] … [To be enforceable,] restrictions must relate to use, repair, maintenance, or improvement of the property, or to payment of taxes or assessments, and the instrument containing the restrictions must be recorded. [Citation.]” (Nahrstedt, supra, 8 Cal.4th at p. 375, 33 Cal.Rptr.2d 63, 878 P.2d 1275.) Phelps testified that the board considers maintaining the aesthetic value of the buildings at Cabrini Villas as essential to protecting the financial future of the community. In keeping with this philosophy, the association spent $2 million on applying a product that made the stucco buildings watertight. Further, to maintain the architectural integrity of the property, the board determines how best to remedy violations of the CC & R’s. Before appellant installed her air conditioner, Phelps testified, on two prior occasions residents had been required to remove room air-conditioning units they had installed in windows because such installation was found to be a violation of the CC & R’s. This was because the board found these air conditioners to be “unsightly.” Regarding appellant’s air conditioner, Phelps testified she first saw it in December 1999, after she learned of its existence from the general manager. She was able to see the air conditioner from the common area sidewalk in front of the unit. Upon consideration, the board determined that appellant’s air conditioner was unsightly. For this reason, as well as for the reason that the air conditioner had the potential of compromising the structural integrity and watertightness of the building, the board concluded it had to be removed.

Under these circumstances, appellant has failed to establish that the imposition 204*204of a fine was an adequate remedy at law. A monetary penalty would not cure the unsightliness of the air conditioner, nor would it bolster the structural integrity or watertightness of the building.

Appellant’s reliance on Ironwood Owners Assn. IX v. Solomon (1986) 178 Cal.App.3d 766, 224 Cal.Rptr. 18 for a contrary result is misplaced. In that case, the appellate court reversed summary judgment granting an injunction compelling homeowners in a planned development community to remove trees from their property which were placed in violation of the CC & R’s. It reasoned: “When a homeowners’ association seeks to enforce the provisions of its CCRs to compel an act by one of its member owners, it is incumbent upon it to show that it has followed its own standards and procedures prior to pursuing such a remedy, that those procedures were fair and reasonable and that its substantive decision was made in good faith, and is reasonable, not arbitrary or capricious. [Citations.]” (Id. at p. 772, 224 Cal.Rptr. 18.) The appellate court found summary judgment was precluded because questions of material fact existed as to whether the association followed its own procedures as set forth in the CC & R’s. (Id. at pp. 772-773, 224 Cal.Rptr. 18.)

Here, the injunction was granted following a trial at which there was adduced evidence that the board was advised that the air conditioner compromised the structural integrity and watertightness of the building, appellant was given notice and an opportunity to be heard by the board of directors and the judicial committee. After considering the matter, the board concluded that the air conditioner should be removed because it was unsightly and because it compromised the structural integrity and watertightness of the building. This constituted substantial evidence that the association followed its own standards and procedures, that those procedures were fair and reasonable, and that the decision to require appellant to remove the air conditioner and repair the wall was made reasonably and in good faith. To the extent there may have been conflicting evidence, the trial court resolved those conflicts against appellant.

The Court Balanced the Hardships

Appellant contends the trial court did not appropriately balance the relative hardships. She argues the CC & R’s contain no specific prohibition against air conditioners, appellant’s air conditioner was not visible from any common area and appellant needed the air conditioner because heat from the closet radiates into the bedroom during the summer. We disagree.

Appellant’s assertions are contrary to the evidence adduced at trial. Although she is correct that there is no specific prohibition against air conditioners, the CC & R’s and respondent’s policy on architectural control expressly prohibit “interior alterations affecting the structural integrity of the unit without the prior written approval of the Architectural Committee.” The CC & R’s also prohibit unsightly objects from protruding through exterior walls. The engineer testified that appellant’s air conditioner, which the parties stipulated was installed through a wall between her closet and the balcony, compromised the structural integrity of the building. Phelps testified that the air conditioner was visible from the sidewalk in the common area. Finally, defendant testified at her deposition that the air conditioner was used to cool only the closet, not any other living area. Again, to the extent appellant testified otherwise at trial, this was a conflict in the evidence that the trial court apparently resolved against her. We see no reason to disturb that finding.

205*205 DISPOSITION

The judgment is affirmed. Respondent shall recover its costs on appeal.

We concur: COOPER, P.J., and BOLAND, J.

[1] On November 17, 1999, after receiving a letter from the association’s general manager stating that the window would have to be removed because it was installed without prior approval, appellant submitted a request for retroactive approval to install the two-by-three-foot window. Appellant’s request was denied because installation of her window required cutting through a wall stud. When appellant failed to remove the window, the general manager wrote to her a second time. In that letter, dated December 10, he warned appellant she had 72 hours in which to make an appointment with the general manager to “amicably resolve” the matter of the window, or it would be turned over to the association’s legal department. Eventually, the matter was resolved.

[2] Appellant maintains this discovery occurred not in December 1999, but in March or April 2000.

[3] A cross-complaint appellant filed against the association and the contractor, hired by the association to do the earthquake repairs to her unit, has been settled.

[4] In opposition to appellant’s demurrer, counsel for the association submitted a declaration in which he averred that on May 20, 200, the law firm sent appellant a letter requesting alternative dispute resolution by regular and certified mail. Counsel further averred that, after appellant failed to respond to the letter within the statutory 30-day time period, the firm filed the instant action. In overruling the demurrer, the trial court found counsel’s declaration “appears to satisfy the requirements [of] Civil Code section 1354, as a request for ADR was made and [appellant] failed to respond. See Civil Code section 1354(c).”

[5] Section 1354 provides in pertinent part: “(a) The covenants and restrictions in the declaration shall be enforceable equitable servitudes …. [¶] (b) [Except under certain specified conditions not relevant here], prior to the filing of a civil action by either an association or an owner or a member of a common interest development solely for declaratory relief or injunctive relief, or for declaratory relief or injunctive relief in conjunction with a claim for monetary damages … not in excess of five thousand dollars ($5,000), related to the enforcement of the governing documents, the parties shall endeavor, as provided in this subdivision, to submit their dispute to a form of alternative dispute resolution such as mediation or arbitration…. Any party to such a dispute may initiate this process by serving on another party to the dispute a Request for Resolution…. Service of the Request for Resolution shall be in the same manner as prescribed for service in a small claims action as provided in Section 116.340 of the Code of Civil Procedure …. [¶] (c) At the time of filing [such an action,] … the party filing the action shall file with the complaint a certificate stating that alternative dispute resolution has been completed in compliance with subdivision (b). The failure to file a certificate as required by subdivision (b) shall be grounds for a demurrer pursuant to Section 430.10 of the Code of Civil Procedure … unless the filing party certifies in writing that one of the other parties to the dispute refused alternative dispute resolution prior to the filing of the complaint, that preliminary or temporary injunctive relief is necessary … or the court finds that dismissal of the action for failure to comply with subdivision (b) would result in substantial prejudice to one of the parties.”

[6] Code of Civil Procedure section 415.20, subdivision (b) provides that, in lieu of personal service, a complaint may be served by leaving a copy at the person’s dwelling in the presence of a competent member of the household and thereafter mailing a copy to the person served at the place where a copy was left.

[7] Pursuant to subdivision (b)(1) and (3) of Code of Civil Procedure section 116.330, the clerk of the small claims court may cause a copy of the plaintiff’s claim or an order setting a hearing to be served on the defendant “by any form of mail providing for a return receipt.”

[8] Appellant testified she believed the certificate was related to some medical equipment she had ordered. At first, she went to the wrong post office to pick up the letter. When she went to the correct post office, she was told the letter had been returned to its sender one or two days before. Having been told the letter was something legal, she then called the association office and ascertained that the letter was related to legal proceedings being brought against her by the association. Appellant claims she never received a copy of the letter until receiving it from her own attorney during the litigation. However, appellant raised the subject of mediation in a letter to counsel which was apparently written to confirm an extension of time before she made a formal appearance at the litigation. In that letter, dated September 20, 2000, appellant writes: “Thank you very much for giving me 15 days, it will help a lots. [¶] Please, if you could, can you let me know when the new date will be, and for a mediation do I need an attorney. [¶] I would really appreciate your answers to my these [sic] two questions.” It would be reasonable to infer from this letter that appellant did, in fact, receive the association’s May 20, 2000, letter by regular mail if not by certified mail.

[9] Our construction gives greater weight to the notion of “manner” or “method” of service than to theperson effecting the service. This is consistent with the use of the word “manner” in section 1354.

[10] Section 116.340 is silent as to what remedy a small claims court plaintiff has if the defendant fails to sign the mail return receipt. This is in contrast with Code of Civil Procedure section 415.30 providing for service by mail of a summons and complaint in superior court actions. According to subdivision (d) of section 415.30, a defendant who fails to acknowledge service “shall be liable for reasonable expenses thereafter incurred in serving or attempting to serve the party by another method….”

[11] Having concluded that appellant waived the defect in service of the request for ADR, we need not address that portion of appellant’s argument that the failure to comply with section 1354 was tantamount to failing to exhaust an administrative remedy, thus depriving the court of subject matter jurisdiction.

[12] Bill Williams, another board member, testified that there was a separate architectural committee. Such a conflict in the evidence does not require reversal. (Cochran v. Rubens (1996) 42 Cal.App.4th 481, 486, 49 Cal.Rptr.2d 672.)

[13] Civil Code section 3422 provides that a final injunction may be granted where “pecuniary compensation would not afford adequate relief” or where it would be difficult to ascertain the amount of compensation which would afford adequate relief.

Keywords: ADR, IDR