Ticor Title Insurance v. Ranch Santa Fe Association

177 Cal.App.3d 726 (1986)

728*728 COUNSEL

John S. Huiskamp, L. Jean Shannon and Huiskamp & Black for Plaintiff and Appellant.

Michael B. Poynor, Eleanor L. Blais and Sternberg, Eggers, Kidder & Fox for Defendants and Respondents.

Summary by Mary M. Howell, Esq.:

Where CC&Rs called for a 20 foot setback, a board-adopted rule could not increase the setback to 50 feet, because the CC&Rs could not be amended except by vote of the owners.  The board lacked the authority under the documents to change the setback solely by board action.

**End Summary**

OPINION

STANIFORTH, Acting P.J.

Ticor Title Insurance Company (Ticor) appeals a judgment affirming Rancho Santa Fe Association’s (Association) denial of a variance application from setback regulations for a tennis court.

FACTS

On December 2, 1981, Ticor purchased two acres in the residential community of Rancho Santa Fe. Development of land in Rancho Santa Fe is controlled by the Rancho Santa Fe Protective Covenant (Covenant). The Covenant was adopted in 1927 and has been amended at various times over the years by votes of the homeowners. The Covenant is administered by the Association through its board of directors (Board) and the Association Art Jury (Art Jury).

Under the Covenant, a homeowner must obtain the Association’s approval before constructing a tennis court. The Covenant restricts the location of tennis courts by its setback regulations. A homeowner can obtain a variance from the setback requirements based on hardship.

On October 19, 1982, Ticor submitted an application to build a tennis court on its property. The tennis court was located 35 feet from the sideyard lot line. The Association refused to process the application because the 729*729 location violated the 50-foot setback regulations adopted by the Board on October 16, 1980, and amended on October 7, 1982.

Ticor then applied to the Art Jury for a variance from the 50-foot setback requirement. The Art Jury held a noticed hearing of the application and on November 9, 1982, denied the variance based on “the unfavorable impact to the neighborhood” and lack of hardship.

Upon denial of its application, Ticor relocated the proposed centerline of the tennis court and submitted another application for a variance. The tennis court encroached slightly on the sideyard 50-foot setback and was within 27 feet of the back lot line. The Art Jury held a noticed hearing and denied Ticor’s application on January 11, 1983.

On January 18, Ticor filed an appeal of the Art Jury’s decision to the Board. A mediation conference was held on March 8, 1983. After the mediation conference, the Association manager indicated no appeal existed from the Art Jury’s decision.

On March 24, 1983, Ticor filed a suit for declaratory relief, contending the Board lacked authority to modify the Covenant’s setback requirements from 20 to 50 feet; that even if the Board had the authority, the 50-foot setback regulations were unreasonable; that the Art Jury arbitrarily and capriciously denied its variance applications and that it was wrongfully denied an appeal of the Art Jury’s decision. The trial court agreed Ticor had a right of appeal to the Board but otherwise found in favor of the Association.

I

The trial court here found the Covenant as well as the Association’s articles of incorporation and bylaws^[1] gave the Board broad powers to adopt regulations, that the Covenant’s provisions were the minimum requirements 730*730 and the Board was authorized to enact regulations that were more than the minimum requirements.Ticor argues that while the Board may have power to enact regulations the Covenant requires a two-thirds vote of the homeowners to modify or change the setback requirements contained in the Covenant.

(1) The fundamental canon of interpreting written instruments is the ascertainment of the intent of the parties. (Civ. Code, § 1636; Universal Sales Corp. v. Cal. etc. Mfg. Co. (1942) 20 Cal.2d 751, 761 [128 P.2d 665]; Lincoln Sav. & Loan Assn. v. Riviera Estates Assn. (1970) 7 Cal. App.3d 449, 463 [87 Cal. Rptr. 150].) As a rule, the language of an instrument must govern its interpretation if the language is clear and explicit. (Civ. Code, § 1638; Salton Bay Marina, Inc. v. Imperial Irrigation Dist. (1985) 172 Cal. App.3d 914, 931 [218 Cal. Rptr. 839].) A court must view the language in light of the instrument as a whole and not use a “disjointed, single-paragraph, strict construction approach” (Ezer v. Fuchsloch (1979) 99 Cal. App.3d 849, 861 [160 Cal. Rptr. 486, 13 A.L.R.4th 1333].) If possible, the court should give effect to every provision. (Civ. Code, § 1641; White v. Dorfman (1981) 116 Cal. App.3d 892, 897 [172 Cal. Rptr. 326].) An interpretation which renders part of the instrument to be surplusage should be avoided. (See Estate of Newmark (1977) 67 Cal. App.3d 350, 356 [136 Cal. Rptr. 628]; Thackaberry v. Pennington (1955) 131 Cal. App.2d 286, 297 [280 P.2d 165].)

(2) When an instrument is susceptible to two interpretations, the court should give the construction that will make the instrument lawful, operative, definite, reasonable and capable of being carried into effect and avoid an interpretation which will make the instrument extraordinary, harsh, unjust, inequitable or which would result in absurdity. (Battram v. Emerald Bay Community Assn. (1984) 157 Cal. App.3d 1184, 1189 [204 Cal. Rptr. 107].) (3a) If a general and a specific provision are inconsistent, the specific provision controls. (National Ins. Underwriters v. Carter (1976) 17 Cal.3d 380, 384 [131 Cal. Rptr. 42, 551 P.2d 362].) In sections where general words follow the enumeration of particular classes of things, a court will construe the general words as applicable only to the things of the same nature as the class enumerated. (Sears, Roebuck & Co. v. San Diego County Dist. Council of Carpenters (1979) 25 Cal.3d 317, 330 [158 Cal. Rptr. 370, 599 P.2d 676]; White v. Dorfman, supra, 116 Cal. App.3d 892, 897.)

II

The articles of incorporation and the Covenant provide the Association with authority to interpret and enforce the restrictions contained in the Covenant. The Covenant also provides: “In interpreting and applying the provisions 731*731 of this covenant they shall be held to be the minimum requirements adopted for the promotion of the health, safety, comfort, convenience and general welfare of the owners and occupants of said property.” (Italics added.)

The bylaws of the Association provide the Board with the power: “To make regulations, resolutions and rulings as authorized by the laws of the State, the Rancho Santa Fe Protective Covenant, the Articles of Incorporation, and these Bylaws.”

The first declaration of the Covenant which covers Ticor’s property is divided into six articles.^[2] The first article contains the “General Basic Restrictions.” It states in paragraph 14 that the Association “shall adopt such rules and regulations” as it deems advisable and necessary “[t]o maintain the health, safety and general welfare of people residing on said property, and to prevent danger from fires, street traffic, camping and picnicking or other hazards to life and limb or property.”

Article I further provides the property owners covenant that: “Par. 36…. [T]he Association shall have the right and power to do and/or perform any of the following things, for the benefit, maintenance and improvement of said property:

“Par. 37. (1) Generally, to do any and all lawful things which may be advisable, proper, authorized and/or permitted to be done by the Association under or by virtue of this covenant or of any restrictions, conditions, and/or covenants or laws any time affecting said property or any portion thereof … and to do and perform any and all acts which may be either necessary for, or incidental to the exercise of any of the powers and duties herein authorized and established or as provided in the Articles of Incorporation…. The regulations of said Association shall have full force and effect from and after the time of their adoption as provided in the By-Laws of the Association and shall thereafter be as binding upon the owners of said property and each of them their successors and assigns as if set out in full herein.”

The trial court here concluded when paragraphs 14, 37 and 149 were read together, they provided the Board with broad authority to enact regulations, including setback regulations which were more stringent than the “minimum requirements” of the Covenant’s provision. However, the Covenant 732*732 also contains an article entitled “Duration, Enforcement, Amendment.” (Art. V.) Paragraph 165 in this article specifically addresses modification of the Covenant’s provisions contained in article VI. The setback requirements involved here are contained in article VI. Paragraph 165 provides: “Any of the conditions, restrictions, covenants, reservations, liens or charges set forth in Article VI hereof, or hereafter established in any declaration, acceptance or covenant of additional restrictions or deed, contract of sale, or lease, approved by the Association as herein provided, and filed for record with said County Recorder, applicable to any part of said property, unless otherwise provided therein,may be changed or modified by written instrument duly executed and placed of record, with the written approval of the Association and the owner or owners of record of two-thirds in area of the property directly subject to said change or modification; provided, however, that no such change or modification shall be made without the written consent duly executed and recorded of the owners of record of not less than two-thirds in area of all said property held in private ownership within five hundred (500) feet in any direction from the property concerning which a change or modification is sought to be made, and provided further that this shall not be construed as requiring the consent of the owners of any property not under jurisdiction of the Association; and also provided that any approval given thereto by the Association shall not be valid unless and until the Board of Directors shall first have had a public hearing thereon. The phrase `property directly subject to said change or modification,’ as used in this paragraph, shall be taken to mean only the parcel or parcels of said property described in the application for amendment presented to the Association for approval.” (Italics added.)

III

The Association argues paragraph 165 applies only to attempts to reduce the Covenant’s requirements, e.g., to reduce the setback requirements below the seven-foot to twenty-foot specifications of paragraph 207 and does not prohibit the Boardfrom increasing the requirements. The Association’s argument is belied by the language of paragraph 165 which states it applies when the Covenant’s provisions in article VI are to be “changed or modified.” (Italics added.)

(4) Words in a written instrument are to be understood in their ordinary and popular sense. (Civ. Code, § 1644.) As used in their ordinary sense, the words “changed” and “modified” include any alteration whether involving an increase or decrease. Had the covenanting parties intended the result urged by the Association, they easily could have said so by stating the two-thirds vote of homeowner procedure applied only when the covenant’s provisions were to be “limited,” “minimized,” “decreased,” etc. 733*733 Since they did not use such restrictive language, we must presume they intended the procedures of paragraph 165 to apply to any change or modification in the setback regulations.

The Association alternatively argues paragraph 165 does not represent the exclusive means of altering the Covenant’s provisions. It points to paragraph 165’s use of the permissive word “may” and the broad powers to enact general welfare regulations in paragraph 14 to support its argument. We are not persuaded.

Initially, we note paragraph 165 is permissive only in that it permits change or modification of the Covenant’s restrictions. Nothing in paragraph 165 implies the procedure it delineates is not the exclusive procedure. Had the covenanting parties intended the result now urged by the Association, they easily could have said so. They could have included additional language in paragraph 165 or an additional paragraph in article V, “Duration, Enforcement, Amendment,” stating the Covenant’s provisions could be changed or modified by the Board acting alone.

Nor does paragraph 14’s broad grant of authority to the Association to adopt regulations for the “general welfare” compel a different result. By its express terms, paragraph 14 addresses the Association’s power to “adopt” regulations. The action involved here was a change or modification of existing provisions in the Covenant, an action specifically addressed in paragraph 165. Moreover, even if we construed paragraph 14’s authorization to include authorization to adopt regulations altering the Covenant’s article VI restrictions, we still would not find paragraph 14 authorized the change by the Board.

Paragraph 14 states the Association has the power to adopt rules and regulations for the general welfare. It does not state the Board has the power. It does not state the procedure for adopting the rules and regulations. While it may be the Board has power to enact some rules and regulations under paragraph 14 and that setback regulations may fall within the broad perimeters of the general welfare, in the case of these setback regulations in this covenant, the procedure for adopting rules and regulations is set forth in paragraph 165 and that paragraph does not authorize the Board to act alone.

The Association argues that since it is granted the power to interpret the Covenant, it acted properly in interpreting paragraphs 14, 37 and 149 to grant the Board power to enact more stringent setback regulations than those contained in the Covenant. The power to interpret, however, is not unlimited. The Board’s construction of its interpretation powers leads to an extraordinary 734*734 and unjust result. Under this construction, the Board is unlimited in its power to interpret the Covenant as it sees fit even if, as in the instant case, it involves ignoring express language in the Covenant and denigrating the voting rights of the property owners. We do not believe the covenanting parties intended the Board to have such unfettered powers by the process of “interpretation.”

IV

Finally, we note a construction enforcing the procedure outlined in paragraph 165 comports with usual procedures for amending covenants, conditions, and restrictions. (See 2 Ogden’s Revised Cal. Real Property Law (Ticor 1975) § 23.27, p. 1156; Advanced Real Property Series, Homeowners Associations Program Material (Cont.Ed.Bar 1984) pp. 65, 99; Condominiums and Planned Developments: Representing Owners, Developers and Lenders (Cont.Ed.Bar Program Material 1978) pp. C-78.21, C-127, C-554.) Further, one of the usual requirements for covenants to run with the land and to bind subsequent owners is recordation. (SeeRiley v. Bear Creek Planning Committee (1976) 17 Cal.3d 500, 511 [131 Cal. Rptr. 381, 551 P.2d 1213].) Paragraph 165 ensures changes to the Covenant’s provisions will run with the land; a goal presumably intended by the covenanting parties.^[3]

(3b) We conclude the Board was not authorized to enact setback regulations different from those contained in the Covenant; therefore we do not address Ticor’sremaining contentions as to the reasonableness of the Board’s setback requirements and the Art Jury’s denial of its variance application.

The judgment is reversed.

Butler, J., and Mitchell, J.,^[*] concurred.

[1] Ticor contends the trial court improperly considered the articles of incorporation and bylaws since neither were admitted into evidence at trial but were attached to a declaration submitted on a motion for summary judgment. Ticor argues this court, also, may not consider the articles and bylaws, citing as support for this proposition Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 184 [151 Cal. Rptr. 837, 588 P.2d 1261], and Oldenkott v. American Electric, Inc. (1971) 14 Cal. App.3d 198, 207 [92 Cal. Rptr. 127], cert. den. 402 U.S. 975 [29 L.Ed.2d 140, 91 S.Ct. 1668]. Neither case supports his proposition. These cases concern the appellate court’s refusal to consider documents which were not part of the record below. The documents here are part of the record.

Moreover, Ticor does not dispute the accuracy of the articles of incorporation or bylaws considered nor did it object below. In this light, we can find no prejudice and error, if any, was waived.

[2] The Covenant contains three declarations. The first declaration contains restrictions covering all property in Rancho Santa Fe. The second two declarations contain additional restrictions on certain land within Rancho Santa Fe. When we refer to the Covenant, we mean the first declaration.

[3] We do not address the issue whether the Board can enact unrecorded regulations that bind subsequent property owners; we merely note that the procedure outlined in paragraph 165 is designed to insure subsequent property owners are bound.

[*] Assigned by the Chairperson of the Judicial Council.

Keywords: Architectural Review

Sui v. Price

196 Cal.App.4th 933 (2011)

935*935 Yan Sui, in pro. per., for Plaintiff and Appellant.

Bonne, Bridges, Mueller, O’Keefe & Nichols, Margaret M. Holm, Robert A. Zermeno, Jr., and Anne K. Bagley for Defendants and Respondents.

Summary by Mary M. Howell, Esq.:

Association’s adoption of rule prohibiting parking of inoperable vehicles on common area was not discriminatory even though plaintiff owner was the only resident in the community who habitually parked such vehicles.  Further, towing a vehicle found in violation was an appropriate method of enforcing the rule.

**End Summary**

CERTIFIED FOR PARTIAL PUBLICATION^[*]

OPINION

IKOLA, J.—

Plaintiff Yan Sui appeals from the judgment dismissing with prejudice his action against defendants Stephen D. Price and 2176 Pacific Homeowners Association after the court sustained without leave to amend defendants’ demurrer to plaintiff’s complaint. The court ruled the complaint did not state facts sufficient to constitute a cause of action and could not be fixed. We affirm.

FACTS

Accepting “as true all material allegations of the complaint” (Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 929 [30 Cal.Rptr.2d 440, 873 P.2d 613]), we draw the following facts from plaintiff’s complaint.

The case involves plaintiff’s 1987 Mitsubishi van, which was registered in the name of his wife, Pei-yu Yang. From 1995 to 2003, plaintiff used the van to drive his family, including three young children, to various destinations, including to school, local parks, and vacation spots. Plaintiff also used the van to make deliveries for a printing brokerage business.

In 2003, the van’s engine broke down. From 2003 to February 2007, plaintiff kept the inoperable, locked van parked in his exclusive parking space 936*936 between units C and D. Plaintiff’s family, including his children, developed a “strong bond” with the van. It was part of their “family, just like some people with their pets.” The van served as a memory of the good times the family had experienced.

From 2005 to 2006, Michelle J. Matteau parked her boat in her parking space between units B and C. Her tenants at that time parked their car behind the boat in violation of the homeowners association’s CC&R’s (covenants, conditions, and restrictions). Matteau’s tenants’ car blocked plaintiff’s car from going in and out of the garage. Plaintiff complained to the then president of the association, Sean Wiggins, and asked Wiggins to have Matteau remove the boat. Matteau removed her boat.

In late 2006, Price, the current president of the homeowners association commenced the process to amend the association’s parking rule, assisted by the law firm of Harkins. Price e-mailed the amended parking rule to all the homeowners. The amendment primarily revised two provisions. It made parking in front of a garage permissible, and prohibited disabled, inoperable vehicles. Plaintiff believed Price was exercising personal retaliation against him, but Price denied the allegation.

In about December 2006, Price informed the homeowners that the amended parking rule had been approved by majority vote and was “immediately effective.” Plaintiff voiced his opposition and asked to see the voting record. Price claimed plaintiff was ineligible to view the record because he was not a board member.

Defendants’ claim that the amended parking rule was “immediately effective” was false, because the amended parking rule had not yet been recorded with the county, as required under the Davis-Stirling Common Interest Development Act (Civ. Code, § 1350 et seq.), Civil Code section 1355, subdivision (b), cited in Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 82-83 [14 Cal.Rptr.3d 67, 90 P.3d 1223].

In January 2007, Price walked uninvited onto plaintiff’s exclusive parking space and placed a warning sticker on the back windshield of the van. Plaintiff walked out and warned Price not to touch plaintiff’s property. Price replied, “I am not touching it,” and left plaintiff’s parking space. The warning on the sticker stated in relevant part, “Your vehicle was in violation of the parking rule and you shall tow it away in X days. If XXX fail to do so, XXX will tow it away.”

937*937 In February 2007, plaintiff was sick and taking a nap when one of his children told him a tow truck was there to tow the van. Plaintiff went to the parking space and saw a tow truck with the logo “South Coast Towing” parked by his van. The operator said he was towing the van away at the association’s request. Plaintiff noticed Price and Matteau watching from a distance, smiling, along with other neighbors.

Plaintiff’s children waved protest signs, which said “get a life,” at Price and Matteau. His wife asked them to use their energy to make some babies. A police officer came to the scene apparently at Price and Matteau’s behest. Plaintiff controlled his anger rather than escalate the confrontation. Price and Matteau used their position with the homeowners association to humiliate plaintiff in front of his children for his inability to protect his personal property.

About two months later, plaintiff’s wife received a bill from a collection agency for about $1,700.00. This charge impacted the credit standing of plaintiff and his wife. Their application to refinance the house was denied and the wife’s application for a credit card was denied. Their credit report showed the wife had an “open collection account” from May of 2007 of about $2,000.

Recently, plaintiff insisted on seeing the voting records on the parking rule amendment. Price claimed the parking rule was not amended and that no amendment was necessary in order to tow away plaintiff’s van.

Defendants intentionally engaged in wrongful and despicable conduct with conscious disregard of plaintiff’s rights and with the intention to injure him. Defendants caused injury to plaintiff and his family. Defendants’ willful misconduct was intended to retaliate against and to humiliate plaintiff. Defendants’ wrongful acts constitute oppression, fraud, or malice under Civil Code section 1572, entitling plaintiff and his family to punitive damages.

Based on these asserted facts, plaintiff filed his complaint on March 15, 2010, against Price, the homeowners association, and Doe defendants, alleging causes of action for fraud, breach of contract, conspiracy to defraud, trespassing, intentional infliction of emotional distress, violation of due process, conversion, libel of character, and declaratory relief. Plaintiff sought compensatory, incidental, and consequential damages of $2,000 and punitive damages of $58,000.

938*938 Defendants demurred on April 28, 2010, on grounds the causes of action were factually insufficient, vague, and as to some of plaintiff’s claims, barred by the statute of limitations.

The court issued a written order sustaining the demurrer without leave to amend on grounds the complaint “has not stated facts sufficient to constitute a cause of action, and there is no way to fix the [c]omplaint.” Judgment was entered against plaintiff and his action was dismissed.

DISCUSSION

Standard of Review

“`Because a demurrer both tests the legal sufficiency of the complaint and involves the trial court’s discretion, an appellate court employs two separate standards of review on appeal. [Citation.] . . . Appellate courts first review the complaint de novo to determine whether or not the . . . complaint alleges facts sufficient to state a cause of action under any legal theory, [citation], or in other words, to determine whether or not the trial court erroneously sustained the demurrer as a matter of law.'” (Filet Menu, Inc. v. Cheng (1999) 71 Cal.App.4th 1276, 1279 [84 Cal.Rptr.2d 384] (Filet).) “`A demurrer tests the pleading alone, and not the evidence or the facts alleged.’ [Citation.] For that reason, we `assume the truth of the complaint’s properly pleaded or implied factual allegations.’ [Citation.] We also `consider judicially noticed matters.'” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315 [64 Cal.Rptr.3d 9].) “Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58] (Blank).) We do not assume the truth of pleaded “`contentions, deductions or conclusions of fact or law.'” (Ibid.) “Because [defendant] was denied leave to amend we construe [the complaint’s] allegations liberally `with a view to substantial justice between the parties.'” (CAMSI IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1530 [282 Cal.Rptr. 80].) “[I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 [9 Cal.Rptr.2d 92, 831 P.2d 317].) The plaintiff “bears the burden of demonstrating that the trial court erroneously sustained the demurrer as a matter of law” and “must show the complaint alleges facts sufficient to establish every element of [the] cause of action.” (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43 [96 Cal.Rptr.2d 354].)

“`Second, if a trial court sustains a demurrer without leave to amend, appellate courts determine whether or not the plaintiff could amend the 939*939 complaint to state a cause of action.'” (Filet, supra, 71 Cal.App.4th at p. 1280.) “[W]e decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank, supra, 39 Cal.3d at p. 318.)^[*]

Plaintiff Failed to State Facts Constituting a Cause of Action for Fraud^[*]

Plaintiff Failed to State Facts Constituting a Cause of Action for Breach of Contract

As to the breach of contract cause of action, the complaint alleged that defendants violated the association’s CC&R’s (a contract between him and the association)^[2] by discriminating against him in violation of article VI, section 3 (Association Rules) of the CC&R’s (since he was the only homeowner with a disabled vehicle at that time); enforcing the CC&R’s by inappropriate means in violation of article VI, section 1 (General Duties and Powers) of the CC&R’s; and permitting parking in front of garage doors through the purported amendment in violation of article XI, section 5 of the CC&R’s.

(1) First, as to the discrimination claim, plaintiff alleges that article VI, section 3 of the CC&R’s provides “[t]hat the Association Rules may not discriminate among Owners, and shall not be inconsistent with this Declaration, the Articles or Bylaws.” Plaintiff alleges he is the only homeowner with a disabled vehicle, and, because “other owners did not have a disabled vehicle at that time [the rule] amendment was taylor-made [sic] for Plaintiff’s van.” But the alleged parking rule does not single out plaintiff. It is equally applicable to all homeowners. True, an operating rule of a homeowners association must be tethered to reasonableness, just like the CC&R’s. (See Civ. Code, §§ 1357.110, subd. (e) [operating rule must be reasonable], 1354 [CC&R’s are enforceable unless unreasonable].) Whether a rule is reasonable “is to be determinednot by reference to facts that are specific to the objecting homeowner, but by reference to the common interest development as a whole.” (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 940*940 361, 386 [33 Cal.Rptr.2d 63, 878 P.2d 1275] [pet restriction prohibiting cats or dogs but allowing other pets was reasonable].) Use restrictions in CC&R’s “should be enforced unless they are wholly arbitrary, violate a fundamental public policy, or impose a burden on the use of affected land that far outweighs any benefit.” (Id. at p. 382.) We see no reason to apply a different test for reasonableness of an association’s operating rules, especially since a rule adopted by the association’s board may be reversed by majority vote of the homeowners at a meeting called on petition of only 5 percent of the separate interests in the association. (Civ. Code, § 1357.140.) (2) Simply put, there is nothing unreasonable about prohibiting the open, long-term parking of disabled vehicles. The association was perfectly reasonable in prohibiting this unsightly intrusion upon the aesthetics of their common interest development.

(3) Second, as to the alleged breach of contract by inappropriate enforcement of the rules, plaintiff alleges that article VI of the CC&R’s provides in part that the board’s duties include the enforcement of the “Association Rules . . . by appropriate means.” Although plaintiff does not explicitly say what inappropriate means were employed, presumably he means the towing of his disabled vehicle. One wonders — how else would the prohibition on parking disabled vehicles be enforced against a recalcitrant homeowner? Moreover, Vehicle Code section 22658, subdivision (a), permits an association of a common interest development to remove a vehicle parked on the property under a variety of circumstances, including the giving of notice of the parking violation, and the lapse of 96 hours after such notice. (Id., subd. (a)(2).) Plaintiff does not allege, nor does he offer to allege, that the provisions of Vehicle Code section 22658 were violated. Thus, it is not inappropriate to enforce a parking rule in the manner authorized by law.

(4) Finally, plaintiff alleges a breach of article XI, section 5 of the CC&R’s. Plaintiff failed to allege what article XI, section 5 provides. That alone would be sufficient to sustain the demurrer. It is impossible to rule on an alleged breach without knowing what promise was not kept. Plaintiff’s complaint does go on to allege that the parking rules were void because they were not recorded with the county. There is no requirement that operating rules of an association be recorded. (See Civ. Code, § 1357.110 [listing requirements for the validity and enforceability of operating rules].) Plaintiff does not allege anywhere in his complaint that the CC&R’s were amended, which, of course, would require recordation.^[3] (See Civ. Code, § 1355, subd. (a).)

941*941 The demurrer to the breach of contract cause of action was properly sustained without leave to amend.

There Is no Cause of Action for Conspiracy to Defraud^[*]

Plaintiff’s Trespass Cause of Action Is Time-barred^[*]

Plaintiff’s Intentional Infliction of Emotional Distress Cause of Action is Time-barred^[*]

Plaintiff Failed to State Facts Constituting a Cause of Action for Violation of Due Process^[*]

Plaintiff’s Conversion Cause of Action Is Time-barred^[*]

Plaintiff’s Cause of Action for Libel of Character Is Time-barred^[*]

Plaintiff Failed to State Facts Constituting a Cause of Action for Declaratory Relief^[*]

942*942 DISPOSITION

The judgment is affirmed. Defendants shall recover their costs on appeal.

Bedsworth, Acting P. J., and Fybel, J., concurred.

[*] This opinion is certified for publication with the exception of the following: The third paragraph, fourth paragraph, fifth paragraph, and footnote 1, in the Discussion section under the subheading titled Standard of Review; the entire sections under the following subheadings titled: Plaintiff Failed to State Facts Constituting a Cause of Action for Fraud; There Is no Cause of Action for Conspiracy to Defraud; Plaintiff’s Trespass Cause of Action Is Time-barred; Plaintiff’s Intentional Infliction of Emotional 2 Distress Cause of Action Is Time-barred; Plaintiff Failed to State Facts Constituting a Cause of Action for Violation of Due Process; Plaintiff’s Conversion Cause of Action Is Time-barred; Plaintiff’s Cause of Action for Libel of Character Is Time-barred; Plaintiff Failed to State Facts Constituting a Cause of Action for Declaratory Relief.

[*] See footnote, ante, page 933.

[2] Plaintiff does not allege Price is a party to the contract.

[3] It does not appear the complaint can be amended on this point. Plaintiff attached to his opening brief on appeal a copy of Price’s e-mail dated September 8, 2009, which stated: “The CC&R’s were not amended, an amendment is not required in order to adopt rules to address the parking problem. All the procedures laid out in section 1357.130 of the Civil Code were adhered to in adopting the rules in regards to parking. . . . You were notified of the change, given a copy of the new rules, asked to move the van numerous times and finally, notice was placed on your van prior to towing. All legal requirements were met prior to towing your van.” Plaintiff does not offer to allege that the CC&R’s were invalidly amended.

[*] See footnote, ante, page 933.

Keywords: Governing Documents, Enforcement

Shorewood West Condominium Association v. Asghar

966 P.2d 372 (1998)

Michael C. Simon, Blair Schaefer Hutchison & Wolfe, Vancouver, for Appellant.

Zachary Harry Stoumbos, Landerholm Memovich, Vancouver, for Respondents.

HOUGHTON, Chief Judge.

Summary by Mary M. Howell, Esq.:

Owner-adopted CC&R amendment, in Washington condominium complex, prohibiting leasing as to current as well as future owners, was reasonable, as was grandfathering in units leased at the time of adoption of the amendment, was reasonable.  Further, the amendment did not impermissibly create two classes of members.  [NOTE:  Rental prohibitions in California are governed by Civil Code §4740, which as of its effective date of January 1, 2012, specifically prevented associations from imposing a rental prohibition on one who owned at the time of adoption of the prohibition, unless such owner consented to the same.  Pre-2012 rental prohibitions are enforceable as to existing owners.]

**End Summary**

Shorewood West Condominiums Owners Association amended its bylaws to restrict owners from leasing units that were not already leased. Later, Asghar Sadri and Dorothy Grazul began leasing a unit purchased 373*373 before the amendment. The trial court held the amendment invalid as to existing owners. We reverse.

FACTS

Shorewood West Condominiums was established by declaration in 1978. The declaration restricted units to residential purposes and prohibited leasing units for fewer than 30 days. The declaration states that it can be amended by a “supermajority” of 60 percent of the owners. All unit owners are members of an owners’ association, administered by a board of directors. Bylaws, adopted in 1978, also restrict units to residential purposes and may be amended by 60 percent of the owners.

On August 11, 1994, the Shorewood West Owners Association (Association) adopted a bylaw amendment restricting leasing to units already leased. It also adopted rules allowing owners to petition to lease their units under circumstances such as job relocation, extended vacation, disability, difficulty buying/selling, or “any other circumstance the Board deems appropriate.” Fifteen units, already leased as of August 11, 1994, were “grandfathered in” as allowable rental units.

In December 1993, respondents Grazul and Sadri purchased unit 7501 for $150,000. They were given a “Property Condition Report” stating there were no restrictions on owners renting units. Grazul, a licensed real estate broker, lived in the unit until the spring of 1995. In May 1995, respondents leased the condominium, effective July 1995.

In January 1996, the Association filed a lawsuit seeking a declaratory judgment and injunctive relief. The trial court agreed with the Association that it had the authority to amend its bylaws to restrict leasing, but ruled that the restriction was valid only as to owners acquiring units after the date of the amendment. The trial court awarded Grazul and Sadri $1,180 in attorney fees for prevailing on the restriction’s application to current owners.

The Association appeals, contending that a condominium owners association may amend its bylaws to restrict leasing of all units occupied by owners at the time of amendment. Grazul and Sadri cross appeal, arguing that the trial court erred: (1) in denying their motion for summary judgment that the Association did not have the authority to amend bylaws to restrict leasing; (2) in granting the Association’s motion for summary judgment that the lease restrictions were valid; and (3) in denying their motion for all of the attorney fees requested.^[1]

ANALYSIS

Condominiums are a statutorily-created form of real estate. RCW 64.32.030 (“Each apartment, together with its undivided interest in the common areas … shall for all purposes constitute and be classified as real property.”) The rights of condominium unit owners are, therefore, not identical to those of real property owners at common law. See Rouse v. Glascam Builders, Inc., 101 Wash.2d 127, 132, 677 P.2d 125 (1984) (“condominiums or horizontal property regimes were unknown in common law”); McElveen-Hunter v. Fountain Manor Ass’n, Inc., 96 N.C.App. 627, 386 S.E.2d 435, 436 (1989) (“The rights and duties of condominium unit owners … are not the same as those of real property owners at common law.”), aff’d, 328 N.C. 84, 399 S.E.2d 112 (N.C.1991). “Central to the concept of condominium ownership is the principle that each owner, in exchange for the benefits of association with other owners, `must give up a certain degree of freedom of choice which he [or she] might otherwise enjoy in separate, privately owned property.'” Noble v. Murphy, 34 Mass.App.Ct. 452, 612 N.E.2d 266, 269 (1993) (quoting Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180, 182, 72 A.L.R.3d 305 (Fla.Dist.Ct.App.1975)).

Washington’s Horizontal Property Regimes Act (Act) anticipates governance by an owners association, with property restrictions to be imposed by recorded instrument. The Act requires each owner to strictly comply with the bylaws and rules, “as either may be lawfully amended.” RCW 64.32.060. It requires a declaration to contain a statement of purpose and restrictions on use of units and 374*374 procedures for amending the declaration and bylaws; a declaration amendment must have at least 60 percent approval, with unanimous consent if it alters the value of the property and of each unit. RCW 64.32.090. All owners “shall be subject to this chapter and to the declaration and bylaws,” and decisions by the Association “under the provisions of this chapter, the declaration, or the bylaws … shall be deemed to be binding on all [unit] owners.” RCW 64.32.250.

Washington has not yet adopted a standard to review condominium rules. Courts in other jurisdictions have adopted various approaches to review restrictions on unit use. Some apply constitutional principles, using equal protection or due process standards, either disregarding the state action requirement or analogizing condominiums to municipalities. See, e.g., White Egret Condominium, Inc. v. Franklin, 379 So.2d 346 (Fla. 1979) (equal protection); Majestic View Condominium Ass’n v. Bolotin, 429 So.2d 438 (Fla. 4th Dist.Ct.App.1983) (procedural due process); cf. Thanasoulis v. Winston Tower 200 Ass’n, 214 N.J.Super. 408, 519 A.2d 911 (1986) (finding constitutional principles inapplicable for lack of state action),rev’d on other grounds, 110 N.J. 650, 542 A.2d 900, 76 A.L.R.4th 273 (N.J.1988);Covered Bridge Condominium Ass’n, Inc. v. Chambliss, 705 S.W.2d 211, 213 (Tex.App.1985) (reviewing for constitutionality while recognizing that the “restriction [was] created by a private contract”); Franklin v. Spadafora, 388 Mass. 764, 447 N.E.2d 1244, 1250, 39 A.L.R.4th 77 (1983) (assuming state action is present when condominium amends bylaws); Levandusky v. One Fifth Ave. Apartment Corp., 75 N.Y.2d 530, 554 N.Y.S.2d 807, 553 N.E.2d 1317, 1320 (1990) (describing condominium association as a “quasi-government”).

Courts often use contract theory to bind owners to rules adopted after purchase, reasoning that the purchaser knew the rules could change, and by purchasing, consented. See, e.g., Thanasoulis, 519 A.2d at 919. Courts also apply the business judgment rule to actions of an owners association, holding its members liable for their decisions only if they benefited to the detriment of other owners. See, e.g.,Schwarzmann v. Association of Apartment Owners, 33 Wash.App. 397, 402, 655 P.2d 1177 (1982).

The most common approach, which the Association urges us to adopt, presumes the validity of restrictions in recorded documents, but tests rules adopted by a governing body for reasonableness. Hidden Harbour Estates, Inc. v. Basso, 393 So.2d 637, 639-40 (Fla. 4th Dist.Ct.App.1981). See also Board of Directors of 175 East Delaware Place Homeowners Ass’n v. Hinojosa, 287 Ill.App.3d 886, 223 Ill.Dec. 222, 679 N.E.2d 407, 411 (1997); Ridgely Condominium Ass’n v. Smyrnioudis, 105 Md.App. 404, 660 A.2d 942, 949 (1995), aff’d, 343 Md. 357, 681 A.2d 494 (Md.1996);Nahrstedt v. Lakeside Village Condominium Ass’n, 8 Cal.4th 361, 33 Cal.Rptr.2d 63, 878 P.2d 1275, 1283 (1994); Noble, 612 N.E.2d at 270; Preston Tower Condominium Ass’n v. S.B. Realty, Inc. 685 S.W.2d 98, 102 (Tex.App.1985). A reasonable restriction is one that is “reasonably related to the promotion of the health, happiness and peace of mind of the unit owners.” Basso, 393 So.2d at 640.

The Basso approach differentiates between two situations in which an owners association attempts to enforce restrictions, depending upon whether the restriction is in a recorded document or a board-promulgated rule. Hinojosa, 223 Ill.Dec. 222, 679 N.E.2d at 411. Restrictions in the first category “are clothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed.” Basso,393 So.2d at 639. Such a restriction is akin to a covenant running with the land and will be upheld unless wholly arbitrary in application or in violation of public policy or a fundamental constitutional right. Basso, 393 So.2d at 640. On the other hand, a governing body that promulgates a rule restricting some use must show that the use is “antagonistic to … the health, happiness and peace of mind of the individual unit owners.” Basso, 393 So.2d at 640. Such restrictions must be reasonable in both purpose and application. Hinojosa, 223 Ill.Dec. 222, 679 N.E.2d at 411.

The Basso court differentiated between declarations and board rules, without reference 375*375 to bylaws. Some courts see a significant distinction as to whether buyers had notice of a restriction before purchase; other courts distinguish between rules approved by a supermajority of owners and those adopted by an elected board.See, e.g., Noble, 612 N.E.2d at 270 (upholding bylaw restriction in “originating documents”); Apple II Condominium Ass’n v. Worth Bank and Trust Co., 277 Ill.App.3d 345, 213 Ill.Dec. 463, 659 N.E.2d 93, 98 (1995) (deferring to declaration amendments passed by a supermajority). Courts have declined to apply a stricter standard to amendments, “expressly treat[ing] an amendment the same as an original recorded provision, on the basis that the unit owner had notice of the provisions and procedures for amending a recorded provision when the unit was purchased.” Ridgely Condominium, 660 A.2d at 949 (collecting cases in support of both propositions).

The court in Ridgely Condominium reviewed a bylaw amendment under the stricter reasonableness test. Ridgely Condominium, 660 A.2d at 950. In that case, the first floor of the condominium building housed professional offices. A bylaw amendment required commercial clients to use an exterior entrance rather than the lobby. Asserting that a more deferential standard would be appropriate to review restrictions recorded before purchase, the court held that “bylaw amendments pertaining to use restrictions” must be reasonable to prevent discrimination against certain classes of owners. Ridgely Condominium, 660 A.2d at 951. The Maryland statute requires that two-thirds of the owners approve bylaw amendments; the “relative ease” of amending bylaws supported a stricter review. Ridgely Condominium, 660 A.2d at 949-50. Because the amendment did not treat owners equally and was not reasonably related “to the health, happiness, and enjoyment of unit owners,” it was invalid. Ridgely Condominium, 660 A.2d at 951.

We find the reasoning in Basso and Ridgely Condominium persuasive and adopt a reasonableness requirement for both post-purchase amendments and rules promulgated by a governing body. This less deferential review is necessary to protect purchasers from unreasonable infringement on their property rights. We thus look at the restriction disputed here to determine whether it meets this test.

Leasing restrictions may be reasonable

Restrictions on leasing have been upheld as reasonable restraints on alienation. Lewis A. Schiller, Limitations on the Enforceability of Condominium Rules, 22 STETSON L. REV. 1133, 1157 (1993) (citing 17 A.L.R.4th 1247 (1982)); Seagate Condominium Ass’n v. Duffy, 330 So.2d 484 (Fla. 4th Dist.Ct.App.1976) (upholding prohibition on leasing for investment, but permitting a four-to twelve-month lease with special permission); Kroop v. Caravelle Condominium, Inc., 323 So.2d 307 (Fla.3d Dist.Ct.App.1975) (upholding rule allowing owner to lease unit only once during lifetime); but cf. Barnett and Klein Corp. v. President of Palm Beach—A Condominium, Inc., 426 So.2d 1074 (Fla. 4th Dist.Ct.App.1983) (holding invalid as discriminatory rule allowing owners who held title before set date to lease once a year, but others once every two years). Leasing restrictions may be reasonable in light of such goals as inhibiting transiency, Duffy, 330 So.2d at 486-87, or discouraging purchase for investment rather than residency, Spadafora, 447 N.E.2d at 1247. Owner occupied buildings may promote stability and a sense of community.See City of Oceanside v. McKenna, 215 Cal.App.3d 1420, 264 Cal.Rptr. 275 (1989)(finding ban on leasing reasonable where intended to foster a stabilized community). People generally buy into regulated developments such as condominiums in order to protect economic interests and social preferences. See Todd Brower, Communities within the Community: Consent, Constitutionalism, and Other Failures of Legal Theory in Residential Associations, 7 J. LAND USE & ENVTL. L. 203, 205-06 (1992). Restricting leases, with appropriate exceptions, is reasonable in the context of a residential condominium.

The fact that the Association amended its bylaws rather than its declaration is immaterial. The Association declaration limits units to “residential purposes.” It allows bylaw amendments to enforce “rules and regulations 376*376 for the use, occupancy and management of the property not inconsistent herewith.” Evidence presented tended to show that unit values would increase if leasing were restricted. The disputed restriction on the use and occupancy of units is not inconsistent with a residential purpose requirement.

Amendments may apply to existing owners

Generally courts have held restrictions contained in amendments invalid as to owners who purchased before the restriction was adopted. See Winston Towers 200 Ass’n v. Saverio, 360 So.2d 470, 471 (Fla.3d Dist.Ct. App.1978); Breene v. Plaza Tower Ass’n, 310 N.W.2d 730, 734 (N.D.1981). Nevertheless, most courts apply amendments to all unit owners, reasoning that purchasers know that bylaws can be amended. McElveen-Hunter, 386 S.E.2d at 436 (amendment restricting leasing applies to existing owners); Hill v. Fontaine Condominium Ass’n, 255, Ga. 24, 255 Ga. 24, 334 S.E.2d 690, 691 (1985) (amendment banning children applies to all owners); Everglades Plaza Condominium Ass’n v. Buckner, 462 So.2d 835, 836-37 (Fla. 4th Dist.Ct.App.1984) (same); Ritchey v. Villa Nueva Condominium Ass’n, 81 Cal. App.3d 688, 146 Cal.Rptr. 695, 100 A.L.R.3d 231 (1978) (same); see Flagler Fed. Sav. and Loan Ass’n v. Crestview Towers Condominium Ass’n, 595 So.2d 198, 200 (Fla.3d Dist.Ct. App.1992) (mortgagee whose title relates back to date prior to declaration amendment restricting leasing is bound by amendment) (citations omitted). Courts reason that condominium owners acquire units “subject to the right of the other owners to restrict their occupancy.” McElveen-Hunter, 386 S.E.2d at 436.

If the leasing restriction at bar reasonably relates to the health, happiness and peace of mind of the unit owners as a whole, then the welfare of the condominium community outweighs an individual owner’s interest in profit. Grazul stated that she purchased the unit expecting to use it for investment, although the declaration requires units to be used for residential purposes. The trial court erred by holding the restriction inapplicable to all but future purchasers.

“Grandfathering” existing rentals is a reasonable distinction

Even when restrictions are considered reasonable they may not be selectively enforced. White Egret Condominium, 379 So.2d at 352 (holding that, although age restriction was reasonable, association could not block sale to purchaser with children when children were living in development). Uniform application is “one factor that should weigh heavily in applying the reasonableness test.” Ridgely Condominium, 660 A.2d at 951.

In Ackerman v. Sudden Valley Community Ass’n, 89 Wash.App. 156, 944 P.2d 1045 (1997), review denied, 134 Wash.2d 1014, 958 P.2d 315 (1998), an owner argued that a dues structure that assessed members differently based upon lot improvements created two classes of members, in violation of a covenant granting the Association power to assess members “on an equitable basis.” The court held that neither lot improvements nor the amount of dues paid were “the type of distinguishing feature that would set different classes of members apart.” Ackerman,89 Wash.App. at 168, 944 P.2d 1045. After all, “one is not a different class of citizen in this country merely because one pays more or less in taxes.” Ackerman, 89 Wash.App. at 168, 944 P.2d 1045.

Similarly, a bylaw amendment restricting all future leases does not create two classes of members. The Association amendment allows existing rentals only until such time as ownership of those units changes, in any manner; barring further amendments, the entire condominium will eventually become owner-occupied. The ban on future leases thus applies equally to all units.

Because our resolution of this case leaves the Association as the prevailing party, we reverse the award of attorney fees and award fees to the Association.

BRIDGEWATER and ARMSTRONG, JJ., concur.

[1] The analysis of the Association’s issues also resolves the cross appeal issues.

Keywords: Governing Documents, Amendments

Schuman v. Ignatin

191 Cal.App.4th 255 (2010)

256*256 John B. Murdock for Plaintiffs, Cross-defendants and Appellants.

Williams & Kilkowski and James M. Kilkowski for Defendants, Cross-complainants and Appellants.

Eric F. Edmunds, Jr., for Cross-defendants, Cross-complainants and Appellants.

Summary by Mary M. Howell, Esq.:

In action between two homeowners to enforce building restrictions in CC&Rs, defendant homeowner’s challenge to the validity of an amendment extending the duration of CC&Rs was untimely.  The amendment, whether valid or not, had been recorded in 1998 and the issue was not raised until time of trial in 2008; any challenge to the validity of the amendment was subject to the four-year statute of limitations set forth in Code of Civil Procedure §343.

**End Summary**

OPINION

WILLHITE, Acting P. J.—

This case involves a dispute among property owners in a general plan development of 68 homes in Los Angeles. The 257*257 owners of one of the properties, Allan Ignatin and Janet Sobell (collectively, Ignatin),^[1] want to build a house that other property owners believe would violate recorded restrictions (conditions, covenants and restrictions (CC&R’s)) governing the development. The owners of a neighboring property, Philip Schuman and Margaret McNulty (collectively, Schuman), filed a lawsuit against Ignatin, seeking to block the proposed construction. Ignatin cross-complained against Schuman and several other property owners, including Eric F. Edmunds, Jr., and Debora Edmunds (collectively, Edmunds), seeking a determination that the proposed house would not violate the CC&R’s. Edmunds, in turn, filed a cross-complaint against Ignatin, alleging that the proposed house would violate the CC&R’s, create a nuisance, and violate city codes and the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq.).

During a recess after the first day of a bench trial, Ignatin for the first time challenged the validity of a recorded amendment that purportedly extended the duration date set forth in the original CC&R’s, and asked the trial court to find that the CC&R’s expired on January 1, 1999, the original expiration date. The trial court made that finding, entered judgment in favor of Ignatin on Schuman’s complaint, and dismissed Ignatin’s and Edmunds’s cross-complaints as moot. Schuman, Edmunds, and Ignatin all appeal: Schuman and Edmunds challenge, among other things, the trial court’s finding that the CC&R’s expired, arguing that the applicable statute of limitations bars Ignatin’s assertion that the amendment of the CC&R’s was invalid, and Ignatin challenges the dismissal of Ignatin’s cross-complaint as moot. We conclude that Ignatin’s assertion of the invalidity of the amendment is time-barred. Accordingly, we reverse the judgment and remand the matter for retrial, at whichIgnatin may present other asserted defenses against Schuman’s and Edmunds’s claims and seek the relief sought in Ignatin’s cross-complaint.

BACKGROUND^[2]

In 1965, Link Builders, owners of real property described as lots 1 through 68 of tract 22876 (Tract 22876) in the City of Los Angeles, recorded a 258*258 declaration of establishment of conditions and restrictions that subjected all of the lots in the general plan development to various conditions and restrictions. Among other things, the CC&R’s provided that no structure on any lot may be constructed in such a manner as to obstruct the scenic view of any other lot owner. The CC&R’s also provided that the conditions and restrictions would run with the land, and would remain in force until January 1, 1999.

On December 31, 1998, the Brentwood Hills Homeowners Association recorded a document entitled “Amendment to Extend Duration of Declaration of Establishment of Conditions and Restrictions” for Tract 22876 (the Amendment). The Amendment, which was signed in mid-December 1998 by the owners of 43 of the 68 lots, stated that the owners desired to amend the CC&R’s to provide that the restrictions and conditions would remain in effect until January 1, 2009, and would be continued automatically for 10-year periods unless a majority of owners recorded a written agreement changing, modifying, or extinguishing the CC&R’s. Schuman signed the Amendment as owner of lot 51 (2569 Cordelia Road, a different lot than the lot Schuman owned at the time this lawsuit was initiated).^[3] Edmunds signed as owner of parcel A (2576 Cordelia Road). Ignatin’s predecessor as owner of lot 53 (2583 Cordelia Road, which was owned by Alfred S. Yue at the time the Amendment was signed) also signed the Amendment. Ignatin purchased lot 53 in or around October 2005.

Sometime before September 2007, Schuman, Edwards, and other owners of homes in Tract 22876 learned that Ignatin planned to construct a new, much larger, home on lot 53. Schuman and the other neighbors believed the new home would violate the CC&R’s, including the view protection provisions. Some of the neighbors expressed to Ignatin their concerns about the proposed construction, and made suggestions about how to abate some of those concerns. When Ignatin did not respond to those suggestions, Schuman, Edmunds, and several other neighbors sent a letter to Ignatin on September 10, 2007, demanding that Ignatin suspend all development of the property until the neighbors’ concerns were addressed. Ignatin responded to the letter a week later, disputing that the proposed construction would violate the CC&R’s; Ignatin did not challenge the validity of the CC&R’s or the Amendment.

259*259 On October 5, 2007, Schuman filed a complaint against Ignatin seeking a declaration that Ignatin’s proposed construction would violate the CC&R’s, and an injunction prohibiting Ignatin from constructing any structure or cultivating any landscaping that would interfere with Schuman’s scenic view in violation of the CC&R’s. That same day, Schuman recorded a “joinder” in the Amendment, as owner of lot 54.

Ignatin filed an answer—a general denial, with several affirmative defenses, none of which challenged the validity of the CC&R’s or the Amendment—and a cross-complaint for declaratory relief against Schuman, Edmunds, and the other property owners who signed the September 10, 2007 letter to Ignatin. The cross-complaint alleged that all the lots in Tract 22876 “are subject to recorded CC&R’s,” but that Ignatin’s proposed construction would not violate the CC&R’s and the Amendment. The cross-complaint also alleged that Schuman, Edmunds, and the other owners “may not enforce the [CC&R’s] and the Amendment, because they have acquiesced in violations of the [CC&R’s] and the Amendment, because they have waived their right to enforce the [CC&R’s] and the Amendment, and because changed circumstances in Tract 22876 render the [CC&R’s] and the Amendment obsolete and enforcement of the [CC&R’s] and Amendment against [Ignatin] inequitable and arbitrary.” Ignatin requested a declaration that the proposed construction “does not violate the [CC&R’s] or the Amendment, or alternatively, that the [CC&R’s] and the Amendment may not be enforced . . . to prevent [Ignatin’s] construction of a residence on [Ignatin’s] property in accordance with the Plans.”

Edmunds responded with a cross-complaint against Ignatin, seeking a declaration that the proposed construction would violate the CC&R’s, city codes and laws, and CEQA, and would constitute a nuisance; Edmunds also sought an injunction prohibiting Ignatin from constructing any structure that would interfere with Edmunds’s rights.

A court trial on the matter began on June 20, 2008. In his opening statement,Ignatin’s attorney asserted the evidence would show that Schuman allowed construction of another house that blocks Schuman’s view, that Ignatin’s proposed house would not unreasonably block any significant views, and that Schuman, Edmunds, and other neighbors could not enforce the CC&R’s against Ignatin because they violated the CC&R’s themselves. There was no reference made to the possible invalidity of the CC&R’s or the Amendment.

260*260 Following opening statements, Schuman presented two expert witnesses—an architect who testified about how the proposed house would block Schuman’s view, and a real estate appraiser who testified about the value of Schuman’s property and the change in value if the proposed house were built. Schuman then called George Marnon, an owner of one of the lots in Tract 22876. Marnon testified that he bought his property after the CC&R’s had been extended by the Amendment, and that the existence of CC&R’s protecting the view was an important consideration when he and his wife decided to buy the property; he noted that he and his wife were aware that Tract 22876 was the only tract in the neighborhood that chose to extend the duration of the CC&R’s. He also testified that he and his wife had to file a lawsuit against another neighbor to enforce the CC&R’s about five years earlier, when the neighbor built a fence that obstructed his view. He and his wife estimated that the value of the view was $100,000, so they were willing to spend that much in legal fees to preserve that view. He testified that even though Ignatin’s proposed house would not interfere with his view, he was concerned that, if Ignatin were to prevail, other property owners would be allowed to build structures that would block his view.

Marnon was the last witness on the first day of trial. Schuman’s attorney estimated that he would call four more witnesses on the next day of trial, and Ignatin’s attorney said that he would call one or two more witnesses before the parties and the court participated in a viewing at the location. On the next day of trial, June 23, 2008, the parties met with the court in chambers, after which the matter was continued until September 29, 2008, to allow the parties to engage in further settlement discussions and/or mediation.

On August 11, 2008, Ignatin filed a “Supplemental Trial Brief.” The stated purpose of this brief was “to address three major issues not previously brought to the [trial] Court’s attention.” Ignatin argued he was “entitled to judgment as a matter of law in this action” because (1) the CC&R’s expired on January 1, 1999; (2) the Amendment was ineffective to extend the CC&R’s because it was not signed by all of the lot owners; and (3) Schuman could not enforce the CC&R’s against Ignatin because the previous owner of Schuman’s lot did not sign the Amendment. At a status conference held on September 3, the trial court ordered further briefing and set a hearing to address the issues Ignatin raised. Schuman filed a response that addressed the merits of Ignatin’s arguments, but also asserted that the arguments were untimely, outside the pleadings, and could not be tried without amendment of Ignatin’s pleadings.

261*261 Following argument, the trial court ruled that Ignatin did not waive the challenge to the CC&R’s by not raising it sooner, and that the Amendment did not extend the CC&R’s because it was not signed by all of the lot owners. The court’s ruling, set forth in a minute order, concluded: “This Court is legally compelled to find that the CCRs expired on January 1, 1999, that the restrictions of the CCRs are not covenants running with the land and that the Defendants are entitled to judgment as a matter of law. The Court is well aware of the impact of this ruling on the plaintiffs and each of the 68 property owners and strongly encourages the parties to take this to the Court of Appeal for guidance.”

Ignatin submitted a proposed judgment that provided that Schuman would take nothing on the complaint, that Edmunds would take nothing on his cross-complaint, and that Ignatin would be granted declaratory relief, decreeing that (1) the CC&R’s expired by their terms and are of no force and effect; (2) the Amendment did not extend the CC&R’s or create equitable servitudes or covenants running withIgnatin’s property, and is void; and (3) neither the CC&R’s nor the Amendment impose any restraint on Ignatin’s proposed construction. The trial court did not sign the proposed judgment, instead writing “The Court’s ruling on the Minute Order will stand as the Judgment.” In the meantime, Edmunds filed an objection to the proposed judgment, arguing that it was inappropriate to issue a final ruling on his cross-complaint because the ruling did not address or resolve all issues alleged in the cross-complaint.

Three months later, Ignatin filed a motion for entry of judgment. Ignatin noted that there was no signed judgment because neither the minute order nor the handwriting on the submitted proposed judgment was signed by the court. Ignatin also pointed out that, although the minute order disposed of all claims based on the CC&R’s and the Amendment, it did not mention all of the cross-defendants. The motion attached two different proposed judgments, and asked that the court sign one of them, or any other judgment that finally adjudicated the rights of all parties. In response to the motion, Edmunds noted that the court had not yet ruled on his earlier objection to the proposed judgment.

At the hearing on Ignatin’s motion, the court provided the parties with a proposed judgment nunc pro tunc it had drafted. That proposed judgment stated that Schuman”shall take nothing by way of the complaint,” that Ignatin shall recover costs fromSchuman, and that Ignatin and Edmunds 262*262 “shall take nothing by way of their cross-complaints.” Counsel for Ignatin argued that the provision stating that Ignatinshall take nothing on his cross-complaint was incorrect; he asserted that Ignatinprevailed on his cross-complaint because the court found that the CC&R’s had expired. Counsel for Schuman also pointed out that Edmunds had filed an objection to the original proposed judgment on the ground that the minute order did not address all of the issues in his cross-complaint, including his allegation that Ignatin’sproposed construction would violate CEQA.^[4] The trial court overruled Edmunds’s objection and signed the judgment nunc pro tunc, with minor changes.

Ignatin moved to vacate the judgment and enter a new judgment. Ignatin argued that the judgment nunc pro tunc was erroneous because “the Court’s ruling in favor of [Ignatin] requires a judgment in [Ignatin’s] favor on their Cross-Complaint.”Ignatin also filed a motion to tax costs, after counsel for Schuman (who also represented all of the neighbors who were sued in Ignatin’s cross-complaint) filed a memorandum of costs seeking reimbursement of the filing fees for all of the cross-defendants’ answers. In the motion to tax costs, Ignatin asserted that the court’s ruling that the CC&R’s had expired and the Amendment did not extend them “was precisely the relief sought in [Ignatin’s] cross-complaint. Under applicable precedent, this constituted `relief’ to [Ignatin] and against the Cross-[defendants].”

At the hearing on both motions, the trial court found that Ignatin’s “request for declaratory relief in the cross-complaint was rendered moot by the finding that the CC&R’s had expired and were not extended by [the Amendment],” noting that the relief Ignatin sought in the cross-complaint was that the planned construction did not violate the CC&R’s or the Amendment or, alternatively, that the CC&R’s and the Amendment could not be enforced by cross-defendants to prevent the planned construction. The court also found that the cross-defendants on Ignatin’s cross-complaint were not entitled to recover costs because Ignatin “obtained greater relief by prevailing on the complaint.”

Schuman and Edmunds timely filed a notice of appeal from the judgment nunc pro tunc to the extent it denied relief on Schuman’s complaint and Edmunds’s cross-complaint. Ignatin also timely filed a notice of appeal from the portion of the judgment nunc pro tunc denying relief on Ignatin’s cross-complaint and from the postjudgment order denying Ignatin’s motion for a new and different judgment.

263*263 DISCUSSION

Most of the arguments in the parties’ briefs on appeal address the requirements for modifying CC&R’s, or whether the CC&R’s and the Amendment constitute equitable servitudes or covenants running with the land as between the owners who signed the Amendment, or whether all of the owners in Tract 22876 needed to be joined in the lawsuit. We need not address those issues, however, because we agree with Schuman and Edmunds’s argument that Ignatin’s challenge to the validity of the Amendment is barred by the applicable statute of limitations, and therefore the judgment in favor of Ignatin, which was based solely on the trial court’s finding that the Amendment was invalid, must be reversed.

A. Challenges to Recorded Amendments to CC&R’s Must Be Brought Within Four Years

Ignatin argued, and the trial court found, that the Amendment was invalid (and therefore did not extend the duration of the CC&R’s) because it was not signed by every lot owner in Tract 22876. Schuman and Edmunds disagree that all lot owners were required to sign the Amendment but they contend, relying upon a recent decision of the Fourth District Court of Appeal, Division One (filed after judgment was entered in this case), that in any event, the statute of limitations bars any challenge to the validity of the Amendment made more than four years after the Amendment was recorded.

That case, Costa Serena Owners Coalition v. Costa Serena Architectural Com.(2009) 175 Cal.App.4th 1175 [97 Cal.Rptr.3d 170] (Costa Serena), involved amendments to the declarations of restrictions governing the seven phases of a planned development consisting of 724 homes. The community was developed in the early 1970’s, and separate, essentially identical, declarations of restrictions were recorded for each phase. (Id. at p. 1178, fn. 1.) Each declaration provided that it could be amended by a recorded instrument signed by at least 75 percent of the record owners, and that the declaration would expire on December 31, 2006, unless a majority of owners executed and recorded a writing extending the restrictions. (Id.at p. 1181.)

The declarations were amended in 1986 by documents that were signed only by members of the unincorporated associations (the architectural committees) named in the declarations to enforce the declarations’ provisions. (Costa Serena, supra, 175 Cal.App.4th at p. 1181.) In 1987, the declarations were amended again to, among other things, combine all seven phases into a single community that would be governed by a single unified declaration, enforced by a single architectural committee (Architectural Committee). The 1987 amendment also altered the provision governing amendments, and 264*264 provided that an amendment may be signed by a majority of the members of the Architectural Committee, certifying that the amendment had been approved by a vote of the owners as required by the declaration. The 1987 amendment was signed only by the members of the Architectural Committee. (Id. at p. 1182.)

The unified declaration (the result of the 1987 amendment) was amended in 1999, to provide that the declaration could be amended or revoked by a vote of more than 50 percent of all owners entitled to vote and casting ballots, and that an amendment would be effective upon the recording of a certificate of amendment executed by certain members of the Architectural Committee, setting forth the amendment and certifying that the voting requirements had been met. The 1999 amendment was signed by members of the Architectural Committee, who certified that the amendment was approved by a vote of the owners as required by the declaration. (Costa Serena, supra, 175 Cal.App.4th at pp. 1182-1183.)

In 2006, the Architectural Committee attempted to extend the unified declaration, which was to expire by its terms on December 31, 2006, using the amendment process set forth in the 1999 amendment. A group of owners (the Coalition) filed a lawsuit to enjoin the Architectural Committee from proceeding with the voting process. The Coalition contended that the seven separate Declarations had not been amended into a single unified declaration, and sought declaratory relief regarding the proper interpretation of the original provisions governing amendments. (Costa Serena, supra, 175 Cal.App.4th at pp. 1183-1184.) After the trial court issued the requested preliminary injunction, the Architectural Committee obtained signed consents to extension from 375 owners and recorded a document entitled “Extension of Declaration of Restrictions.” The Coalition then amended its complaint to allege the invalidity of the extension document, and sought cancellation of the prior amendments and the extension document. (Id. at p. 1184.) The trial court granted summary adjudication to the Coalition and entered a judgment declaring, among other things, that the declarations for all seven phases expired on December 31, 2006, and that the 1986, 1987, and 1999 purported amendments were void ab initio. (Id. at p. 1187.)

(1) The Court of Appeal reversed, finding the Coalition’s challenge to the 1986, 1987, and 1999 amendments was untimely. The appellate court found no support for the trial court’s conclusion that the amendments were void ab initio, observing that “[t]he trial court apparently misapprehended the limited circumstances in which a court may conclude that an instrument is a complete nullity, as opposed to being voidable pursuant to a timely challenge by a party, due to a deficiency in the instrument’s creation.” (Costa Serena, supra, 175 Cal.App.4th at p. 1191.) The Court of Appeal explained that a 265*265 challenge to an amendment on the ground that it was enacted in a manner that failed to conform to the requirements of the provision governing amendments would render the amendment voidable, not void ab initio. (Id. at p. 1193, citing Peyton v. Cly (1960) 184 Cal.App.2d 193, 196 [7 Cal.Rptr. 504] [“A contract not executed in conformity with the provisions of the statute of frauds is not void but merely voidable.”].) Because the amendments were voidable, rather than void ab initio, the court concluded the Coalition’s challenge was barred by Code of Civil Procedure section 343, the four-year statute of limitations applicable to claims seeking to set aside all kinds of instruments, which began to run as to each amendment when it was recorded. (Costa Serena, supra, 175 Cal.App.4th at p. 1196.)

B. The Statute of Limitations Bars Ignatin’sChallenge

In the present case, the Amendment extending the CC&R’s was recorded in December 1998. Ignatin first sought to challenge the validity of the Amendment in August 2008. Under Costa Serena, Ignatin’s challenge is barred by the statute of limitations. (Costa Serena, supra, 175 Cal.App.4th at p. 1196.) Ignatin argues, however, that his challenge is not barred because (1) Costa Serena conflicts with the rule stated in Taormina Theosophical Community, Inc. v. Silver (1983) 140 Cal.App.3d 964 [190 Cal.Rptr. 38] (Taormina) and should not be followed, (2) Schuman and Edmunds did not plead the statute of limitations in their answers to Ignatin’s cross-complaint and therefore waived that affirmative defense, and (3) the statute of limitations does not bar Ignatin from asserting the invalidity of the Amendment as a defense. We disagree.

1. Costa Serena does not conflict with Taormina

Ignatin argues that Costa Serena should not be followed because it allows amendments that clearly do not conform to the amendment procedure set forth in the CC&R’s to become binding after four years. Ignatin contends the better rule is stated in Taormina, in which the Court of Appeal found that an amendment to CC&R’s that was not made in accordance with the procedures established in the CC&R’s was void and not enforceable. (Taormina, supra, 140 Cal.App.3d at p. 970.) But as the court in Costa Serena observed, “Taormina supports only the limited proposition that amendments to CC&R’s . . . that are not made pursuant to the procedure `established in the provision’ for modifying the restrictive covenants may be voided under certain circumstances. [Citation.] The case does not speak to the issue here—i.e., whether an amendment that was not enacted pursuant to the procedure set out in the provisions of a declaration of restrictions is void ab initio, or merely voidable. . . . The Taormina court did not refer to the documents at issue as void ab initio, nor did it appear to reach this 266*266 conclusion. Rather, it appears that the court was simply permitting the plaintiff to void a voidable instrument. [¶] . . .Taormina . . . does not state that amendments to CC&R’s . . . that are not adopted in conformance with the provisions of those CC&R’s . . . may be challenged on this basis and voided at any time. The lawsuit in Taormina was filed less than three years after the amendment in question was recorded; there was no statute of limitations issue raised in that case.” (Costa Serena, supra, 175 Cal.App.4th at p. 1194.) In short, Taormina is not inconsistent with Costa Serena.

2. Schuman and Edmunds‘s failure to plead the statute of limitations did not waive the affirmative defense

Ignatin contends that Schuman and Edmunds cannot assert the statute of limitations because they did not plead it in their answers to Ignatin’s cross-complaint. (Citing Minton v. Cavaney (1961) 56 Cal.2d 576, 581 [15 Cal.Rptr. 641, 364 P.2d 473].) Had Ignatin asserted the invalidity of the Amendment and/or expiration of the CC&R’s in his cross-complaint, this argument might prevail. But Ignatin’s challenge was not raised in the cross-complaint. Indeed, the cross-complaint alleged that the lots in Tract 22876 were subject to the CC&R’s, but that Ignatin’s proposed construction would not violate the CC&R’s, or that the CC&R’s were not enforceable for various reasons not related to their validity. In fact, Ignatin’s challenge to the validity of the CC&R’s and the Amendment was not even raised in a motion. It was raised in a supplemental trial brief, filed during a recess in the trial. In light of the timing and the manner in which Ignatin’s challenge was asserted, we conclude that Schuman and Edmunds did not forfeit the statute of limitations defense by failing to plead it.

3. Ignatin’s defensive challenge sought affirmative relief, and therefore the statute of limitations applies

(2) Ignatin argues that the statute of limitations does not bar his assertion of the invalidity of the Amendment as a defense to the claims against him. It is true that, in many cases, statutes of limitations do not apply to defenses. (See, e.g., Styne v. Stevens (2001) 26 Cal.4th 42, 51-52 [109 Cal.Rptr.2d 14, 26 P.3d 343].) Those cases generally involve attempts to enforce fraudulent or illegal contracts. (Ibid., and cases cited therein.) But when an asserted defense “sets up an affirmative cause of action, the adverse party may . . . show that the attempted defense is barred by the statute of limitations.” (Hermosa Beach Land & Water Co. v. Law Credit Co. (1917) 175 Cal. 493, 495 [166 P. 22] (Hermosa Beach); see also Strong v. Strong (1943) 22 Cal.2d 540, 544-545 [140 P.2d 386].) Thus, the Supreme Court has held that, in an action to quiet title, the defendant’s answer asking the court to require the plaintiff to accept the defendant’s tender of the balance due on a contract of conveyance, sought 267*267 affirmative relief that was barred by the statute of limitations. (Hermosa Beach, supra, 175 Cal. at p. 495.) And in another quiet title action, the Supreme Court held that the defendant’s answer asserting ownership of the property at issue was actually a cause of action to avoid the plaintiff’s deed, which was barred by the applicable statute of limitations. (Strong v. Strong, supra, 22 Cal.2d at pp. 544-545.)

In the present case, Ignatin’s challenge to the validity of the Amendment set up an affirmative cause of action. Indeed, Ignatin repeatedly argued in the trial court—and argues in his own appeal—that the success of his defense required a judgment in his favor on his cross-complaint. And, although the trial court denied Ignatin’s request for judgment in his favor on the cross-complaint, the court agreed that Ignatin had obtained affirmative relief through his defense. In fact, the court acknowledged that its ruling on that defense would affect all of the property owners in Tract 22876, and that Ignatin obtained greater relief by prevailing on Schuman’s complaint than Schuman, Edmunds, and the other cross-defendants obtained by the dismissal of Ignatin’s cross-complaint.

Because Ignatin sought, and obtained, a judgment declaring the Amendment invalid, we conclude that his defense constituted an affirmative cause of action to which the statute of limitations applies. Application of the statute of limitations is particularly appropriate in this case, because Ignatin’s challenge was to a recorded Amendment to CC&R’s—brought almost 10 years after it was recorded—on which property owners have relied in purchasing, selling, or retaining their property. As the Supreme Court has observed, “`[s]tatutes of repose are in fact favored in the law . . .” . . . . The theory is that even if one has a just claim it is unjust not to put the adversary on notice to defend within the period of limitation and that the right to be free of stale claims in time comes to prevail over the right to prosecute them.” [Citation.]’ [Citation.]” (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 756 [76 Cal.Rptr.2d 749, 958 P.2d 1062].) Because Ignatin’s challenge to the validity of the Amendment was asserted more than four years after the Amendment was recorded, it is barred by the statute of limitations. (Code Civ. Proc., § 343; Costa Serena, supra, 175 Cal.App.4th at p. 1196.)

Although our conclusion that the statute of limitations bars any challenge to the validity of the Amendment resolves both appeals in this case, it does not resolve the complaint or cross-complaints. Therefore, the matter must be remanded for trial on all other issues raised in the complaint and cross-complaints.

268*268 DISPOSITION

The judgment is reversed and the matter is remanded for trial. Schuman and Edmunds shall recover their costs on appeal.

Manella, J., and Suzukawa, J., concurred.

[1] Although Ignatin refers to two people, we will use the singular when using that name (as well as other couples’ names) in this opinion.

[2] The trial court entered judgment midtrial, without any dispositive motion, based upon supplemental trial briefs and the pleadings. Our recitation of the factual background therefore is based in large part on the allegations of the complaint and cross-complaints and the exhibits attached thereto.

[3] Schuman owned and lived at 2601 Cordelia Road at the time the instant lawsuit was filed. The owner of that property at the time the Amendment was recorded was not among the owners who signed the Amendment.

[4] Mr. Edmunds, who is an attorney and represented himself and his wife on their cross-complaint, had informed the trial court that he was unable to appear at the hearing on Ignatin’s motion because he was engaged in trial in Orange County.

Keywords: Governing Documents, Statute of Limitations

Riley v. Bear Creek Planning Committee

17 Cal.3d 500 (1976)

503*503 COUNSEL

Stark, Stewart, Simon & Sparrowe, V. James Jackl, Cadwalader & Black and Harvey N. Black, Jr., for Defendant, Cross-complainant and Appellant and for Defendants and Appellants.

Franklin H. Tuttle, Richard E. Tuttle and Thomas S. Harte for Plaintiffs, Cross-defendants and Respondents.

Summary by Mary M. Howell, Esq.:

Restrictive covenant for building restrictions in subdivision, recorded by developer after conveyance to owner, and to which there was no reference in owner’s deed, is not enforceable against owner.

**End Summary**

OPINION

THE COURT.

In this proceeding, arising out of an effort by defendants Bear Creek Planning Committee and some of its members to enforce certain building restrictions alleged to control the construction of improvements on plaintiffs’ real property, defendants appeal from a judgment quieting title in plaintiffs. After decision by the Court of Appeal, Third Appellate District, affirming the judgment, we granted a hearing in this court for the purpose of giving further consideration to the issues raised. Having made a thorough examination of the cause, we have concluded that the opinion of the Court of Appeal prepared by Presiding Justice Puglia and concurred in by Justices Janes and Evans correctly treats and disposes of the issues involved, and we adopt such opinion as and for the opinion of this court. Such opinion (with appropriate deletions and additions) is as follows:^[*]

[] Central to the disposition of this appeal is the question whether or not plaintiffs’ property is burdened by an equitable servitude for the benefit of other lots in the tract of which plaintiffs’ property is a part.

On February 26, 1964, Alpine Slopes Development Company (hereinafter “grantor”), a limited partnership, by grant deed conveyed Lot 101 in Alpine Meadows Estates Subdivision No. 3, located in Placer County. 504*504 to Ernest H. and Jewel Riley, husband and wife.^[1] The deed, recorded March 13, 1964, contains no restrictions upon the use of the plaintiffs’ property nor is there any reference therein to any instrument purporting to impose restrictions upon Lot 101. In fact, at the time of the conveyance there was no document of record purporting to restrict the use of Lot 101.

On November 25, 1964, exactly nine months after the conveyance to plaintiffs, the grantor caused to be recorded with the Placer County Recorder a document entitled “Declaration of Covenants, Conditions, Restrictions and Reservations on Lots 72 through 116 of Alpine Meadows Estates Unit No. 3” (referred to hereinafter as “declaration”). The declaration was executed by an agent of the grantor and by him acknowledged on November 20, 1964. Preliminarily the declaration recites that grantor is the owner and subdivider of Lots 72 through 116 inclusive (which are particularly described therein by reference to a recorded map); that “it [grantor]^[**] has established and does hereby establish a general plan for the improvement and development of said property and does hereby establish restrictions, easements, conditions, covenants and reservations upon and subject to which all of the aforementioned lots and parcels of said real property shall be improved and sold or conveyed by it as such owner, each and all of which is or are for the benefit of the [grantor]^[**] and the owner of any part or parcel of said property or interest therein and shall apply to and bind the respective successors in interest of the owner or owners thereof and are, and each thereof is, imposed upon said property as a servitude in favor of each subsequent declarant and of each and every parcel of land therein as a dominant tenement or tenements….” There follow 26 numbered paragraphs in which restrictions, covenants and conditions common to subdivision developments of the type here involved are spelled out which are to remain in full force and effect until January 1, 1983.

It is the plaintiffs’ alleged violation of the provisions of paragraph 6 of the declaration that precipitated the instant controversy. Insofar as relevant, paragraph 6 provides: “No dwelling, garage, building, fence, wall, retaining wall or other structure or excavation therefor shall be 505*505 moved onto, commended, erected or maintained on said lots, nor shall any addition to, change, or alteration therein, be made until the plans and specifications for same have been submitted to the Bear Creek Planning Committee and the approval of said Committee has been secured, …”^[2]

At a time not established by the record, the plaintiffs constructed a snow tunnel on their lot. In reaction thereto, on January 12, 1972, the committee recorded a “Notice of Violation of Covenants, Conditions and Restrictions.” Referring specifically to Lot 101 and the declaration recorded November 25, 1964, the notice recited the “probable violation” of the provisions of the declaration in that “A covered walkway has been constructed on said lot 101 without prior compliance with Paragraph 6 of the above described recorded restrictions.”

Thereafter plaintiffs filed their complaint to quiet title and for damages for slander of title and defendant cross-complained for declaratory relief. The resulting judgment quieted plaintiffs’ title to Lot 101 against all claims of defendants and found for plaintiffs and against defendant on the latter’s cross-complaint for declaratory relief.^[3]

(1a) Inasmuch as there is no privity of contract between defendants and plaintiffs, [] [defendants’] right to enforce use restrictions against plaintiffs depends upon whether or not the restrictions sought to be enforced are comprehended within mutually enforceable equitable servitudes for the benefit of the tract. (Trahms v. Starrett(1973) 34 Cal. App.3d 766, 772 [110 Cal. Rptr. 239]; Ross v. Harootunian (1967) 257 Cal. App.2d 292, 295 [64 Cal. Rptr. 537]; see Girard v. Miller (1963) 214 Cal. App.2d 266, 278-279 [29 Cal. Rptr. 359], dissenting opn. of Files, J.) (2) The issue thus framed, [] [defendants’] claim founders upon the rule announced in Werner v.Graham (1919) 181 Cal. 174, at pages 506*506 183-185 [183 P. 945]: “It is undoubted that when the owner of a subdivided tract conveys the various parcels in the tract by deeds containing appropriate language imposing restrictions on each parcel as part of a general plan of restrictions common to all the parcels and designed for their mutual benefit, mutual equitable servitudes are thereby created in favor of each parcel as against all the others. The agreement between the grantor and each grantee in such a case as expressed in the instruments between them is both that the parcel conveyed shall be subject to restrictions in accordance with the plan for the benefit of all the other parcels and also that all other parcels shall be subject to such restrictions for its benefit. In such a case the mutual servitudes spring into existence as between the first parcel conveyed and the balance of the parcels at the time of the first conveyance. As each conveyance follows, the burden and the benefit of the mutual restrictions imposed by preceding conveyances as between the particular parcel conveyed and those previously conveyed pass as an incident of the ownership of the parcel, and similar restrictions are created by the conveyance as between the lot conveyed and the lots still retained by the original owner…. [¶]^[**] [H]^[**]ere there is no language in the instruments between the parties, that is, the deeds, which refers to a common plan of restrictions or which expresses or in any way indicates any agreement between grantor and grantee that the lot conveyed is taken subject to any such plan…. [¶]^[**] The intent of the common grantor — the original owner — is clear enough. He had a general plan of restrictions in mind. But it is not his intent that governs. It is the joint intent of himself and his grantees, and as between him and each of his grantees the instrument or instruments between them, in this case the deed, constitute the final and exclusive memorial of such intent. It is also apparent that each deed must be construed as of the time it is given. It cannot be construed as of a later date, and in particular, its construction and effect cannot be varied because of deeds which the grantor may subsequently give to other parties…. Whatever rights were created by the deed were created and vested [when it was given]^[**], and the fact that it later appears that [the grantor]^[**] was pursuing a general plan common to all the lots in the tract cannot vary those rights. The same is true of each deed as it was given. Nor does it make any difference that, as claimed by the defendants, [the grantor]^[**] gave each grantee to understand, and each grantee did understand, that the restrictions were exacted as part of a general scheme. Such understanding was not incorporated in the deeds, and as we have said, the deeds in this case constitute the final and exclusive 507*507 memorials of the understandings between the parties. Any understanding not incorporated in them is wholly immaterial in the absence of a reformation. [Citations.]^[**] This whole discussion may in fact be summed up in the simple statement that if the parties desire to create mutual rights in real property of the character of those claimed here they must say so, and must say it in the only place where it can be given legal effect, namely, in the written instruments exchanged between them which constitute the final expression of their understanding.” (See also Murry v. Lovell (1955) 132 Cal. App.2d 30 [281 P.2d 316].)[^[4]]

(1b) From the recordation of the first deed which effectively imposes restrictions on the land conveyed and that retained by the common grantor, the restrictions are binding upon all subsequent grantees of parcels so affected who take with notice thereof notwithstanding that similar clauses have been omitted from their deeds. (Werner v. Graham, supra, at pp. 183-184; Martin v. Holm, [supra], 197 Cal. 733, 746-748; Girard v. Miller, supra, 214 Cal. App.2d at pp. 275-276; Seaton v. Clifford(1972) 24 Cal. App.3d 46, 50 [100 Cal. Rptr. 779]; Trahms v. Starrett, supra, 34 Cal. App.3d at p. 771.) Neither proof nor contention is made that plaintiffs are grantees subsequent to the recordation of such a deed with notice thereof and, quite apart from the rule of Werner v. Graham, it is manifest that acknowledgement and recordation of a declaration of restrictions by the grantor after the conveyance to plaintiffs cannot affect property in which the grantor no longer has any interest.

To surmount the obstacle erected by the rule of Werner v. Graham, defendants postulate an analysis of the pertinent law dependent upon the following premises: parol evidence is admissible to explain the terms of a deed to the same extent as with contracts generally; the rule of Werner v. Graham is a function of and predicated upon the parol evidence rule; the modification of the parol evidence rule accomplished by Masterson v. Sine (1968) 68 Cal.2d 222 [65 Cal. Rptr. 545, 436 P.2d 561], therefore operated in effect to overrule Werner v. Graham sub silentio.Accordingly, defendants conclude, extrinsic evidence is admissible to establish 508*508the mutual intention of the parties to the conveyance to plaintiffs that it be subject to restrictions identical to those contained in the declaration recorded subsequently by the grantor and specifically in paragraph 6 thereof.

In furtherance of this theory, defendants at trial offered extrinsic evidence of the understanding of the plaintiffs and their grantor. The evidence was received provisionally, subject to the trial court’s later ruling on plaintiffs’ continuing objection thereto and motion to strike based both on the parol evidence rule and the principle (stated in Werner v. Graham, supra, at p. 185) that the evidence was irrelevant as the deed is conclusive of the parties’ intention with respect to mutually restrictive covenants. In summary, the challenged evidence tended to prove that the grantor intended to convey and plaintiffs intended to purchase a parcel which both parties assumed to be governed by building restrictions; that prior to purchase plaintiffs’ attention had been directed to the existence of the assumed restrictions and for the first several years of their occupancy of the lot, they conducted themselves in compliance with what they understood to be binding controls upon the use of the property. The trial court, regarding Werner v. Graham as controlling, granted plaintiffs’ motion to strike all extrinsic evidence of the intention of the parties. Defendants assign the ruling as reversible error.

We have no quarrel with the initial premise upon which defendants’ theory of the case is predicated, i.e., the admissibility of parol evidence where otherwise proper to explain the terms of a deed. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 521-523 [67 Cal. Rptr. 761, 439 P.2d 889]; Masterson v. Sine, supra, 68 Cal.2d 222; Civ. Code, § 1066.) However, we cannot agree with the second postulate of defendants’ theory, i.e., that the parol evidence rule supplies the exclusive rationale underlying the doctrine of Werner v. Graham.

(3) The parol evidence rule operates to bar extrinsic evidence which contradicts the terms of a written contract. (1 Witkin, Summary of Cal. Law (8th ed. 1973) Contracts, § 204.) It “is not a rule of evidence but is one of substantive law. It does not exclude evidence for any of the reasons ordinarily requiring exclusion, based on the probative value of such evidence or the policy of its admission. The rule as applied to contracts is simply that as a matter of substantive law, a certain act, the act of embodying the complete terms of an agreement in a writing (the 509*509 `integration’), becomes the contract of the parties. The point then is, not how the agreement is to be proved, because as a matter of law the writing is the agreement. Extrinsic evidence is excluded because it cannot serve to prove what the agreement was, this being determined as a matter of law to be the writing itself.” (Italics in original.) (Estate of Gaines (1940) 15 Cal.2d 255, 264-265 [100 P.2d 1055]; see Tahoe National Bank v.Phillips (1971) 4 Cal.3d 11, 22-23 [92 Cal. Rptr. 704, 480 P.2d 320].)

(4) In contrast to the rationale of the rule barring parol evidence, the “Purpose of the statute of frauds is to prevent fraud and perjury with respect to certain agreements by requiring for enforcement the more reliable evidence of some writing signed by the party to be charged….” (Sousa v. First California Co. (1950) 101 Cal. App.2d 533, 542 [225 P.2d 955].) Thus the statute of frauds excludes proof of certain types of agreements which are not sufficiently evidenced by a writing. (1 Witkin, Summary of Cal. Law, supra, § 204.) Every material term of an agreement within the statute of frauds must be reduced to writing. No essential element of a writing so required can be supplied by parol evidence. (Ellis v. Klaff (1950) 96 Cal. App.2d 471, 476 [216 P.2d 15]; Witkin, Cal. Evidence (2d ed. 1966) § 716.) Among the types of agreement to which the statute of frauds applies are contracts for the sale of real property or an interest therein (Civ. Code, § 1624, subd. 4; Code Civ. Proc., § 1971) and agreements which by their terms are not to be performed within a year (Civ. Code, § 1624, subd. 1; see Long v. Cramer Meat & Packing Co. (1909) 155 Cal. 402 [101 P. 297].)^[[5]]

(1c) In Masterson v. Sine, supra, 68 Cal.2d 222, [] [this court] abandoned the rule that evidence of oral agreements collateral to an agreement in writing must be excluded where the instrument on its face appears to be an integration. Rather, the court held that credible extrinsic evidence of a collateral oral agreement is admissible if, considering the circumstances of the parties, the agreement is one which “`might naturally be made as a separate agreement.'” (P. 228.) Defendants contend that under the rule announced in Masterson, the extrinsic evidence which was stricken by the court was credible evidence 510*510 admissible to show the collateral oral understanding of plaintiffs and their grantor that Lot 101 be subject to the restrictions which defendants seek here to enforce.

[] [Although certain language in our Werner case was susceptible of the conclusion that the principle there announced had its roots in the parol evidence rule, our decision four years later in McBride v. Freeman (1923) 191 Cal. 152 [215 P. 678],made it clear that other considerations were of greater importance. There, in strongly reaffirming our adherence to Werner in the face of a vigorous frontal attack upon it, we stated:] “Any other rule would make important questions of the title to real estate largely dependent upon the uncertain recollection and testimony of interested witnesses. The rule of the Werner case is supported by every consideration of sound public policy which has led to the enactment and enforcement of statutes of frauds in every English-speaking commonwealth.” (P. 160.) (See also Triangle Ranch, Inc. v. Union Oil Co. (1955) 135 Cal. App.2d 428, 438-439 [287 P.2d 537]; 5 A.L.R.2d 1316, 1343-1344.)

In Wing v. Forest Lawn Cemetery Assn. (1940) 15 Cal.2d 472 [101 P.2d 1099, 130 A.L.R. 120], [], referring to the policy underlying the Werner rule, [we] quoted with approval Professor Burby (10 So.Cal.L.Rev. 281, 289, fn. 21) who observed that “[t]here should be some written evidence, either in the form of a plat of [sic]^[**]otherwise, delineating or pointing out the extent of the property affected by the restrictions…. As a matter of policy, the understanding of the parties should be definite and clear, and should not be left to mere conjecture.” (Italics added.) (15 Cal.2d at p. 480.)

The proposition that the rule of Werner v. Graham springs from the same policy considerations as underlie the statute of frauds is further bolstered by Southern Cal. Edison Co. v. Bourgerie (1973) 9 Cal.3d 169 [107 Cal. Rptr. 76, 507 P.2d 964]. In that case [] [we] held that a building restriction in a deed constitutes property, thus entitling the owner of the dominant tenement to compensation for damage caused by construction of an improvement in violation of the restriction by a condemnor exercising the power of eminent domain over the servient tenement. In so deciding [] [we] abandoned the rule of longstanding, first announced in Friesen v. City of Glendale (1930) 209 Cal. 524 [288 P. 1080], that a building restriction gave rise not to a right in the land itself but to a mere 511*511 contractual right cognizable in equity between the contracting parties or their successors with notice.

We recognize that a deed poll such as used here and commonly throughout California does not satisfy the requirement of the statute of frauds that the written memorandum be subscribed by the party to be charged [when that party is the grantee.] (Civ. Code, § 1624; 1 Witkin, Summary of Cal. Law, supra, § 210.)^[[6]]Notwithstanding the lack of complete congruity of common conveyancing practice in the creation of so-called negative easements to the requirements of the statute of frauds, we are of the view that the doctrine of Werner v. Graham, though undoubtedly a function in part of the parol evidence rule, is not exclusively so; that independently therefrom it derives vitality from the policies underlying and implemented by the statute of frauds; that as a consequence, it remains a viable “rule of property” ([McBride v. Freeman, supra, 191 Cal. 152, 155;] Girard v. Miller, supra,214 Cal. App.2d at p. 275) unimpaired and unaffected by subsequent modifications of the parol evidence rule.

Moreover, there is a practical consideration favoring the rule of Werner v. Graham.The grantee of property subject to mutually enforceable restrictions takes not just a servient tenement but, as owner of a dominant tenement, acquires a property interest in all other lots similarly burdened for the benefit of his property. That fact significantly affects the expectations of the parties and inevitably enters into the exchange of consideration between grantor and grantee. Even though the grantor omits to include the mutual restrictions in deeds to parcels thereafter severed from the servient tenement, those who take such property with notice, actual or constructive, of the restrictions are bound thereby. (Arrowhead Mut. Service Co. v. Faust (1968) 260 Cal. App.2d 567, 580 [67 Cal. Rptr. 325].) Thus, the recording statutes operate to protect the expectations of the grantee and secure to him the full benefit of the exchange for which he bargained. (Wayt v. Patee (1928) 205 Cal. 46, 49 [269 P. 660]; Doo v. Packwood (1968) 265 Cal. App.2d 752, 758-759 [71 Cal. Rptr. 477];Barbieri v. Ongaro (1962) 208 Cal. App.2d 753, 757 [25 Cal. Rptr. 471].) Where, however, mutually enforceable equitable servitudes are sought to be created outside the recording statutes, the vindication of the expectations of the original grantee, and for that matter succeeding grantees, is hostage not only to the good faith of the 512*512grantor but, even assuming good faith, to the vagaries of proof by extrinsic evidence of actual notice on the part of grantees who thereafter take a part of the servient tenement either from the common grantor or as successors in interest to his grantees. The uncertainty thus introduced into subdivision development would in many cases circumvent any plan for the orderly and harmonious development of such properties and result in a crazy-quilt pattern of uses frustrating the bargained-for expectations of lot owners in the tract.

(5) [Finally, although defendants in their briefs before the trial court expressly indicated that they placed no reliance on the doctrine of estoppel, we think it appropriate to observe, for the guidance of the courts in future cases, that that doctrine has no application in this area. Equitable servitudes in land may be created in this state only by deed, and the expectations of the parties, reasonable or otherwise, are wholly without relevance in the absence of language in the deed having the legal effect of creating such a servitude. (Martin v. Holm, supra, 197 Cal. 733, 742-743; Murry v. Lovell, supra, 132 Cal. App.2d 30, 34-35.) To the extent it is inconsistent herewith, the case of Smith v. Rasqui (1959) 176 Cal. App.2d 514 (1 Cal. Rptr. 478), is disapproved.]

The trial court correctly struck extrinsic evidence of the intention of plaintiffs and their grantor.[^[7]]

[] [The judgment is affirmed.]

TOBRINER, J.

I dissent.

I cannot subscribe to the majority’s conclusion that a buyer of a subdivision lot, who takes his deed with actual knowledge of a general plan of mutual restrictions applicable to the entire subdivision and who conducts himself for many years in a manner which demonstrates his belief that such restrictions apply to his property, may thereafter violate all such restrictions with impunity simply because the restrictions were 513*513 inadvertently omitted from his individual deed. Contrary to the majority’s suggestion, we need not decree this inequitable result in order to prevent fraud to maintain security in land titles; the very antithesis — a ruling that a buyer with actual knowledge of restrictions is thereby bound — ensures fairness and promotes security in land transactions; it implements the intention of both the buyer and the seller. As I shall explain, the majority can sustain their forced result only by ignoring a host of recent decisions of this court which have abandoned the antiquated rule that “property rights” can be ascertained only within the “four corners of a deed.”

In the present case, defendants offered proof to establish that (1) prior to their purchase of the lot, plaintiffs received copies of the written restrictions, the bylaw of defendant committee and the real estate commissioner’s public report, which stated that the subdivision lots were subject to building restrictions; (2) because of a mistake by the title company, plaintiffs’ deed did not contain the restrictions and was recorded prior to recording of the declaration of restrictions; and (3) despite the mistakes of the title company, plaintiffs conducted themselves in accordance with the restrictions for a number of years, seeking defendant committee’s approval for the construction of a home and the removal of a tree on their lot. Thus the evidence offered by defendants would demonstrate that plaintiffs took their deed with the understanding that the lot was subject to valid restrictions.

The majority’s holding will permit plaintiffs in this case to ignore restrictions designed to preserve natural beauty and property values in a carefully planned residential community. Although the use of all other lots in the community will continue to be restricted, plaintiffs will be free to subdivide their land into any number of small building sites, construct apartments or rent commercial space, ignore building lines and obstruct views from neighboring lots, raise livestock, and strip the land by removing trees and shrubs.

Common sense and substantive justice dictates that the plaintiffs should not be free to violate such restrictions. At the time of purchase plaintiffs had actual knowledge of those restrictions; the restrictions formed a part of the consideration exchanged by the parties. The restrictions continue to enhance the value of plaintiffs’ individual lot because all other property owners in the subdivision are bound thereby. As I shall explain, the intent of the parties should govern, and the rule of 514*514 Werner v.Graham (1919) 181 Cal. 174 [183 P. 945], which forbids proof of intent by extrinsic evidence should be rejected, as indeed it has been by virtually every other state. (2 American Law of Property (Casner ed. 1952) § 9.29, p. 417.)

The majority holds that recent decisions of this court modifying the parol evidence rule do not affect the validity of the holding in Werner v. Graham, because that decision did not rest primarily on the parol evidence rule. The language of Werneritself compels a different conclusion. As the majority notes, the parol evidence rule excludes extrinsic evidence as to the terms of an agreement, not because the probative value of such evidence is questioned, but because as a matter of substantive law the writing constitutes the complete agreement between the parties. The language of Werner clearly indicates that the decision applied the parol evidence rule; the court stated that “the deeds in this case constitute the final and exclusive memorials of the understandings between the parties. Any understanding not incorporated in them is wholly immaterial….” (At p. 185.)

Although the majority suggests that Werner rests on policies underlying the statute of frauds, the Werner court did not so much as discuss that statute. The issue in Werner turned on whether the parties intended the restrictions contained in a deed to create either an equitable servitude enforceable by other landowners in the subdivision or to constitute merely personal covenants inuring solely to the benefit of the grantor. The court held that the parol evidence rule mandated that intent of the parties be ascertained from the face of the deed; the decision does not hold, or even imply, that any policy underlying the statute of frauds would be violated if the intended effect of written restrictions were to be proven by extrinsic evidence.

Contrary to Werner v. Graham, most states allow proof intent by extrinsic evidence (7 Thompson on Real Property (1962 Replacement) § 3163, pp. 125-126; 2 American Law of Property (Casner ed. 1952) § 9.29, pp. 416-419); these decisions turn on the interpretation of the policies underlying the parol evidence rule (e.g., Clemv. Valentine (1928) 155 Md. 19 [141 A. 710]; Ridley v. Haiman (1932) 164 Tenn. 239 [47 S.W.2d 750]), not upon the policies of the statute of frauds. Indeed, despite dictum in McBride v. Freeman (1923) 191 Cal. 152 [215 P. 678], suggesting that the statute of frauds supplied the rationale for the Werner decision, subsequent California cases have recognized that exclusion of 515*515 extrinsic evidence in interpretation of deeds emanates from the parol evidence rule. (E.g., Moore v. Ojai Improvement Co.(1957) 152 Cal. App.2d 124 [313 P.2d 47]; Murphy Slough Assn. v. Avila (1972) 27 Cal. App.3d 649 [104 Cal. Rptr. 136].)

Werner v. Graham, then, is based upon the strict parol evidence rule then in effect in California; consequently its holding must be reexamined in light of recent decisions of this court which modify the application of the parol evidence rule. In Masterson v.Sine (1968) 68 Cal.2d 222 [65 Cal. Rptr. 545, 436 P.2d 561], we rejected the principle that parol evidence as to the terms of an agreement is inadmissible simply because the written memorandum appears on its face to be an integration. We recognized that “The crucial issue in determining whether there has been an integration is whether the parties intended their writing to serve as the exclusive embodiment of their agreement,” (at p. 225) and noted that application of the “face of the document” test would “often defeat the true intent of the parties.” (At p. 227.) Accordingly, we held that “Evidence of oral collateral agreements should be excluded only when the fact finder is likely to be misled. The rule must therefore be based on the credibility of the evidence.” (At p. 227.)

Thereafter, in Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33 [69 Cal. Rptr. 561, 442 P.2d 641, 40 A.L.R.3d 1373], this court extended the holding of Masterson v. Sine to cases in which extrinsic evidence was offered which would disturb the “plain meaning” of the document. We stated, “The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (At p. 37.) In Thomas Drayage as inMasterson v. Sine, we emphasized that the actual intent of the parties should govern the interpretation of their agreement.

The modifications of the parol evidence rule announced in Masterson v. Sine andThomas Drayage apply to the interpretation of deeds as well as contracts. (Civ. Code, § 1066; Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 521-522 [67 Cal. Rptr. 761, 439 P.2d 889]; French v. Brinkman (1963) 60 Cal.2d 547, 552-553 [35 Cal. Rptr. 289, 387 P.2d 1].) In Continental Baking Co. v. Katz, supra, we upheld the admissibility of extrinsic evidence to show that the parties actually intended an easement expressed in a deed as appurtenant to a small parcel of land to 516*516 be appurtenant to a different, larger parcel not described in the deed. In Murphy Slough Assn. v. Avila, supra, 27 Cal. App.3d at page 654, the court held that extrinsic evidence was admissible to prove that the parties intended and understood a grant deed conveying a fee interest to convey only a right of way.

The reasoning of the court in Murphy illustrates the proper application of our decisions in Masterson v. Sine and Thomas Drayage to the interpretation of deeds. The court noted initially that “grants are to be interpreted in the same way as other contracts and not according to rigid feudal standards.” (At p. 655.) The grant involved was silent as to riparian rights, and the court reasoned that this silence, together with the nominal consideration of $10 paid by the grantee, raised a doubt as to the interest conveyed. The court therefore admitted extrinsic evidence to prove the parties’ actual understanding concerning riparian rights, although the “plain meaning” of the document was to grant a fee simple absolute. In holding that the interest conveyed actually constituted a right of way, the court emphasized that “Subsequent acts of the parties to the transaction which disclose the interpretation given to the conveyance by themselves is strong evidence of the interest conveyed.” (At p. 658.)

The present case presents a situation similar to that encountered by the court inMurphy. Plaintiffs’ deed does not refer to building restrictions; it does not specifically state that the land is free from all such restrictions. The deed does, however, identify the lot conveyed as a particular parcel within a large subdivision known as “Alpine Meadows Estates Subdivision No. 3.” The deed’s silence with respect to restrictions. coupled with its reference to the subdivision, raises a doubt as to whether the lot in question was sold pursuant to a common scheme of restricted development for the entire subdivision. The language of the deed does not preclude an underlying understanding that the lot was subject to building restrictions. As in Murphy, the acts of the parties in the present case subsequent to the sale of plaintiffs’ lot constitute strong evidence that the restrictions were applicable to the property.

Thus our decision in Masterson v. Sine, supra, and Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co., supra, sanction the admission of the evidence offered by defendant committee to establish the intention of the parties that the restrictions governing the use of land in the subdivision bind plaintiffs’ property, even though the deed appears on its face to convey the lot without such restrictions. The requirement of Masterson 517*517 that the proffered evidence be “credible” is met; the restrictions were embodied in a writing which plaintiffs received before they bought their lot. Proof of the terms of the understanding between the parties will not, therefore, be “dependent upon the uncertain recollection and testimony of interested witnesses.” (McBride v. Freeman, supra, 191 Cal. 152, 160.)

I believe, therefore, that in light of this court’s modification of the parol evidence rule,Werner v. Graham is no longer a correct application of existing law and should be overruled. The question remains, however, whether, as the majority maintains, the policy underlying the statute of frauds provides an independent basis for rejecting the evidence offered by defendants. That policy, as the majority points out, is to prevent fraud and perjury with respect to certain types of transactions by requiring the most reliable evidence available, a written document. In the present case, however, insistence upon a writing signed by both grantor and grantee is not necessary to prevent fraud, and such a requirement should not be invoked to frustrate the intention of the parties.

The courts of this state have frequently recognized situations in which circumstances surrounding a transaction render the production of a writing signed by both parties unnecessary, and accordingly have established a number of exceptions to the application of the statute. As the majority notes, a deed poll containing restrictions binding upon the grantee does not satisfy the requirements of the statute of frauds, since it is not subscribed by the party to be charged. The courts have held, however, that such deeds are enforceable against the grantee. (Grange Co. v.Simmons (1962) 203 Cal. App.2d 567, 573 [21 Cal. Rptr. 757].) In the present case, the grantor gave a written document containing the restrictions to the grantee, and the fact that the document was, like a deed poll, not signed in accordance with the requirements of the statute of frauds should not result in the exclusion of the document as evidence of the parties’ understanding. The courts have further modified the application of the statute of frauds by holding that once the grantor has given one deed creating restrictive covenants binding on subdivision land to a purchaser, subsequent grantees from the same grantor who have actual notice of the restrictions are bound thereby, although no restriction or reference thereto is contained in their individual deeds. (Arrowhead Mut. Service Co. v. Faust (1968) 260 Cal. App.2d 567, 580 [67 Cal. Rptr. 325].) Likewise in the present case, plaintiffs took their deed with actual notice of the restrictions at issue.

518*518 Moreover, in the area of land transactions, our courts have given effect to oral agreements conveying an interest in land on the basis of the doctrine of part performance. (See Note, Part Performance, Estoppel, and the California Statute of Frauds (1951) 3 Stan.L.Rev. 281.) That doctrine represents a recognition of the inequities which will result if the courts refuse to enforce an agreement partially performed by one of the parties. Such part performance must, however, be clearly a performance of the oral contract and not of some other obligation between the parties. As the court explained in Trout v. Ogilvie (1919) 41 Cal. App. 167, 172 [182 P. 333], “To take a contract out of the operation of the statute of frauds, however, the acts relied upon must be unequivocally referable to the contract.” (See Magee v.Magee (1917) 174 Cal. 276 [162 P. 1023]; Manning v. Franklin (1889) 81 Cal. 205 [22 P. 550].)

In the present case, both parties have performed acts “unequivocally referable” to their understanding that all the lots in the subdivision, including plaintiffs’, were subject to building restrictions. The grantor filed the plat containing the restrictions, and conveyed all subsequent deeds subject to those restrictions. The plaintiffs complied with the restrictions by submitting plans for construction on the lot to defendant committee, and by seeking approval of the committee for the removal of a tree from the lot. The only reasonable explanation for this behavior by plaintiffs is that such actions were taken pursuant to the understanding between plaintiffs and their grantor that the lot was subject to subdivision restrictions. The agreement between plaintiffs and their grantor can, therefore, be enforced despite the policy of the statute of frauds favoring formalized writings; indeed, other states have enforced such agreements. (See Hall v. Solomon (1892) 61 Conn. 476, 483-484 [23 A. 876].)

In summary, I believe that Werner v. Graham should be overruled, and that the evidence offered by defendants should be admitted to establish that plaintiffs took their lot subject to the building restrictions, which continue to bind the rest of the property owners in the subdivision, and that plaintiffs, indeed, conducted themselves in accordance with such restrictions for many years. To hold otherwise would defeat the actual intent of the parties; it would allow plaintiffs to reap the benefits of their neighbors’ restrictions while, as to their own lot, they enjoy complete freedom.

Further, plaintiffs have filed suit against defendant committee for slander of title; the majority’s holding thus could allow plaintiffs to 519*519 collect damages from the committee for its attempt to enforce restrictions which plaintiffs understood to govern their land when they took their deed. The majority’s rigid adherence to the rule ofWerner v. Graham as a “rule of property” conflicts with our previous recognition that “our courts no longer feel constricted by feudal forms of conveyancing … grants are to be interpreted in the same way as other contracts and not according to rigid feudal standards.” (Willard v. First Church of Christ, Scientist (1972) 7 Cal.3d 473, 476 [102 Cal. Rptr. 739, 498 P.2d 987].)

Accordingly, I would hold that the evidence offered by defendant committee is admissible to establish the existence of building restrictions binding upon plaintiffs.

[*] Brackets together, in this manner [] without enclosing material are used to indicate deletions from the opinion of the Court of Appeal; brackets enclosing material (other than editor’s added parallel citations) are, unless otherwise indicated, used to denote insertions or additions by this court. We thus avoid the extension of quotation marks within quotation marks, which would be incident to the use of such conventional punctuation, and at the same time accurately indicate the matter quoted. In so doing, we adhere to a method of adoption employed by us in the past. (See Chicago Title Ins. Co. v.Great Western Financial Corp. (1968) 69 Cal.2d 305, 311, fn. 2 [70 Cal. Rptr. 849, 444 P.2d 481], and cases there cited.)

[1] Original brackets.

[**] By this deed plaintiffs took an undivided one-half interest in Lot 101 as joint tenants. The remaining one-half interest was by the same instrument conveyed to Frederick LaTour and Margaret LaTour, husband and wife. Prior to this dispute the LaTour interest was sold to the Rileys.

[2] The record shows only that the Bear Creek Planning Committee is an unincorporated association, in existence at least since 1962, and purporting to exercise architectural control over structures erected in the tract containing plaintiffs’ lot. Otherwise, considering that the committee claims control over the erection, placement or alteration of any building in the tract area, the record is remarkably silent concerning the origin, organization, operation and, of primary importance, source of jurisdiction of the committee. (Cf. Russell v. Palos Verdes Properties (1963) 218 Cal. App.2d 754 [32 Cal. Rptr. 488], wherein a nonprofit homeowners’ association which itself owned none of the land involved was by contract with the grantor given authority for the benefit of the property owners to enforce restrictions similar to those involved herein; see also 51 A.L.R.3d 556, 587.)

[3] By stipulation the cause of action for slander of title was severed and continued for trial. It is not involved in this appeal.

[4] [The Murry case, a leading authority in the Werner line, makes clear that even if the restrictions here in question had been recorded prior to the issuance of plaintiffs’ deed, no equitable servitude would have been created absent the inclusion of such restrictions, by recitation or incorporation, in the deed. Compare Martin v. Holm (1925) 197 Cal. 733 [242 P. 718]. wherein the deed to defendants contained no restrictions but they took with record notice of a prior deed establishing reciprocal servitudes binding upon their grantor.]

[[5]] In the Long case, the predecessors in interest of plaintiffs and defendant entered into a parol agreement before they acquired certain lands as tenants in common. The agreement, of indefinite duration, provided that the lands were not to be used to herd or graze sheep. Defendant was the grantee of the covenantor and took with notice of the restriction. Plaintiffs’ attempt to enforce the restriction against defendant was rebuffed by the court because the agreement, not to be performed within a year, rested wholly in parol and thus “did violence to the statute of frauds, …” (P. 406.)

[[6]] However, the acceptance by the grantee of a deed poll containing a covenant to be performed by him binds him to performance thereof. (Grange Co. v. Simmons (1962) 203 Cal. App.2d 567, 573 [21 Cal. Rptr. 757].)

[7] [Nothing we have said in this opinion should be interpreted to cast any doubt upon the principle, reiterated by us above, that extrinsic evidence may be admissible to explain the terms of a deed. (Continental Baking Co. v. Katz, supra, 68 Cal.2d 512, 521-523, and authorities there cited.) While equitable servitudes restricting the free use of land may be created only by a deed setting forth the restriction (or referring to a recorded declaration of restrictions) and identifying the dominant land or lands, the interpretation of the terms creating such a servitude — in the matter of scope, for instance — is governed by normal principles relative to the admission of extrinsic evidence. (Cf. Buehler v.Oregon-Washington Plywood Corporation, post, at p. 520 [131 Cal. Rptr. 394, 551 P.2d 1226].)]

Keywords: Governing Documents, Enforcement