A Superior Court judge on Friday heard the Rancho Murieta Association's appeal of a Small Claims Court decision about granting exclusive uses of common area. After a 40-minute hearing in Small Claims Court, Judge James Henke said he would review the documents in the case before making a decision.
Henke began the proceedings by noting, ""My decision has no binding power even assuming another party came before the court and another judge decided a different way. ... In other words, there's no legal precedence as far as Small Claims matters. That being said, I basically agree with (the commissioner) who heard the case originally ..."
In that hearing, Sacramento Small Claims Court ruled in favor of neighbor Wilbur Haines' lawsuit against the RMA's interpretation of requirements to grant exclusive uses of common land after a hearing before a court commissioner in January.
The ruling awarded Haines $500, the amount sought, plus $40 in costs. Enforcement of the judgment was delayed 30 days to give the RMA time to appeal.
At the appeals hearing Friday, RMA legal counsel Steven S. Weil told the court, "I see this case as having two pieces: the impact of the Small Claims Court ruling and the ... question of whether the law trumps the CC&Rs."
"And I think I have to decide that," said Henke.
"In this case the governing documents say the board has the authority to convey these easements," said Weil. "And this board has simply followed the CC&Rs. And the power in the board isn't inherent. It was given to the board by a vote of the members. So any judgment that this court makes ... cannot help but -- to put it bluntly -- invade the province of the exercise of discretion by a board given it by the members."
He added, "Rancho Murieta is a very political environment and an award invites umpty-umpty-ump other people to bring a claim ... and that raises the question of inconsistent judgments."
Haines has said he filed the suit to help the RMA read the legal winds relative to the association's interpretation of a statute that took effect in 2006. The RMA's interpretation, supported by legal opinion, is that the board is able to vote to approve exclusive uses because 60 percent of the community approved CC&Rs giving them that right a decade ago. Haines argues that the law requires 67 percent approval of the membership to issue new exclusive uses unless the CC&Rs specify a different percentage.
Under the planned development ordinance enacted in 1977 and current RMA CC&Rs, owners of cottage, townhouse and circle lots can lease up to 1,200 square feet of common area immediately adjacent to their homes for heating and air conditioning equipment, propane tanks, decking, unroofed patios, landscaping and swimming pools.
At Friday's hearing, Haines maintained the legislature intended a vote of the members on exclusive uses. "The entire purpose of the Davis-Stirling Act is to put an overlay of democracy into this process that doesn't exist in your normal non-profit mutual benefit corporation," said Haines. "The Davis-Stirling Act exists to regulate the behavior of homeowners associations. ... (The legislature is) very deliberately wading into the board's discretion. They said before the board can do this they must get the approval of 67 percent of the membership. ... They said it shall be 67 percent unless your CC&Rs say something otherwise. ... The CC&Rs merely say the board may confer these leases and lays out some procedures and some guidelines for fee structure and such."
"If these CC&Rs were silent and if the board claimed the power to give easements ... I would agree with the argument ...," Weil countered. He quoted from a legislative history of the bill, pointing out changes that were made in the wording as the bill evolved. He concluded, "The statute isn't so clear. They could have said a vote of the members is required, period."
Weil said that out of 2,400 lots in Rancho Murieta, there are 900 that are eligible for the extra 1,200 square feet and, of these, 200 to 300 have received exclusive use leases.. "So if I buy a lot, I already know that the neighboring owner or some owner might have the ability" to apply for additional land up to that amount, he said.
"I worked on the bill," Haines said "They left the associations the flexibility -- it could be 66 percent of votes cast because we got a horrible time getting any large percentage of the whole voting power to open an envelope and mark a ballot. ... So what I've been telling the board is we could make a simple majority of quorum would satisfy the statute and the ones that aren't objectionable would sail through."
"If the board was going to allow the use of these small pieces of land by getting the vote of the members each time, it'd be a bear. It wouldn't happen," Weil said.
In his final comments, he added, "Given the numbers of lots involved and the impact the ruling could have, and the lack of clarity, I just urge the court not to create a precedent of having members come down to Small Claims court every time they disagree with their board of directors over the meaning and application of a recorded provision in the CC&Rs."