HOA Lawyer Blog

Attorney’s Fees are Recoverable to Enforce Settlement Agreement Reached in ADR

Published on: November 1, 2016 | by Steven J. Tinnelly, Esq.

*New Case Law

The Davis-Stirling Act promotes the nonjudicial resolution of disputes between homeowners associations (“HOAs”) and their members in various respects. One example is found contained in Civil Code Sections 5930 et. seq. which, in sum, require that the disputing parties to endeavor to resolve the dispute through Alternative Dispute Resolution (“ADR”) before a lawsuit is filed. ADR is essentially a form of mediation that uses a neutral third-party mediator (often a retired judge) to assist the parties in securing a mutually acceptable resolution.

Experienced HOA Board members, management professionals, and attorneys understand that ADR is often successful in resolving a dispute before it escalates to costly and protracted litigation. That resolution is typically memorialized in a written settlement agreement negotiated during ADR and executed by the parties. The settlement agreement often governs what actions must be taken by the parties within specified time frames. For example, in an architectural dispute, the settlement agreement may require the homeowner to take corrective measures (i.e., to modify or remove unapproved architectural improvements) within a specified time frame.

However, in some instances, a party to the settlement agreement may subsequently fail to honor its terms. The other party is then placed in a position of having to take legal action to enforce the other party’s compliance with the settlement agreement. The enforcing party may then have concerns regarding its ability to recover its attorney’s fees in taking such action. While the Davis-Stirling Act allows for a prevailing party in an action to enforce a HOA’s governing documents to recover its attorney’s fees, it is unclear whether enforcement of a settlement agreement reached at ADR constitutes such an enforcement action.

Fortunately, the recent case of Rancho Mirage Country Club HOA v. Hazelbaker (2016) 2 Cal. App. 5th 252 (“Hazelbaker”) addressed this exact issue… Continue Reading ›

New Client: Sommerset Citihomes Homeowners Association

Published on: October 18, 2016 | by Steven J. Tinnelly, Esq.

Sommerset-Citihomes We are proud to announce that Sommerset Citihomes Homeowners Association has selected Tinnelly Law Group as their association’s legal counsel.

Located in the City of Costa Mesa, the Sommerset Citihomes condominium community consists of 120 beautiful condominium homes located just a few blocks from South Coast Plaza, South Coast Metro, and Crystal Court. Residents enjoy using the community pool, spa, and taking a walk to the nearby shopping centers.

Our HOA attorneys and staff look forward to working with Sommerset Citihomes’s Board and management.

New Client: L’Association Des Propriataires

Published on: October 10, 2016 | by Steven J. Tinnelly, Esq.

Le-Parc We are proud to announce that L’Association Des Propriataires (“Le Parc”) has selected Tinnelly Law Group as their association’s legal counsel.

Le Parc is a condominium community located in Lake Forest. Originally designed by Johannes Van Tilburg & Partners, this award-winning project was completed in three different phases in 1983 and 1984. Le Parc boasts three pools and three spas complimented by 4 water features, and presents itself as an island of calm within the greater hustle and bustle of Lake Forest. Over 600 trees including palm trees surrounding the pool areas as well as alder and eucalyptus add to the already peaceful demeanor to make Le Parc a true urban forest.

Our HOA attorneys and staff look forward to working with Le Parc’s Board and management.

HUD Establishes Rules Regarding Discriminatory Activity and Liability under the Fair Housing Act that will Directly Impact Homeowners Associations

Published on: September 30, 2016 | by Steven J. Tinnelly, Esq.

family The U.S. Department of Housing and Urban Development (“HUD”) recently adopted regulations for evaluating claims of harassment in housing and housing related transactions because of race, color, religion, sex, national origin, disability, or familial status under Title VIII of the Civil Rights Act of 1968 (“Fair Housing Act”). The new regulations, which will directly impact Homeowners Associations (“HOAs”), are set to take effect October 14, 2016.

Brief Background

Both Courts and HUD have long recognized that the Fair Housing Act prohibits harassment in housing and housing related transactions on account of race, color, religion, sex, national origin, disability, or familial status in the same way that Title VII of the Civil Rights Act of 1964 (“Title VII”) prohibits harassment on these same basis in an employment setting. Prior to HUD’s adoption of these new regulations, Courts often applied Title VII standards when evaluating claims of harassment in the housing setting. However, because employment and home settings are different environments, the application of one to another is not always appropriate. To address these deficiencies, HUD recently adopted formal standards for evaluating claims of harassment under the Fair Housing Act.

The new regulations directly impact HOAs because their directors and officers are the ones who are responsible for investigating an owner’s or tenant’s claim of housing related harassment. Furthermore, liability for harassment under the Fair Housing Act can be imposed not just on the HOA but on its officers and directors for their own actions as well as the actions of third-party agents like a management company.

New Client: 1 Channel Island Homeowners Association

Published on: September 13, 2016 | by Steven J. Tinnelly, Esq.

1-Channel-Island We are proud to announce that 1 Channel Island Homeowners Association has selected Tinnelly Law Group as their associations’ legal counsel.

1 Channel Island, by Shea Homes, is a brand new single-family home community located in Encinitas. It was recently awarded Community of the Year by the Building Industry Association of San Diego County at the 2015 Icon Awards, in addition to awards for Best Architectural Design and Best Interior Design. Homes in 1 Channel Island will feature coastal plantation architecture with outdoor Lanais, reminiscent of New Zealand and Hawaii, and a focus on environmental efficiencies.

Our HOA attorneys and staff look forward to working with 1 Channel Island’s Board and management.

New Client: The Cannery Neighborhood Association

Published on: August 31, 2016 | by Steven J. Tinnelly, Esq.

The-Cannery We are proud to announce that The Cannery Neighborhood Association has selected Tinnelly Law Group as their associations’ legal counsel.

The Cannery, by The New Home Company, is a brand new master planned community located in Davis. Winner of the 2016 Master-Planned Community of the Year Award, The Cannery is California’s first farm-to-table new home community. Residents will enjoy 4.7 acres of parks, trails, sports courts, amphitheater, and a 7.4-acre working farm.

Our HOA attorneys and staff look forward to working with The Cannery’s Board and management.

Business Judgment Rule Does Not Protect the Willfully Ignorant

Published on: August 17, 2016 | by Steven J. Tinnelly, Esq.

*New Case Law Business Judgment Rule HOA

Volunteer homeowners association (“HOA”) directors are fiduciaries who are held to high standards of conduct when making decisions or taking actions on behalf of the communities they represent. Sometimes those decisions, which may seem reasonable at the time, ultimately lead to problems for the HOA or its members. If volunteer HOA directors were made personally liable for the consequences of their erroneous decisions, it would be virtually impossible for any HOA to recruit individuals to serve on its board. For this reason, HOA directors are afforded several liability protections under California law. One of those protections is a legal doctrine known as the “Business Judgment Rule.”

The Business Judgment Rule generally shields directors from personal liability that may result from their erroneous decisions, provided that the decision was made (1) with care, (2) in good faith, and (3) was based upon what the director believed to be in the best interest of the HOA. Making a decision “with care” generally requires that directors exercise reasonable diligence to investigate the issues surrounding the decision so that they are able to act on an informed basis.

But how broad are the protections of the Business Judgment Rule? Does it automatically shield a director who chooses to remain willfully ignorant as to the issues surrounding her actions or the scope of her authority? According to the Court of Appeal in the recent case of Palm Springs Villas II Homeowners Association v. Parth (2016) 248 Cal.App.4th 268, that answer appears to be no… Continue Reading ›

New Client: Villa Portofino Homeowners Association

Published on: July 14, 2016 | by Steven J. Tinnelly, Esq.

Villa-Portofino We are proud to announce that Villa Portofino Homeowners Association has selected Tinnelly Law Group as their association’s legal counsel.

Villa Portofino is a planned development located at the southern gateway to the community of Tierrasanta in San Diego. Residents enjoy a clubhouse, pool, basketball court, tennis courts, and a park/playground area.

Our HOA attorneys and staff look forward to working with Villa Portofinos’s Board and management.

New Client: Woodbury Lafayette Community Association

Published on: June 27, 2016 | by Steven J. Tinnelly, Esq.

We are proud to announce that Woodbury Lafayette Community Association has selected Tinnelly Law Group as their association’s legal counsel.

Woodbury Lafayette is a brand new condominium community by The New Home Company and is centrally located just a short five minute walk from downtown Lafayette. It consists of luxury Garden Flats and Terrace Flats, many with views of Mount Diablo. Woodbury was recently honored with the “Community of the Year” award at the Bay Area Building Industry Association’s (BIA) 2016 Excellence in Home Building Awards.

Our HOA attorneys and staff look forward to working with Woodbury Lafayette’s Board and management.

Associations Could Be Held Liable for the Employees of Independent Contractors

Published on: June 22, 2016 | by Steven J. Tinnelly, Esq.

Labor-Unions-Preventive-Practices-1024x683 On August 27, 2015, the National Labor Relations Board (“NLRB”) published its decision in the Browning-Ferris Industries of California, Inc. case (“BFI Case”). In that case, Browning-Ferris Industries of California, Inc. (“BFI”) retained the services of Leadpoint Business Services (“LBS”) to provide staff to one of BFI’s recycling facilities. The contract between BFI and LBS recognized, and the parties understood, that the personnel staffed by LBS were the employees of LBS. Nevertheless, given the fact that the contract granted BFI with some control over the employees of LBS, the NLRB concluded that BFI was a joint-employer of LBS thereby obligating BFI to comply with federal labor laws.

In adopting a new legal standard for determining joint-employer status, the NLRB emphasized that such a determination should not be based solely on actual control over the employees of another, but the “existence, extent, and object of the putative joint employer’s control.” (Browning-Ferris Industries of California, Inc. (2015) 2015 NLRB No. 672, *12 (Emphasis added).) Otherwise, employers would be able to insulate themselves from their responsibility to comply with federal labor laws. (Id. at p. *21) Accordingly, as long as a company retains (e.g., through the execution of a contract) the authority to control the employees of another, said company shall be given joint employer status. (Id. at p. *2.) This is true even if control is exercised indirectly (e.g., through an intermediary). (Id.)

Many associations retain a community management firm for the purpose of executing the duties of the association. These community management firms in turn employ community managers and support staff to manage these associations. While historically recognized as the employee of the community management firm (and an independent contractor of the association), the BFI Case raises some questions with respect to the nature of the relationship between the employees of a community management firm and the association. Accordingly, associations must be cognizant that a Court may find that it is a joint employer of the community manager (and support staff), notwithstanding the fact that it exercises no direct and immediate control over said manager.

Similarly, associations and management companies must take care when hiring maintenance and service providers for the community. When managers, committee members, or board members are conducting job walks with a contractor’s employee, reviewing specifications, or receiving invoices, the management company and the association may become joint employers. In Heiman v. Worker’s Compensation Appeals Board, Cal: Court of Appeal, 2nd Appellate Dist., 3rd Div. 2007 (“Heiman”), a community association manager hired an unlicensed and uninsured contractor on behalf of the association to install rain gutters on the condominium buildings. An employee of the contractor was seriously injured on the first day of the project and sued the contractor, management company, and association for workers’ compensation. The Court held that the contractor, the association, and the management company were all joint employers because the contractor hired the injured employee, and the management company, as agent of the association, hired the contractor. The BFI Case seems to affirm this decision.

In order to insulate the association from a possible finding of joint-employer status, the association should ensure that its contract with independent contractors, requires all proper licenses and insurance, adequately sets forth the desired results, and sets forth the level of care and skill to be used in accomplishing the desired results. (See Id. at p. 12 (“mere ‘service under an agreement to accomplish results or to use care and skill in accomplishing results’ is not evidence of an employment, or joint-employment relationship”).) The agreement should also include a provision that requires the contractor to indemnify and hold the association harmless in the event a labor dispute arises.

Blog post authored by TLG attorney, Matthew T. Plaxton.

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