HOA Lawyer Blog

“Evergreen” Clauses – Avoiding Self-Renewing Contracts

Published on: July 13, 2022 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – Our Board of Directors has been seeking to switch out a vendor for some time, but we have been waiting for the current contract to expire. It has become known that the current vendor contract automatically “renewed” for another 5-year period because we did not provide notice of our intent to terminate at least 90 days before the contract expired. This termination notice period was required under the terms of the agreement, but we were unaware of it until it was too late. Is there anything we can do to get out from under this contract?

Answered – Unfortunately, certain service agreements (such as waste disposal agreements, among others) may contain provisions whereby the contract continues in perpetuity, even after the expiration of the initial term, unless affirmative cancellation notice is provided to the vendor. These contracts are usually referred to as “evergreen” contracts because they automatically renew unless otherwise cancelled by the association within a specified period. Each situation is unique so counsel should be consulted to review the contract to determine if there is a legal basis for termination.

However, prevention is the best remedy so all significant vendor contracts should be reviewed by counsel, prior to execution, to remove or negotiate burdensome provisions such as “evergreen” clauses. This can save significant time and expense in the future. In addition, associations should calendar all termination requirements and notice periods contained in their agreements so that they do not lapse.

-Blog post authored by TLG Attorney, Tim D. Klubnikin, Esq.

New Client: Newfield Homeowners Association

Published on: July 6, 2022 | by Steven J. Tinnelly, Esq.

Newfield-300x169 It’s our privilege to welcome Newfield Homeowners Association to Tinnelly Law Group’s growing family of HOA clients.

Located in the City of Gardena, Newfield is a newly constructed, luxury condominium community by KB Homes. Residents enjoy a tot lot and close proximity to beach cities and the South Bay Galleria.

Our HOA lawyers and staff look forward to working with Newfield’s Board and management.

New Client: Country Villas Homeowners Association

Published on: June 29, 2022 | by Steven J. Tinnelly, Esq.

Country-Villas-300x169 It’s our privilege to welcome Country Villas Homeowners Association to Tinnelly Law Group’s growing family of HOA clients.

Country Villas is condominium community located in the City of Fullerton. Residents enjoy a pool, spa, tennis courts, and breathtaking views.

Our HOA lawyers and staff look forward to working with Country Villas’ Board and management.

Non-Compete Clauses

Published on: June 22, 2022 | by Matthew Plaxton, Esq.

*Asked and Answered

Asked – An employee (“Employee”) of one of our vendor’s (“Vendor”) has left the company and is now employed by a competing firm (“Competitor”). We want to terminate our contract with Vendor and switch to Competitor so that we can continue to use Employee. Vendor’s contract has a non-compete clause stating that we cannot “directly or indirectly” hire any of Vendor’s employees for twelve (12) months after contract termination. Is such a provision enforceable?

Answered – Non-compete clauses are very common, especially in routine service vendor contracts (e.g., building maintenance, management companies, etc.). They are meant to prevent clients from leaving when the employee leaves; after all, the relationship is with the employee, not the employer. Fortunately, such non-compete clauses are generally unenforceable in California.

California law demonstrates a strong aversion to contract provisions that place a restraint on profession, trade, or business. Indeed, unless the covenant falls within one of the expressly defined exceptions, it is void and unenforceable. (See Cal. Bus. & Prof. Code § 16600 (“Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”).) The type of provision referenced in the question does not fall into one of the exceptions identified in the California Business and Professions Code.

Moreover, such a provision has been rendered void as an impermissible restraint on trade under California case law. For example, in VL Systems, Inc. v. Unisen, Inc., the Court held that a very broad no-hire provision of a contract between consulting company and client, under which client could not hire any of consulting company’s employees for twelve (12) months after the contract terminated, was unenforceable, in violation of the statute prohibiting restraints on engaging in a lawful, profession, trade, or business of any kind. (2007) 152 Cal. App. 4th 708. Like in VL Systems, Inc., the no-hire provision in the Vendor’s contract prevents the association from hiring any of Vendor’s employees for twelve months after the contract terminated. Thus, although not a true “covenant not to compete,” the “effect of the no-hire provision is to restrict the employment of [Vendor’s] employees; it is inconsequential whether the restriction is termed a ‘no-hire’ provision between [Vendor] and [the association] or a ‘covenant not to compete’ between [Vendor] and its employees.” (Id. at pp. 716-17.)

Although the non-compete provision is invalid, it does not mean that Vendor will not bring a lawsuit against the association for breach of contract. Indeed, Vendor may very well bring a lawsuit against the association, which will necessarily result in the parties incurring legal expenses relative thereto. The association therefore must remain mindful of this fact and be prepared to defend itself should a lawsuit ensue.

-Blog post authored by TLG Attorney, Matthew T. Plaxton, Esq.

New Client: Huntington Pier Colony Condominium Homeowners’ Association

Published on: June 15, 2022 | by Steven J. Tinnelly, Esq.

Huntington-Pier-Colony-300x169 It’s our privilege to welcome Huntington Pier Colony Condominium Homeowners’ Association to Tinnelly Law Group’s growing family of HOA clients.

Huntington Pier Colony is a resort style community of condominium homes in downtown Huntington Beach located within easy walking distance to a wide variety of shops, boutiques, museums, restaurants and entertainment. Residents enjoy an attractive salt water pool and spa; a clubhouse with a full kitchen, workout center and lounge area overlooking the ocean.

Our HOA lawyers and staff look forward to working with Huntington Pier Colony’s Board and management.

New ‘Community Association Update Newsletter’ – Issue 55

Published on: June 14, 2022 | by Steven J. Tinnelly, Esq.

New-Newsletter-Template-300x167 In case you missed it, Issue # 55 of our ‘Community Association Update’ newsletter is available now!

Topics covered in this issue include:

Combatting Unlawful Harassment with Restraining Orders
What the Cluck? Addressing Backyard Chickens in HOA’s
The Impact of a Homeowner Filing Bankruptcy and Receiving a Discharge on Assessment Collection
How to Determine Whether Compliance Fines are Reasonable

A link to the newsletter is here.

Need to be added to our mailing list? Click here to sign up. Links to previous editions of our newsletter can be found here.

New Client: Turnleaf at the Seasons Neighborhood Association

Published on: June 8, 2022 | by Steven J. Tinnelly, Esq.

Turnleaf-300x169 It’s our privilege to welcome Turnleaf at the Seasons Neighborhood Association to Tinnelly Law Group’s growing family of HOA clients.

Turnleaf is a new single family home development by KB Home. Located in Chino, residents enjoy a swimming pool with spa, as well as a park and tot-lot, half basketball court and BBQ area.

Our HOA lawyers and staff look forward to working with Turleaf’s Board and management.

Combatting Unlawful Harassment with Restraining Orders

Published on: June 1, 2022 | by Steven J. Tinnelly, Esq.

Man-yelling-at-women-300x200-1 Board Members are tasked with the difficult job of enforcing the Association’s rules and regulations against non-compliant Members. Unfortunately, this often creates tension between Board Members and Members. In some circumstances, this tension turns into unlawful harassment. When this occurs, Board Members should consider the available legal remedies provided under both California law and their homeowners association’s governing documents in order to protect themselves and abate the harassing conduct.

Generally speaking, a restraining order will provide Board Members with the most immediate relief and protection. This is because the California Code of Civil Procedure requires judges to review and rule on requests for Temporary Restraining Orders within the next business day of filing for the same. (Cal. Code Civ. Proc., § 527.6(e).) (Although, Temporary Restraining Orders only remain in effect for a period not to exceed twenty-one [21] days. Before issuing Permanent Restraining Orders, courts must first allow the parties to present their sides of the story at hearings.)

There are two types of restraining orders that Board Members may consider depending on the nature of the alleged harassing conduct. The most common type of restraining order is a Civil Harassment Restraining Order. To prevail and receive a Civil Harassment Restraining Order, the Board Member must prove that the alleged harasser engaged in one of the following forms of unlawful harassment:

unlawful violence (i.e., assault, battery or stalking as defined by the California Penal Code);
a credible threat of violence (i.e., a statement or course of conduct that places a reasonable person in fear for their safety or the safety of their immediate family, and that serves no legitimate purpose); or
a course of conduct directed at the Board Member that seriously alarms, annoys, or harasses the Board Member and causes the Board Member to suffer from substantial emotional distress (and would also cause a reasonable person to suffer substantial emotional distress), and that serves no legitimate purpose.

On the other hand, homeowners associations (as corporations) may consider filing Workplace Violence Restraining Orders against the alleged harasser on behalf of its Board Members. According to the California Code of Civil Procedure, Board Members are considered “employees” of homeowners associations for the limited purpose of Workplace Violence Restraining Orders. (Cal. Code Civ. Proc., §527.8(b)(3).) To prevail and receive a Workplace Violence Restraining Order, the homeowners association must prove that the Board Members (or any other employee as defined by the Code of Civil Procedure) suffered:

unlawful violence (i.e., assault, battery or stalking as defined by the California Penal Code); or
a credible threat of violence (i.e., a statement or course of conduct that places a reasonable person in fear for their safety or the safety of their immediate family), that can reasonably be construed to be carried out or to have been carried out at the workplace, and that serves no legitimate purpose.

If after a hearing on the merits, the Court finds that unlawful harassment has taken place, then the judge may issue a Permanent Civil Harassment Restraining Order for up to five (5) years or a Workplace Violence Restraining Order for up to three (3) years. However, the Code of Civil Procedure only permits Courts to award the prevailing party its attorneys’ fees and costs in lawsuits for Civil Harassment Restraining Orders, not Workplace Violence Restraining Orders.

Finally, in some circumstances, a Member’s harassing conduct toward the Board may constitute a nuisance, as defined by the homeowners association’s CC&Rs. In those situations, the homeowners association may consider bringing an unlimited civil action lawsuit against the offending Member to enforce the homeowners association’s governing documents. Board Members should keep in mind that this type of civil litigation is often more costly and the potential relief is not usually as immediate. Furthermore, the alleged harassment must satisfy the definition of a “nuisance,” as set forth in the governing documents.

If Board Members believe that they are being harassed as a result of their service on the Board of Directors, they should consult with the Association’s general counsel to determine the most effective way to address the problem. Each situation must be evaluated on a case-by-case basis to determine whether the facts meet the legal definition of “unlawful harassment” or a “nuisance.” Of course, Board Members should immediately contact their local law enforcement agencies if they believe that their safety and wellbeing is at risk.

-Blog post authored by TLG Attorney, Sarah A. Kyriakedes, Esq.

New Client: Talavera Homeowners Association

Published on: May 25, 2022 | by Steven J. Tinnelly, Esq.

Talavera-300x169 It’s our privilege to welcome Talavera Homeowners Association to Tinnelly Law Group’s growing family of HOA clients.

Talavera is a new single family home development by KB Home. Located in Menifee, residents enjoy large homesites and a community park.

Our HOA lawyers and staff look forward to working with Talavera’s Board and management.

New Client: Delta Coves Maintenance Corporation

Published on: May 18, 2022 | by Steven J. Tinnelly, Esq.

Delta-Coves-300x169 It’s our privilege to welcome Delta Coves Maintenance Corporation to Tinnelly Law Group’s growing family of HOA clients.

Poised along the pristine canals of the Delta is the brand new boaters club called Delta Coves. This club community is home to 494 waterfront residences each with a private boat dock, all within minutes of fast water. The community’s centerpiece is the Island Camp Club. The Island Camp amenity offers gathering fitness, family games and swim facilities. And a prime location at the gateway to 1,000-plus miles of waterways and 740,000 acres of preserve for unlimited boating, fishing and water sports pursuits.

Our HOA lawyers and staff look forward to working with Delta Coves’ Board and management.

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