Formosa Gardens Homeowners Assn. v. Krechmer CA2/1 ( 2015 )

Filed 9/2/15 Formosa Gardens Homeowners Assn. v. Krechmer CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
FORMOSA GARDENS HOMEOWNERS B255916
ASSOCIATION et al.,
(Los Angeles County
Plaintiffs and Appellants, Super. Ct. No. BC495900)
v.
DANIEL KRECHMER,
Defendant and Respondent.
Appeal from judgment of the Superior Court of Los Angeles. Malcolm Mackey,
Judge. Reversed.
Law Office of Christie Gaumer, Christie Gaumer for Plaintiffs and Appellants.
Richardson Harman Ober, Kelly G. Richardson, Brian D. Moreno for Defendant
and Respondent.
__________________
In a protracted dispute over control of a homeowner association, two members of
the five-member association appeal from a judgment following a grant of summary
judgment, and from an award of attorney fees in favor of another association member.
We reverse the award.
Background1
The Complaint
Plaintiffs Formosa Gardens Homeowners Association (FGHOA), Keith Worthy,
Colin Fulford, and Alexei Durack, filed a complaint seeking declaratory and injunctive
relief against Daniel Krechmer.2 The November 19, 2012 complaint, alleged (in
pertinent part) that Formosa Gardens is a five-unit condominium in Los Angeles; that
Krechmer was a resident and homeowner at Formosa Gardens, and the former president
of the FGHOA; that sometime after Formosa Gardens’ development and FGHOA’s
creation, the Davis-Stirling Common Interest Development Act3 was enacted, mandating
homeowners-associations’ compliance with provisions for governance and election of
directors and officers; that defendant Krechmer had refused to comply with the law’s
election requirements; that the plaintiffs had seen indications of questionable or improper
1
This court is not aided in its review by the parties’ failure to adhere to rules
8.124(d)(1) and 8.144(a)(1)(C) of the California Rules of Court, requiring chronological
arrangement of records included in their respective appellate appendices (see Eby v.
Chakin (1996) 47 Cal. App. 4th 1045, 1047), and the failure of appellants to comply with
rules 8.122(b)(1)(F) and 8.124(b)(1)(A), requiring inclusion of the lower court’s register
of actions in an appellant’s appendix.
2
The complaint’s caption, as well as most of the subsequent pleadings and
documents in the record, identify Ms. Durack as “Alexis Durack.” But appellants’ briefs
in this court identify her as “Alexei Durack.” The judgment filed February 21, 2014,
identifies her as “Alexis Durack, also known as Alexei Durack.”
3
The Davis-Stirling Common Interest Development Act was enacted as Civil
Code sections 1350 through 1378, originally operative as of January 1, 1986. The Act
was repealed and re-enacted, as revised, as Civil Code sections 4000 through 6150,
effective January 1, 2013, operative January 1, 2014. (Stats. 1992, ch. 162, § 3 (Assem.
Bill No. 2650).)
2
spending of FGHOA funds during Krechmer’s tenure as president, which Krechmer
refused to explain; and that Krechmer had moved his residence from Formosa Gardens in
October 2012, leaving no records for FGHOA’s continuing operations.
The complaint further alleged that on November 5, 2012, “the homeowners” held
an emergency meeting at which they voted to recall the current directors of FGHOA and
to elect Worthy, Fulford, and Durack as new directors, to authorize a criminal complaint
against Krechmer for embezzlement, and to authorize the association to retain an attorney
to bring the FGHOA into compliance with Davis-Stirling Act requirements. In a single
cause of action the complaint seeks a judicial declaration of the parties’ rights with
respect to their representative status in the FGHOA. Its prayer asks for various
declarations (identified in greater detail below), primarily that Krechmer cannot act as
FGHOA’s president, that he was never legally entitled to act as FGHOA’s president, and
that the plaintiffs are the FGHOA’s true board. And the complaint seeks attorneys’ fees
and costs.
Demurrer to Complaint and Anti-SLAPP Motion
Krechmer demurred on December 5, 2012, primarily on two grounds: that the
purported November 5, 2012 “emergency” meeting was invalid, because the law does not
permit emergency special membership meetings of common interest developments
without proper notice (Corp. Code, § 7222); and that (former) Civil Code sections
1369.510, 1369.520, and 1369.560 (now Civ. Code, §§ 5925, 5930, & 5950) prohibit a
homeowners association or its members from filing an enforcement action without first
trying to submit their dispute to alternative dispute resolution and filing a certificate of
compliance. (Code Civ. Proc., § 431.10, subd. (e).) On January 7, 2013, Krechmer also
filed an anti-SLAPP motion to strike the complaint, arguing (as had his demurrer) that the
complaint was a continuation of Worthy’s earlier unsuccessful action.4 (Code Civ. Proc.,
§ 425.16.)
4
Worthy apparently had been the plaintiff in a previous lawsuit challenging
Krechmer’s status as FGHOA board member and president, which lawsuit was ended by
3
The plaintiffs’ January 9, 2013 “objection” to the demurrer argued that Krechmer
was disqualified from relying on the Davis-Stirling Act due to his own failure to comply
with the act’s requirements, that the plaintiffs had provided the required notice for the
emergency meeting, and that they had properly alleged their pre-filing dispute-resolution
efforts and Krechmer’s refusal to respond. Attached were unauthenticated copies of
meeting notices and declarations, and email communications between the Formosa
Gardens homeowners regarding them.
The court heard and denied the anti-SLAPP motion on May 8, 2013. It found that
the SLAPP statute applied, but Krechmer had failed to conclusively negate the plaintiffs’
potentially meritorious theories.
Application for Temporary Restraining Order and Preliminary Injunction
On June 21, 2013, the plaintiffs sought an ex parte temporary restraining order
(TRO), restraining Krechmer from acting on behalf of the FGHOA until a preliminary or
permanent injunction could be sought. The court set an order to show cause re
preliminary injunction for July 2, 2013, reciting Krechmer’s agreement to take no further
action pending the hearing. After the July 2, 2013 hearing, the court denied the requested
relief. On July 3, 2013, Krechmer renewed his demurrer to the complaint.5
Answer to Complaint
Krechmer answered the complaint on August 19, 2013, generally denying its
allegations and asserting affirmative defenses.
Renewed Application for TRO
On August 20, 2013, the plaintiffs filed a renewed ex parte application for a TRO
and order to show cause against Krechmer, to be heard on September 26, 2013.
Krechmer filed an opposition the same day, requesting an order to show cause for
sanctions against the plaintiffs.
Krechmer’s successful anti-SLAPP motion. Durack and Fulford are also apparently
Formosa Gardens residents (although the complaint does not expressly say so).
5
The record does not reflect that the renewed demurrer was ever heard.
4
The court granted the TRO request and issued an order to show cause re
preliminary injunction. The order prohibited Krechmer from holding any election
without the court’s consent, from representing himself as a FGHOA director, from
collecting FGHOA homeowner fees, from maintaining FGHOA bank accounts, and from
directing FGHOA’s contractors. It ordered Krechmer to turn over FGHOA bank
accounts to Worthy, and to show cause why he should not provide the plaintiffs with
FGHOA insurance and claims information, and documentation of past elections and
finances.
Discovery Requests
On August 22, 2013, Krechmer noticed the depositions of Worthy, Fulford, and
Durack, and requested extensive written discovery.
Application for Modification of TRO
On August 25, 2013, Krechmer applied ex parte for orders vacating, modifying or
clarifying the August 20 TRO, and scheduling an election. The ex parte request also
sought leave to file a cross-complaint. In a declaration filed August 26, Krechmer’s
counsel averred that he had made a proposal to plaintiffs’ counsel for resolution of the
parties’ disputes concerning future FGHOA elections, that plaintiffs’ counsel had rejected
the offer, and that he made a further settlement offer to which he had received no
response. He averred also that a number of the acts required by the court’s August 20
TRO were beyond Krechmer’s power to accomplish, and that three of the five
homeowners of Formosa Gardens favor Krechmer as a FGHOA director.
The court’s August 26, 2013 minute order, neither granted nor denied relief, but
instead ordered the parties’ counsel to attempt to resolve the issues. The order recites the
parties’ agreement to hold an election on October 30, and to exchange information
concerning the election, to delay any tree trimming, to refrain from any action concerning
the FGHOA management contract, and to provide the plaintiffs with information about
the FGHOA bank account.
5
Cross-Complaint Against Plaintiffs
On September 3, 2013, Krechmer cross-complained against the plaintiffs
(FGHOA, and the individual plaintiffs, Worthy, Fulford, and Durack), seeking a
determination that the November 5, 2012 meeting was invalid, and also seeking
enforcement of an alleged August 26, 2013 stipulation for an annual meeting and election
to be conducted on October 30, 2013. Each of the cross-complaint’s three causes of
action sought “reasonable costs of suit and attorney fees incurred in prosecuting this
action pursuant to the governing documents and Civil Code Sections 1354(c), 1363.09
and 1717(a).”
Dismissal of Complaint as to Individual Plaintiffs
On September 6, 2013, plaintiffs Worthy, Fulford, and Durack filed requests for
dismissal of their complaint against Krechmer. (Code Civ. Proc., § 581, subd. (c).) The
court entered the dismissals on September 9, 2013.
Denial of Preliminary Injunction
The court’s September 26, 2013 minute order, reflects that the court denied the
requested preliminary injunction, “as fully reflected in the notes of the court reporter and
incorporated by reference herein.”6
Answer to Cross-Complaint
The cross-defendants answered the cross-complaint on November 1, 2013.
Although the answer purports to be on behalf of “Plaintiffs and Cross Defendants,” it
recites that “FGHOA” denies the cross-complaint’s allegations, and its caption page
identifies the filing attorney as “Attorney for FGHOA” (rather than for “Cross-
Defendants”).
6
No transcript of the September 26, 2013 proceedings was designated for
inclusion in the record on appeal. The notice of ruling filed by Krechmer’s counsel
recites that the court also permitted an annual meeting and election, although the minute
order does not mention of such a ruling.
6
Motions for Summary Judgment and for Attorneys’ Fees
Krechmer filed two motions on November 4, 2013: a motion for summary
judgment or summary adjudication; and a motion for attorney fees. Krechmer sought
judgment against the individual plaintiffs and cross-defendants on the grounds that the
individual plaintiffs had dismissed their complaint, and that they had stipulated that the
November 5, 2012 special membership meeting, did not comply with the law or
FGHOA’s governing documents. Krechmer sought summary judgment against FGHOA
on the grounds that the November 5, 2012 meeting was invalid, that FGHOA lacked
standing to sue, that the lawsuit was time-barred, and that Krechmer was immune from
liability under the business-judgment rule. The motion sought summary adjudication in
the alternative, on essentially the same grounds.
The motion for attorney fees sought a $40,230 award against FGHOA and the
individual plaintiffs and cross-defendants. It cited Civil Code section 1354, subdivision
(c) in support of the award (contending that Civ. Code, § 1717, subd. (b)(2) does not
apply).
The plaintiffs and cross-defendants opposed the summary judgment motion, filing
an opposition to Krechmer’s separate statement of undisputed facts (apparently as well as
a concurrent memorandum in opposition to the motion, which does not appear in the
parties’ respective appendices). No opposition was filed to the attorney-fee motion.
The court heard the motions for summary judgment and for attorney fees on
January 27, 2014. (The previously continued motion for preliminary injunction, and a
motion to disqualify plaintiffs’ counsel for alleged conflicts of interest, were also set for
hearing that day. The court denied those motions, without comment.)
Orders Granting Summary Judgment and for Attorneys’ Fees
The court granted summary judgment on the complaint and cross-complaint in
Krechmer’s favor at the January 27, 2014 hearing; and it awarded Krechmer attorney fees
of $30,000 against FGHOA, Worthy, Fulford, and Durack. Judgment reflecting these
rulings was entered in Krechmer’s favor on February 21, 2014. Notice of the order’s
entry was filed and served March 14, 2014.
7
The New Trial Motion
On April 1, 2014, Durack and Fulford filed a motion for a new trial or to vacate
the verdict. As grounds for new trial, the motion (as amended) cited irregularity in the
proceedings, improper orders, and abuse of discretion (Code Civ. Proc., §§ 657, subd. (1)
& 663); excessive damages (Code Civ. Proc., § 667, subd. (5)); and error in law (Code
Civ. Proc., § 667, subd. (7)). (A motion by Durack and Fulford for reconsideration of the
fee order was placed off calendar at the plaintiffs’ request.)
The new trial motion argued that a new trial should be granted as to the attorney
fee order, on two grounds: First, Durack’s and Fulford’s failure to file opposition to the
fee motion resulted from counsel’s mistake, which the trial court should have excused at
the hearing, permitting them to file a late opposition. Second, the “damages”—the fees
awarded by the court—are excessive as to Durack and Fulford, because they did not
actively participate in the action, and they were named as plaintiffs only because together
they own a condominium in the project.
On April 25, 2014, the trial court denied the new trial motion. Its minute order
briefly explains its ruling: (1) the statute does not permit a new trial motion based on an
issue of fact in an attorney-fee ruling; and (2) the attorney fee ruling was in any event
correct on the merits, because a failure to file a timely opposition to the fee motion gives
the court discretion to find a waiver of any opposition, which waives the issue on appeal.
The Notice of Appeal
On April 28, 2014, appellants Durack and Fulford filed a notice of appeal from
“the judgment entered on February 21, 2014, notice of which was served on February 27,
2014 and on March 14, 2014, a motion for new trial thereon which was denied on April
25, 2014”—and from all other appealable orders and rulings, including from the denial of
the new trial motion, the grant of summary judgment, and the grant of attorneys’ fees.
8
Discussion
A. Standard of Review
“A trial court properly grants summary judgment where no triable issue of
material fact exists and the moving party is entitled to judgment as a matter of law.
[Citation.] We review the trial court’s decision de novo, considering all of the evidence
the parties offered in connection with the motion (except that which the court properly
excluded) and the uncontradicted inferences the evidence reasonably supports.” (Merrill
v. Navegar, Inc. (2001) 26 Cal. 4th 465, 476.)
B. Orders Appealed
Judgment was entered against Durack and Fulford on February 21, 2014. Notice
of its entry was given on March 14, 2014. The appeal from the judgment filed April 28,
2014 therefore is timely. (Cal. Rules of Court, rule 8.104(a)(1)(B) [notice is timely
within 60 days after filing and service of notice of entry].)
1. The motion for summary judgment and supporting factual statements
failed to address issues raised by the complaint and cross-complaint;
summary judgment therefore was erroneously granted.
The complaint alleged that the homeowners of FGHOA held an emergency
meeting on November 5, 2012, at which they voted to (among other things) recall the
then-current directors (including Krechmer) and to elect the individual plaintiffs as
directors.7 It also alleges a number of acts of wrongdoing (actual and suspected) it
attributes to Krechmer, including refusing to comply with the mandates of the Davis-
Stirling Act regarding elections for directors and financial reporting, use of FGHOA
funds, disclosures to FGHOA homeowners, and removal of records necessary for
FGHOA operations. It sought a judicial declaration of the rights of the plaintiffs and
Krechmer with respect to the FGHOA. Specifically, it sought a declaration that
7
The complaint actually alleges in paragraph 11 that the homeowners voted at the
November 5, 2012 meeting, to elect “Alexis Fulford, Keith Worthy, and Colin Fulford”
as directors—apparently misnaming plaintiff Durack. The parties have not indicated that
the apparent error has any significance here, nor do we see any.
9
Krechmer is not, and never was, authorized to act as the FGHOA president, and his recall
as a director was valid and lawful; it sought a declaration that the plaintiffs’ election to
the FGHOA board was valid and lawful, and they are the board’s true members; and it
sought a declaration that Krechmer has no authority to direct professionals and others
hired by FGHOA, and those hired by FGHOA owe their duties to FGHOA, not to
Krechmer.
The cross-complaint against the individual plaintiffs and FGHOA sought a
determination that the November 5, 2012 meeting was invalid; and it sought enforcement
of an alleged August 26, 2013 stipulation, for an annual meeting and election to be
conducted on October 30, 2013.
Krechmer’s summary judgment motion argued that summary judgment against
Durack, Fulford, and Worthy is appropriate because they stipulated that the November 5,
2012 special membership meeting, did not comply with the Davis-Stirling Common
Interest Development Act and the FGHOA governing documents; because they had
dismissed their complaint against Krechmer; and because the November 5, 2012 meeting
was void as a matter of law. It contends that summary judgment is also appropriate
against FGHOA, because the November 5, 2012 meeting was invalid.8
8
The motion’s supporting declaration alleges (among other things) that the
plaintiffs’ counsel had agreed that the plaintiffs would stipulate that the November 5,
2012 emergency meeting, “was not held according to code, although Plaintiffs would not
stipulate that the November 5, 2012 meeting was invalid.” The declaration authenticates
a copy of the stipulation. The “Stipulation Of Undisputed And Admitted Facts,” signed
by counsel for the plaintiffs and for Krechmer, stipulates that the “recall meeting” did not
have a quorum, that there was no petition to the board to call a special membership
meeting, as required by FGHOA bylaws; that ballots were not given to the membership
and an inspector of elections was not appointed, as required by specified provisions of
Civil Code section 1363.03, and that “all of the members of Formosa Gardens were not
provided with sufficient notice of the meeting as required by law.” The motion’s
separate statement of undisputed facts alleges (among other things) that the November 5,
2012 meeting was void, because it violated the Davis-Stirling Act and the FGHOA
governing documents, citing the plaintiffs’ stipulation.
10
But the motion’s supporting statement of undisputed facts does not even purport to
address the complaint’s allegations of actual or potential wrongdoing and Davis-Stirling
Act violations by Krechmer, wholly apart from the invalidity of the November 5, 2012
meeting.9 And it ignores the cross-complaint’s cause of action seeking a court-ordered
FGHOA election pursuant to an alleged open-court stipulation.10
The appeal challenges the summary judgment on two grounds: First, the motion’s
supporting separate statements state only legal conclusions, not statements of fact;
“Without an actual undisputed fact, as opposed to a legal conclusion, the motion for
summary judgment should not have been granted.” Second, the trial court improperly
decided issues of fact in granting summary judgment.
A stipulation of the parties’ counsel that the November 5, 2012 meeting, violated
the Davis-Stirling Act and the FGHOA governing documents in significant ways might
well be enough to entitle Krechmer to a summary adjudication that the November 5, 2012
meeting, and that the actions purportedly taken at the meeting are invalid. But the
stipulated facts could not entitle him to summary judgment, for his motion and supporting
factual statements do not address the other issues raised by the complaint and cross-
complaint.
The complaint alleges that Krechmer has acted as president of the FGHOA
without complying with the Davis-Stirling Act’s requirements for elections and financial
reporting; that he has embezzled FGHOA funds; that he has taken FGHOA records
necessary for the association’s continued operations; that he represents to the plaintiffs
and others that he is the FGHOA president, (despite his refusal to comply with the
requirements for legal elections). And the complaint asks for relief that is not at all
9
We do not address appellants’ contention that the fact the stipulation is signed
only by counsel precludes it from binding them as a discovery admission.
10
Unmentioned by the parties is the fact that the documents supposedly supporting
the motion’s statement of undisputed facts (and for which judicial notice was requested in
the trial court) are for the most part unauthenticated (even if the supporting facts were
otherwise sufficient). (Evid. Code, §§ 250, 1401, subd. (a) [authentication of writing is
required before it may be received in evidence].)
11
dependent on the validity of the November 5, 2012 meeting. It seeks judicial declarations
that Krechmer is not, and never was, entitled to act as the association’s president, and that
Krechmer has no legal authority to direct the conduct of those dealing and contracting
with the association, who owe their duties to the association and not to Krechmer.
Nothing in the stipulation on which the summary judgment rests addresses or resolves
these allegations.
Summary judgment may be granted only if the moving papers establish that the
moving party is entitled, as a matter of law, to judgment on all claims raised by the
pleadings. (Code Civ. Proc., § 437c, subd. (c); Merrill v. Navegar, Inc., supra, 26
Cal.4th at p. 476.) The motion’s failure to meet that burden is demonstrated by its failure
to address the plaintiffs’ claims in the complaint, as well as the claims of the cross-
complaint, that are not dependent on the validity of the November 5, 2012 meeting—such
as the claims that Krechmer is not and never was the association’s rightful president, and
that he has no authority to direct the conduct of those dealing and contracting with the
association. Nor does it address the cross-complaint’s claim for a declaration of right to a
court-ordered FGHOA election of directors and officers. For these reasons alone
(without regard to any other issue in this appeal), the judgment must be reversed.
Conclusion
The judgment entered on the basis of the order granting summary judgment must
be reversed. The judgment’s reversal makes it unnecessary for us to address the parties’
other contentions with respect to the judgment’s validity, it eliminates the purported basis
for the order granting attorneys’ fees, requiring reversal of that order as well, and
rendering moot the appeal from the new trial motion’s denial.
12
Disposition
The judgment is reversed, as is the order granting attorneys’ fees. Appellants are
entitled to their costs on appeal.
NOT TO BE PUBLISHED.
CHANEY, Acting P. J.
We concur:
JOHNSON, J.
MOOR, J.*
*
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
13