Judge: John J. Kralik, Case: 22BBCV00669, Date: 2023-02-24 Tentative Ruling

Case Number: 22BBCV00669    Hearing Date: February 24, 2023    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

 

 

eli lazarov,

                        Plaintiff,

            v.

 

interinsurance exchange of the automobile club, et al.,

 

                        Defendants.

 

  Case No.:  22BBCV00669

 

  Hearing Date: February 24, 2023

 

  [TENTATIVE] order RE:

demurrer

 

           

BACKGROUND

A.    Allegations

Plaintiff Eli Lazarov (“Plaintiff”) alleges that he is the owner of and resides at 12801 Moorpark Street, Unit 317, in Studio City.  He alleges that on October 4, 2021, a storm struck Los Angeles that caused water damage to his property.  Plaintiff alleges that he had a Condominium Owners insurance policy with Defendant Interinsurance Exchange of the Automobile Club United Fire & Casualty (“AAA”) during the relevant period.  Plaintiff alleges that he notified AAA of the loss immediately, but that AAA conducted no investigation of the loss, asserted that the policy had no coverage for water damage, and concealed that the water damage resulting from a wind-created opening in a temporary roof was covered by AAA’s policy.

Plaintiff alleges that Defendant Bumble Roofing Inc. (“Bumble”) negligently installed and maintained a temporary roof with full knowledge of the impending storm, which allowed the wind to create openings in the temporary roof such that rain entered Plaintiff’s property.  Plaintiff alleges that Defendant Parkside Condominiums Homeowners Association (“HOA”) undertook a legal duty to maintain the common areas of the condominiums, including HOA’s roof and that HOA negligently hired an incompetent roofer.

The first amended complaint (“FAC”), filed September 26, 2022, alleges causes of action for: (1) breach of contract against AAA; (2) tortious breach of the implied covenant of good faith and fair dealing against AAA; and (3) negligence against Bumble and HOA.

B.     Demurrer on Calendar

On December 6, 2022, HOA filed a demurrer to the complaint.

On February 9, 2023, Plaintiff filed an opposition brief.

On February 15, 2023, HOA filed a reply brief.

REQUESTS FOR JUDICIAL NOTICE

            HOA requests judicial notice of Exhibit A: The Restated Declaration of Covenants, Conditions, and Restrictions (“CC&Rs”) for HOA.  The request is granted to the extent that the Court will take judicial notice of the existence of the document, but not for the truth of the matters stated therein.

DISCUSSION

HOA demurs to the 3rd cause of action for negligence in the FAC.

In the 3rd cause of action for negligence, Plaintiff alleges that in September 2021, Bumble contracted with HOA to perform roofing services at the condominium.  (FAC, ¶35.)  Plaintiff alleges that HOA negligently hired Bumble, as Bumble was not qualified to perform roofing work, and HOA negligently failed to determine that Bumble had adequate liability insurance to protect Plaintiff and the other condominium owners in the event Bumble’s errors and omissions caused water intrusions.  (Id.)  Plaintiff alleges that his property has not been repaired by HOA or Bumble’s liability insurance carrier and that the premises has been uninhabitable since October 4, 2021.  (Id.)  In tb

HOA argues that the CC&Rs govern the relationship between Plaintiff and HOA and that the CC&Rs do not allow Plaintiff to bring an action for simple negligence against HOA.  In opposition, Plaintiff cites to Cohen v. Kite Hill Community Association (1983) 142 Cal.App.3d 642, arguing that he is able to bring a claim for negligence against HOA. 

In Cohen, the plaintiffs submitted a plan to their association’s architectural committee to install a fence that would not obstruct views and, thereafter, their neighbors also received approval from the committee to construct a fence that would obstruct views.  The Court of Appeal discussed the association’s duties with respect to the fence and, more relevantly, the effect of the exculpatory clause in the declaration of covenants, conditions, and restrictions.  In discussing whether the exculpatory clause in the CC&Rs cancelled out the association’s duties and immunized it from suit, the Court of Appeal stated:

The law has traditionally viewed with disfavor attempts to secure insulation from one's own negligence or wilful misconduct, and such provisions are strictly construed against the person relying on them, particularly where such person is their author. [Citations.] Here, the Association is the creation and successor of the author, S & S Construction Company, and therefore subject to this rule of strict construction.

Furthermore, it is the express statutory policy of this state that “[a]ll contracts which have for their object, directly or indirectly, to exempt anyone from the responsibility for his own fraud or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.” (Civ. Code, § 1668.)

This public policy applies with added force when the exculpatory provision purports to immunize persons charged with a fiduciary duty from the consequences of betraying their trusts. [Citation.]

Moreover, the California Supreme Court has evinced a clear policy of enforcing only those exculpatory provisions which do not affect “the public interest.” [Citation.] Factors to be considered in determining whether a business or transaction affects a public interest include: (a) whether the matter is suitable for public regulation; (b) whether the party provides a service of importance to the public; (c) whether the party invoking it possesses a bargaining advantage against any member of the public who seeks such service; (d) and whether one party is particularly subject to the other's control and the risk of his or her carelessness. [Citation.]

Applying one or more of these criteria, the courts have invalidated exculpatory clauses invoked by banks [citations], and apartment complexes [citations].

For the reasons earlier stated, we view the Association of homeowners as occupying a particularly elevated position of trust because of the many interests it monitors and services it performs. There fore, we hold that the exculpatory provisions contained in the Declaration constitute no bar to suit against the Association.

The arguments set forth by the Association merit little consideration. It argued most strenuously that the Declaration does not create an easement or equitable servitude giving plaintiffs the right to an unobstructed “view.” That is plainly not the issue here. The central question is whether the Association, under the Declaration, has a duty to act in good faith and avoid arbitrary decisions in approving the plans for construction of a fence on codefendants' property.

Nor are plaintiffs barred from filing suit because they are members of the Association, a nonprofit corporation. It is well settled that members may sue such entities for personal injuries. Nor, finally, is the injunctive relief requested by plaintiffs inappropriate or impractical. It is well within the trial court's power, if it determines that the architectural committee breached its duty, to order the Association to exercise its authority under the Declaration to compel compliance with the architectural standards set forth therein.

In sum, we hold that the Association in reviewing the codefendant's improvement plan owed a fiduciary duty to plaintiffs to act in good faith and to avoid arbitrary action, and that there is an issue of fact raised by the pleadings as to whether the Association did so. As a consequence, the demurrer was improperly sustained.

(Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642, 654-656 [citations omitted] [emphasis added].)

            In reply, HOA argues that exculpatory clauses have been upheld in the past and cites to Franklin v. Marie Antoinette Condominium Owners Association (1993) 19 Cal.App.4th 824.  The issue in Franklin concerned an exculpatory clause contained in the CC&Rs governing the relationship between the condominium’s homeowner’s association and the condominium owners.  In Franklin, the plaintiff moved into the unit, installed hardwood floors and bathroom fixtures.  The plaintiff’s hardwood floors were water damaged when a leak beneath her master bedroom bathroom spread under the floorboards.  The association determined the leak was caused by her sink and was her sole responsibility.  The plaintiff filed suit against the association, alleging its failure to maintain and repair the central plumbing caused water damage to her floors.  The CC&Rs included provisions that the association was to maintain and repair the common areas, the association was not required to reimburse an owner for property damage caused by a central plumbing leak which occurred in the absence of negligence by the association, and the exculpatory clause stated that the association shall not be liable for damage to property resulting from water which may leak or flow from outside of any unit or from any part of the building or any pipes/drains/etc. or from any other place or cause, unless caused by gross negligence of the association.  The Court of Appeal found Cohen to be distinguishable because the exculpatory clause in Cohen relieved the association of its responsibility to adhere to its architectural standards in the CC&Rs and the issue there was whether the exculpatory clause effectively cancelled out that duty and immunized the association from suit.  The Franklin court found that the exculpatory clause in the Franklin case purported to provide immunity from negligence liability, but stated that issue was moot because the court found no negligence at trial.  The Court of Appeal stated: “Although plaintiff disputes the merits of the exculpatory clause, we find this contractual allocation of risk to be reasonable and fair to the condominium owners as a whole.  Here, the condominium owners voluntarily agreed to bear the risk of loss and limit their recovery against the nonnegligent Association to that which is recoverable under the insurance policy. Any condominium owner who desires to purchase additional insurance may do so.”  (Franklin, supra, 19 Cal.App.4th 824, 833.) 

            The Court finds both cases to be partially instructive.  Here, the parties do not appear to dispute that the CC&Rs exist between the parties.  The Cohen cases provides the law showing that exculpatory clauses in CC&Rs are generally disfavored.  Further, the Franklin case shows a scenario where the exculpatory clause would apply.  However, at this time, the Court will not make a definitive determination whether the exculpatory clause in the CC&Rs at issue would apply to the facts of this case.  Based on the allegations of the complaint, this does not appear to be a situation that is similar to Franklin, where the leak originated in the plaintiff’s bathroom and caused damage to her floors.  Instead, here, the water damage to Plaintiff’s property occurred as a result of HOA’s approved roof work in the common area, wherein HOA contracted Bumble to do the work.  Bumble allegedly placed a temporary roof that had openings, such that water entered into the condominium premises and caused water damage to Plaintiff’s unit when a storm hit the area. (FAC, ¶¶18-19.)  Taking the truth of the allegations of the complaint as alleged, this case is distinguishable from Franklin as the alleged negligence in this action was caused by HOA’s approval of work and Bumble’s roofing work in the common area, and not as a result of Plaintiff’s actions that affected his property.

Thus, at this time, the Court declines to find that the CC&Rs immunize HOA from this action at this time.  The demurrer to the 3rd cause of action is overruled.

CONCLUSION AND ORDER

Defendant Parkside Condominiums Homeowners Association’s demurrer to the 3rd cause of action in the first amended complaint is overruled.

Defendant shall provide notice of this order.