Judge Lisa K. Sepe-Wiesenfeld, Case Number: 23SMCV03382, Date: 2024-09-06 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 23SMCV03382, Date: 2024-09-06 Tentative Ruling

Case Number: 23SMCV03382 Hearing Date: September 6, 2024 Dept: N

TENTATIVE RULING

Defendant Carolwood Homeowners Association, Inc.’s Motion for Summary Adjudication of Issues is GRANTED as to the first issue, relating to violation of Business and Professions Code section 17200, and DENIED as to the second issue, relating to punitive damages.

Defendant Carolwood Homeowners Association, Inc. to give notice.

REASONING

Defendant Carolwood Homeowners Association, Inc. (“the HOA”) moves for summary adjudication of the following issues: (1) Plaintiffs Chloe Fogel, Arthur Fogel, and the Arthur Fogel/Kaleen Lemmon Family Trust (“Plaintiffs”) cannot recover on their fourth cause of action for violation of Business and Professions Code section 17200 against the HOA because the HOA is not a business for purposes of the statute, and (2) Plaintiffs cannot recover punitive damages against the HOA because Plaintiffs cannot establish conduct by the HOA which constitutes oppression, fraud, or malice.

Request for Judicial Notice

The HOA requests judicial notice of The First Restatement To The Declaration Of Covenants, Conditions, And Restrictions Establishing A Plan For Condominium Ownership For Carolwood

Homeowners Association, Inc., recorded in the Official Records of Los Angeles County on July 14, 2015, as Document No. 20150845374 (“CC&Rs”), as well as Plaintiffs’ complaint in this action. The HOA’s request is GRANTED pursuant to Evidence Code section 452, subdivisions (c) and (d).

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Ibid.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Med. Ctr. (2008) 159 Cal.App.4th 463, 467 (Avivi).)

“Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “[T]he court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection) . . . in the light most favorable to the party opposing summary judgment.” (Avivi, supra, 159 Cal.App.4th at p. 467; see also Code Civ. Proc., § 437c, subd. (c).)

Analysis

The HOA first argues that Plaintiffs cannot recover on their fourth cause of action for violation of Business and Professions Code section 17200 against the HOA because the HOA is not a business for purposes of the statute. The HOA presents evidence that it is a nonprofit, mutual benefit corporation, a Common Interest Development association governed in accordance with the Davis-Stirling Act governing nonprofit mutual benefit corporations, and a governing body for the planned development commonly known as Carolwood Condominiums in West Hollywood. (Def.’s UMF Nos. 1-3.) Plaintiffs are the owners of Unit T7, 1033 Carol Drive, in West Hollywood. (Def.’s UMF No. 4.) The HOA is governed by a five-person volunteer Board of Directors, and the HOA and properties within are governed pursuant to CC&Rs applicable to the property and specific rules and regulations, including that the HOA is responsible for managing and maintaining common areas. (Def.’s UMF Nos. 5, 9-11.) The HOA argues that case law makes clear that homeowners associations are not businesses operating commercial activity for purposes of Business and Professions Code section 17200 (“the UCL”), such that Plaintiffs’ cause of action against the HOA for violation of the UCL cannot continue. The HOA cites That v. Alders Maintenance Association (2012) 206 Cal.App.4th 1419, 1426-1427, which stated that a homeowners association was not a business for the purposes of applying the UCLA to an election dispute.

Plaintiffs argue that That v. Alders Maintenance Association, supra, 206 Cal.App.4th 1419 is limited to application in an election dispute. The Court is not convinced. The appellate court stated clearly that no case law supported treating a homeowners association as a business under the UCL, and it did not state that its application was limited to only election disputes. Instead, the appellate court stated that the UCL could apply to a homeowners association where the association engages in commercial activity such as selling products or services that are voluntary purchases for members or nonmembers. (Id. at p. 1427.) Here, the conduct alleged is the failure to follow the CC&Rs, which require maintenance of the common areas, and there is no basis to conclude this is a commercial activity. The UCL serves “to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services” (ibid.), and the Court cannot conclude that application of the UCL is proper here where Plaintiffs simply take issue with the HOA’s failure to comply with the CC&Rs. Further, it is well established that cause of action for unfair competition “is not an all-purpose substitute for a tort or contract action” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173), and Plaintiffs have brought this claim for violation of the UCL as a substitute for a claim for violation of the CC&Rs. Thus, the Court finds that Plaintiffs cannot bring a claim against the HOA for violation of Business and Professions Code section 17200, and the HOA’s motion for summary adjudication is GRANTED as to the first issue.

The HOA also contends that Plaintiffs cannot recover punitive damages against the HOA because Plaintiffs cannot establish conduct by the HOA which constitutes oppression, fraud, or malice. The HOA argues that Plaintiffs’ claims for punitive damages arise exclusively from claims of breach of the CC&Rs, and Plaintiffs also cannot demonstrate an intent to induce injury. The HOA provides evidence that Plaintiff Chloe Fogel complained of flooding at the unit, and the HOA responded quickly to investigate and with remedial work. (Def.’s UMF Nos. 12-14.) The HOA also provides evidence that there is a pending application for permits for common area repair work. (Def.’s UMF Nos. 15-16.)

Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression. (Civ. Code, § 3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Turman v. Turning Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Ibid.)

First, it is not clear from the complaint that Plaintiffs are seeking punitive damages only from contract, as the HOA alleges. Plaintiffs have alleged several tort claims, and punitive damages may be warranted if the trier of fact concludes that the HOA’s “inattention to the danger” of water intrusion and failure to maintain the commons areas, causing alleged mold in Plaintiffs’ unit, “showed a complete lack of concern regarding the harmful potential [and] the probability and likelihood of injury.” (Nolin v. National Convenience Stores, Inc. (1979) 95 Cal.App.3d 279, 288.) Second, the HOA’s argument that an intent to injure is an element that must be proven before recovering punitive damages is not well taken, as it is clear that malice, oppression, and fraud can be proven without an intent to injure. Plaintiffs provide evidence that the damage to the unit was never adequately remediated and repaired, Plaintiff Chloe Fogel lived in uninhabitable and dangerous conditions due to the HOA’s failure to repair, requests to repair were not addressed, and Plaintiff Chloe Fogel suffered physical and emotional distress due to the issues. (Pls.’ UMF Nos. 23, 24, 28, 30, 65.) This provides a basis for punitive damages. Accordingly, the HOA’s motion for summary adjudication is DENIED as to the second issue.

Evidentiary Objections

The HOA objects to certain statements within the declaration of Chloe Fogel and exhibits thereto. The HOA’s objections are OVERRULED.