Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
APPEAL from an order of the Superior Court of San Diego County, Ct. No. GIS28440, William S. Cannon, Judge.
McCONNELL, P. J.
The sole issue in this case is whether the trial court abused its discretion by denying plaintiff Starboard Street, LLC's (Starboard) motion for attorney fees as the prevailing party under Civil Code section 1354, which applies to litigation to enforce the governing documents of common interest developments. We find no abuse of discretion and affirm the order.
All section references are to the Civil Code unless otherwise specified.
FACTUAL AND PROCEDURAL BACKGROUND
Starboard owns a commercial condominium in the 13-building project known as 868 and 872 Starboard Street, in Chula Vista, California. Defendant Venture Commerce Center - Eastlake Condominium Association (the Association) manages the project and defendant Ron Lee is the Association's president.
The project is subject to a Declaration of Covenants and Restrictions (the Declaration), which makes the Association responsible for managing the project's common areas. The Declaration defines "common area" as including all project property other than owners' condominium units.
The Declaration provides that owners are responsible for maintaining, repairing and replacing smoke detectors within their units. The Association hired Bay Alarm Company (Bay Alarm) to install a fire suppression and alarm system to protect the common areas (master alarm system). Bay Alarm owns the master alarm system and leases it to the Association, and their contract prohibits the connection of any unit owner's fire alarm system to Bay Alarm's master system without the prior approval of Bay Alarm and the Association. A sign notifying owners of the prior approval requirement is posted near the master system, which is located in the project's fire control room, within the project's common area.
In early March 2007 Starboard had Dependable Alarm Systems, Inc. (Dependable Alarm) install a fire alarm system in its condominium unit (unit alarm system). The control panel of the unit alarm system is also in the project's fire control room, and Starboard intended to interconnect the unit alarm system with the master alarm system. According to Starboard, the two systems are compatible, and state fire codes require the interconnection of the unit alarm system and the master alarm system.
Starboard, however, did not obtain Bay Alarm's or the Association's prior approval to interconnect the unit alarm system to the master alarm system. Further, Starboard did not comply with section 7.13, subdivision F. of the Declaration, which provides: "Before an Owner commences or causes to be commenced any alteration or improvements within a Unit, whether or not such alteration or improvements requires approval by the Board or Architectural Control Committee, the Owner shall provide proof of insurance to the Association and name the Association as an additional insured on such insurance."
Starboard's managing member, Todd Lesser, met at the fire control room with a Dependable Alarm service technician and a representative of Bay Alarm. The Bay Alarm representative authorized Dependable Alarm to interconnect the unit alarm system to the master alarm system. Lee then appeared with a service technician from Bay Alarm, and although the technician said the two systems were compatible, Lee directed him to disconnect the unit alarm system. Lee advised Lesser that the unit alarm system could not be interconnected to Bay Alarm's master system unless Lesser signed a written agreement to remove it within 60 days and install a Bay Alarm system in Starboard's unit. Lee said those terms "were not negotiable."
Starboard and the Association continued to disagree on the issue, and on March 16, 2007, Starboard sued the Association and Lee for damages and declaratory and injunctive relief. Starboard applied for a temporary restraining order (TRO) to prohibit the Association from interfering with Starboard's alleged right to interconnect the unit alarm system with the master alarm system.
The Association argued a TRO was improper because Starboard did not comply with its request that Starboard submit "full and complete plans" for the unit alarm system. The Association agreed that the unit alarm system may ultimately be "approvable," but it pointed out that there are 73 other units in the project and "we can't have people submitting incomplete plans and potentially 73 different compatible or incompatible systems tied into ours." The Association predicted "chaos" if correct procedures were not followed, and the court responded, "I agree."
The court declined to issue a TRO. Instead, the court ordered Starboard to present complete plans for the unit alarm system to the Association for its consideration at its April 14 meeting. The court scheduled another hearing for April 17, and stated, "Get this thing worked out, people. This is not a big deal."
On April 12 Starboard submitted to the Association a set of plans for the unit alarm system. On April 16 the Association approved the plans and interconnection of the unit alarm system and master alarm system, with some conditions. For instance, the Association required Starboard to submit "a written certificate that both the Association and Bay Alarm . . . are named as additional insured on endorsements issued by Starboard's insurance carrier." Further, the Association required that a Bay Alarm employee perform the "actual physical interconnection" of the systems, and that Starboard give the Association reasonable notice of the fire department's inspection so the Association "can have a reasonable opportunity to schedule Bay Alarm to be on site to connect the two systems and to verify that they are working together seamlessly and without causing the Bay system to malfunction."
The court took the April 17 hearing off calendar, noting in its minutes that the parties were working on a settlement. The court placed the matter on a 60-day dismissal calendar, and on May 29 the court dismissed the matter at Starboard's request.
Starboard then moved for $24,813 in attorney fees under section 1354 as the prevailing party in the litigation. In a tentative ruling, the court denied the motion on the ground that "[b]oth parties achieved what they sought to achieve. While the [A]ssociation eventually permitted plaintiff to connect a fire alarm system from a different vendor to the [A]ssociation's system, plaintiff initially connected his system without obtaining the [A]ssociation's approval." After a hearing, the court confirmed its tentative ruling.
DISCUSSION
I
Section 1354 is part of the Davis-Sterling Common Interest Development Act. (§ 1350 et seq.) Subdivision (c) of section 1354 provides: "In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney's fees and costs."
The statute contains no definition of "prevailing party." The trial court here expressly relied on Heather Farms Homeowners Association v. Robinson (1994) 21 Cal.App.4th 1568 (Heather Farms), in which the court declined to adopt a rigid definition of "prevailing party" and held the analysis must be based on "which party had prevailed on a practical level." (Id. at p. 1574, relying on Winick Corp. v. Safeco Insurance Co. (1986) 187 Cal.App.3d 1502, 1506-1508; Donald v. Cafe Royale, Inc. (1990) 218 Cal.App.3d 168, 185; Elster v. Friedman (1989) 211 Cal.App.3d 1439, 1444.)
In Heather Farms, the homeowners association sued the owner (Robinson) of two units in a residential planned unit development to enforce the governing covenants, conditions and restrictions, alleging he made unauthorized modifications to his units. The "complaint spawned a complex series of cross-complaints and subsidiary actions which eventually entangled the association itself" and numerous other parties. (Heather Farms, supra, 21 Cal.App.4th 1568, 1570.) After several years of litigation, the matter was referred to a judge for a special settlement conference. The judge negotiated a global settlement that required the association to dismiss its suit against Robinson without prejudice, even though he refused to participate in any agreement with the association. The judge "cautioned that this should not be interpreted as meaning that Robinson had prevailed," and he expressly found there was no prevailing party. (Id. at pp. 1570-1571.)
At the conclusion of the settlement, Robinson moved for attorney fees under section 1354 from the association, arguing that since he received a dismissal he was the prevailing party. The court agreed with the settlement judge that there was no prevailing party, and the Court of Appeal affirmed the ruling. (Heather Farms, supra, 21 Cal.App.4th at pp. 1571, 1574.)
Starboard contends it was the prevailing party under section 1354, subdivision (c) because until it sued the Association and Lee, they insisted that Starboard use Bay Alarm for Starboard's unit alarm system. Starboard asserts that unless it "was willing to concede and only buy the alarm through . . . Bay Alarm, Starboard would not be allowed to install any alarm, and could not get its certificate of occupancy" for its business.
We review the matter under an abuse of discretion standard. (Heather Farms, supra, 21 Cal.App.4th at p. 1574.) "The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court." (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479.)
We cannot say the court exceeded the bounds of reason by finding no prevailing party under the Heather Farms test. Starboard did receive relief, the right to connect its alarm system to the Association's master system. The Association, however, also received relief. Its master alarm system was located in a common area of the project, the fire control room, and a sign near the master system cautioned owners they were not allowed to connect individual unit alarm systems to the master system without the Association's prior authorization. Starboard had caused its unit alarm system to be connected to the Association's master system without the Association's prior authorization. Further, the Association obtained Starboard's compliance with the additional insured provision of section 7.13, subdivision F. of the Declaration before allowing it to interconnect the unit alarm system to the master alarm system. To allow Starboard fees under these circumstances would encourage the violation of the governing documents of common interest developments.
II
In asserting Starboard was required to submit plans for its unit alarm system to the Association, the Association relies on section 7.13, subdivision A. of the Declaration, which provides: "No alterations, renovations, additions, installations, or other changes to the exterior of the Project, or any portion thereof, . . . shall be commenced . . . or maintained upon the Property by any Owner, nor shall there be any modification, alteration or removal of any such exterior improvements, until the same has been approved in writing by the [Association] Board, or by an Architectural Control Committee appointed by the Board." (Italics added.)
Starboard contends the provision is inapplicable because its unit alarm system was not installed on the "exterior" of the project. The Declaration defines "Project" as "the real property and improvements shown on the Map and the Condominium Plan, including all structures and improvements erected or to be erected thereon."
Additionally, Starboard cites section 7.13, subdivision B. of the Declaration, which provides that "[i]mprovements or alterations made to the interior of a Unit are not subject to review or control by the [Association] Board or the Architectural Control Committee, provided that such interior improvements or alterations do not alter the exterior appearance of the Building, do not materially impair the structural integrity of the Building, do not damage or interfere with utility lines or other Utility Facilities which serve the Common Area or other Condominiums and comply with all applicable laws, codes and ordinances." (Italics added.)
Subdivision B. of section 7.13 of the Declaration is inapplicable because the unit alarm system is not wholly contained within Starboard's unit. Read literally, subdivision A. of section 7.13 of the Declaration does not apply because no component of the unit alarm system is located on the exterior of a project building. However, " '[i]nterpretation of a contract "must be fair and reasonable, not leading to absurd conclusions. [Citation.]" ' " (Bill Signs Trucking, LLC v. Signs Family Ltd. Partnership (2007) 157 Cal.App.4th 1515, 1521.) It would be absurd to interpret the Declaration to allow an owner to make alterations to common area rooms, such as a clubhouse or utility room, without obtaining the Association's prior approval.
Regardless of the specific language of subdivision A. of section 7.13 of the Declaration, Starboard cannot reasonably argue it was not required to obtain the Association's authorization to install the control panel of the unit alarm system in the fire control room, within the project's common area, or to interconnect it to the Association's master alarm system. The Association is responsible for maintaining the common areas, and it is reasonable for the Association to require the submission of plans for a unit alarm system to aid in the determination of whether the systems are compatible and may be connected without jeopardizing the integrity of the master alarm system.
DISPOSITION
The order is affirmed. The Association is entitled to costs on appeal.
WE CONCUR: McDONALD, J., AARON, J.