                                                                  FILED
                       ORDERED PUBLISHED                           AUG 26 2019
                                                               SUSAN M. SPRAUL, CLERK
                                                                 U.S. BKCY. APP. PANEL
                                                                 OF THE NINTH CIRCUIT



          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

In re:                                        BAP No. CC-18-1248-LSTa
                                              BAP No. CC-18-1242-LSTa
MARIA A. BASAVE DE GUILLEN,                   (consolidated appeals)

                  Debtor.                     Bk. No. 8:18-bk-10693-CB

HIGHLAND GREENS HOMEOWNERS
ASSOCIATION OF BUENA PARK,

                  Appellant,

v.                                            OPINION

MARIA A. BASAVE DE GUILLEN,

                  Appellee.

                  Argued and Submitted on May 23, 2019
                         at Pasadena, California

                            Filed – August 26, 2019

              Appeal from the United States Bankruptcy Court
                   for the Central District of California

         Honorable Catherine E. Bauer, Bankruptcy Judge, Presiding
Appearances:     Erin A. Maloney of Fiore, Racobs & Powers argued for
                 Appellant; Charity Manee argued for Appellee.



Before: LAFFERTY, SPRAKER, and TAYLOR, Bankruptcy Judges.

LAFFERTY, Bankruptcy Judge:



                            INTRODUCTION

     Highland Greens Homeowners Association (“Highland Greens”)

appeals the bankruptcy court’s order sustaining in part Debtor Maria

Basave de Guillen’s objection to Highland Greens’ proof of claim. The

bankruptcy court found that, under California law, Highland Greens’

recorded notice of lien for delinquent homeowners assessments on

Debtor’s condominium did not secure amounts accruing after the

recordation of the lien. Accordingly, the bankruptcy court limited

Highland Greens’ secured claim to the amount of its recorded pre-petition

state court judgment, classifying the remainder of the claim as unsecured.

     We AFFIRM.

                       FACTUAL BACKGROUND

     Pre-petition, Debtor fell behind on the homeowners association

(“HOA”) dues on her condominium in Buena Park, California (the

“Property”). As a consequence, Highland Greens recorded a Notice of

                                     2
Delinquent Assessment Lien (the “Notice”) against the Property on

December 1, 2008.1 Highland Greens recorded an amendment to the Notice

in April 2011 (the “2011 Amendment”). Both the Notice and the 2011

Amendment purported to include, in the amount subject to the lien, unpaid

assessments and charges accruing after the date of the notice.

       In August 2011, Highland Greens sued Debtor in state court to

enforce its lien and, in April 2012, obtained a default judgment for

foreclosure and a money judgment of $21,398.02 (consisting of $10,140

principal, attorney’s fees of $10,273.12, and collection costs of $2,885, minus

a $1,900.10 payment). The money judgment was subsequently recorded,

and Highland Greens began the foreclosure process, but no sale was ever

conducted.

       Debtor filed a chapter 132 case on February 28, 2018.3 On Schedule D,

she listed two debts to Highland Greens secured by the Property, one for

$8,000, described as “interest on claim,” and another for $40,000, described

as “assessments and attorney’s fees.” Her proposed plan provided for



       1
        Under California law, the recordation of such a notice, if it complies with certain
statutory requirements, creates a lien against the owner’s interest in the subject
property. Cal. Civ. Code § 5675.
       2
      Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532.
       3
       Debtor had filed a previous chapter 13 petition in July 2017. That case was
dismissed pre-confirmation on February 16, 2018.

                                             3
payment of both claims in full, with interest at ten percent on the $40,000

claim.

      Highland Greens then filed a proof of claim for $64,137.20,

purportedly secured by the Property, with interest at twelve percent. The

itemization attached to the proof of claim indicated that it consisted of:

(1) the April 2012 money judgment of $21,398.02; (2) $8,572.63 in interest on

the judgment; (3) post-judgment assessments through February 1, 2018 of

$14,060; (4) late charges of $690; (5) post-judgment interest of $7,207.44;

(6) post-judgment attorney’s fees and costs of $13,729.11; less (7) a payment

credit of $1,520. The attachment to the proof of claim explained that the

post-judgment assessments were secured by the Property pursuant to the

Declaration of Covenants, Conditions and Restrictions (“CC&Rs”) recorded

in 1964 against the Property. Highland Greens also asserted that it was

entitled to twelve percent interest on any delinquent amounts pursuant to

California Civil Code § 5650(b)(3).

      Highland Greens attached eight pages of the CC&Rs to its proof of

claim. The relevant provision (paragraph 12(b)) provides, among other

things, that if a delinquency in assessments is not paid within ten days after

delivery of a notice of default, the Board of Governors may file a claim of

lien; the provision then lists the information that must be included in such

claim of lien. The paragraph continues, “[u]pon recordation of a duly

executed original or duly executed copy of such claim of lien by the


                                       4
Recorder of the County of Orange the lien claimed therein shall

immediately attach and become effective, subject only to the limitations

hereinafter set forth. Each default shall constitute a separate basis for a

claim of lien or a lien.”

      Debtor filed an objection to Highland Greens’ claim. She argued:

(1) the claim should be disallowed in its entirety for lack of supporting

documentation; (2) most of the claim should be reclassified as unsecured

because Highland Greens did not comply with the procedures set forth in

the Davis-Stirling Common Interest Development Act (“Davis-Stirling Act”

or the “Act”), specifically, California Civil Code §§ 5660 and 5676, and

there was no basis to find an equitable lien; (3) only the portion of the debt

representing the amount owing under the judgment may be classified as

secured; (4) the attorney’s fee portion of the claim should be disallowed as

unreasonable and unsupported; and (5) the claim should not include future

assessments because Debtor was current postpetition on those obligations.

      Highland Greens filed an opposition in which it asserted: (1) the

Notice recorded in 2008 complied with all procedural requirements and in

any event had been adjudicated valid by the state court in the foreclosure

lawsuit; (2) Debtor was barred by issue preclusion from challenging the

validity of the lien; (3) Highland Greens was entitled under California Civil

Code § 5650(b)(3) to twelve percent interest on the post-judgment

assessments and related fees and costs; (4) Highland Greens was entitled to


                                       5
submit cost bills for its judgment enforcement activities, which increased

the judgment amount; and (5) the assessment lien was a “continuing lien”;

thus, assessments that became delinquent after the recordation of the lien

were appropriately included in the amount secured by the lien, citing Bear

Creek Master Ass’n v. Edwards, 130 Cal. App. 4th 1470, 1489 (2005).

      Debtor filed a reply in which she argued that the Davis-Stirling Act

prohibited Highland Greens from asserting a continuing lien. She

contended that Bear Creek was not binding on the bankruptcy court and

that federal courts in California had held to the contrary, citing In re

Warren, No. 15-CV-03655-YGR, 2016 WL 1460844 (N.D. Cal. Apr. 13, 2016),

and In re Guajardo, No. 15-31452 DM, 2016 WL 943613 (Bankr. N.D. Cal.

Mar. 11, 2016).

      At the initial hearing on Debtor’s objection, counsel for Highland

Greens stated that the HOA was relying on the assessment lien rather than

the judgment lien as the basis for its security interest. The bankruptcy court

requested further detail as to how the different components of the claim

amount were calculated and continued the matter for further briefing,

which the parties submitted.

      At the final hearing on the claim objection, the bankruptcy court did

not rule on the reasonableness of the attorney’s fees or any of the other

arguments raised by Debtor. But it ruled that under applicable law there

was no continuing lien based on the Notice. As such, the only basis for


                                       6
Highland Greens’ security interest was its judgment lien.4 Accordingly, the

court sustained Debtor’s objection in part, allowing Highland Greens’

claim in full but reclassifying it as $29,970.65 secured (principal of

$21,398.02 plus pre-petition interest of $8,572.63) and the $34,166.55 balance

as unsecured. Shortly thereafter, the court entered its order on the Debtor’s

claim objection, and Highland Greens timely appealed.5

                                    JURISDICTION

       The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(B). We have jurisdiction under 28 U.S.C. § 158.

                                          ISSUE

       Did the bankruptcy court err in sustaining in part Debtor’s objection

to Highland Greens’ claim?

                             STANDARD OF REVIEW

       This appeal involves issues of statutory and contract interpretation,

which we review de novo. See Veal v. Am. Home Mortg. Serv., Inc. (In re

Veal), 450 B.R. 897, 918 (9th Cir. BAP 2011) (citations omitted) (an order

sustaining or overruling a claim objection “can raise legal issues (such as


       4
        Under California law, the assessment lien merged into the judgment. Diamond
Heights Village Ass’n, Inc. v. Financial Freedom Senior Funding Corp., 196 Cal. App. 4th 290,
301-02 (2011).
       5
       Highland Greens filed its notice of appeal on September 4, 2018. It filed an
amended notice of appeal six days later. Two appeal numbers were assigned due to
administrative error. The appeals were thus consolidated, with all papers to be filed
under BAP No. CC-18-1248.

                                             7
the proper construction of statutes and rules) which we review de novo

. . . .”); Renwick v. Bennett (In re Bennett), 298 F.3d 1059, 1064 (9th Cir. 2002)

(“Under California law, the interpretation of a contract is a question of law

which the court reviews de novo.”).

                                 DISCUSSION

      This appeal requires us to determine whether, under California law,

Highland Greens’ assessment lien was a continuing lien on the Property

such that it secured amounts that became delinquent after Highland

Greens recorded its Notice. This is a question of first impression for this

Panel, and it presents some challenges. First, the statute in question does

not expressly address the issue of an HOA’s right to a continuing lien.

Second, the statute references the governing documents (the CC&Rs),

which may or may not create a contractual basis for a continuing lien.

Third, California Courts of Appeal have differed significantly in their

assessment of the policy to be enhanced by the Davis-Stirling Act, i.e., is the

purpose of the Act to facilitate the expeditious collection of HOA

assessments or to safeguard the notice rights of homeowners?

      These variables and complexities notwithstanding, we do not write

on a blank judicial slate: as discussed below, two federal courts have

opined that the Davis-Stirling Act does not provide for the continuing lien

that Highland Greens seeks. Highland Greens relies principally on Bear

Creek, an older California Court of Appeal decision to the contrary. But that


                                         8
decision, as discussed below, did not address the matter of continuing liens

as the primary issue on appeal nor did it consider the Act’s notice

provisions. The court of appeal instead focused on what it plausibly

believed to be the policy underlying the Act–to facilitate HOAs’ collection

of delinquent assessments. But its view is not supported by the legislative

history or other California cases. The decision’s rationale was, at least

indirectly, called into question by a more recent California Court of Appeal

decision, Diamond v. Superior Court, 217 Cal. App. 4th 1172, as modified on

denial of reh’g (July 12, 2013), confirming that the most fundamental and

important purpose of the statute is to protect homeowners (not

associations), and that the statutory requirements for precision in the notice

of lien provided to homeowners must override any goals of expedition or

convenience to associations.

      As discussed below, we conclude that there are two independent

bases on which to affirm the bankruptcy court’s order sustaining Debtor’s

objection in part. First, the language of the Notice and 2011 Amendment

conflicts with the applicable CC&Rs, which do not authorize a continuing

lien. Second, the Davis-Stirling Act does not authorize a continuing lien. In

reaching this latter conclusion, we agree with the reasoning of the other

federal courts to consider this issue that a continuing lien is inconsistent

with the Act’s notice provisions and the expressed legislative purpose of

the Act.


                                       9
A.    The Davis-Stirling Act

      We begin, as we must, with the language of the relevant statutes. See

United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989); Lee v. Hanley,

61 Cal. 4th 1225, 1232-33 (2015). The Davis-Stirling Act, enacted in 1985,

authorizes condominium homeowners associations to levy assessments.

Subject to certain limitations, a homeowners association “shall levy regular

and special assessments sufficient to perform its obligations under the

governing documents and this act.” Cal. Civ. Code § 5600.6 The Act also

sets forth procedures for collecting delinquent assessments:

      (a) A regular or special assessment and any late charges,
      reasonable fees and costs of collection, reasonable attorney's
      fees, if any, and interest, if any, as determined in accordance
      with subdivision (b), shall be a debt of the owner of the
      separate interest at the time the assessment or other sums are
      levied.

      (b) Regular and special assessments levied pursuant to the
      governing documents are delinquent 15 days after they become
      due, unless the declaration provides a longer time period, in
      which case the longer time period shall apply.

Cal. Civ. Code § 5650. In addition, it authorizes HOAs to recover

reasonable collection costs, including attorney’s fees, late charges, and

interest not to exceed twelve percent. Id. at § 5650(b)(1)-(3).


      6
        The Davis-Stirling Act was renumbered in 2014. It is currently codified at
sections 4000-6150 of the California Civil Code; it was formerly found at sections 1350-
1378.

                                           10
      California Civil Code § 5675 provides for the placing of a lien on the

owner’s interest in the condominium to secure delinquent assessments:

      (a) The amount of the assessment, plus any costs of collection,
      late charges, and interest assessed in accordance with
      subdivision (b) of Section 5650, shall be a lien on the owner’s
      separate interest in the common interest development from and
      after the time the association causes to be recorded with the
      county recorder of the county in which the separate interest is
      located, a notice of delinquent assessment, which shall state the
      amount of the assessment and other sums imposed in
      accordance with subdivision (b) of Section 5650, a legal
      description of the owner’s separate interest in the common
      interest development against which the assessment and other
      sums are levied, and the name of the record owner of the
      separate interest in the common interest development against
      which the lien is imposed.

Cal. Civ. Code § 5675. This section further requires that the notice of

delinquent assessment must be signed by a designated person and include

an itemized statement of charges; it also requires a copy of the notice to be

mailed by certified mail to the record owner(s). Cal. Civ. Code § 5675(b)-(e).

These notice requirements are to be strictly construed. Diamond, 217 Cal.

App. 4th at 1189.

      In applying these statutes, we are guided by (1) the plain language of

the Davis-Stirling Act as interpreted by California federal and state courts;

(2) the public policy behind the Act; and (3) principles of statutory

construction. And, given that the Act references the “governing


                                      11
documents,” we also consider the terms of the applicable CC&Rs.

B.    California Federal Cases Interpreting the Davis-Stirling Act

      The Davis-Stirling Act itself does not provide for a continuing lien,

and case law is scant regarding whether the Act may be fairly interpreted

as so providing. Two federal courts in the Northern District of California

have held that adding future assessments to a recorded lien securing

delinquent assessments without recording a new lien is impermissible

under the Davis-Stirling Act. In re Warren, 2016 WL 1460844; In re Guajardo,

2016 WL 943613.

      In Guajardo, the bankruptcy court was tasked with determining the

priorities between an HOA’s assessment lien and a federal tax lien for

purposes of distributing the proceeds of a sale of property of the estate. The

notice of delinquent assessment at issue in that case provided, “Additional

monies shall accrue under this claim at the rate of the claimant’s regular

monthly or special assessments, plus permissible late charges, costs of

collection and interest, accruing subsequent to the date of this notice.” 2016

WL 943613, at *1. The court held that this language was ineffective under

both California contract law and the Davis-Stirling Act, for two reasons.

      First, the CC&Rs at issue in that case provided that each “lienable

default shall constitute a separate basis for a lien.” Id. at *3. The court found

that the language of the notice that provided for the lien to include

subsequent assessments and related charges was inconsistent with this


                                       12
provision. Id. at *3.7

      Second, and importantly, the court interpreted the language of

California Civil Code § 5675 as limiting an assessment lien to the amount

stated in the notice of delinquent assessment. Specifically, the statute

provides that the amount of the assessment (plus costs, late charges, and

interest) shall be a lien on the owner’s separate interest. The statute further

requires that the notice state the amount of the delinquent assessment and

other sums. As such, the court found that adding future assessments to an

existing lien would be “inconsistent with the portions of the Davis-Stirling

Act requiring the unpaid amounts to be specifically set forth in the notice

and in an attached accounting.” Id. at *3.

      The bankruptcy court distinguished Bear Creek. As discussed below,

in that case, the California Court of Appeal held that homeowners

assessments that became due after the recordation of a lien notice were

properly included in a judgment for lien foreclosure and breach of contract,

based on the applicable CC&Rs and the provisions of the Davis-Stirling Act

that, in turn, referenced the HOA’s governing documents. The Guajardo

court noted that the CC&Rs in Bear Creek were much more specific as to

future accruals than those at issue in the case before it, but the court also

held that “the general imposition of a ‘present’ lien at the time of and by


      7
        The CC&Rs, Notice, and 2011 Amendment contain language that is substantially
similar to the documents at issue in Guajardo.

                                         13
operation of the CCRs with respect to all future and potentially unknown

assessments does not satisfy the notice and lien provisions of the Civil

Code.” Id.

      In Warren, the district court affirmed the bankruptcy court’s order

sustaining a debtor’s objection to the secured claim of an HOA on grounds

that the HOA’s lien was limited to the amounts stated in its notice of lien

assessment. 2016 WL 1460844 at *1. As in Guajardo, the lien notice in that

case contained language that purported to constitute a prospective charge

for future assessments and related costs. And like the bankruptcy court in

Guajardo, the district court held that this language was impermissible under

the Davis-Stirling Act. The court noted that the procedural notice

requirements of the Davis-Stirling Act are to be strictly construed, citing

Diamond, 217 Cal. App. 4th at 1191, and found that “[t]he Davis-Stirling Act

limits the lien to the amount specified in the notice . . . .” Id. at *3-*4. The

court went on: “Claimant should have filed additional liens to secure its

interest in future unpaid assessments. To hold otherwise would offend the

comprehensive notice scheme and homeowners’ rights to contest

delinquent assessments as established in the Davis-Stirling Act.” Id. at *4.

C.    California State Cases Interpreting the Davis-Stirling Act

      In Bear Creek, the California Fourth District Court of Appeal affirmed

a judgment for lien foreclosure and breach of contract based on a

condominium owner’s failure to pay assessments. 130 Cal. App. 4th at


                                         14
1472. The primary issue before the court of appeal was whether an HOA

may charge an owner assessments for lots on which condominium units

were planned but had not yet been built. Id. In affirming the trial court’s

foreclosure judgment, the court of appeal held that the definition of

“condominium” in the Davis-Stirling Act included unbuilt lots in a

qualifying condominium plan. Id. at 1481-82. The court of appeal also

affirmed the trial court’s finding that the HOA had properly served lien

notices on the owner. Id. at 1488. Finally, the court of appeal considered the

appellant’s argument that the trial court had improperly determined the

amount of the lien assessments because it included amounts that came due

after the recordation of the lien notice; it found that those amounts were

properly included. Id. at 1489.

      The court of appeal rejected the owner’s argument that no “recurring

liens” were authorized under the relevant statutes such that the amount of

the assessments secured by the lien was limited to the amount initially

stated in the lien notice. The court noted that former California Civil Code

§ 1367 (recodified at § 5675), in describing the amounts to be secured by the

lien, referenced former California Civil Code § 1366 (recodified at § 5600),

which in turn referenced the homeowners association’s “governing

documents.” Id. at 1488.

      Specifically, California Civil Code § 1367(b) provided: “[t]he amount

of the assessment, plus any costs of collection, late charges, and interest


                                      15
assessed in accordance with Section 1366, shall be a lien on the owner’s

interest in the common interest development from and after the time the

association causes to be recorded with the county recorder of the county in

which the separate interest is located, a notice of delinquent assessment.

. . .” Id. at 1488. The cross-referenced statute, former California Civil Code

§ 1366, provided, in relevant part: “the association shall levy regular and

special assessments sufficient to perform its obligations under the

governing documents and this title.”8

      The court next looked to the governing documents, specifically, the

CC&R’s. The CC&Rs provided that “any demand or claim of lien or lien on

account of prior delinquencies shall be deemed to include subsequent

delinquencies and amounts due on account thereof.” Id. Further, the

recorded lien notices provided that “[a]dditional monies shall accrue under

this claim at the rate of the claimants’ regular monthly or special

assessments, plus permissible late charges, costs of collection and interest,

accruing subsequent to the date of this notice.” Id. Based on this language,

the court of appeal held that “all of the sums included on the liens and lien

notices are authorized by the CC & R’s and statutory law. The amounts

here determined by the court to be owing as liens are no more than the

amounts authorized by the governing documents and statutes.” Id.


      8
       That section was recodified at California Civil Code § 5600(a) and contains
substantively identical language.

                                           16
      The court of appeal opined that its holding was consistent with the

legislative purpose of providing homeowners associations a quick and

efficient means of seeking relief against a nonpaying owner:

      Were the relevant provisions to be construed as [the owner]
      suggests, the described statutory purpose of providing for a
      quick and efficient means of enforcing the CC & R’s would be
      seriously undermined; each month, or at such other intervals as
      the assessments are charged under a given set of CC & R’s, the
      association would be required to record successive liens. A
      successive recordation requirement would impose a heavy—
      and needless—burden upon homeowners’ associations, fraught
      with risk to the association, and undue windfall to the
      delinquent homeowner, should any installment be overlooked.
      We are unwilling to construe Civil Code section 1367 to require
      such an oppressive burden. Both delinquent homeowners and
      the public at large are placed on notice, with the recordation of
      the initial assessment lien, that subsequent regularly and
      specially levied assessments, if they continue unpaid, will
      accrue in due course. The purpose of the lien notice and
      recordation will have been served, and the association's remedy
      justly preserved, by the initial recordation of lien.

Id. at 1489.

      Two years after the decision in Bear Creek, the California Sixth District

Court of Appeal held that the notice provisions of the Davis-Stirling Act

are to be strictly construed. Diamond, 217 Cal. App. 4th at 1189. The issue in

Diamond was whether “substantial compliance” with the pre-lien and pre-

foreclosure notice requirements of the Davis-Stirling Act was sufficient to

permit an HOA to proceed with foreclosure. The court of appeal held that

                                      17
it was not. In its opinion, the court of appeal examined the legislative

history of the Act and concluded that it was intended to “protect the

interest of a homeowner who has failed to timely pay an assessment levied

by a homeowners association.” Id. at 1190-91. As such, the notice

requirements were intended to be mandatory. Id.

      The court of appeal noted that its conclusion was supported by

California Supreme Court precedent, including Li v. Yellow Cab Co., 13 Cal.

3d 804, 815 (1975) (“If a provision of the [Civil] [C]ode is plain and

unambiguous, it is the duty of the court to enforce it as it is written.”);

Chase v. Putnam, 117 Cal. 364, 367–368 (1897) (“a lien which is the creature

of statute can be enforced only in the manner prescribed by the statute.”).

Diamond, 217 Cal. App. 4th at 1192-93.

D.    Bear Creek does not control the outcome of this appeal.

      Highland Greens argues that we must follow Bear Creek because there

are no other California state court decisions on point. It points out that in

the absence of a state supreme court decision on the issue, a federal court is

obligated to follow a decision of an intermediate court of appeal unless

there is convincing evidence that the highest court of the state would

decide differently. Sec. Pac. Nat’l Bank v. Kirkland (In re Kirkland), 915 F.2d

1236, 1238-39 (9th Cir. 1990) (citing American Triticale, Inc. v. Nytco Services,

Inc., 664 F.2d 1136, 1143 (9th Cir. 1981); Stoner v. New York Life Ins. Co., 311

U.S. 464, 467 (1940)).


                                        18
      In predicting how the state’s highest court would decide the issue, we

look to “intermediate appellate court decisions, decisions from other

jurisdictions, statutes, treatises, and restatements as guidance.” In re

Kirkland, 915 F.2d at 1239 (citations omitted). Bear Creek appears to be the

only California intermediate appellate decision addressing the propriety of

continuing liens under the Davis Stirling Act. Nevertheless, for the reasons

discussed below, we conclude that Bear Creek is factually distinguishable

and that the California Supreme Court would not likely decide the issue in

accord with Bear Creek.

      In determining that delinquent HOA assessments which came due

after the recordation of the lien notices were properly included in the

amount secured by the lien, the court of appeal in Bear Creek relied

primarily on the language of the CC&Rs and the lien notices, all of which

provided that any lien for delinquent HOA assessments would be deemed

to include subsequent delinquencies. Because certain provisions of the Act

referred to the HOA’s governing documents, and those documents

provided for a continuing lien, the Bear Creek court concluded that the

continuing lien was consistent with the Act.

      Here, however, the CC&Rs do not provide for a continuing lien; as

such, Bear Creek is factually distinguishable in a critical respect, and we

may ignore it. Further and importantly, relevant to our anticipation of the

California Supreme Court’s eventual view, the Bear Creek court of appeal


                                       19
did not take into account the Act’s notice provisions as they pertained to

the issue of a continuing lien and failed to consider that, although one

purpose of the Act may be to facilitate an HOA’s collection of delinquent

assessments, see Bear Creek, 130 Cal. App. 4th at at 1489,9 the cases citing

directly to legislative history emphasize that the purpose of the Davis-

Stirling Act is to protect homeowners. See Diamond, 217 Cal. App. 4th at

1190 (“This bill goes to the heart of home owner rights, touching upon the

key issue of when, if ever, a homeowners’ association should have the right

to force the sale of a member’s home when the home owner falls behind on

paying overdue assessments or dues.”) (quoting Assem. Com. on Judiciary,

Analysis of Sen. Bill No. 137 (2005–2006 Reg. Sess.) as amended Apr. 5, 2005,

pp. 1–2); Huntington Continental Townhouse Ass’n, Inc. v. Miner, 230 Cal.

App. 4th 590, 603-04 (2014) (same).

      Although Diamond did not involve the identical issue raised here, the

opinion’s thorough analysis of the legislative history and citations to

precedent all supported its determination that the requirements of the

Davis-Stirling Act must be strictly construed, and support the conclusion


      9
        In concluding that the purpose of the Act was to facilitate collection of
delinquent assessments, the court of appeal in Bear Creek relied on quoted language
from Park Place Estates Homeowners Ass’n v. Naber, 29 Cal. App. 4th 427, 432 (1994)
(“Because homeowners associations would cease to exist without regular payment of
assessment fees, the Legislature has created procedures for associations to quickly and
efficiently seek relief against a non-paying owner.”). But the court of appeal in Park
Place Estates did not support its conclusion by any citation to legislative history.

                                           20
that the California Supreme Court would not follow Bear Creek. This

conclusion is bolstered by the analysis in Guajardo and Warren. As noted by

the District Court for the Northern District of California:

      The Davis-Stirling Act reflects the legislature’s intent to impose
      and rigorously enforce its procedural requirements to protect
      the interest of the homeowner. See Diamond v. Superior Court,
      217 Cal. App. 4th 1172, 1191 (2013) (the procedural notice
      requirements prescribed in the Davis-Stirling Act must be
      “strictly construed” such that “substantial compliance is
      insufficient”). Accordingly, the Court finds that the language of
      the 2008 Lien purporting to secure future assessments is not
      permissible under the Davis-Stirling Act.

In re Warren, 2016 WL 1460844, at *4.

      Applying these principles to the matter before us, we conclude that

here, the Notice and 2011 Amendment, which purported to secure future

assessments, were (1) inconsistent with the applicable CC&Rs; and

(2) impermissible under the Davis-Stirling Act, which limits the lien to the

amount specified in the notice, see Cal. Civ. Code § 5675(a); in turn, the

notice must include an itemized statement showing the delinquent

assessments (and related fees and costs) owing at the time of the notice. See

Cal. Civ. Code § 5660(b); See also In re Guajardo, 2016 WL 943613, at *2-*3.

E.    Highland Greens’ arguments in support of its interpretation of the
      Davis Stirling Act are inconsistent with established principles of
      statutory construction.

      In the absence of evidence of contrary legislative intent, courts are to


                                        21
follow the principle of statutory construction, expressio unius est exclusio

alterius, or “the expression of one thing in a statute ordinarily implies the

exclusion of other things.” In re J.W., 29 Cal. 4th 200, 209 (2002). See also

People v. Guzman, 35 Cal. 4th 577, 587 (2005) (“[I]nsert[ing] additional

language into a statute violate[s] the cardinal rule of statutory construction

that courts must not add provisions to statutes.”)(second and third

alterations in original)(quoting Sec. Pac. Nat’l Bank v. Wozab, 51 Cal. 3d 991,

998 (1990)); Cal. Civ. Proc. Code § 1858 (“In the construction of a statute or

instrument, the office of the Judge is simply to ascertain and declare what

is in terms or in substance contained therein, not to insert what has been

omitted, or to omit what has been inserted; and where there are several

provisions or particulars, such a construction is, if possible, to be adopted

as will give effect to all.”).

      Highland Greens argues that certain provisions of the Davis-Stirling

Act support its contention that a continuing lien is permitted under that

Act. First, it notes that California Civil Code § 5650 permits collection costs

to be added to the amount secured by the lien, when those costs are

generally incurred after the lien is recorded.10 But this provision does not

support Highland Greens’ position. To the contrary, the legislature’s



      10
        California Civil Code § 5650 merely lists the types of costs that may be added to
the amount of delinquent assessments. California Civil Code § 5675 provides that the
assessed costs and interest will be part of the lien.

                                           22
omission of subsequent delinquent assessments from the list of charges

authorized strongly indicates that it did not intend those amounts to be

added.

      Despite the above argument, Highland Greens also contends that, if

we affirm the bankruptcy court’s ruling, it would mean that a delinquent

owner would be able to stop a foreclosure sale by paying only the face

amount of the lien without paying the costs of enforcing the lien,

apparently assuming an HOA would need to record separate liens to

secure collection costs. But, as Highland Greens points out, the statute

explicitly provides that the lien may include collection costs.

      Second, Highland Greens cites California Civil Code § 5720(b)(2),

which permits an HOA to record a lien for less than $1,800 but requires the

HOA to wait to foreclose until the amount of delinquent assessments

exceeds that amount (or the assessments secured by the lien become more

than twelve months delinquent).11 Highland Greens argues that, because


      11
           That statute provides, in relevant part:

             An association that seeks to collect delinquent regular or special
      assessments of an amount less than one thousand eight hundred dollars
      ($1,800), not including any accelerated assessments, late charges, fees and
      costs of collection, attorney's fees, or interest, may not collect that debt
      through judicial or nonjudicial foreclosure, but may attempt to collect or
      secure that debt in any of the following ways:
      ....
             (2) By recording a lien on the owner’s separate interest upon which
                                                                                (continued...)

                                               23
this provision apparently allows for the addition of subsequent delinquent

assessments to the lien amount, any lien may include such assessments

without requiring a new notice. But the fact that this provision applies only

to liens securing amounts less than $1,800 supports the conclusion that it

excludes liens securing higher amounts. In other words, the provision may

fairly be interpreted as an exception to the general rule prohibiting

addition of delinquencies without specific notice. Additionally, this

provision, as written, promotes the purpose of protecting “owners’ equity

in their homes when they fail to pay relatively small assessments to their

common interest development associations.” Diamond, 217 Cal. App. 4th at

1190 (quoting Sen. Com. on Judiciary, Analysis of Sen. Bill No. 137

(2005–2006 Reg. Sess.) Mar. 29, 2005, p. 1.). As stated by the district court in

Warren:

      Section 5720(b)(2) simply provides an association with the
      option to wait to record the lien until delinquent assessments
      exceed $1,800. Alternatively, the association may record the lien
      and wait a year to foreclose thereon. . . . Section 5720(b)(2) does
      not allow an association to bypass the notice and recording


      11
        (...continued)
      the association may not foreclose until the amount of the delinquent
      assessments secured by the lien, exclusive of any accelerated assessments,
      late charges, fees and costs of collection, attorney’s fees, or interest, equals
      or exceeds one thousand eight hundred dollars ($1,800) or the assessments
      secured by the lien are more than 12 months delinquent. . . .

Cal. Civ. Code § 5720(b)(2).

                                            24
      requirements in Sections 5660, 5670, and [5675] merely because
      the initial lien secures an amount below the $1,800 threshold to
      initiate foreclosure proceedings.

In re Warren, 2016 WL 1460844, at *4 (footnote omitted).

F.    Highland Greens’ policy arguments are contradicted by the
      California Court of Appeal’s holding in Diamond.

      Finally, Highland Greens, (joined by amicus curiae Community

Associations Institute), urges us to follow Bear Creek and reverse the

bankruptcy court because to do otherwise would negatively impact all

California HOAs and their members. Highland Greens contends that

HOAs would have to record liens for delinquent assessments on a monthly

basis to secure all amounts owed, and that doing so would result in higher

collection costs that would then be passed on to the delinquent owner.

      This argument is certainly consistent with the court of appeal’s

comments in Bear Creek, 130 Cal. App. 4th at 1489. But it ignores the fact

that the Davis-Stirling Act “reflects the legislature’s intent to impose and

rigorously enforce its procedural requirements to protect the interest of the

homeowner.” In re Warren, 2016 WL 1460844, at *4 (citing Diamond, 217 Cal.

App. 4th at 1191). While we acknowledge that requiring HOAs to file

“successive liens” imposes a burden, that is an issue for the legislature to

address.

                               CONCLUSION

      Because we find no error in the bankruptcy court’s interpretation of


                                      25
California law, we AFFIRM.




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