Filed 1/5/15 Bertoli v. Dennis CA1/5
                    NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified
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publication or ordered published for purposes of rule 8.1115.


             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FIRST APPELLATE DISTRICT

                                                DIVISION FIVE


CHRISTIAN BERTOLI et al.,
         Plaintiffs and Appellants,                                A137221
v.
                                                                   (Mendocino County Super. Ct.
JANET Q. DENNIS et al.,                                            No. SCUK-CVG-10-56629)
         Defendants and Respondents.

CHRISTIAN BERTOLI et al.,
         Plaintiffs and Respondents,                               A137786
v.
                                                                   (Mendocino County Super. Ct.
WILLIAM MOORES et al.,                                             No. SCUK-CVG-10-56629)
         Defendants and Appellants.


         In 2010, Pro Solutions, a debt collection agency owned by Janet Dennis and Jack
Dennis, recorded assessment liens on behalf of the Irish Beach Clusterhomes Association
against 12 homeowners in the common interest development.1 Contesting the validity of
the assessments, the Homeowners sued Pro Solutions, and developers William Moores



         1
         The homeowners are Christian Bertoli, Patricia Bertoli, Michael Farrell, Dean
Freedlun, Susan Freedlun, Kent Keebler, Sandra Trujillo, Mark Walker, Deborah Walker,
Gayle Arrowood Weaver, Lynne Weaver, and Thomas Weaver. We refer to them
collectively hereafter as the Homeowners. Janet Dennis, Jack Dennis (doing business as
Pro Solutions), and their employee Jessica Koller are hereafter referred to collectively as
Pro Solutions.


                                                            1
and Tona Moores for, inter alia, declaratory relief.2 The trial court granted a motion for
judgment on the pleadings filed by Pro Solutions and joined by the Moores.
       The Homeowners appeal from the judgment, arguing that the trial court erred in
concluding that their first amended complaint (FAC) pled no valid cause of action and, in
the alternative, that the trial court abused its discretion by denying leave to amend.
(Appeal No. A137221.) The Moores also appeal from the trial court’s postjudgment
order denying their motion for attorney fees. (Appeal No. A137786.) On our own
motion, we have ordered the two appeals consolidated. We agree with the Homeowners
that their FAC stated a cause of action for declaratory relief. Accordingly, we reverse the
judgment, in part, and dismiss the Moores’ appeal as moot.
                                 I. LEGAL BACKGROUND
       The Davis-Stirling Common Interest Development Act (the Davis-Stirling Act or
the Act)3 “consolidated the statutory law governing condominiums and other common
interest developments. Under the Act, a common interest development is created
‘whenever a separate interest coupled with an interest in the common area or membership
in [an] association is, or has been, conveyed’ and a declaration, a condominium plan, if
one exists, and a final or parcel map are recorded. (§ 1352.) Common interest
developments are required to be managed by a homeowners association (§ 1363, subd.
(a)), defined as ‘a nonprofit corporation or unincorporated association created for the
purpose of managing a common interest development’ (§ 1351, subd. (a)), which
homeowners are generally mandated to join. [Citation.]” (Villa De Las Palmas
Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 81, fn. omitted.) “The declaration,


       2 To avoid confusion, and intending no disrespect, reference to individual
members of the Moores family shall be by first name. William and Tona are hereafter
referred to collectively as the Moores.
       3 In 2012, at the time the motions for judgment on the pleadings were considered,
the Davis-Stirling Act was found at Civil Code former section 1350 et seq. The Act was
later repealed and, operative in 2014, reenacted as Civil Code section 4000 et seq. All
further undesignated statutory references are to the Act’s former code sections in effect at
the time of judgment in this matter.


                                              2
which is the operative document for the creation of any common interest development, is
a collection of covenants, conditions and servitudes that govern the project. [Citations.]”
(Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 372.)
       The Davis-Stirling Act also requires an association to “levy regular and special
assessments sufficient to perform its obligations under the governing documents and [the
Act].” (§ 1366, subd. (a).) Such an assessment “becomes a debt of the owner when the
assessment is levied by the . . . association. [Citation.] ‘The debt is only a personal
obligation of the owner, however, until the community association records a “notice of
delinquent assessment” against the owner’s interest in the development. Recording this
notice creates a lien and gives the association a security interest in the lot or unit against
which the assessment was imposed.’ [Citations.]” (Diamond Heights Village Assn., Inc.
v. Financial Freedom Senior Funding Corp. (2011) 196 Cal.App.4th 290, 300–301;
§ 1367.1, subds. (a), (d).) Before an association may record a lien upon the separate
interest of an owner to collect a debt which is past due, “the association shall notify the
owner of record in writing by certified mail of . . . : [¶] (1) A general description of the
collection and lien enforcement procedures of the association and the method of
calculation of the amount, a statement that the owner of the separate interest has the right
to inspect the association records . . . and the following statement in 14-point boldface
type, if printed, or in capital letters, if typed: ‘IMPORTANT NOTICE: IF YOUR
SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE
BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT
ACTION.’ [¶] (2) An itemized statement of the charges owed by the owner . . . .”
(§ 1367.1, subd. (a).) An assessment lien may be enforced “in any manner permitted by
law,” including judicial or nonjudicial foreclosure, at least 30 days after the lien is
recorded. (§ 1367.1, subd. (g).)




                                               3
                     II. FACTUAL AND PROCEDURAL BACKGROUND4
       The Homeowners own improved lots in a common interest development known as
“Unit 8,” in Irish Beach, Mendocino County. The entire property was originally owned
by the Moores. After the Moores subdivided it, the development was to be governed by a
homeowners association, entitled the Irish Beach Clusterhomes Association
(Association), and conditions, covenants and restrictions (CC&Rs) recited in recorded
declarations against each property within the subdivision. The Association, however,
held no formal meetings from its inception, in 1980, through 1997 and had no budgets or
assessments through 2003.
       There are 16 lots in the development, as well as a common area. Ten unimproved
lots are owned by the Moores or their daughter, Jessica Olson. Six homes were built on
the remaining lots. The Moores kept one and sold the five remaining developed lots.
                                   The Prior Litigation
       In 2003, a fire destroyed two homes in the development, one owned by the Moores
and the other by appellants Farrell and his wife, Trujillo. Although the Association was
moribund, William informally asked Farrell to act as president of the Association to
pursue an insurance claim on its behalf. Farrell did so, but tensions arose, causing two
factions to form: one comprised of the Moores and Olson, the other comprised of the
remaining homeowners. In May and June 2004, at meetings attended only by the Moores
and Olson, 11 votes were cast (one for their home and their 10 vacant lots) to elect the
Irish Clusterhomes Association Board of Governors (Board of Governors) and William
as its president. Certain assessments were also levied.




       4 The underlying facts in this case are taken from the allegations of the FAC, as
well as the documents referenced and attached thereto and any facts which we may
judicially notice. In order to provide context, we take portions of our statement of facts
from, and take judicial notice of, the record and opinion of a prior appeal involving some
of the same parties (Irish Beach Clusterhomes Association Board of Governors v. Farrell
(Jan. 21, 2009, A120147, A121049) [nonpub. opn.] (Irish Beach Board of Governors)).


                                             4
       In March 2005, the Board of Governors and William, purporting to act as its
president, sued Farrell and Trujillo to collect assessments imposed by the Association
(2005 Complaint), as well as to obtain a judicial declaration of the parties’ rights to
manage and operate the Association.
       Farrell, who disputed William’s authority to act on behalf of the Association, filed
a cross-complaint (2005 Cross-Complaint) against the Board of Governors and the
Moores in their individual capacities. The 2005 Cross-Complaint alleged three causes of
action. The first sought a declaration that the Board of Governors had not operated the
Association properly under applicable law. The second sought injunctive relief to force
the Board of Governors to properly manage the Association. The third was against
William and Tona personally and alleged that they had breached their fiduciary duties.
       The case came to trial before the Honorable Lloyd Von Der Mehden. The primary
issue at trial was whether actions taken at the May and June 2004 meetings were valid,
including whether the Board of Governors had been duly elected. That question turned
on who had the right to vote. Judge Von Der Mehden interpreted the Association’s
CC&Rs and by-laws and concluded that only lots that had been improved with a home
were entitled to vote. Applying that methodology, the court ruled the actions taken at the
May and June 2004 meetings were invalid. Accordingly, the court ruled that the
“plaintiffs” were to take nothing on their complaint and that the “cross-defendants” were
enjoined from imposing any assessments against Farrell. The court also ruled that
William individually had breached his fiduciary duties to the Association, but awarded
only nominal damages of $1.
       The Board of Governors and William, acting as its president, filed the Irish Beach
Board of Governors appeal in which they argued the trial court interpreted the
Association’s governing documents incorrectly when it ruled that only those lots that had
been improved with a home were entitled to vote. We did not reach the issue, however,
because it was conceded on appeal, that the Board of Governors was not a legal entity
capable of bringing or defending suit. Accordingly, we held that the judgment was void
“to the extent it [was] in favor of or against the ‘Irish Beach Clusterhomes Association


                                              5
Board of Governors’ and ‘William Moores, President.’ ” We also observed that William
was sued “in his individual capacity” in the breach of fiduciary duty cause of action in the
2005 Cross-Complaint. With respect to Farrell’s remaining two causes of action for
declaratory and injunctive relief, we said, “the allegations in the cross-complaint are
vague and it does not appear that they were directed against Moores in his individual
capacity.”
                              Events After Our Prior Opinion
       At some point after Irish Beach Board of Governors was filed, the Association
imposed additional assessments against the improved lots. When the assessments went
unpaid by the Homeowners, William, acting as “Chairman” of the Association, hired
Pro Solutions to collect what the Homeowners alleged to be “unauthorized and invalid”
assessments. Pro Solutions, acting as collections agent for the Association, sent notices
to each of the Homeowners of the Association’s intent to lien. The notices detailed the
Association’s itemized statement of the amounts owed. The notices further stated: “If
your separate interest is placed in foreclosure because you are behind in your
assessments, it may be sold without court action. [¶] Failure to receive your full payment
(or arrange for a payment plan) by the date indicated will result in a Notice of Lien
Assessment (Lien) being sent to the County Recorder on the next working day without
further notice to you.” (Boldface & capitalization omitted.)
       The Homeowners protested the debt collection attempts and asserted to
Pro Solutions, through counsel, that the Association was not a legally existing entity and
that Pro Solutions had no legal authority to collect debts on its behalf. Despite the
Homeowners’ protest, Pro Solutions persisted in its collection efforts and filed notices of
lien assessments against the Homeowners’ properties. The notices provided: “[T]he
Association hereby designates Pro Solutions . . . the Agent/Trustee authorized by the
Association to enforce said assessment lien by sale of the property in accordance with the
Declaration and all applicable provision[s] of the law of the State of California . . . .”




                                               6
                                   The Current Litigation
       On July 21, 2010, the Homeowners filed a complaint against Pro Solutions based
on its attempts to collect the assessments despite having been warned that the Association
“did not exist.” The complaint asserted causes of action for abuse of process, intentional
infliction of emotional distress, slander of title, and unfair business practices. The
Homeowners also sought declaratory and injunctive relief.
       Pro Solutions filed a cross-complaint against the Association for indemnity.
William was also added as a cross-defendant. Pro Solutions also successfully moved for
an order joining the Association, the Moores, and Olson as indispensable parties to the
Homeowners’ complaint.
       The Homeowners filed the FAC, in which they alleged that the Irish Beach Board
of Governors opinion determined that the Association did not exist. The Homeowners
further alleged: “By Judicial Decree, the Association no longer exists, and as such, is
without the power to levy assessments on the properties within the Subdivision. [¶] . . .
There has never been a valid vote of the owners within the Subdivision to reconstitute the
Association and thus, the Association no longer exists by such judicial holding. [¶] . . .
Any actions taken by the Association or assessments levied by the Association are invalid
and unenforceable. [¶] . . . The nonexistent Association continued to operate and
attempted to levy assessments on the Subdivision properties in spite of the court ruling
that the Association did not exist.”
       The FAC also added a seventh cause of action, for declaratory relief, against the
Moores, Olson, and the Association, in addition to Pro Solutions.5 Specifically, the
Homeowners alleged in the seventh cause of action: “[T]he assessments which
Defendants seek to collect are invalid because the Association no longer exists, and that
by the principals [sic] of res judicata and collateral estoppel [the Moores] and [Olson], as
individual owners of unimproved lots without structures, have no right to vote under the


       5Pro Solutions also filed a first amended cross-complaint seeking indemnity from
the Association and William.


                                              7
[CC&Rs], whereas Defendants . . . dispute this contention and contend that the
assessments are valid and enforceable and will attempt to foreclose on Plaintiffs’ real
properties if the assessments are not paid.” Accordingly, the Homeowners sought “a
declaration of the rights and duties of the parties, including a declaration that the
assessments Defendants seek to collect are invalid and that owners of unimproved lots
have no rights to vote by earlier decision.”
       The Moores filed a demurrer and, as did Pro Solutions, a motion to strike the FAC,
all of which were denied. After its answer was filed, Pro Solutions filed a motion for
judgment on the pleadings, asserting that all of the Homeowners’ causes of action were
barred by the litigation privilege. The Honorable Diane Elan Wick denied the motion
without further comment.
       However, in March 2012, the Association and Olson demurred to the seventh
cause of action, asserting that our Irish Beach Board of Governors opinion contradicted
the Homeowners’ allegation that the Association does not exist. The Honorable
Richard J. Henderson agreed and sustained the demurrer with leave to amend.
Specifically, Judge Henderson wrote: “There is a clear contradiction between the
allegations in the [FAC] that the appellate court determined that ‘the Association no
longer exists’ and the specific language of the attached appellate decision. That
contradiction renders the seventh cause of action uncertain, ambiguous and unintelligible.
[¶] . . . [¶] . . . [T]he complaint fails to identify the judgment, order or ruling underlying
any claim of res judicata or estoppel or otherwise explain how the application of those
judicial principles might affect the voting rights of [Olson]. [Olson] was not a party to
the matter before the appellate court. The appellate decision which superseded the trial
court decision did not contain any analysis or determination regarding [her] voting
rights.” The Homeowners did not amend their allegations against the Association and
Olson, and judgment was entered in their favor.6


       6The Homeowners also did not appeal the judgment in favor of the Association
and Olson. Neither Olson nor the Association are parties to the instant appeals.


                                               8
       Thereafter, Pro Solutions filed another motion for judgment on the pleadings, in
which the Moores joined. Pro Solutions contended that, with respect to the seventh cause
of action, Judge Henderson’s demurrer ruling applied equally to it and that all other
causes of action were barred by the litigation privilege and statute of limitations.
Judge Henderson took judicial notice of the recorded CC&Rs, the notice of liens, as well
as our Irish Beach Board of Governors opinion, the 2005 Complaint, the 2005 Cross-
Complaint, the 2007 Judgment, and Judge Von Der Mehden’s statement of decision. The
motion for judgment on the pleadings was granted without leave to amend.
       Judge Henderson reasoned that the Homeowners’ FAC was insufficient to state a
cause of action because: (1) the Irish Beach Board of Governors decision did not make
any determination regarding the legal existence of the Association; (2) “The only
references in the general allegations to voting rights within the homeowners association
are found in Paragraphs 11 and 15 and are insufficient to put a reasonable person on
notice of a claim that either the [A]ssociation had been improperly formed or that the
assessments were invalid due to voting irregularities involving the Moores family”; and
(3) “whatever findings [Judge Von Der Mehden] may have made regarding the voting
rights of the Moores family must be limited to the only entity that was a party to that
action: the . . . Board of Governors.” Judge Henderson also concluded that the conduct
underlying the first four causes of action was protected by the litigation privilege.
Judgment was entered against the Homeowners and in favor of the Moores and
Pro Solutions. The Homeowners filed a timely notice of appeal from the judgment
(appeal No. A137221).
                                  Motion for Attorney Fees
       The Moores moved for an award of attorney fees, arguing that “because [they]
successfully defended the [Homeowners’] attempts to strip their voting rights . . . , the
Moores are entitled to their attorney fees . . . pursuant to . . . [section] 1354” and an




                                               9
attorney fees provision of the CC&Rs.7 Judge Henderson determined that “the action
was primarily brought to construe and enforce an appellate court decision” and denied the
motion. The Moores filed a timely notice of appeal (appeal No. A137786).
                                      III. DISCUSSION
       On appeal from the judgment, the Homeowners challenge Judge Henderson’s
conclusion that they did not state a valid cause of action for declaratory relief against the
Moores and Pro Solutions. Specifically, the Homeowners contend that (1) Judge
Henderson misconstrued our Irish Beach Board of Governors opinion; (2) the doctrine of
collateral estoppel applies to Judge Von Der Mehden’s finding regarding voting rights;
and (3) the FAC sufficiently raised the Moores’ inability to vote as an alternate basis for
invalidating the assessments.8 The Homeowners also argue that their first through fourth
causes of action are not barred by the litigation privilege. In the alternative, the
Homeowners contend that, if the FAC was defective, Judge Henderson abused his
discretion in denying leave to amend.
       In their appeal from the postjudgment order denying attorney fees, the Moores
contend that they are entitled to attorney fees, under both section 1354 and contract,



       7 Section 1354 provides, in relevant part: “(a) The covenants and restrictions in
the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall
inure to the benefit of and bind all owners of separate interests in the development.
Unless the declaration states otherwise, these servitudes may be enforced by any owner
of a separate interest or by the association, or by both. [¶] . . . [¶] (c) In an action to
enforce the governing documents, the prevailing party shall be awarded reasonable
attorney’s fees and costs.” (Italics added.)
       8 We reject the argument of the Moores and Pro Solutions that the Homeowners’
instant appeal was forfeited when they failed to appeal the dismissal of Olson and the
Association. They cite no authority supporting the proposition that the Homeowners are
required to engage in further litigation against the Association and Olson in order to
preserve their right to proceed against the Moores and Pro Solutions. We are aware of no
such authority. Assuming that the Association and Olson are indispensible parties, their
absence “ ‘does not deprive a court of the power to make a legally binding adjudication
between the parties properly before it.’ [Citation.]” (Golden Rain Foundation v. Franz
(2008) 163 Cal.App.4th 1141, 1155.)


                                              10
“[b]ecause [their] litigation efforts prevented [the Homeowners] from extinguishing the
Association and preserved ‘unimproved’ lot owners’ right to vote under the Association’s
governing documents.” As this argument appears to concede, the FAC adequately
alleges the existence of an actual controversy regarding Association voting rights.
Accordingly, the trial court erred, in part, in granting judgment on the pleadings.
A.     Standard of Review
       “A motion for judgment on the pleadings is analogous to a general demurrer, but
is made after the time to file a demurrer has expired. (Code Civ. Proc., § 438,
subd. (f)(2); Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 602.)
The trial court’s judgment on the order granting a motion for judgment on the pleadings
is reviewed independently under the de novo standard of review. [Citation.] ‘[W]e treat
the properly pleaded allegations of [the] complaint as true, and also consider those
matters subject to judicial notice. [Citations.] “Moreover, the allegations must be
liberally construed with a view to attaining substantial justice among the parties.”
[Citation.] “Our primary task is to determine whether the facts alleged provide the basis
for a cause of action against defendants under any theory.” [Citation.]’ [Citations.]”
(International Assn. of Firefighters Local 230 v. City of San Jose (2011) 195 Cal.App.4th
1179, 1196, parallel citation omitted.) “We may also take notice of exhibits attached to
the complaints. If facts appearing in the exhibits contradict those alleged, the facts in the
exhibits take precedence.” (Holland v. Morse Diesel Internat., Inc. (2001)
86 Cal.App.4th 1443, 1447, superseded on other grounds as stated in White v.
Cridlebaugh (2009) 178 Cal.App.4th 506, 521.)
       With respect to determining whether a pleading states a cause of action under
Code of Civil Procedure section 1060, we exercise independent review.9 (Environmental



       9 “Any person interested under a written instrument . . . or who desires a
declaration of his or her rights or duties with respect to another, or in respect to, in, over
or upon property . . . may, in cases of actual controversy relating to the legal rights and
duties of the respective parties, bring an original action or cross-complaint in the superior
court for a declaration of his or her rights and duties in the premises, including a

                                             11
Defense Project of Sierra County v. County of Sierra (2008) 158 Cal.App.4th 877, 885.)
When an actual controversy does exist, Code of Civil Procedure section 1061 gives the
trial court discretion to “refuse to [grant declaratory relief] in any case where its
declaration or determination is not necessary or proper at the time under all the
circumstances.” If a trial court determines that an actual controversy does not warrant
declaratory relief, we review that determination for an abuse of discretion. (Meyer v.
Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 647; Osseous Technologies of America, Inc.
v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 367.) “The discretion to
refuse to entertain an action in declaratory relief vested in the trial court by [Code of Civil
Procedure] section 1061 is not unlimited. It may be exercised only when there is a basis
in fact for the conclusion that the declaration is not necessary or proper. [Citations.]”
(Warren v. Kaiser Foundation Health Plan, Inc. (1975) 47 Cal.App.3d 678, 683.)
       Where a demurrer is sustained or a motion for judgment on the pleadings is
granted, the trial court’s denial of leave to amend is reviewed for abuse of discretion.
(Rodriguez v. County of Los Angeles (2013) 217 Cal.App.4th 806, 810.) “ ‘[T]o meet the
plaintiff’s burden of showing abuse of discretion, the plaintiff must show how the
complaint can be amended to state a cause of action. [Citation.] However, such a
showing need not be made in the trial court so long as it is made to the reviewing court.’
[Citations.]” (Dudley v. Department of Transportation (2001) 90 Cal.App.4th 255, 260.)
B.     Seventh Cause of Action for Declaratory Relief
       The Homeowners argue that Judge Henderson erred in dismissing their seventh
cause of action for declaratory relief. “ ‘All that Code of Civil Procedure section 1060
requires is that there be [an] “actual controversy relating to the legal rights and duties of


determination of any question of construction or validity arising under the instrument or
contract. He or she may ask for a declaration of rights or duties, either alone or with
other relief; and the court may make a binding declaration of these rights or duties,
whether or not further relief is or could be claimed at the time. The declaration may be
either affirmative or negative in form and effect, and the declaration shall have the force
of a final judgment. The declaration may be had before there has been any breach of the
obligation in respect to which said declaration is sought.” (Code Civ. Proc., § 1060.)


                                              12
the respective parties.” . . . A cardinal rule of pleading is that only the ultimate facts need
be alleged. [Citation.] In a declaratory relief action, the ultimate facts are those facts
establishing the existence of an actual controversy. (Code Civ. Proc., § 1060.) . . .
However, to be entitled to declaratory relief, a party need not establish that it is also
entitled to a favorable judgment. . . . “A complaint for declaratory relief is legally
sufficient if it sets forth facts showing the existence of an actual controversy relating to
the legal rights and duties of the parties under a written instrument or with respect to
property and requests that the rights and duties of the parties be adjudged by the court.
[Citations.] If these requirements are met and no basis for declining declaratory relief
appears, the court should declare the rights of the parties whether or not the facts alleged
establish that the plaintiff is entitled to [a] favorable declaration. [Citations.]” ’
[Citation.]” (Market Lofts Community Assn. v. 9th Street Market Lofts, LLC (2014)
222 Cal.App.4th 924, 931.)
       In the statement of decision, Judge Henderson wrote: “The gravamen of the . . .
FAC is that the appellate court had determined by ‘judicial decree’ that the Association
no longer existed and was without the power to levy assessments on the [Homeowners’]
properties. . . . [The Homeowners] did not allege in the FAC any basis for the alleged
invalidity of the Association other than the effect of the ‘judicial decree.’ ” (Fns.
omitted.) In our view, the Homeowners’ claim for declaratory relief is more accurately
described as seeking a declaration that the assessments are invalid on two alternative
grounds: (1) “because the Association no longer exists”; and (2) “that by the principles
of res judicata and collateral estoppel [the Moores and Olson], as individual owners of
unimproved lots without structures, have no right to vote under the CC&Rs . . . .” We
address each basis in turn, keeping in mind that “to the extent the factual allegations
conflict with the content of the exhibits to the complaint, we rely on and accept as true
the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal
effect of the exhibits. [Citations.]” (Barnett v. Fireman’s Fund Ins. Co. (2001)
90 Cal.App.4th 500, 505.)



                                               13
       1.     Existence of the Association
       First, the Homeowners allege that the assessments should be declared invalid
because “the Association no longer exists” by virtue of our Irish Beach Board of
Governors opinion. We agree with Judge Henderson that the allegation is flatly
contradicted by that prior opinion.10 We stated, in the factual and procedural
background, that the Association was moribund. However, moribund means “being in a
state of inactivity or obsolescence.” (Merriam-Webster Online Dict.
<http://www.merriam-webster.com/dictionary/moribund> [as of Dec. 22, 2014].) In the
discussion section of the prior opinion, we only observed: “[B]oth parties now concede
that the Irish Beach Clusterhomes Association Board of Governors is not a legal entity
that is capable of bringing suit.” (Italics added.)
       2.     Collateral Estoppel
       In their seventh cause of action, the Homeowners also alleged that the assessments
should be declared invalid because the Moores and Pro Solutions are estopped from
challenging Judge Von Der Mehden’s finding that owners of unimproved lots have no
right to vote under the CC&Rs. Judge Henderson appears to have found this allegation to
be contradicted by our Irish Beach Board of Governors opinion, the 2005 Complaint, the
2005 Cross-Complaint, and Judge Von Der Mehden’s statement of decision. Judge
Henderson wrote: “[W]hatever findings [Judge Von Der Mehden] may have made
regarding the voting rights of the Moores family must be limited to the only entity that


       10  We do not address Pro Solutions’s argument that the Association reconstituted
itself after the Irish Beach Board of Governors decision. The limited role of a motion for
judgment on the pleadings is to test the legal sufficiency of the operative complaint.
(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) The FAC
specifically alleged that “[t]here has never been a valid vote of the owners . . . to
reconstitute the Association,” and there is no matter properly subject to judicial notice
contradicting this allegation. “ ‘The hearing on demurrer may not be turned into a
contested evidentiary hearing through the guise of having the court take judicial notice of
documents whose truthfulness or proper interpretation are disputable.’ [Citations.]”
(Silguero v. Creteguard, Inc. (2010) 187 Cal.App.4th 60, 64 [denying request for judicial
notice of deposition testimony].)


                                              14
was a party to that action: the . . . Board of Governors. The Association was not a party
. . . . Finally, the scope of the appellate court opinion must be construed to include the
trial court’s determination regarding voting rights in the homeowners group. The
appellate court declared the [2007 judgment] was void to the extent it was in favor of or
against the [Board of Governors] and [William] in his capacity as president. The only
cause of action to survive that sweeping determination of invalidity was the third cause of
action of the cross-complaint seeking monetary damages for breach of fiduciary duty
against [William] in his capacity as developer. The trial court determination regarding
voting rights were not essential or even relevant to that determination.”
       The Homeowners contend that Judge Von Der Mehden’s finding regarding voting
rights is binding on the Moores and Pro Solutions under the doctrine of collateral
estoppel. Collateral estoppel “means simply that when an issue of ultimate fact has once
been determined by a valid and final judgment, that issue cannot again be litigated
between the same parties in any future lawsuit.” (Ashe v. Swenson (1970) 397 U.S. 436,
443.) A party will be collaterally estopped from relitigating an issue “ ‘only if several
threshold requirements are fulfilled. First, the issue sought to be precluded from
relitigation must be identical to that decided in a former proceeding. Second, this issue
must have been actually litigated in the former proceeding. Third, it must have been
necessarily decided in the former proceeding. Fourth, the decision in the former
proceeding must be final and on the merits. Finally, the party against whom preclusion is
sought must be the same as, or in privity with, the party to the former proceeding.
[Citation.]’ [Citation.]” (Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 511.) The
burden of proving the requirements for application of the doctrine falls on the party
asserting it. (First N.B.S. Corp. v. Gabrielsen (1986) 179 Cal.App.3d 1189, 1194.)
       The Homeowners argue: “These factors all apply here: the voting right of
property owners was previously litigated, resulting in a final judgment on the merits (not
reversed on that point) and Pro Solutions is in privity with [William], who was a party to
the prior proceeding both in a representative and personal capacity.” (Italics added.) The
Homeowners maintain, “[T]he [Irish Beach Board of Governors] decision effected only a


                                             15
partial reversal. It did not and could not reverse other issues decided in that case,
including the requirement of an improved lot as a basis for voting rights.” We disagree.
       Judge Von Der Mehden decided the voting rights issue against the Board of
Governors and against William, acting as president. However, as outlined above, we
determined that “the judgment is void to the extent it is in favor of, or against” these same
parties. “[A] void judgment will not operate as a bar to relitigation of the issues
purportedly adjudicated. [Citations.]” (Pajaro Valley Water Management Agency v.
McGrath (2005) 128 Cal.App.4th 1093, 1100, italics omitted; see also Rochin v. Pat
Johnson Manufacturing Co. (1998) 67 Cal.App.4th 1228, 1239 [“[t]he doctrine of res
judicata is inapplicable to void judgments”].) The Homeowners appear to concede as
much.11 Instead, they assert that the voting rights issue was also necessarily decided in
the portion of Judge Von Der Mehden’s judgment that remains undisturbed by Irish
Beach Board of Governors.
       It is clear from our Irish Beach Board of Governors opinion that the judgment
against William, in his individual capacity, remains standing as a final judgment. In that
opinion, we recognized repeatedly that “[William] was sued in his individual capacity in
the cross-complaint” and that the third cause of action therein, alleging a breach of
fiduciary duty, “was clearly directed at [William] in his individual capacity.” As the only
final judgment was that entered against William as an individual for breach of fiduciary
duty, we must determine if the voting rights issue was “necessarily decided” therein.



       11 The authority relied on by the Homeowners does not suggest otherwise. (See
Ginsberg v. Gamson (2012) 205 Cal.App.4th 873, 904–905 [“[t]he reviewing court will
avoid ordering a retrial of all issues when some can ‘be determined separately without
prejudice to any party . . . to relieve the trial court and the parties of the unnecessary
burden of relitigating issues that have been decided, and to respect and preserve the
results of a trial on issues as to which the appellant has not shown error’ ”]; Gray v.
Cotton (1913) 166 Cal. 130, 139 [“[t]he practice of reversing a judgment in part only is
well settled . . . and should be followed where the error found to have been committed
has affected the determination of but one or more of a greater number of distinct and
severable issues or causes of action”].)


                                             16
       “ ‘The “ ‘necessarily decided’ ” requirement generally means only that the
resolution of the issue was not “ ‘entirely unnecessary’ to the judgment in the initial
proceeding.” [Citation.]’ [Citation.]” (Apple, Inc. v. Franchise Tax Bd. (2011)
199 Cal.App.4th 1, 15; accord, First N.B.S. Corp. v. Gabrielsen, supra, 179 Cal.App.3d
at p. 1196.) “ ‘ “ ‘If “anything is left to conjecture as to what was necessarily involved
and decided” there can be no collateral estoppel [citations] . . . .’ [Citation.]” [Citation.]’
[Citation.]” (Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1520.)
“ ‘To establish a cause of action for breach of fiduciary duty, a plaintiff must demonstrate
the existence of a fiduciary relationship, breach of that duty and damages.’ [Citation.]”
(Id. at p. 1509.) The directors of a homeowners association owe a fiduciary duty of
undivided loyalty to the association, and may not make decisions for the association that
benefit their own interests at the expense of the association and its members. (Raven’s
Cove Townhomes, Inc. v. Knuppe Development Co. (1981) 114 Cal.App.3d 783, 799.)
       The allegations in Farrell’s breach of fiduciary duty cause of action included no
mention of the voting rights issue. Instead, Farrell alleged: “[William, as an original
subdivider and director of the Association, was] obligated and required to act in a
fiduciary capacity with respect [to] the property of the Association and the management
of its affairs in an honest and good faith manner. Instead of so acting, [he] put [his] own
interests in [the Moores’] individual lots above the interests of the Association by causing
the improved lots within the subdivision to be assessed for more than their fair share of
the assessments, so that the unimproved lots owned by [the Moores] were assessed for
less than their fair share of the total cost of the operation of the Association.” (Italics
added.)
       And, the voting rights issue was not mentioned by Judge Von Der Mehden in the
portion of the statement of decision analyzing the breach of fiduciary duty cause of
action. Instead, it was discussed in the analysis of the 2005 Complaint—causes of action
decided against the Board of Governors and William, as president. In the statement of
decision, Judge Von Der Mehden explained: “With reference to the assessments claimed
by [the Board of Governors and William, as president], the court finds that such


                                              17
assessments are not valid or enforceable . . . . The subject assessments are based on the
meetings of the same board of governors and president of the [Association] during 2004
and thereafter as stated above, and were therefore not valid acts for or on behalf of the
[Association]. In addition, a budget or proposed budget and other fiscal records for the
[Association] were not timely prepared or distributed to all members as required under
the [Davis-Stirling Act] and the amendment to the [CC&Rs]. Further, in determining the
basis and amount of the assessments, [the Moores] confused or commingled their own
interests with the common interests of [the Association] including [Farrell and Trujillo]
as homeowners and members. In this regard, the determination and allocation of
assessments as to parcels and unimproved lots, past and present, were disproportionate as
to various septic system expenses, costs of insurance and other expenses. Cross-
defendants undertook to impose assessment through the [Association] for repairing or
modifying a septic system that was originally installed improperly and without final
permit approval . . . . [¶] . . . It is evident that [William] had a conflict of interest in
regards to the [Association] and [Farrell and Trujillo]. [William] was the subdivider and
developer of Unit 8; he was in control of the [Association] from its infancy and he caused
the board of governors, including himself, to be elected and himself to be elected as
president of the [Association]. Decisions were then made as noted above that benefitted
his own interests at the expense of the [Association] and cross-complainant as a
homeowner and member. The court finds cross-defendant William Moores had a
fiduciary duty owing to the [Association] and to cross-complainant as a homeowner and
member, and that [William] breached such duty by his various acts and omission that
occurred in 2004 and thereafter as referred to above . . . .” (Italics added.)
       Although the assessments at issue in the 2005 Cross-Complaint may have been
imposed, at the May and June 2004 meetings, after William (as an unimproved lot
owner) voted, a finding that he was not entitled to vote does not appear to have been
necessary to show William’s breach of his fiduciary duties. We agree with Judge
Henderson that resolution of the voting rights issue was unnecessary to the judgment
against William as an individual. Because we conclude that William is not estopped


                                                18
from denying that unimproved lot owners cannot vote, we need not consider the
Homeowners’ further arguments that the findings were also binding on Pro Solutions by
virtue of contractual privity or “the Association and all property owners in the
development under Duffey v. Superior Court (1992) 3 Cal.App.4th 425.” The
Homeowners have not met their burden to show that the collateral estoppel doctrine
applies.
       3.      Voting Rights Remain Undetermined
       If res judicata and collateral estoppel do not apply, it is implicit that an actual
controversy exists between the parties regarding voting rights. Accordingly, the
Homeowners contend that, even if Judge Henderson did not misconstrue the effect of the
prior litigation, they did not fail to state a cause of action for declaratory relief on the
voting rights issue. In the order granting the motion for judgment on the pleadings, Judge
Henderson wrote: “[A] reasonable reading of the FAC fails to provide sufficient notice
that the [the Homeowners’] allegations of the legal status of the Association are based on
the additional claim that the Moores family was not entitled to vote . . . . The only
references in the general allegations to voting rights within the [Association] are found in
Paragraphs 11 and 15 and are insufficient to put a reasonable person on notice of a claim
that either the [Association] had been improperly formed or that the assessments were
invalid due to voting irregularities involving the Moores family.[12] The additional
allegations in the Seventh Cause of action were limited to that cause of action alone and
were not incorporated into any other cause of action.”
       This begs the question. Does the seventh cause of action—for declaratory relief—
fail to state a cause of action? Paragraphs 11 and 15 were incorporated by reference into


       12   Paragraphs 11 and 15 of the FAC alleged: “The Superior Court interpreted the
Association’s CC&Rs and bylaws in favor of Farrell . . . and concluded that: (a) only lots
that had been improved with a home were entitled to vote on Association matters; (b) the
actions taken by the Association Board at the May and June 2004 meetings were invalid;
and (c) the Association was enjoined from imposing any assessments against Farrell. [¶]
. . . [¶] There has never been a valid vote of the owners within the Subdivision to
reconstitute the Association, and thus, the Association no longer exists . . . .”


                                               19
the seventh cause of action. And, in the seventh cause of action, the Homeowners further
alleged: “An actual controversy has arisen and now exists between Plaintiffs and
Defendants concerning their respective rights and duties. Plaintiffs contend that the
assessments which Defendant seek to collect are invalid because the Association no
longer exists, and that by the principles of res judicata and collateral estoppel William
Moores, Tona Moores, and Jessica Olson, as individual owners of unimproved lots
without structures, have no right to vote under the CC&Rs, whereas Defendants and all of
them dispute this contention and contend that the assessments are valid and enforceable
and will attempt to foreclose on Plaintiffs’ real properties if the assessments are not paid.
[¶] A judicial declaration is necessary and appropriate at this time . . . in order that
Plaintiffs and all parties containing an interest in any and all property governed by the
[CC&Rs] may ascertain the rights and duties with regard to the [CC&Rs] and
assessments issued by the Association . . . .” In their prayer for relief, the Homeowners
sought “a declaration of the rights and duties of the parties, including a declaration that
the assessments Defendants seek to collect are invalid and that owners of unimproved
lots have no rights to vote by earlier decision.”
       The Homeowners, in their FAC, may have incorrectly focused on the prior
litigation, but we agree with them that, liberally construed, the FAC provides sufficient
notice that an actual controversy regarding voting rights remains. The Moores
themselves concede as much. We conclude that the trial court erred in granting judgment
on the pleadings on this cause of action.
C.     Litigation Privilege and the First Four Causes of Action
       Finally, the Homeowners contend that the trial court erred in concluding that their
first through fourth causes of action are barred by the litigation privilege.13 In their first
three causes of actions, the Homeowners sought damages against Pro Solutions, under
various tort theories, for their recordation of liens to facilitate collection of the challenged


       13  The Homeowners do not challenge the trial court’s judgment with respect to
their fifth and sixth causes of action.


                                              20
assessments and communications preceding such liens. In their fourth cause of action,
the Homeowners alleged: “[The Homeowners] contend that the assessments which
[Pro Solutions] seek[s] to collect are invalid because the Association no longer exists,
whereas [Pro Solutions] dispute[s] this contention and contend[s] that the assessments are
valid and enforceable and will attempt to foreclose on [the Homeowners’] real properties
if the assessments are not paid.” Judge Henderson determined that all four causes of
action were barred by the litigation privilege.
       “A privileged publication or broadcast is one made [¶] . . . [¶] . . . in any . . .
judicial proceeding . . . .” (Civ. Code, § 47, subd. (b).) The statute has been broadly
construed, such that “ ‘communications preparatory to or in anticipation of the bringing
of an action or other official proceeding are within the protection of the litigation
privilege . . . .’ [Citations.]” (Briggs v. Eden Council for Hope & Opportunity (1999)
19 Cal.4th 1106, 1115.) “ ‘ “The usual formulation is that the privilege applies to any
communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other
participants authorized by law; (3) to achieve the objects of the litigation; and (4) that
have some connection or logical relation to the action.” [Citation.] The privilege “is not
limited to statements made during a trial or other proceedings, but may extend to steps
taken prior thereto, or afterwards.” [Citation.]’ [Citations.]” (Feldman v. 1100 Park
Lane Associates (2008) 160 Cal.App.4th 1467, 1485, italics omitted.)
       The purpose of the litigation privilege is to afford litigants freedom of access to
the courts without fear of being harassed by derivative tort actions. (Silberg v. Anderson
(1990) 50 Cal.3d 205, 213.) “Although originally designed to limit an individual’s
potential liability for defamation, the privilege has since been extended to apply to other
torts,” such as abuse of process, and intentional infliction of emotional distress.
(Feldman v. 1100 Park Lane Associates, supra, 160 Cal.App.4th at pp. 1485–1486.)
       “The litigation privilege, however, is not without limit.” (Action Apartment Assn.,
Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1242.) The Legislature has made
clear that it does not intend the enforcement of a statute to be barred by the litigation
privilege when the statute “is more specific than the litigation privilege and would be


                                               21
significantly or wholly inoperable if its enforcement were barred when in conflict with
the privilege.” (Id. at p. 1246.) For instance, the litigation privilege does not bar claims
based on conduct violating the Rosenthal Fair Debt Collection Practices Act (RFDCPA;
Civ. Code, § 1788 et seq.). (Komarova v. National Credit Acceptance, Inc. (2009) 175
Cal.App.4th 324, 340 [debt collector frequently called plaintiff (whose name was similar
to debtor’s) without disclosing his identity, communicated with plaintiff’s employer, and
engaged in other harassing communication].) And “it is . . . well settled that the
California litigation privilege does not apply to federal causes of action,” including
claims under the Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. § 1692 et seq.).
(Oei v. North Star Capital Acquisitions, LLC (C.D.Cal. 2006) 486 F.Supp.2d 1089,
1098.)
         In Wilton v. Mountain Wood Homeowners Assn. (1993) 18 Cal.App.4th 565
(Wilton), our colleagues in Division Four held that the litigation privilege protects the
publication of allegedly fraudulent assessment liens recorded by a homeowners
association against a condominium unit. (Id. at pp. 567, 569.) In Wilton, the unit’s
owner sued the homeowners association for slander of title and then appealed from a
judgment of dismissal after the homeowners association’s demurrer was sustained
without leave to amend. (Id. at pp. 567–568.)
         The Wilton court noted: “Condominium homeowners associations must assess
fees on the individual owners in order to maintain the complexes. [Citation.] When an
owner defaults, the association may file a lien on the owner’s interest for the amount of
the fees. [Citation.] If the default is not corrected, the association may pursue any
remedy permitted by law, including judicial foreclosure or foreclosure by private power
of sale. [Citation.]” (Wilton, supra, 18 Cal.App.4th at p. 568; §§ 1366, subd. (a), 1367,
subds. (b), (e).) Relying on Frank Pisano & Associates v. Taggart (1972) 29 Cal.App.3d
1, 25, the Wilton court determined that the publication of homeowners’ assessment liens,
like the filing of mechanic liens, was absolutely privileged under Civil Code section 47,
subdivision (b), because the liens are “ ‘required or permitted by law in the course of a
judicial proceeding to achieve the objects of the litigation, even though the publication is


                                             22
made outside the courtroom and no function of the court or its officers is invoked.’
[Citation.]” (Wilton, at p. 569, fn. omitted.) However, the Wilton court made clear that
its holding “does not prevent those who are subject to homeowners’ assessment liens
from seeking declaratory relief or filing quiet title actions to contest the validity of liens
that are improper.” (Id. at p. 571, italics added.)
       We are not persuaded by the Homeowners’ attempt to distinguish Wilton on the
basis of the debt collection agency’s involvement or conduct. Nonparties can invoke the
litigation privilege. (Tom Jones Enterprises, Ltd. v. County of Los Angeles (2013)
212 Cal.App.4th 1283, 1295; Foothill Federal Credit Union v. Superior Court (2007)
155 Cal.App.4th 632, 635–636 [litigation privilege is not restricted to the actual parties to
the lawsuit but applies to “ ‘litigants or other participants authorized by law’ ”].) The
only tortious acts alleged by the Homeowners were Pro Solutions’ recording notices of
lien assessments and Pro Solutions’ pre-lien notification to the Homeowners. They
alleged: “Despite warnings of the illegitimate nature of the Association, [Pro Solutions]
continue[d] to pursue collection efforts against [the Homeowners] on the fraudulent
assessments and . . . filed Notices of Lien Assessment against [the Homeowners’] real
properties.”14 Pro Solutions’ actions were required or permitted by the Act in order to
pursue foreclosure. (§§ 1367, 1367.1, subds. (a), (d), (g).) The Homeowners do not
allege in their first four causes of action that Pro Solutions used threats, harassment, or
other violations of the FDCPA or the RFDCPA. Following Wilton, we agree that the
Homeowners’ first, second, and third causes of action are barred by the litigation
privilege. The Homeowners have not met their burden to show the possibility to amend
the factual basis for their tort claims.




       14 Contrary to the Homeowners’ argument, it is well established that the litigation
privilege “is absolute in nature, applying ‘to all publications, irrespective of their
maliciousness.’ [Citation.]” (Action Apartment Assn., Inc. v. City of Santa Monica,
supra, 41 Cal.4th at p. 1241.) None of the authority relied on by the Homeowners
suggests a contrary rule.


                                              23
       However, in determining that the Homeowners’ cause of action for declaratory
relief against Pro Solutions was barred by the litigation privilege, the trial court erred.
(Wilton, supra, 18 Cal.App.4th at p. 571.) The trial court erred in granting the motions
for judgment on the pleadings with respect to the two declaratory relief causes of action.
We therefore reverse the judgment with respect to those causes of action. Our conclusion
moots the Moores’ appeal from the order denying attorney fees.
                                      IV. DISPOSITION
       In appeal No. A137221, we reverse only that portion of the judgment sustaining
the motion for judgment on the pleadings as to the fourth and seventh causes of action for
declaratory relief. Appeal No. 137786 is dismissed as moot. The parties are to bear their
own costs on appeal.




                                                   _________________________
                                                   BRUINIERS, J.


WE CONCUR:


_________________________
SIMONS, Acting P. J.


_________________________
NEEDHAM, J.




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