Dolan-King v. Rancho Santa Fe Ass'n

Opinion

After the Board of Directors (the Board) of the Rancho Santa Fe Association (the Association), on the advice of a five-person “Art Jury,” rejected Patricia Dolan-King’s proposed plans for home additions and

Dolan-King’s home was within the Type I Architecture District, described in the Covenant as “that distinctive type of architecture which for several decades has been successfully developing in California, deriving its chief inspiration directly or indirectly from Latin types, which developed under similar climatic conditions along the Mediterranean or at points in California, such as Monterey.”

Dolan-King was drawn to Rancho Santa Fe because she “wanted to live in the Covenant.” She was aware of the Covenant’s existence and had “read over it” before she agreed to purchase the house. Dolan-King testified she liked the house and was “really excited” by the fact it was in the Covenant. However, she desired to make some changes, and through architects DolanKing submitted to the Art Jury plans for a new perimeter fence as well as “turret-style” additions to her living and family rooms. In place of the original three-rail corral-type fence on her property when she purchased it,

Following the presentation of evidence and written arguments, the court rendered its intended statement of decision in Dolan-King’s favor. It found the Association and Art Jury’s decisions rejecting her applications “failed the rational relationship test and constituted an abuse of power.” Specifically, it concluded: (1) Board approval of Dolan-King’s applications would not violate paragraph 46 of the Covenant, requiring that the Art Jury ensure “a uniform and reasonably high standard of artistic result and attractiveness, in exterior and physical appearances” of the property and improvements; (2) Dolan-King’s fence plans should have been approved by the Art Jury and Board because (a) the proposed fence type was “consistent with the type of architecture required by the Covenant,” (b) the Board and Art Jury’s decisions were improperly based on Guidelines that were without “controlling effect,” and (c) the fence could be masked by appropriate landscaping; and (3) The Covenant required the Art Jury and Board to approve any fenestration plan “consistent with the required style of architecture that was not aesthetically displeasing,” and the turrets were not at all or barely visible from the street. After the Association unsuccessfully objected to the court’s intended statement of decision, the court deemed the intended statement of decision final and entered judgment for Dolan-King. It awarded Dolan-King attorney fees in the amount of $187,677.

Discussion

We first address the proper standard for our review of the court’s judgment. The Association contends we must act “independently of the trial court” and review the Board and Art Jury’s decisions “in the light most favorable to the decision to deny approval,” giving deference to the Board’s decision analogous to review of decisions of governmental agencies on petition for writ of mandate. It urges we follow the “rule of judicial deference” to community association board decisionmaking set out by the California Supreme Court in Nahrstedt v. Lakeside Village Condominium

Dolan-King’s complaint was for declaratory relief. Whether a determination is proper in an action for declaratory relief is a matter within the trial court’s discretion and the court’s decision to grant or deny relief will not be disturbed on appeal unless it is clearly shown its discretion was abused. (Hannula v. Hacienda Homes (1949) 34 Cal.2d 442 , 448 [ 211 P.2d 302 , 19 A.L.R.2d 1268 ].) Here, however, the decisive underlying facts, primarily Dolan-King’s proposed designs and the Art Jury and Board’s actions, are undisputed. In such a case, in reviewing the propriety of the trial court’s decision, we are confronted with questions of law. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791 , 799 [ 35 Cal.Rptr.2d 418 , 883 P.2d 960 ]; Coloca v. County of San Diego (1999) 72 Cal.App.4th 1209 , 1217 [ 85 Cal.Rptr.2d 660 ].) Moreover, to the extent our review of the court’s declaratory judgment involves an interpretation of the Covenant’s provisions, that too is a question of law we address de novo. (City of El Cajon v. El Cajon Police Officers’ Assn. (1996) 49 Cal.App.4th 64 , 71 [ 56 Cal.Rptr.2d 723 ]; Clark, supra, 216 Cal.App.3d at pp. 618-619 [resolving as a matter of law whether the language of the Covenant permits the Association and Art Jury to use subjective criteria in judging property owners’ applications to improve their property].)

We reject Dolan-King’s narrow interpretation of the Covenant. This court held in Clark, supra, 216 Cal.App.3d 606 , that reading the Covenant as a whole, the Art Jury and Board are empowered to render judgments on property improvement applications based upon subjective as well as objective criteria. (Id. at pp. 618-619.) We noted the Covenant’s stated goal of a “ ‘uniform and reasonably high standard of artistic result and attractiveness, in exterior and physical appearance of said property and improvements’ ” and its “purpose ... as protecting the attractiveness and value of the area as ‘a high class place of residence.’ ” (Id. at p. 618.) Our decision in Clark recognized that the Covenant expressly grants the Association and Art Jury broad authority to apply standards that are inherently subjective and by their nature cannot be measured or quantified: “Necessarily, any such evaluations of a property owner’s proposal for compatibility with these desired environmental qualities must be done on a subjective basis, as ‘attractiveness’ and ‘artistry’ are, like beauty, well within the eye of the beholder. Such qualities have never been measurable or quantifiable.” (Id. at p. 619, fn. omitted.)

Implicit in our holding in Clark is that the Covenant’s grant of authority to the Art Jury to make subjective aesthetic judgments is not wholly arbitrary. A restriction is arbitrary when it bears “no rational relationship to the protection, preservation, operation or purpose of the affected land.” (Nahrstedt, supra, 8 Cal.4th at p. 381.) It is clear even from Dolan-King’s own briefs and testimony that one of the desirable aspects of living “in the Covenant” is the concern and control exercised by the Association over style and presentation of the homes as well as the surrounding properties. Maintaining a consistent and harmonious neighborhood character, one that is architecturally and artistically pleasing, confers a benefit on the homeowners by maintaining the value of their properties. Given the Covenant’s unambiguous intent to ensure relatively consistent architectural styles and a valuable, aesthetically appealing, high quality neighborhood for the collective benefit of the Rancho Santa Fe homeowners, we conclude the Covenant’s grant of broad authority and discretion in the Art Jury to apply

While we recognize that the Guidelines are not equitable servitudes, we find nothing inherently unreasonable about the Guidelines in and of themselves. They are the Association’s attempt to give property owners guidance, by way of detailed examples and explanation, on the criteria used by the Art Jury and Board in reviewing proposed improvements and exercising their broad discretion under the Covenant. The Board’s desire to give property owners more concrete examples of how the Art Jury is likely to exercise its broad discretion is entirely legitimate and fair, even though the Guidelines are not binding restrictions. That Dolan-King lacked notice of the Guidelines does not affect their reasonableness, but may influence our determination of whether the Board fairly and reasonably relied upon them to deny DolanKing’s fence application, which we address below.

III. Validity of the Art Jury and Board’s Exercise of Discretion in Denying Dolan-King’s Applications

The Association contends the court erred by failing to exercise deference to the Board’s decisionmaking authority under Ixunden, supra, 21 Cal.4th at page 265 and in substituting its own judgment based upon its own evaluation of Dolan-King’s applications, including its conclusion DolanKing’s room additions should have been approved because they were not “aesthetically displeasing.” According to the Association, as long as the record demonstrates a good faith and rational effort by the Board to further the purpose of the development, the court must uphold its decision. DolanKing, on the other hand, argues the Board’s decisions are not entitled to deference under Lamden because the record shows they were made without reasonable investigation, in bad faith, and in disregard of the best interests of the community association and its members.

Applying those standards here, it is clear that while the Covenant’s grant of discretionary decisionmaking authority to the Board and Art Jury is broad, it is not unbridled. Lamden' s rule of conditional judicial deference places limits upon how the Art Jury and Board may exercise their discretion in approving or rejecting improvement plans based on their subjective aesthetic judgment. Under those standards, where the record indicates the Art Jury and Board acted within the authority granted to it by the Covenant, pursuant to a reasonable investigation, in the best interests of the community and not in an arbitrary manner, we will respect and uphold their decisions. Having sought a declaration that the Art Jury and Board imposed restrictions unreasonably and arbitrarily, it was Dolan-King’s burden at trial to make that showing before the trial court. (Merkley v. Merkley (1939) 12 Cal.2d 543 , 547 [ 86 P.2d 89 ] [the plaintiff in a declaratory relief action has the burden to show the conditions exist that will justify the court in exercising its discretion to grant the relief sought].)

A. The Room Addition Proposal

Exercising its right to ensure a “uniform and reasonably high standard of artistic result and attractiveness” under paragraph 46 of the Covenant, the

B. The Fence Proposal

The court reached the following conclusions regarding Dolan-King’s fence application: It found the parties did not dispute Dolan-King’s home was of “Spanish Colonial Revival,” which was an acceptable type of type I architecture under the Covenant. It noted the Covenant was silent on the type of perimeter fence appropriate for the type I architectural district, but drew an inference that the Covenant required such a fence be consistent with the Santa Barbara/Monterey/Spanish Colonial Revival type of architecture. The court ruled that, from an aesthetic standpoint, the fence should be compatible with the architectural style of Dolan-King’s home and other existing fences. Moreover, the court ruled there were inconsistencies between the Covenant’s requirements and the Guidelines, but noted the parties agreed the Guidelines were not restrictive covenants and concluded the Covenant’s provisions controlled. It acknowledged Dolan-King’s architect’s testimony that her proposed fence design was beautiful from an artistic standpoint, and “consistent with the Spanish Colonial Revival type architecture required” by the Covenant. The architect testified the pasture-rail type fence, on the other hand, was inconsistent with the Covenant. Based upon these findings and conclusions, the court declared Dolan-King’s fence application should have been approved.

The court’s ruling was based upon an overly narrow interpretation of both the Covenant’s grant of authority to the Art Jury and Board and its scope of permissible architectural types for improvements in Rancho Santa Fe. As we have explained, the Art Jury and Board acted well within their power to render subjective, aesthetic judgments about Dolan-King’s fence design. The Art Jury had the discretion to base its decision on a finding that a particular improvement lacked “harmony” with the subject property and its surrounding neighborhood. The court found the Guidelines inconsistent with the Covenant’s provisions relating to architectural type, specifically, the court

The relevant inquiry, whether the Art Jury and Board properly exercised their broad discretion, was not directly addressed by the court. The court’s findings and conclusions did not establish that either the Art Jury or Board acted arbitrarily, without reasonable investigation or in bad faith in denying Dolan-King’s fence application. For example, the court made no finding as to the “rural character” or predominance of fence type within Dolan-King’s immediate neighborhood. It did not determine whether other similarly designed homes had pasture-rail fences, or fences with design aspects similar to those proposed by Dolan-King. It did not find that other homes having wrought iron or stucco fences were in neighborhoods with predominantly pasture-rail type fences.

Nor could the court have made these findings on the record before it. At trial, the president of the Board testified that nearly all of the fencing in Dolan-King’s neighborhood was pasture-rail-type fencing. A member of the Art Jury explained that one of the bases for the Art Jury’s denial of her fence was that its composition, namely the combination of wrought iron and pilasters, was “too urban” and too formal in relation to the character of the neighborhood. She recalled the type of fences in Dolan-King’s neighborhood was white pasture-rail, and there were no other fences with pilasters and wrought iron in the neighborhood. Dolan-King’s architect conceded there was “quite a bit” of pasture-rail fencing in Rancho Santa Fe, and that style of fencing was consistent with the California ranch style of architecture as well as the Rancho Santa Fe community. While Dolan-King demonstrated homes in Rancho Santa Fe having a mix of fences and walls ranging from solid stucco, wrought iron rail, combined brick and wrought iron, and layered