By Karen St. Onge, Esq.
This article first appeared in our Fall 2022 Communicator Magazine.
Although attorneys advise homeowner associations and community managers in preparation for appearing in small claims court and assist with appeals, more often community managers and board members go it alone since the amount in controversy does not seem to warrant the expense. (CCP §116.530, 116.540, Civil Code §4100). Here is what senior community managers in the Bay Area and Central Valley had to say about their experiences in small claims court.
According to a manager who has appeared hundreds of times in small claims court, the first sign that the association is going to get sued by a member of the association is a request for association records. The first thing she does is open a file and starts tracking everything that is requested and produced, in detail, and document every interaction with that member.
When it is the association initiating a suit, which includes injunctive relief, the board should determine if filing in small claims court is sufficient or if the association should file in Superior Court where there are seasoned judges and more appeal rights. (CCP §116.710.) Filing in small claims court has been a crap shoot, one manager reported. She recounted a case in Contra Costa County where an owner of a single-family home stopped paying assessments (but kept the balance below the threshold for nonjudicial foreclosure), allowed the residence to fall into disrepair and painted the house the wrong color. The tenants repaired cars in the driveway and street until late at night with the help of bright lights, in violation of the CC&Rs. Although the judge awarded the delinquent assessments, the judge did not award attorney’s fees, costs, or fines. The judge also did not order the tenants to stop working on cars in the driveway and street. The judge concluded that the association was interfering with the tenants’ hobby of car repair. Looking back, the manager wishes the association had filed in superior court.
Although the dollar amount at risk is no more than $10,000 if an individual sues the association, or $5,000, if the association or an entity files the suit, the cost of legal counsel may still be warranted. Some experienced managers reported that if the facts were straight-forward they did not need to confer with legal counsel, but other managers felt it was imperative in order to protect themselves from board scrutiny if the court ruled against them. Some managers include a requirement in their management contract that legal counsel be provided if they want the manager to appear on behalf of the association in small claims court.
One manager reported that in a case filed by a member against the association and a towing company, the manager regretted relying on the towing company’s expertise and not consulting with legal counsel. The member’s oversized and unregistered vehicle was towed six times. The towing company was confident that they had done everything required by law, but the judge disagreed, and believed the member when he claimed that the requisite towing sign had fallen down. Even though it was the towing company and not the association who had to pay the owner, a ruling against an association can have negative effects on the association, such as eroding members’ confidence in its ability to enforce the governing documents, chilling the board’s willingness to take violators to court in the future, and negatively affecting a board’s morale and motivation to continue volunteering. Even though a defendant who loses in small claims court may have the case reheard in superior court, the superior court’s decision is not appealable, and sometimes there is more at stake than money.
Another manager reported how defeated she felt after one of her first times appearing in small claims court. She was in the Oakland courthouse (Alameda County) to defend the association. A member filed a lawsuit to resolve a dispute over maintenance responsibilities and was asking the court to order the association to pay for a maintenance project. It was clear that the judge was not familiar with associations or CC&Rs, but the manager provided the judge with copies and left the hearing feeling good. Then the order came in the mail stating that the association had to pay the owner for the maintenance project. The judge didn’t provide any reasoning. The manager was left feeling defeated even though she did everything she could to explain the association’s position. "As much as you prepare and everything is clear-cut, judges don’t always grasp homeowner associations," she said. From then on, she began preparing herself and her boards, informing them in some cases they are more likely to lose than prevail, even if they do everything right.
There is a good chance that a community manager will know more about the Davis-Stirling Act than the judge hearing the case, especially if it is a judge pro tem (an attorney who volunteers on the bench from time to time). Community association law is a niche area of the law. Be prepared to educate the judge by providing copies of the relevant portions of the Davis-Stirling Act with key language highlighted, such the Civil Code sections setting forth the board’s duties and authority.
Managers reported that they had better success when at least one member of the board of directors attended the hearing, and the more witnesses the better. Judges seemed to be more receptive to hearing from the volunteer homeowners who serve on the board than just the community manager.
A manager from the Central Valley gave credit for his successes in small claims court in Stanislaus and Calaveras Counties to his client’s well-written Declaration of CC&Rs, especially clear and unambiguous maintenance responsibilities.
CC&Rs that were drafted by the developer or are many decades old often contain vague and confusing language about maintenance responsibilities and use restrictions. An association should not expect a small claims judge to interpret vague and confusing language in the CC&Rs; they don’t have the time. If an association wants the best chance of enforcing its CC&Rs, they should ensure they are clear and unambiguous. This is another reason to invest in amended and restated CC&Rs.
Expect to spend your entire day at the courthouse, or at least all morning or afternoon. Managers reported that it is common for judges to leave cases with homeowner associations to the end of the hearing calendar.
Managers found some judges stricter than others about allowing the use of phones, on silent, while waiting for a case to be heard. One judge in Walnut Creek even confiscated cell phones. It will be up to the individual judge whether you can "work" while waiting on your case.
Many courts use a pro tem judge (a temporary judge) instead of a regular judge. A judge pro tem is a lawyer who volunteers from time to time as a substitute for a regular judge. Courts also use small claims commissioners instead of regular judges. Commissioners are paid and hired full time to hear small claims cases. If an association wants its matter heard by a regular judge and not a pro tem judge or commissioner, the association must make a timely objection. (Rules of Court, Rule 2.816(d); Code of Civil Procedure section 170.6). One manager reported that he regretted not objecting to the pro tem judge because, even though he gave the judge a copy of the Davis-Stirling Act, it was clear the judge was not familiar with the statute. Although it will require a return to the courthouse, sometimes it is worth it. Most courts will have a judicial directory available on their website that will identify the judge and/or commission assigned to small claims.
If the association is asked if they want to mediate with one of the small claims court’s mediators prior to the hearing, one manager says that she always agrees, even if she knows it won’t be successful, because she has seen judges hold it against an association if they don’t try to mediate.
Have a document to back up every statement so that when the other side denies the fact, the judge is not faced with a "he said/she said" dilemma, especially when it comes to whether the party received notice. If the association is trying to enforce a rule, be prepared to have not only a copy of the rules, but the board minutes adopting the rule and evidence of how it was distributed to the membership. When seeking a reimbursement assessment, have every receipt, invoice, and photograph of the damage and work performed.
Managers from the following companies shared their time and experiences for this article: Alliance HOA Management, OMNI Community Management, Silvercreek Association Management, RealManage, Bay Area Property Services, Collins Management.
Karen St. Onge practices community association law with Adams Stirling, PLC, serving the San Francisco Bay Area.