Dalton v. Tahoe Beach & Ski Club Owners Assn

Filed 3/17/06 Dalton v. Tahoe Beach & Ski Club Owners Assn. CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Lisa Guy‑Schall, Judge. Affirmed.

Gonzalo and Charito Dalton (the Daltons) appeal the trial court's judgment sustaining the demurrer of Tahoe Beach and Ski Club Owners Association^[1] (the Association), Continental Central Credit, Inc. (Continental) and Vacation Resorts International, Inc. (Vacation Resorts) (collectively, respondents) to the third amended complaint. The Daltons also challenge the trial court's award of attorney fees to respondents. For the reasons set forth below, we affirm.^[2]

I

FACTUAL AND PROCEDURAL BACKGROUND

In September 1997 the Daltons entered into a contract (the time-share contract) with Sunterra Corporation (Sunterra) for a time-share interest in the Tahoe Beach & Ski Club in South Lake Tahoe, California (the resort). According to the Daltons, they exercised their right to rescind the time-share contract within three days of entering into it. Sunterra is not a party to this action.^[3]

The Association is the homeowners association at the resort. Some of the Daltons' claims in this action depend on whether they are in privity of contract with the Association. Although the Daltons broadly allege that they entered into "a contractual obligation with [the Association] to pay homeowner's assessments, maintenance fees, interest and real estate taxes pursuant to the covenants, conditions, and restrictions," they do not claim they signed an agreement with the Association. Instead, they allege that "[p]rivity exists" with the Association "because the [resort's covenants, conditions and restrictions] are enforceable by [the Association]." The Daltons allege they were provided with "a schedule to pay quarterly association dues" in a "separate, pre‑printed supplement" to the time-share contract. According to the Daltons, this supplement also included a "promise to pay 'any related costs' of collection" for the association dues.

The Daltons allege that although they rescinded the time-share contract, the management company for the resort, respondent Vacation Resorts, hired respondent Continental to collect homeowners association assessments from them. The Daltons allege that they made seven payments of homeowners association assessments, totaling $1,028.^[4] The trial court took judicial notice of cancelled checks showing that these payments were made between February 2, 1998, and April 6, 1999.^[5]

Throughout their pleadings, the Daltons vaguely refer to a 40 percent collection fee imposed in connection with the effort to collect the homeowner association assessments, but they do not plead that they ever paid such a fee.

The Daltons brought their lawsuit as a proposed class action, alleging that other members of the class who purchased time shares from Sunterra were pursued for collection of homeowner association assessments after rescinding their contracts, and that these purchasers, as well as other class members targeted by Continental's debt collection efforts, were charged inflated collection fees.^[6]

The third amended complaint, which the Daltons filed after the trial court twice sustained demurrers to previous versions of the pleadings with leave to amend, asserts two factually inconsistent theories. First, the Daltons allege that respondents unlawfully demanded homeowners assessments even though the time-share contract was rescinded. Second, the Daltons allege that if, on the other hand, the time-share contract was not rescinded, respondents breached contractual and fiduciary duties by unlawfully demanding unreasonably high collection fees.^[7] The Daltons allege these theories in four separate causes of action.

The first cause of action is for breach of statutory cancellation rights in violation of former Business and Professions Code section 11024, which (before it was repealed and recodified as Bus. & Prof. Code, § 11238 (Stats. 2004, ch. 697, §§ 13, 14, pp. 4098, 4118-4119)) mandated a three-day rescission period for time-share real estate purchases.^[8] The Daltons allege that by demanding the payment of homeowners association assessments after the time-share contract was rescinded, respondents failed to honor these statutory cancellation rights.

The second cause of action alleges breach of contract. It alleges (1) that the Daltons entered into a contractual obligation with the Association by way of the supplement to the time-share contract with Sunterra, (2) that there was an implied covenant of good faith and fair dealing in the contract, and (3) that respondents breached that covenant by imposing an unconscionable collection fee.

The third cause of action, although labeled "negligence," is substantively a claim for breach of fiduciary duty (the negligence/breach of fiduciary duty claim), alleging that "as a homeowner's association, [the Association] owes a fiduciary duty of due care" to the Daltons, which it breached by attempting to collect homeowners association assessments when it knew, or should have known, that the time-share contract was terminated.

The fourth cause of action is for violation of Business and Professions Code section 17200 et seq. (UCL claim) and alleges that respondents committed unlawful business practices by, among other things, assessing unconscionable collection fees, ignoring statutory cancellation rights and violating the federal Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.).

Respondents demurred to the third amended complaint. The trial court sustained the demurrer without leave to amend. The trial court held that the Daltons could not maintain a claim for breach of statutory cancellation rights against respondents (first cause of action) because the Daltons had not entered into the time-share contract with respondents, but rather with Sunterra. Similarly, the trial court rejected the breach of contract claim (second cause of action) because the Daltons had not sufficiently pled the existence of a contract. The trial court held that both the negligence/breach of fiduciary duty claim (third cause of action) and the UCL claim (fourth cause of action) both were time-barred under the applicable four-year statute of limitations because the Daltons made their last payment in April 1999, more than four years before they filed their complaint in June 2003. The trial court rejected the negligence/breach of fiduciary duty claim on the further ground that the Daltons had not identified any injury caused by the alleged breach, and it rejected the UCL claim on the further ground that the Daltons had not pled facts sufficient to establish any predicate unlawful or unfair acts.

Respondents applied for, and were awarded, attorney fees in the amount of $21,487.50, as reflected by the final judgment.^[9]

The Daltons appeal the judgment entered on the demurrer and the attorney fees award.

II

DISCUSSION

A

Standard of Review

We conduct a de novo review of the trial court's ruling sustaining the demurrer. (McGettigan v. Bay Area Rapid Transit Dist. (1997) 57 Cal.App.4th 1011, 1016.) We determine whether the facts pled state a cause of action, accepting as true all facts that may be inferred from those expressly alleged. (Ibid.) Further, when a demurrer is sustained without leave to amend, we review the decision to deny leave to amend to determine "whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion" in denying leave to amend. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; see also Mosley v. San Bernardino City Unified School Dist. (2005) 134 Cal.App.4th 1260, 1263.) The burden of proving a reasonable possibility of curing the defect "is squarely on the plaintiff." (Blank, at p. 318.)

In conducting a de novo review of whether the facts pled in the complaint state a claim, we are limited by the principle that "[i]ssues not raised in an appellant's brief are deemed waived or abandoned." (Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6.) " 'This court is not required to discuss or consider points which are not argued or which are not supported by citation to authorities or the record.' " (Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.)

B

The Daltons Fail to State a Claim in the First and Second Causes of Action

Turning to the substance of the Daltons' appeal, we first address the causes of action for breach of contract and breach of statutory cancellation rights.

The trial court concluded that the existence of a contract is required for a breach of contract claim and a claim for breach of statutory cancellation rights. We agree. "[T]he elements of the cause of action are the existence of the contract, performance by the plaintiff or excuse for nonperformance, breach by the defendant and damages." (First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731, 745, italics added.) Similarly, the right to rescind a time-share purchase agreement under former Business and Professions Code section 11024 applied to "the right to rescind any contract" resulting from the acceptance of an offer to purchase a time-share interest. (Italics added.) As we will explain, the Daltons have not pled that they had a contractual relationship with respondents, and thus the Daltons have failed to state a claim for breach of contract or breach of statutory cancellation rights.

Our review of the third amended complaint reveals that there was no contract executed by the Daltons and respondents. Instead, the Daltons allege that they signed an agreement only with defendant Sunterra. Attempting to circumvent this problem, the Daltons state in their third amended complaint that "[p]rivity exists" with the Association "because the [resort's covenants, conditions and restrictions] are enforceable by [the Association]." The Daltons echo this theory in their appellate briefing by arguing that "[p]rivity exists between plaintiffs and defendants by virtue of the [resort's covenants, conditions and restrictions]," but they do not cite any authority in support of their argument.

We reject the Daltons' argument that the resort's covenants, conditions and restrictions create a contractual relationship between the Daltons and respondents. A homeowners association's ability to enforce covenants, conditions and restrictions is based on real property law, not contract. The covenants, conditions and restrictions in a common interest development are "enforceable equitable servitudes" that may be enforced by the association that manages the common interest development. (Civ. Code, § 1354; see also Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 373 [explaining that ownership in a common interest development ordinarily "entails mandatory membership in an owners association"].) Thus, any relationship that the Daltons had with the Association, including the obligation to pay homeowners association assessments, was based on the operation of real property law, which enforces such obligation as an equitable servitude rather than being based on the existence of a contract between the Daltons and the Association.^[10]

C

The Statute of Limitations Bars the Third and Fourth Causes of Action

We next address the negligence/breach of fiduciary duty claim and the UCL claim. As we will explain, we conclude that both claims are barred by the statute of limitations.

The trial court correctly identified a four-year limitations period for the UCL claim and negligence/breach of fiduciary duty claim. "[W]here a cause of action is based on a defendant's breach of its fiduciary duties, the four-year catchall statute set forth in Code of Civil Procedure section 343 applies."^[11] (David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 893.) Similarly, a UCL claim is subject to a four-year limitations period pursuant to Business and Professions Code section 17208, which states that "[a]ny action to enforce any cause of action under this chapter shall be commenced within four years after the cause of action accrued. . . ." (See also Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178 [applying four-year limitations period].)

A cause of action accrues when "all essential elements are present and a claim becomes legally actionable." (Glue-Fold, Inc. v. Slautterback Corp. (2000) 82 Cal.App.4th 1018, 1029 (Glue-Fold).)^[12] Here, both the UCL claim and the negligence/breach of fiduciary duty claim focus on the harm allegedly suffered by the Daltons when respondents demanded payments from them after the time-share contract was rescinded. The Daltons made payments in response to such demands between February 1998 and April 1999. Thus, all of the elements of both causes of action were present by February 1998 (and at the latest by April 1999), which was more than four years before this action was filed in June 2003. Accordingly, both the UCL claim and the negligence/breach of fiduciary duty claim are barred by the statute of limitations.^[13]

The Daltons argue that the statute of limitations should not run from the date of their payments in 1998 and 1999, but rather from a date in 2002 when respondents purportedly again began demanding payment.^[14] Although the Daltons argue in their appellate briefing that respondents renewed their collection efforts in 2002, the third amended complaint does not so allege, nor does any other evidence in the record support such an inference.^[15] As a court must look only to the face of the complaint and any other judicially noticed evidence to determine if a claim is barred by the statute of limitations (Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th 344, 350), we do not consider any argument based on the assertion that respondents renewed their payment demands in 2002. Instead we analyze the statute of limitations issue based on the facts alleged in the third amended complaint and judicially noticed by the trial court, and doing so, we have concluded that both the UCL claim and negligence/breach of fiduciary duty claim are time-barred.^[16]

D

The Trial Court Properly Denied Leave to Amend

The Daltons argue that the trial court abused its discretion by sustaining the demurrer without granting leave to amend. We reject this argument. First, although it is the Daltons' burden to explain how they could amend to cure the defects in their pleadings, they do not explain how they could amend their complaint to overcome the statute of limitations bar or to plead the existence of a contract. "A demurrer is properly sustained without leave to amend where the pleading discloses on its face that the action is barred by the statute of limitations" (Honig v. San Francisco Planning Dept. (2005) 127 Cal.App.4th 520, 524) and where plaintiff does explain how it could amend its pleadings to cure other defects. (See Reynolds v. Bement (2005) 36 Cal.4th 1075, 1091 [burden of proving that the complaint's defects can be cured rests squarely on plaintiff].) Second, we note that trial court twice gave the Daltons leave to amend, but they were nevertheless unable to remedy the defects in their pleadings. " 'Leave to amend is properly denied . . . where it is probable from the nature of the defects and previous unsuccessful attempts to plead that the plaintiffs cannot state a cause of action [citation].' " (Titus v. Canyon Lake Property Owners Assn. (2004) 118 Cal.App.4th 906, 917.) Here, the Daltons' two previous unsuccessful attempts to state a claim provided an ample basis for the trial court's decision to sustain the demurrer to the third amended complaint without leave to amend.^[17]

The Daltons suggest on the last page of their reply brief that they should have been given leave to amend to plead a claim for declaratory relief. This argument follows an earlier contradictory statement in the reply brief that the Daltons "do not contend that leave should have been granted nor that amendment was needed." Because "[t]his court will not consider points raised for the first time in a reply brief for the obvious reason that opposing counsel has not been given the opportunity to address those points" (REO Broadcasting, supra, 69 Cal.App.4th at p. 500), we do not consider whether the trial court should have given the Daltons leave to plead a claim for declaratory relief, as it is an issue raised for the first time in the reply brief.

E

The Daltons Failed to Provide an Adequate Record Regarding Their

Challenge to the Attorney Fees Award

The Daltons argue that the trial court erred in awarding attorney fees to respondents because such an award, presumably based on the existence of a contractual attorney fees provision, was inconsistent with the trial court's conclusion that no contractual relationship existed between the Daltons and respondents.

Concerning the attorney fees award, the Daltons have not supplied us with any briefing from the trial court, any hearing transcript or any ruling by the trial court. "Where the party fails to furnish an adequate record of the challenged proceedings, his claim on appeal must be resolved against him." (Rancho Santa Fe Assn. v. Dolan-King (2004) 115 Cal.App.4th 28, 46 [challenge to attorney fees award resolved against appellant that failed to include the moving and opposing papers on the fee matter]; see also Estrada v. Ramirez (1999) 71 Cal.App.4th 618, 620, fn. 1 ["It is the burden of appellant to provide an accurate record on appeal to demonstrate error. Failure to do so precludes an adequate review and results in affirmance of the trial court's determination"].) This rule exists because " ' "[a] judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown." ' " (Gee v. American Realty & Construction, Inc. (2002) 99 Cal.App.4th 1412, 1416, fn. 9.) "We should not have to point out to counsel who should be well-versed in appellate procedure that the appellant has the burden of affirmatively demonstrating error by providing an adequate record." (Mountain Lion Coalition v. Fish & Game Com. (1989) 214 Cal.App.3d 1043, 1051.)

Here, because the record does not contain the materials necessary for us to review the Daltons' contention that the trial court improperly awarded attorney fees, we resolve the claim against the Daltons and reject their challenge to the attorney fees award.

DISPOSITION

The judgment is affirmed.

IRION, J.

WE CONCUR:

McCONNELL, P. J.

NARES, J.

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^[1] It is unclear from the record whether the correct name of the entity is the Tahoe Beach and Ski Club Owners Association or the Tahoe Beach & Ski Club Association.

^[2] The Daltons filed a request that we take judicial notice of proposed changes to the regulations of the California Department of Real Estate. We deny the request because the regulations are not relevant to any issue currently before us. (See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6 [declining to take judicial notice of materials that are not "necessary, helpful, or relevant"].)

^[3] According to the Daltons, Sunterra filed a bankruptcy court petition. The Daltons state that "[b]ut for the bankruptcy filing, Sunterra would be named as a Defendant in this lawsuit."

^[4] Respondents claim that the payments were mortgage loan payments for the Daltons' time-share interest. However, as this action comes to us on an appeal from a demurrer, we present the facts as they are pled in the Daltons' complaint.

^[5] We do not address the propriety of the trial court's decision to take judicial notice of the cancelled checks, as the Daltons have not raised that issue on appeal, nor have they provided us with any information in the record showing that they opposed the request in the trial court. (See Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816, 833 [deciding that the court need not reach the question of whether judicial notice was proper because appellants did not challenge it on appeal].)

^[6] The proposed class is broadly defined to include "[a]ll debtors against whom Continental [and another dismissed defendant] has assessed and/or collected a percentage collection fee from during the period commencing in January 1999 through the date of trial" and "[a]ll California residents who purchased time-share interests and related services from Sunterra or its subsidiaries, and either gave timely rescission notices with respect to such time-share interests and who paid on their time-share loans or homeowners assessments or fees or whose debts were not validated pursuant to law."

^[7] As the trial court observed, these two theories are factually contradictory because one of them depends on an allegation that the Daltons rescinded the time-share contract, but the other depends on an allegation that the time-share contract remained in force and gave rise to various obligations on the part of respondents.

^[8] Business and Professions Code section 11238 now provides for a seven-day rescission period.

^[9] The final judgment is not part of the clerk's transcript, but the Daltons provided it to us in response to our request after the notice of appeal was filed.

^[10] Under the heading "There is Serious Doubt That Plaintiffs Were Appropriately Charged Any Fees," the Daltons present a confusing collection of disjointed arguments that do not have any obvious relationship to any relevant issue. For example, the Daltons address the issue of whether "Sunterra is an indispensable and necessary party." We reject all of the arguments presented under this heading as irrelevant to the issues before us and because the heading itself does not pertain to any relevant issue. (See Alameida v. State Personnel Bd. (2004) 120 Cal.App.4th 46, 59 ["We may disregard arguments not properly presented under appropriate headings"].) Further, we note with disapproval that the arguments appear to be copied without further editing from briefs filed in the trial court, as they reference previous rulings of "this court," plainly referring to previous rulings of the trial court. And further, "[b]ecause of the lack of organization and the improper format of [the Daltons'] briefs, arguments in addition to those we have discussed may have been alluded to or raised in other than the discussion section. To that extent or to the extent [the Daltons] mentioned other issues without fully or properly briefing them, they are waived." (Evans v. Centerstone Development Co. (2005) 134 Cal.App.4th 151, 165.)

^[11] Although labeled a claim for negligence, we analyze whether the third cause of action is barred by the statute of limitations by treating it as a claim for breach of fiduciary duty, as that is the substance of the claim. "[T]he applicable statute of limitations is determined by -- as variously phrased -- the nature of the right sued upon, the primary interest affected by the defendant's wrongful conduct, or the gravamen of the action." (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1158-1159.)

^[12] The common law discovery rule, which applies to a claim for breach of fiduciary duty, "postpones accrual until a plaintiff discovers or has reason to discover the cause of action." (Glue-Fold, supra, 82 Cal.App.4th at p. 1029; Royal Thrift & Loan Co. v. County Escrow, Inc. (2004) 123 Cal.App.4th 24, 43.) The delayed discovery rule does not apply to claims brought under Business and Professions Code section 17200. (Snapp & Associates Ins. Services, Inc. v. Robertson (2002) 96 Cal.App.4th 884, 891 ["The 'discovery rule,' which delays accrual of certain causes of action until the plaintiff has actual or constructive knowledge of facts giving rise to the claim, does not apply to unfair competition actions"].) To the extent the delayed discovery rule applies here, the Daltons had reason to discover their cause of action as soon as they made their first payment in 1998.

^[13] For the first time in their reply brief, the Daltons briefly argue that "the trial court should not have dismissed Plaintiffs' cause of action for violation of the California Fair Debt Collection Practices Act," which was pled in a previous version of the complaint, but not in the third amended complaint. We do not consider the Daltons' challenge to the trial court's ruling on the Fair Debt Collection Practices Act as an independent cause of action because it is raised for the first time in the reply brief. (REO Broadcasting Consultants v. Martin (1999) 69 Cal.App.4th 489, 500 (REO Broadcasting).)

^[14] Although the Daltons cite no authority for this argument in their opening brief, in their reply brief they cite case law and argue that the doctrine of equitable tolling should apply because respondents renewed their collection efforts in 2002.

^[15] We note that even in their briefing, the Daltons do not directly state that they, rather than members of the proposed class, were the subject of these renewed demands in 2002.

^[16] The Daltons address whether they have standing to pursue their UCL claim, presumably responding to an argument made by respondents in their trial court briefing. However, the trial court did not sustain the demurrer to the UCL claim on the ground that the Daltons lacked standing. Thus, the Daltons' argument is out of place in this appeal, and we do not consider it because it is not relevant to the issue of whether the trial court erred in sustaining the demurrer to the UCL claim.

^[17] The Daltons extensively discuss Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319 in support of the argument that they should have been given leave to amend, arguing that they "must be given leave to amend their class allegations." (Italics added.) The Daltons' argument is misplaced because the demurrer did not challenge the sufficiency of their class allegations. Instead, it challenged the sufficiency of the Daltons' case on grounds such as the bar of the statute of limitations and the failure to plead the existence of a contract. We note also that Sav-On is inapplicable for the further reason that it addresses whether a court should certify a class action, not whether it should grant leave to amend after sustaining a demurrer. (Sav-On, supra, 34 Cal.4th 319.)