Rivera v. Henricks

Filed 1/31/07  Rivera v. Henricks CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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  This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

                        Appeal from a judgment of the Superior Court of Orange County, Gregory  Munoz, Judge.  Affirmed.

                        Brian Shumake for Plaintiff and Appellant.

                        The Duringer Law Group, Stephen C. Duringer and Kirk D. Beatty for Defendants and Respondents.

*                *                *

Introduction

Appellant Mark Rivera is a homeowner and shareholder of the Tustin Woods Homeowners Association (the HOA), a nonprofit corporation.  Pursuant to Civil Code section 1363, subdivision (a), the HOA manages a common interest development consisting of five units.  Respondents Lynn E. Henricks and Jill Henricks (the Henricks) were members of the HOA board of directors and owned two of the five units in the common interest development. 

When Rivera suspected the Henricks were not paying their association fees, he demanded an audit of the HOA finances and requested the Henricks produce the HOA financial records for his inspection.  The Henricks did not meet Rivera's demands, so he filed a lawsuit against the HOA and the Henricks asserting derivative causes of action for an accounting, negligence, and breach of fiduciary duty.  What followed was a series of demurrers and amended complaints, culminating in a third amended complaint alleging individual causes of action against the Henricks alone for declaratory relief, negligence, and breach of fiduciary duty. 

The trial court sustained the Henricks' demurrers to the third amended complaint without leave to amend.  We affirm as to the first cause of action (declaratory relief) because a claim based on Civil Code section 1365.2 can be made only against the HOA.  We affirm as to the second cause of action (negligence) and third cause of action (breach of fiduciary duty) because they alleged only derivative claims, and Rivera failed to comply with Corporations Code section 7710, subdivision (b)(2).[1]

Facts and Proceedings in the Trial Court

As of July 2004, the Henricks held two of the four seats on the HOA board of directors.  Jill Henricks was the HOA treasurer, and Lynn Henricks was the HOA vice‑ president.  The Henricks reside in Incline Village, Nevada and, according to Rivera, kept the HOA books and records there.  Rivera contended the Henricks had never produced a financial accounting for the HOA and had rebuffed his prior efforts to review the HOA records.

Rivera suspected the Henricks were not paying their association fees and were â€