Authors: Shani O. Zakay, Esq. and Rachael Harrington
David and Patricia Valentine lived in a two story house situated in the Canyon Hills Community Association. In 2006, they decided to rebuild their home and sought permission from the Association to tear down their current house and rebuild a new one. After obtaining the requisite awareness forms from neighbors and approval from the Association, the Valentines, in 2009, abandoned their original construction plans in exchange for a new, larger, building plan. While the Valentines sought approval from the Association for the new plans, no awareness forms were obtained from the neighbors this time. When construction began, neighbor Jacklyn Harper was not pleased. Harper filed a suit claiming the Association and the Valentines did not follow the proper procedures as outlined in the architectural application process and the CC&Rs.
The trial court decided Harper had to prove, and did not prove, that the Association failed to act in good faith and in the best interest of the Association. The Court of Appeals, however, found the trial court was wrong. It held that the Association, not Harper, had the burden of proving it acted in good faith. Harper v. Canyon Hills Community Association, 2014 WL 4079930 (2014).
When the governing documents of a common interest development allow the Association to enforce the CC&Rs and other rules and regulations, the Association has a duty to do so in a manner that is fair and reasonable, not arbitrary or capricious. When an Association acts fairly and reasonably, makes reasonable investigations, and acts in good faith and in the best interest of the Association, courts are to give the Board of Directors “judicial deference;” that is, courts are to presume the Board of Directors did act under its authority and in the best interest of the Association. When given judicial deference, the Association, in general, will be the prevailing party in lawsuit.
An issue arises when an Association is sued for failure to act in accordance with the governing documents. In this case, the Association, as the defendant, raised the defense that its actions were in good faith and for the best interest of the Association. Harper, 2014 WL 4 (internal cites omitted).
The Court of Appeal in Harper put the burden of proof on the Association. It held that it is the Association that must prove it acted in good faith, not the owner, who is claiming the Association breached its duty to the members. Although this case is not published, it refines the meaning of the judicial deference rule. The court will not presume from the onset that the Board of Directors of an Association acted in good faith; rather, the Association will have to prove it acted in good faith in order to be given judicial deference. As such, the Association bears the burden of proof. Harper, 2014 WL 4-5, 8.
The party that has the burden of proof has a more difficult role in trial as it must provide evidence to support its assertions, which generally makes it more difficult for that party to succeed. It is, therefore, important the Association act reasonably, make reasonable investigation into matters, properly maintain its records, and act in accordance with the governing documents.