Ralph O. Williams III

Resolving Common Internet Development Disputes

By: Ralph O. Williams lll, Michael P. King, Daniel C. Shapiro and Mark J. Rosenbaum

The vast majority of CID disputes involve people in a continuing relationship, so mediation is the dispute-resolution process of choice. Alternative dispute resolution, not a lawsuit, is the first option for home owners living in common-interest developments (i.e., condominiums, town homes and planned communities). Civil Code Section 1363.820 requires that, prior to initiating certain lawsuits, both homeowners' associations and owners must first offer to resolve their disputes through ADR, such as mediation or arbitration. Because the vast majority of CID disputes involve people in a continuing relationship, mediation generally is the dispute-resolution process of choice. Homeowners' associations and individual owners are bound by governing documents, including articles of incorporation, declarations of covenants conditions and restrictions (CC&Rs), by-laws and rules and regulations. Section 1363.820 requires that homeowners' associations and owners must submit disputes "related to the enforcement of the governing documents" to ADR prior to filing a lawsuit solely for declaratory or injunctive relief or such a suit claiming damages less then $5,000. Section 1363.820 authorizes the parties to a CID dispute to choose any ADR process that meets their needs. For example, they could choose mediation or binding or non-binding arbitration, or they could choose first to mediate and, if unsuccessful, then to arbitrate. This procedural flexibility empowers the parties to find a process that will result in an acceptable solution to all. The Party initiating the dispute, prior to filing a lawsuit, must serve on the other party a "Request for Resolution," including the following information and language: a brief description of the dispute, a request that the matter be submitted to ADR and a statement that the party receiving the Request for Resolution must respond within 30 days of receipt or the Request for Resolution will be "deemed rejected." Additionally, a copy of Section 1354 must go with the Request for Resolution. The Request for Resolution must go to the responding party in the same manner as service in a small-claims action as provided in Code of Civil Procedure Section 116.340 (i.e., personal service or substituted service as provided in Code of Civil Procedure Section 415.20(a) or (b). On receipt of a Request for Resolution, the responding party has 30 days in which to either accept or reject the Request. The Request for Resolution is "rejected" in the event the response does not arrive within the 30 day period. If the Request for Resolution is accepted, the parties must complete their ADR process within 90 days of receipt of the acceptance. The parties can stipulate in writing to extend this period. The parties bear the costs of any ADR process equally. If, despite the parties' effort, one party files a lawsuit, the plaintiff must file with the complaint a certificate stating that they completed ADR in compliance with Section 1363.820. The failure to file the certificate is grounds for demurrer (Code of Civil Procedure Section 430.10) or a motion to strike (Code of Civil Procedure Section 435). An ADR completion certificate is not necessary if the plaintiff certifies in writing that the defendant refused ADR, if preliminary or temporary injunctive relief is necessary, if the statute of limitations would have run within the 120 days prior to the filing of the action or if the court finds that dismissal for failure to comply with Section 1363.820 would result in substantial prejudice to one of the parties. Unless consented to by all parties participating in the process, statements made during any ADR process are not admissible as evidence at trial. Section 1535(g). At trial, the court may consider a party's failure to participate in ADR when ruling on a request for attorney fees and costs. After assessment-collection problems, CID disputes fall into three broad categories: architectural controls, including improvements, painting and landscaping; pet problems; and people-to-people interactions, including facilities' use, noise and rudeness. Mediation provides an excellent vehicle to resolve these disputes. It is a non-judgmental forum in which people can share information, clarify communication, negotiate compromises, maintain peaceful relationships and restore order.

Architectural Controls.

The typical architectural-control dispute begins with an owner seeking the homeowners' association's board of directors' permission to build an improvement, such as a patio cover. The board of directors, charged with enforcing the CC&Rs, denies permission, setting the stage for conflict. Alternatively, the owner builds the improvement without permission and then the homeowners' association cites the owner for a violation of the CC&Rs. In these situations the mediator can help the owner understand his or her obligations under the CC&Rs as well as help the board of directors' duty to maintain and improve property in accordance with the CID's overall plan. As a neutral disinterested third party, the mediator should be able to frame options and compromises within the spirit of the CC&Rs.

Pet Issues.

Barking dogs, wandering cats and uncleaned up messes are a constant irritant when people live within close quarters. Because people love their pets, these disputes tend to be highly emotional. A mediator's calming influence and ability to explore feelings outside the strict construction of the technical legal language of the CC&Rs promote resolution of pet-control disputes.

People Interactions.

These disputes center around the use of common-area facilities(i.e., gyms, recreation rooms and parking garages.), noise creation and abatement and sometimes just plain, ordinary rudeness. At base, these conflicts arise from the simple failure to get along and be respectful of the rights of others. Because one neighbor may not communicate effectively with another neighbor in asking him, or her to turn down the stereo, the first neighbor enlists the aid of the homeowners' association to enforce the "quiet enjoyment" provisions of the CC&Rs. The mediation process allows the homeowners' association to extricate itself from what is essentially a failure to communicate and a lack of respect between two individuals. The parties increase the probability for a successful CID mediation when they consider and implement the following strategies:

Location. As a general rule, the mediation should take place at a neutral site within the project. The parties' ability to communicate the extent of the problems improves by being able simply to get up from the table, walk around the project and view the situation. Full copies of the CC&Rs and other governing documents are usually available for review and discussion.

Parties. No mediation will be successful without the presence of the parties necessary to make a decision. This includes an appropriate representative from the homeowners' association and all owners involved in the dispute. This becomes especially critical when the tenant of an off-site owner causes the alleged problem. In most CC&Rs, the owner has an obligation to control the tenant. In the mediation setting, in order to reach an effective agreement by which all parties will abide, both the owner and the tenant must attend the mediation.

Food. Things go better with food. Being angry with someone is hard while breaking bread with them. Wine and cheese might be a little too much, but certainly fruit, bagels or doughnuts and coffee facilitate any interaction.

In the short and long run, ADR processes are less expensive than litigation. In a typical CID dispute, the litigation option generally involves filing a lawsuit and securing provisional relief, such as a temporary restraining order followed by an injunction and, finally a trail involving damages and attorney fees. These disputes generally cost between $5,000 and $25,000. A typical half-day mediation involving representatives of the homeowners' association and the owner costs between $1,000 and $1,500. The financial savings, combined with the opportunity to promote neighbor good will, make the ADR option highly preferable. Section 1363.820, requiring ADR in CID disputes, provides for the best of all worlds, a low-cost way for people to get along.