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CASE LAW -
Statute of Limitations to Enforce CC&Rs Commences
When Demand for Performance Is Made. Cutujian v. Benedict
Hills Estates Association (1996) 41 Cal.App.4th
1379, 49 Cal.Rptr.2d 166 [originally in Guralnick
& Gilliland's Eleventh Annual Legislative Update]
CASE FACTS
In 1988, Eric K. Cutujian purchased a partially improved
residential lot in a common interest development subdivision
governed by the Benedict Hills Estates Association. Between
1976 and 1978, a surface slump occurred on the fill slope
of the partially improved lot. Under the Association's CC&Rs,
the Association had an affirmative duty to maintain, in a
neat and safe condition, the natural and manmade slopes and
corresponding drainage ditches on both the common areas and
on the residential lots. This duty included the "repair and
replacement of landscaping and improvements when necessary
and appropriate."
In April 1988, prior to the close of his escrow on the lot,
Cutujian demanded that the Association repair the damage to
the slope so that he could subsequently commence building
his residence. The Association did not refuse to repair the
slope. However, subsequent to discussions regarding the costs
and feasibility of repairing the slump, Cutujian determined
that the Association was not going to effectuate repairs.
Therefore, he repaired the surface slump at his own cost and
brought action against the Association to recover the costs
of repairing the surface slump on the property.
In his lawsuit, originally filed in 1989 and subsequently
amended a first, second and third time, Cutujian alleged breach
of covenant, negligence and, finally, continuing nuisance.
In 1993, the Association moved for summary judgment, alleging
that Cutujian's action was barred by the four year statute
of limitations for actions on a written instrument (the CC&Rs).
The Superior Court sustained the Association's motion on the
basis that Cutujian did not timely file his action and, thus,
exceeded the statute of limitations. Judgments for dismissal
and attorneys' fees were entered in March 1994 in favor of
the Association as the prevailing party in the action.
Cutujian filed an appeal on several points, the most applicable
point being that his claim for damages was timely filed. The
appellate court found in favor of Cutujian, reversed the lower
court's decision, and sent the case back to the lower court
for further deliberation.
ANALYSIS
The major issue before the court was not which statute of
limitations applied to this case (3 years or 4 years,
depending on the cause of action cited by Cutujian), but,
rather, at what point in time did the statute of limitations
begin to run. Unfortunately, the court found no California
statute or judicial decision directly addressing when the
statute commences for either an action to enforce CC&Rs
or action to enforce a covenant running with the land which
requires the performance of an affirmative act, i.e.,
the duty of the Association to repair the damaged lot. Therefore,
the court relied heavily on a few rulings in similar cases
reviewed by the Montana Supreme Court.
The court found the most reasonable ruling to be that the
statute of limitations to enforce affirmative covenants running
with the land, and, in particular, duties included in a declaration
of CC&Rs, commence when a demand for performance is made.
In reviewing the specifics of the Cutujian case,
the court concluded that the express language contained within
the CC&Rs, referencing the Association's responsibility
to maintain the slope areas and to repair and replace improvements
when "necessary and appropriate", clearly supported the Association's
obligation to do so after Cutujian made his demand.
Furthermore, Cutujian was not barred from his action simply
because the slump occurred 10 to 12 years prior to his purchase
of the lot. On the contrary, the Association's duty to repair
and maintain always existed as a covenant running with the
land. However, the repair was not "necessary and appropriate"
until such time when someone seriously contemplated building
on the lot. Accordingly, Cutujian's purchase of the lot in
1988 and desire to build upon the lot triggered the "necessary
and appropriate" repairs. The Association's failure to facilitate
the necessary slope repairs was a violation of the CC&Rs.
The court disagreed with the Association's argument that
any action was time-barred since damage to the slope occurred
between 1976 and 1978. The court concluded that the statute
of limitations began to run in 1988 when Cutujian demanded
the Association repair the surface slump on his property.
It found that the statute of limitations for an action such
as Cutujian's was four years and commenced with the written
demand to the Association.
As a side note, the court also determined that even if the
statute of limitations did commence between 1976 and 1978,
and did run by 1982, the end result would have been unjust
to Cutujian because during that time the board was a developer-controlled
board. Additionally, one of the developers was the predecessor-in-interest
to the lot purchased by Cutujian. The predecessor had knowledge
of the slump and the need to repair it, but never took action.
The court stated it would have been unfair if Cutujian was
estopped from pursuing his rights under the CC&Rs simply
because of his predecessor's inaction.
CONCLUSION
The fact that Benedict Hills Estates Association's CC&Rs
were recorded in 1976 and the fact that the damage to the
slope occurred some time between 1976 and 1978 were not determining
factors as to when the statute of limitations began to run.
Rather, the determining factors were when Cutujian made his
demand to the Association for performance under the CC&Rs
and when he filed his suit to enforce same. Cutujian made
his demand in 1988 and filed suit in the same year. Thus,
his filing was timely.
*Important Note. This case stands for the proposition
that where an association has an affirmative duty to repair,
created by the CC&Rs, that duty may be a continuing requirement
and the applicable statute of limitations may only begin to
run with the homeowner's demand for the association to repair
the property condition at issue. In other words, associations
may be held responsible for rectifying property conditions
which are more than four years old and a lawsuit may be filed
based upon a written demand by the owner to the association
within the four-year time period from that demand.
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