(PS) Kan v. Verdera Community Assoc.

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 JOHHNY KAN, Case No. 2:22-cv-00348-KJM-JDP (PS) 12 Plaintiff, FINDINGS AND RECOMMENDATIONS 13 v. THAT DEFENDANTS VERDERA COMMUNITY ASSOCIATION AND 14 VERDERA COMMUNITY SHAMUS MCCLURE’S MOTION FOR ASSOCIATION, et al., SUMMARY JUDGMENT BE DENIED 15 Defendants. ECF No. 88 16 OBJECTIONS DUE WITHIN FOURTEEN 17 DAYS 18 19 Plaintiff filed this action against eight defendants—including Verdera Community 20 Association (“Verdera”) and its president, defendant Shamus McClure—alleging claims related to 21 a 2022 foreclosure of his home. Defendants Verdera and McClure (“defendants”) move for 22 summary judgment on plaintiff’s claim for violation of the Davis-Stirling Common Interest Act 23 (“Davis-Stirling Act” or “Act”), the sole claim remaining against them. ECF No. 88. I 24 recommend that defendants’ motion be denied. 25 Background 26 Plaintiff’s first amended complaint alleges that in 2009, he purchased a home in Lincoln, 27 California. ECF No. 29 at 9. The home was subject to Covenants, Conditions, and Restrictions 28 (“CC&Rs”) that required plaintiff to maintain the home and landscaping at community standards 1 and to make monthly payments to Verdera’s homeowners’ association (“HOA”). Id. In 2015, 2 Verdera sued plaintiff in state court to collect unpaid dues, fines, and attorneys’ fees resulting 3 from plaintiff’s purported failure to comply with its CC&Rs. Id. at 11. Plaintiff claims, however, 4 that he paid all monthly dues and that he never received written notices of nonpayment. Id. at 10. 5 In 2019, the state court entered default judgment against plaintiff, id. at 11, and in August 6 2020 it ordered the sale of plaintiff’s home, ECF No. 88-4.1 Verdera subsequently instructed the 7 sheriff’s department to post a notice of sale of the property, and on February 23, 2022, plaintiff’s 8 home was sold. ECF No. 29 at 12. 9 The first amended complaint asserted five claims against Verdera: (1) violation of the Fair 10 Debt Collection Practices Act (“FDCPA”); (2) violation of California Code of Civil Procedure 11 section 704.780(b); (3) violation of California Business and Professional Code section 17200 12 against; (4) violation of California’s Davis-Stirling Act; and (5) elder abuse. Id. at 14-21. 13 Plaintiff’s section 704.780(b) and Davis-Stirling Act claims were also brought against McClure. 14 Defendants moved to dismiss plaintiff’s claims, ECF No. 35, and the court granted in part and 15 denied in part defendants’ motion. Specifically, the court denied the motion as to plaintiff’s 16 Davis-Stirling Act claim and granted it as to the remaining claims.2 ECF No. 52. 17 Defendants now move for summary judgment on plaintiff’s Davis-Stirling Act claim, the 18 only claim that remains against them. ECF No. 88. 19 Legal Standards 20 Summary judgment is appropriate where there is “no genuine dispute as to any material 21 fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Washington 22 23 1 Defendants ask that the court take judicial notice of state court records, a Notice of Sheriff’s Sale of Real Property, and this court’s April 12, 2023 order. The request is granted as to 24 the state court records and the Notice of Sheriff’s Sale of Real Property, which are subject to judicial notice. See Fed. R. Evid. 201(b); Miles v. California, 320 F.3d 986, 987 n.1 (9th Cir. 25 2003) (taking judicial notice of state court records); Mir v. Little Co. of Mary Hosp., 844 F.2d 26 646, 649 (9th Cir. 1988) (“In addition to the complaint, it is proper for the district court to take judicial notice of matters of public record outside the pleadings and consider them for purposes of 27 the motion to dismiss.”) (internal quotations omitted). The request is denied as to the April 12, 2023 order, which is already filed in this case. 28 2 Plaintiff was granted leave to amend but did not file a second amended complaint. 1 Mutual Inc. v. United States, 636 F.3d 1207, 1216 (9th Cir. 2011). An issue of fact is genuine 2 only if there is sufficient evidence for a reasonable fact finder to find for the non-moving party, 3 while a fact is material if it “might affect the outcome of the suit under the governing law.” 4 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Wool v. Tandem Computers, Inc., 818 5 F.2d 1422, 1436 (9th Cir. 1987). 6 Rule 56 allows a court to grant summary adjudication, also known as partial summary 7 judgment, when there is no genuine issue of material fact as to a claim or a portion of that claim. 8 See Fed. R. Civ. P. 56(a); Lies v. Farrell Lines, Inc., 641 F.2d 765, 769 n.3 (9th Cir. 1981) (“Rule 9 56 authorizes a summary adjudication that will often fall short of a final determination, even of a 10 single claim . . . .”) (internal quotation marks and citation omitted). The standards that apply on a 11 motion for summary judgment and a motion for summary adjudication are the same. See Fed. R. 12 Civ. P. 56 (a), (c); Mora v. Chem-Tronics, 16 F. Supp. 2d 1192, 1200 (S.D. Cal. 1998). 13 Each party’s position must be supported by (1) citations to particular portions of materials 14 in the record, including but not limited to depositions, documents, declarations, or discovery; or 15 (2) argument showing that the materials cited do not establish the presence or absence of a 16 genuine factual dispute or that the opposing party cannot produce admissible evidence to support 17 its position. See Fed. R. Civ. P. 56(c)(1) (quotation marks omitted). The court may consider 18 other materials in the record not cited to by the parties, but it is not required to do so. See Fed. R. 19 Civ. P. 56(c)(3); Carmen v. San Francisco Unified School Dist., 237 F.3d 1026, 1031 (9th Cir. 20 2001); see also Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 1017 (9th Cir. 2010). 21 “The moving party initially bears the burden of proving the absence of a genuine issue of 22 material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To meet its burden, “the 23 moving party must either produce evidence negating an essential element of the nonmoving 24 party’s claim or defense or show that the nonmoving party does not have enough evidence of an 25 essential element to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. 26 Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). If the moving party meets this 27 initial burden, the burden then shifts to the non-moving party “to designate specific facts 28 demonstrating the existence of genuine issues for trial.” In re Oracle Corp. Sec. Litig., 627 F.3d 1 376, 387 (citing Celotex Corp., 477 U.S. at 323). The non-moving party must “show more than 2 the mere existence of a scintilla of evidence.” Id. (citing Anderson v. Liberty Lobby, Inc., 477 3 U.S. 242, 252 (1986)). However, the non-moving party is not required to establish a material 4 issue of fact conclusively in its favor; it is sufficient that “the claimed factual dispute be shown to 5 require a jury or judge to resolve the parties’ differing versions of the truth at trial.” T.W. 6 Electrical Serv., Inc. v. Pac. Elec. Contractors Assoc., 809 F.2d 626, 630 (9th Cir. 1987). 7 The court must apply standards consistent with Rule 56 to determine whether the moving 8 party has demonstrated there to be no genuine issue of material fact and that judgment is 9 appropriate as a matter of law. See Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir. 1993). 10 “[A] court ruling on a motion for summary judgment may not engage in credibility 11 determinations or the weighing of evidence.” Manley v. Rowley, 847 F.3d 705, 711 (9th Cir. 12 2017) (citation omitted). The evidence must be viewed “in the light most favorable to the 13 nonmoving party” and “all justifiable inferences” must be drawn in favor of the nonmoving party. 14 Orr v. Bank of America, NT & SA, 285 F.3d 764, 772 (9th Cir. 2002); Addisu v. Fred Meyer, Inc., 15 198 F.3d 1130, 1134 (9th Cir. 2000). 16 Discussion 17 Plaintiff alleges that defendants violated the Davis-Stirling Act by not complying with its 18 notice requirements and by failing to engage in the required alternative dispute resolution 19 processes before initiating judicial foreclosure proceedings. ECF No. 29 at 19-20. 20 The Davis-Stirling Act “is a comprehensive statutory scheme governing residential 21 common interest developments in California.” In re Warran, No.: 15-cv-03655-YGR, 2016 WL 22 1460844, *3 (N.D. Cal. Apr. 13, 2016). It authorizes homeowners associations to levy 23 “assessments sufficient to perform [their] obligations under the governing documents,” Cal. Civ. 24 Code § 5600, and provides a regulatory scheme for the collection of delinquent assessments, id. 25 § 5660.3 Delinquent assessments, late fees, and collection costs become “a debt of the owner of 26 3 The Act’s provisions were renumbered in 2014. See In Re Basave De Guillen, 604 B.R. 27 826, 832 n.6 (observing that the Davis-Stirling Act was “sections 4000-6150 of the California Civil Code; it was formerly found at sections 1350-1378”). Defendants note that the amended 28 complaint cites to the repealed provisions. ECF No. 88-1 at 5-6. They do not, however, identify 1 [property] at the time the assessment or other sums are levied.” Id. § 5650. Before an association 2 can record a lien, it must provide the owner with a written notice that provides: a “description of 3 the collection and lien enforcement procedures of the association,” a “statement of the charges 4 owed by the owner, including items on the statement which indicate the amount of any delinquent 5 assessments,” a “statement that the owner shall not be liable to pay . . . if it is determined the 6 assessment was paid on time to the association,” a statement the owner has a “right to request a 7 meeting with the board,” . . . a statement that the owner has the “right to dispute the assessment 8 debt by submitting a written request for dispute resolution to the association,” and statement that 9 the owner has the “right to request alternative dispute resolution with a neutral third party . . . .” 10 Id. § 5660. The Act also “includes provisions addressing alternative dispute resolution (ADR), 11 including the initiation of such nonjudicial procedures, the timeline for completing ADR, and the 12 relationship between ADR and any subsequent litigation.” Grossman v. Park Fort Washington 13 Assn., 212 Cal. App. 4th 1128, 1132 (2022); see Cal. Civ. Code § 5930(a) (“An association or a 14 member may not file an enforcement action in the superior court unless the parties have 15 endeavored to submit their dispute to alternative dispute resolution pursuant to this article.”). 16 Defendants argue that there is no dispute that plaintiff both lacks standing under the 17 Davis-Stirling Act and has no evidence that defendants violated the Act. ECF No. 88-1 at 5-6. 18 This is so, according to defendants, due to plaintiff’s failure to timely respond to Verdera’s 19 Request for Admissions (“RFAs”). Id. 20 On July 21, 2023, defendants’ counsel served plaintiff’s former counsel via email 21 Verdera’s first set of RFAs.4 ECF No. 88-2 at 2. In his declaration, defendants’ counsel states 22 that when serving the RFAs, he sent the request to plaintiff’s former counsel’s “main email 23 address and his paralegal’s email address.” Id. He explains that this same form of “electronic 24 service [was] utilized to serve” motions that Verdera previously filed in this action, and that “[a]ll 25 other defendants in this case utilize[d] the same email addresses to serve” plaintiff’s former 26 any material differences between the repealed and current versions. 27 4 Plaintiff was previously represented by attorney Marc Applbaum. On October 12, 2023, Mr. Applbaum was suspended from the bar of this court. ECF No. 83. Plaintiff was afforded an 28 opportunity to secure new counsel but has not done so and now proceeds pro se. 1 counsel. Id. Defendants’ counsel further declares that plaintiff never served a response to 2 Verdera’s RFAs. Id. 3 Pursuant to FRCP 36(a)(3), a matter is deemed admitted unless, within thirty days of 4 being served with discovery, the party to whom the request is directed serves a written answer or 5 objection. The Federal Rules of Civil Procedure permit discovery requests to be served by 6 electronic means, but only when the responding party has “consented in writing.” Fed. R. Civ. P. 7 5(b)(2)(E). The Advisory Committee notes explain that the consent “must be express, and cannot 8 be implied from conduct.” Fed. R. Civ. P. 5, Advisory Committee Notes, 2001 Amendment. 9 The record before the court does not establish that plaintiff or his former attorney 10 consented in writing to service by email. At most, defense counsel’s declaration indicates an 11 informal practice of serving documents by electronic means, which does not equate to express, 12 written consent. As such, Verdera’s RFAs were never deemed admitted pursuant to Rule 36(a); 13 they were never properly served. Cf. Bunn v. Dash, No. 2:20-cv-07389-DMG-JC, 2021 WL 14 4868353, at *6 (C.D. Cal. July 23, 2021) (“The Requests were never ‘deemed admitted’ by 15 operation of law under Rule 36(a) because they were not properly served so there is no need to 16 ‘relieve’ Defendant of making deemed admissions or to authorize him to ‘withdraw’ the same.”); 17 Family Dollar Stores, Inc. v. United Fabrics Intern., Inc., 896 F. Supp. 2d 223 (S.D.N.Y. 2012) 18 (holding that a party’s service of requests for admissions by e-mail was void where the 19 responding party did not consent in writing to accept service by electronic means). 20 Defendants have made no other attempt to show that there is an absence of a genuine issue 21 of material fact as to plaintiff’s Davis-Stirling Act claim. Indeed, their motion relies exclusively 22 on the mistaken assumption that Verdera’s RFAs have been deemed admitted. As discussed 23 above, defendants, as the moving party, bear the initial “burden of proving the absence of a 24 genuine issue of material fact.” Celotex Corp., 477 U.S. at 323. They have failed to satisfy that 25 burden, and so summary judgment is not appropriate. 26 Accordingly, it is hereby RECOMMENDED defendants Verdera and McClure’s motion for 27 summary judgment, ECF No. 88, be denied. 28 These findings and recommendations are submitted to the United States District Judge 1 || assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen days of 2 || service of these findings and recommendations, any party may file written objections with the 3 || court and serve a copy on all parties. Any such document should be captioned “Objections to 4 | Magistrate Judge’s Findings and Recommendations,” and any response shall be served and filed 5 || within fourteen days of service of the objections. The parties are advised that failure to file 6 || objections within the specified time may waive the right to appeal the District Court’s order. See 7 || Turner vy. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Yist, 951 F.2d 1153 (9th Cir. 8 | 1991). ? | ITIS SO ORDERED. 10 / 11 | Dated: _ August 19,2024 _ gene Ws JEREMY D. PETERSON 12 UNITED STATES MAGISTRATE JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28