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Defense Verdict In Suit Against HOA

April 1, 2005

James S. Williams and Tina Varjian successfully defended a homeowners association against a suit attacking the validity of the annexations of thousands of homes into the association over a period of more than 50 years. The plaintiffs challenged the annexations and contended that the changes were made without authority under the By-Laws. The plaintiffs contended that the annexations violated the Non-Profit Mutual Benefit Corporations Law and California's Davis-Stirling Common Interest Development Act. Although some of the challenged actions of the HOA had occurred nearly half a century before the suit had been filed, plaintiffs contended that the statute of limits did not apply because the HOA's acts were ultra vires - that is, utterly beyond the authority of the By-Laws of the HOA. Among other things, plaintiffs contended that the HOA was without authority to make them pay monthly assessments above the amounts originally set in 1945. In the bench trial, the court held that the HOA and the plaintiff-homeowners were subject to both the Davis-Stirling Act and to the Non-Profit Mutual Benefit Corporations Law and that plaintiffs' monthly assessments could be increased above 1945 levels to comport with current HOA operating costs. The court ruled that challenged annexations were proper, that the thousands of homes annexed were rightful members of the HOA and that the statute of limitations and laches barred many of plaintiffs' claims, including those alleged to have undertaken by the HOA without any authority under the By-Laws.