Wednesday, January 8, 2014

Represent!

Market Lofts Community Association v. 9th Street Market Lofts, LLC, No. B245558 (D2d2 Jan. 7, 2013)

In a dispute between a developer and a homeowners’ association over parking spaces at some lofts across the street from Staples Center, the court of appeal reverses an order sustaining the developer’s demurrer for lack of standing. Because the HOA was a party to the parking contract with the developer, and an actual dispute about the HOA’s rights had arisen, it had standing to sue on its own behalf for declaratory relief. As to the HOA’s other claims—for breach of a contract between the developer and the homeowners, breach of fiduciary duty, fraud, rescission, and violations of the Unfair Competition Law—the court held that the HOA had representative standing to bring claims on behalf of its members under Code of Civil Procedure § 382. Although most people think of § 382 as the statute that authorizes class actions
(albeit kind of vaguely), it also covers representative actions of other sorts. While “[i]t may also be true that while all class suits are representative in nature, all representative suits are not necessarily class actions.” (quoting Raven’s Cove Townhomes, Inc. v. Knuppe Dev. Co., 114 Cal. App. 3d 783, 794 (1981)). Standing to bring a representative action is appropriate when there is “an ascertainable class and a well-defined community of interest in the questions of law and fact involved affecting the parties to be represented.” Here, the issues raised by the HOA’s complaint were common amongst its members, who would all be affected in the same manner by the their resolution, and in the absence of standing for the HOA, the homeowners would need to litigate 267 separate claims. Under the circumstances it was appropriate to afford representative standing to the HOA under § 382. That the developer might have individualized defenses against the homeowners did not merit otherwise.

Reversed.

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