Facts.

You have a disagreement with your association. You wish to plant artificial grass in your front lawn, but the association states that it will not allow you to do so. You do not wish to engage in expensive and time consuming litigation over this issue. You are looking for a non-litigation alternative to resolve your disagreement with your association. Are there any such alternatives available?

Legal Analysis.

There are two approaches that are available. The first is internal dispute resolution. The second is alternative dispute resolution.

1. Internal dispute resolution.

Internal dispute resolution is governed by Civil Code sections 1363.810 to 1363.850. Internal dispute resolution requires that the association provide a “air, reasonable and expeditious procedure for resolving a dispute.” The association is required to establish prompt deadlines and a maximum time for the association to act. It may be invoked by either the association or the member. If the association invokes it, the member may abstain from participating. However, if the member invokes it, the association must participate. There is no fee or charge to the member. Any resolution is judicially enforceable.

The mechanics for internal dispute resolution are fairly simple. The association designates one or more board members to attend a meeting with the member. The board member must confer in good faith with the member. If the matter is resolved, a written document is prepared and signed. The agreement must be consistent with the authority granted by the board or ratified by the board. It can be invoked in any stage in the dispute process. Thus, it may be invoked prior to litigation or during litigation. It may be invoked by a member even before the association realizes there is a disagreement.

2. Alternate dispute resolution.

Alternate dispute resolution is governed by Civil Code sections 1369.510 to 1369.580.

Alternate dispute resolution consists of mediation or arbitration before a neutral party approved by both the association and the member. Mediation consists of a process whereby the neutral party tries to persuade both sides to reach an agreement. It is entirely voluntary by both parties. However, if an agreement is achieved, reduced to writing and states that it is “binding and enforceable,” the agreement may be judicially enforced. In contrast, arbitration is a process whereby the neutral party conducts a trial which consists of the presentation of evidence through witnesses and documents, the cross-examination of witnesses and all the other parts of a trial without a jury. The arbitrator then makes a decision which usually identifies the prevailing party and the non-prevailing party. Usually, the decision in arbitration is binding and can be judicially enforced. There is a procedure known as non-binding arbitration, but it is rarely used.

The main advantage of mediation is that a creative remedy can be developed that is satisfactory to both parties. For example, if there is a disagreement concerning the location of a driveway, the mediator can work with the parties to develop a re-design of the driveway that is acceptable to both parties. In contrast, in arbitration, the arbitrator can only make a decision that is framed in the issues presented by the parties, such as party “A” recovers $5,000 against party “B.” In the case of a disagreement concerning the location of the driveway, the arbitrator would rule that the driveway goes or the driveway stays. The arbitrator cannot generally impose a creative solution such as a redesign of the driveway.

Neither the association nor the owner may file an enforcement action in court until the parties have attempted alternate dispute resolution. An exception to this rule applies where the action is for declaratory relief, injunctive relief or writ relief.

The procedure to begin is fairly simple. One party serves a written request for resolution on the other party. The request must contain a description of the dispute, a request for resolution and a request for a response within 30 days. If the association starts the process, it must contain a copy of the governing statute with the request. If the request for resolution is not accepted within 30 days, the request is deemed rejected. If the request is accepted, it must be completed within 90 days. The cost is shared equally between the parties.

The statute of limitations is tolled during the process.

In order to file a court action, the party filing the action must file a certificate with the complaint stating that alternate dispute resolution has been completed or one party did not accept alternate dispute resolution, or injunctive relief is necessary. If a party fails to file such a certificate with the complaint, this is grounds for dismissal of the complaint unless the court finds that dismissal would result in “substantial prejudice.”

In awarding attorney’s fees, the court may consider whether a party’s refusal to participate before commencement of the action was reasonable or unreasonable.

The association must provide an annual written report to its members summarizing its procedures.

Barry A. Ross is a member of the Real Estate Section and the Business Litigation Section of the Orange County Bar Association. Mr. Ross represents property owners in disputes with their homeowners associations. Mr. Ross can be reached at 949-727-0977 or http://www.RossRealEstateLaw.com