Plaintiffs and Respondents, homeowners in the Morningside community in Rancho Mirage, challenged an amendment to their homeowners association covenants, conditions and restrictions (CC&Rs) that imposed a $250 monthly assessment against non-members to subsidize the costs of maintaining The Club at Morningside members-only golf and tennis club in the residential desert community. The Club’s members were not required to pay the new assessment.
Plaintiffs sued several defendants, including appellants The Morningside Community Association and its directors, the Club at Morningside and its directors, and Peters & Freedman LLP, and David M. Peters, lawyers for the Association.
Defendants responded by filing Anti-SLAPP motions.
Slovak Baron Empey Murphy & Pinkney LLP represented the Plaintiffs and Respondents. The trial court denied Defendants’ anti-SLAPP motions, and the Court of Appeals recently affirmed. Shaun Murphy opposed the anti-SLAPP motions in the trial court and Wendy Dowse handled the appeal.
The Association manages the common areas of the Morningside Community. The Club is located within the Morningside Community, but not all members of the Association are members of the Club. The governing boards of both the Association and the Club collaborated, with legal assistance from the Peters Defendants, and proposed a new $250 assessment on each resident. While all Morningside homeowners would be charged the assessment, Club/Association Members would receive a credit of 100 percent of the monthly payment towards Club dues.
The adoption of the new assessment required a vote to amend the CC&Rs, approved by a majority of the residents. The Association retained Mr. Peters as the “independent” inspector of elections. During the election, Association directors requested and obtained confidential voting information from the Peters Defendants, and used the information, before the election was completed and votes tabulated.
The Peters Defendants supplied information (including ballots received and cast) to the Association’s directors, including a list of members who had not voted. The Club then used that information to call Club/Association Members. For example, an Association director and Club Member sent an email to the Association General Manager, an Association director, and the Club General Manager, stating: “I just spoke with Dave Peters. Because I asked him for the list of who has voted he is sending it to me. If someone else asks him for it he will send it to them. Let’s keep this absolutely between the four of us… [We] will have to just ask people to call certain numbers without telling them you know they haven’t voted.”
The majority approved the amendment to require the minority to subsidize the Club. Plaintiffs subsequently filed suit to challenge the validity of the new assessment. Plaintiffs’ complaint identifies a number of acts of alleged misconduct surrounding the election on the Propriety Fee, and includes causes of action for negligence, breach of fiduciary duty/conspiracy to violate election statutes, fraud/deceit restitution and declaratory relief.
The trial court denied Defendants’ anti-SLAPP motions, concluding that Plaintiffs’ causes of action based on the election did not arise from protected activity. On October 31, 2018, the Court of Appeal affirmed, holding that Plaintiff’s causes of action did not arise from protected activity, and that Plaintiffs are likely to succeed on the merits of their claims.
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