The DBPOA is not governed by the Davis-Stirling Act because the association has no common interest property.  Therefore, it is governed by Corporations Code, its Articles of Incorporation, its CC&Rs and its Bylaws only…

It is registered with the California Secretary of State as a Nonprofit Mutual Benefit Corporation, therefore, Corporations Code Sections 7110 through 8910 and 5034 apply.  (Click here:  C0RPORATIONS CODE) 

How many Nonprofit Mutual Benefit Corporations have mandatory membership, aside from common interest HOAs, that you know of?  Pretty hard to come up with one, isn’t it?  So how was the DBPOA able to accomplish this?  Please read our DBPOA HISTORY page to find the answer. 

Our HOAs HISTORY page explains why this is the reason that many judges (or attorneys) have mistakenly assumed the DBPOA manages common interest property; therefore, many times the court has found in the association’s favor (or attorneys have given inappropriate advice) when disputes arise.

COURT DECISIONS

Further substantiation of the court’s prior assumption can be seen in the decision rendered in the Betty Grace (Small Claims Court) case, filed by the DBPOA in 2006, in which this issue was specifically addressed for the first time since the 1987 Hall (Superior Court) case.  The court found that because Betty purchased her property in 1980, under the original Veronica Development Corporation 1970 CC&Rs, which specified that there could be no mandatory membership in a HOA, she is not (and never has been) a member; is not obligated to pay dues; and her property cannot have a lien placed on it for the purpose of collecting dues or fines.  (Click here:  GRACE CASE)  Pertinent areas are highlighted.

The court found that the condition of her property created a “private nuisance” and awarded monetary damages of $500.00 to the DBPOA only because it represents the other homeowners.  If she painted her house trim by a specific date, she no longer owed the $500.00.  She did this, and did not have to pay the DBPOA $500.00.  The same result could be expected if the DBPOA did not exist, and the plaintiff was another homeowner in her neighborhood, because the CC&Rs “run with the land”.

It was also significant that the court found that since the DBPOA is not a common interest development under the Davis-Stirling Act, she could not be compelled to join the association.  It would not be a quantum leap to apply this same reasoning to what happened to all of the homeowners in 1985…

The DBPOA has intentionally not publicized the results of the Grace case for obvious reasons.  Rightfully, one would think that the DBPOA would inform all of the homeowners who purchased their properties before 1985 of the court’s findings, and provide a membership option at the very least.  The reasons for not taking this action are equally obvious.  Instead, they choose to continue to collect dues from these homeowners, essentially “bluffing” to maintain the status quo, and banking on the knowledge that all these properties will eventually change ownership and automatically become members.

Let’s examine another court decision:

The Meyner (Superior Court) case was much publicized by the DBPOA, in its newsletters, as having established that the DBPOA 1985 CC&Rs are valid and the DBPOA is legal.

In reality, the Meyner Case established that the CC&Rs that Gustave Meyner wrote and filed in February 1997, for tract 4206, were not valid.

The judge's decision was based on two reasons: 1) No admissible evidence was provided to show that all or a majority of the owners in tract 4206 held a meeting, with notice to all owners, and voted on the amendment; and 2) It was invalid because it required the approval of a majority of all the owners in Discovery Bay as required by the DBPOA 1985 CC&Rs.  (CLick here:  MEYNER CASE)  Pertinent areas are highlighted. 

Again, this was based on the assumption that the 1985 amended DBPOA CC&Rs were legal.  Had it been properly challenged that the original CC&Rs were amended and filed in 1985, before obtaining the required 2/3rds approval of all the homeowners in Discovery Bay as required by the original 1970 CC&Rs; no noticed meeting or vote took place; and the amended CC&Rs were then filed tract by tract, in 1987, by invalidated petition signatures which have since disappeared; the decision may have indeed been very different…

It is also interesting to note that the judge stated that “an invalid recording does not become valid because the time to file an action thereon has expired”.  While this reference was to the Meyner CC&Rs, it can be concluded that this can also be applied to the 1985 DBPOA CC&Rs.

It is not known why the judge concluded that the ambiguous terms of the DBPOA Bylaws had to be read in conjunction with the provision in Article 1.2 of the CC&Rs…  Those bylaws were written when membership was not mandatory, prior to the usurping of property rights by the DBPOA in 1985.
 

QUESTIONABLE ACTIONS

Corporations Code 7150 states: 

7150.  (a) Except as provided in subdivision (c) and Sections 7151,

7220, 7224, 7512, 7613, and 7615, bylaws may be adopted, amended or

repealed by the board unless the action would:

   (1) Materially and adversely affect the rights of members as to

voting, dissolution, redemption, or transfer;

The bylaws should have been amended in 1985 when the DBPOA took over the property rights of the homeowners and made membership mandatory; not thirteen years later…

Regardless, let’s look at what happened in 1998:

The first act of priority was to change the article on termination of membership.  The 1980 Bylaws stated membership shall terminate on the death of the property owner or failure to pay the annual dues.  A written ballot was sent to the members with an accompanying letter stating that the DBPOA could remedy this inconsistency on its own, but felt that involving the membership was the best approach.  Wrong…a vote was required.  The 1980 Bylaws clearly showed that membership was voluntary; therefore, Corporations Code 7150 above applied.  The written ballot also stated that at least 20% of the ballots had to be returned and a majority had to be in favor to pass.  Where did this come from?  (Click here:  1998 LETTER & WRITTEN BALLOT) Pertinent areas are highlighted.

Corporations Code 7513 states:

7513.  (b) Approval by written ballot pursuant to this section shall be

valid only when the number of votes cast by ballot within the time

period specified equals or exceeds the quorum required to be present

at a meeting authorizing the action, and the number of approvals

equals or exceeds the number of votes that would be required to

approve at a meeting at which the total number of votes cast was the

same as the number of votes cast by ballot.

The 1980 Bylaws clearly stated that the voting quorum was 51%.  (Click here:  1980 BYLAWS)  Pertinent area is highlighted.

Corporations Code 5033 states:

5033.  "Approval by (or approval of) a majority of all members"

means approval by an affirmative vote (or written ballot in

conformity with Section 5513, Section 7513, or Section 9413) of a

majority of the votes entitled to be cast.  Such approval shall

include the affirmative vote of a majority of the outstanding

memberships of each class, unit, or grouping of members entitled, by

any provision of the articles or bylaws or of Part 2, Part 3, Part 4

or Part 5 to vote as a class, unit, or grouping of members on the

subject matter being voted upon and shall also include the

affirmative vote of such greater proportion, including all, of the

votes of the memberships of any class, unit, or grouping of members

if such greater proportion is required by the bylaws (subdivision (e)

of Section 5151, subdivision (e) of Section 7151, or subdivision (e)

of Section 9151) or Part 2, Part 3, Part 4 or Part 5.

So, apparently the change was approved because of the way it was presented; but it is not known if by a majority of the real required quorum stated in the bylaws.  (If you have information on the vote tally, please let us know – See our CONTACT US page.)  It is likely that the quorum was reduced because of two failed attempts, in 1996 and 1997, of CC&R amendments requiring 51% of the membership vote…

In addition, although not included on the written ballot, the DBPOA increased the number of Directors from five to seven:

Corporations Code 7151 states:

7151.  (b) Once members have been admitted, a bylaw specifying or

changing a fixed number of directors or the maximum or minimum number

or changing from a fixed to a variable board or vice versa may only

be adopted by approval of the members (Section 5034).

So, it appears the DBPOA completely overlooked the required vote on this since there had been seven directors since the mid eighties, but never changed in the bylaws…  This was when it also illegally changed the 51% voting quorum to a 20% quorum.  (Click here:  1998 BYLAWS)  Pertinent areas are highlighted.  Could this have been done because no one apparently challenged the 20% quorum stated for the 1998 written ballot?  Why would members, unlike board members, have to know the association's bylaws?  Is it unreasonable to trust that your "elected officials" know the contents of its governing documents and that they are giving accurate facts on a ballot?  You decide... 

The major amendments then took place in 2000: 

The DBPOA sent a copy of completely amended bylaws, together with a written ballot to vote for or against them, to the 1320 members “in good standing” at the time.  No copy of the then current bylaws was distributed.  The written ballot stated that “with the exception of the amendment to Article II, Section 5 (a) of the current Bylaws (which amendment is found in Article II, Section 5 A. (1) of the proposed Bylaws), the amended Bylaws must receive approval from at least a majority of those members who cast ballots.”  It goes on to say that to be valid, a quorum of the membership must vote.  It then says, “That quorum is fixed in the current Bylaws at twenty percent (20%) of the members of the corporation who are in good standing.”  (Click here:  2000 BALLOT)  Pertinent area is highlighted.

Again, when was this new quorum decided on and how?  All we know is that it was slipped into the bylaws after a written vote on an amendment only to the termination of membership… 

This meant that had the quorum requirement not been illegally changed in the Amended 1998 Bylaws, 673 votes would have been necessary to meet the quorum.  Only 530 valid votes were received.  Additionally, the reported results included the “invalid” votes in the total of the votes cast to figure the percentage…?  (Click here:  NEWSLETTER - SUMMER 2000)  Pertinent area is highlighted.
 

So, how did we really (or legally) end up with bylaws now “in sync” with the CC&Rs?

Aside from having to mislead the membership in its attempt to correct obvious contradictions in its governing documents, the DBPOA will continue to face challenges to the way it operates because of what took place in 1985.

Just one example of this is what took place in 1998 when the DBPOA placed a Notice of Assessment Lien against a former board member.  A letter from his attorney revealed further insights into how the boards had been operating since 1985.  This letter was used in the effort to have the Hall case unsealed.  It is not known what results the demands produced, but it confirms that the board members were fully aware of the DBPOA's position.  (Click here)

So, how many of these demands were met, and why or why not?

Not being able to legally operate under the Davis-Stirling Act, but attempting to do so, results in many of the DBPOA’s actions manipulating the corporate codes it is governed by:

CORPORATIONS CODE   

There is no provision in Corporations Code to fine members.  Yet, in its amended 2000 bylaws, the DBPOA states in Article IX that “In order to achieve compliance with the Association’s Covenants, Conditions and Restrictions (CC&Rs) for Discovery Bay, the board may establish enforcement procedures that include disciplinary fines, interest and collections costs, if any, for continued CC&R violations.  Any discipline of members of this Association must be done in good faith and in a fair and reasonable manner as provided for in the California Corporations Code, Section 7341.”  (Click here:  2000 BYLAWS)   Pertinent area is highlighted. 

This is Corporations Code 7341:

7341.  (a) No member may be expelled or suspended, and no membership

or memberships may be terminated or suspended, except according to

procedures satisfying the requirements of this section.  An

expulsion, termination or suspension not in accord with this section

shall be void and without effect.

   (b) Any expulsion, suspension, or termination must be done in good

faith and in a fair and reasonable manner.  Any procedure which

conforms to the requirements of subdivision (c) is fair and

reasonable, but a court may also find other procedures to be fair and

reasonable when the full circumstances of the suspension,

termination, or expulsion are considered.

   (c) A procedure is fair and reasonable when:

   (1) The provisions of the procedure have been set forth in the

articles or bylaws, or copies of such provisions are sent annually to

all the members as required by the articles or bylaws;

   (2) It provides the giving of 15 days' prior notice of the

expulsion, suspension or termination and the reasons therefor; and

   (3) It provides an opportunity for the member to be heard, orally

or in writing, not less than five days before the effective date of

the expulsion, suspension or termination by a person or body

authorized to decide that the proposed expulsion, termination or

suspension not take place.

   (d) Any notice required under this section may be given by any

method reasonably calculated to provide actual notice.  Any notice

given by mail must be given by first-class or registered mail sent to

the last address of the members shown on the corporation's records.

Do you think this code gives authority to fine its members?

Attempts to operate legally with confusing governance can sometimes even result in violating its bylaws or other applicable state laws:

BYLAWS VS CODE OF CIVIL PROCEDURE

The DBPOA regularly makes use of the Small Claims Court to award and collect dues, fees and fines it says are owed by the homeowners.  (Click here:  COURT LISTINGS)

The Code of Civil Procedure 116.540(b) states that "Except as additionally provided in Subdivision (i), a corporation may appear and participate in a small claims action only through a regular employee, or a duly appointed or elected officer or director, who is employed, appointed, or elected for purposes other than solely representing the corporation in small claims court."  (Click here)

Subdivision (i) states "A party that is an association created to manage a common interest development, as defined in Section 1351 of the Civil Code, may appear and participate in a small claims action through an agent, a management company representative, or bookkeeper who appears on behalf of that association."

The DBPOA is not a common interest development.  Therefore, Subdivision (i) does not apply.

Small Claims Court document SC-109 requires that an employee or an officer of the corporation represent the corporation, and must be filed and signed by such person under the penalty of perjury.  (click here:  SC-109)

So how does the DBPOA get away with having independent contractors (a secretary, compliance inspector, and consultant) represent them in court?

In 2005, due to being questioned by the courts on being legally represented, the DBPOA again amended its bylaws to add the words “employees or” to “officers of the board shall be members in good standing of the association” in Article V, Section 2.  (Click here:  FEBRUARY 2005 NEWSLETTER)  Pertinent area is highlighted.

Two things were wrong with this action:  (1) The DBPOA has no regular employees because this would change its tax-exempt filings with the Franchise Tax Board and Internal Revenue Service, and (2) DBPOA Bylaw Article V, Section 10 states that “Officers of the Association shall serve without compensation, except that actual expenses may be allowed and paid for approved expenses incurred.”

When questioned again on this action in 2007, the Board of Directors took these further actions:  (1) Passed a resolution to interpret and define its independent contractors as “employees”; and (2) Appointed these independent contractors as Officers of the Board of Directors with terms expiring September 30, 2008.  (Click here:  BOARD OF DIRECTORS MEETING MINUTES - FEBRUARY 12, 2008)  Pertinent areas are highlighted.

Four things were wrong with these actions:  (1) The resolution does not confer regular employee status as required by the Civil Code of Procedure (but may enhance its defense in any future challenge by saying they thought they were employees); (2) Article V, Section 2 of its bylaws states “Each officer of the Board shall hold office until he or she resigns, is removed as an Officer by the Board, or is otherwise disqualified to serve.”; (3) Since Officers and Directors are indicated as one and the same in the bylaws, appointing them as Officers increased the number of Directors to ten without the required membership approval, and (4) In so doing, Article IV, Section 3 states “Each Director shall be a Member in good standing of the Association.”  The Compliance Inspector is not a DBPOA member…  (Click here:  2005 BYLAWS)  Pertinent areas are highlighted.

The DBPOA has refused to answer what their titles or duties are.  It now says, after the legality of these appointments was questioned again in 2008, when the board appointed them for another one-year term (Click here), that they are Officers “for” the Board of Directors and, therefore, not Directors; and they are not paid in their capacity as Officers, only for what they do as independent contractors…

So, were they appointed as Officers solely to be able to represent the DBPOA in small claims court (in violation of Code of Civil Procedure 116.540); or, were they just appointed as Officers of the corporation for a specific term (in violation of Bylaw Article V, Section 2)?  If they are not members of the Board of Directors, why does Article V, Section 3 of its bylaws state “Board members removed as a Board officer remain as members of the Board of Directors unless they cease to be qualified as a Director as provided for in these Bylaws”?  If this is not confusing enough, one can always ask, are they now regular “employees”, as required by the Civil Code of Procedure, and not “independent contractors”, simply by passing a resolution identifying them as such by its interpretation and definition of what an employee means?

The above is just one example of the position the DBPOA finds itself in due to not being governed by the Davis-Stirling Act, but requiring mandatory membership.

The Legislature recognized that homeowner associations requiring mandatory membership must have laws which apply to them specifically due to this requirement; and this requirement is necessary because property within the association is collectively owned.  While this was the intent of the Davis-Stirling Act, all homeowner associations (including these) are nevertheless still classified as nonprofit mutual benefit corporations and are governed by its codes…

However, these corporate codes apply generally; and while they include “common interest” homeowner associations (CIDs), they also include all other nonprofit mutual benefit corporations.  None of these require mandatory membership…

Prior to enacting the Davis-Stirling Act to eliminate confusion, the Corporations Code addressed all nonprofit mutual benefit corporations collectively, as shown by the following code.

Corporations Code 7340:

7340.  (a) A member may resign from membership at any time, although

the articles or bylaws may require reasonable notice before the

resignation is effective.

   (b) This section shall not relieve the resigning member from any

obligation for charges incurred, services or benefits actually

rendered, dues, assessments or fees, or arising from contract, a

condition to ownership of land, an obligation arising out of the

ownership of land, or otherwise, and this section shall not diminish

any right of the corporation to enforce any such obligation or obtain

damages for its breach.

   (c) A membership issued for a period of time shall expire when

such period of time has elapsed unless the membership is renewed.

Therefore, section (b) was written with the intent to include those HOAs now also governed by the Davis-Stirling Act, as well as HOAs with voluntary membership.

So, could this be why the DBPOA feels it is a legitimate homeowner association requiring mandatory membership without common interest property?  Or, should it be a homeowner association with voluntary membership to be legitimate?

We feel the latter is the only viable solution to the dilemma it finds itself in.  Voluntary membership should be restored, as it was prior to 1985.  See our LIFE WITHOUT THE DBPOA page for information on how property values would be maintained. 

PICKING AND CHOOSING

For many years, the DBPOA chose which laws supported its position on issues of controversy, utilizing the Davis-Stirling Act or Corporations Code, before homeowners were forced to do research.  It can no longer do this since now finally admitting (after many challenges) that it is not governed by the Davis-Stirling Act.  However, in many ways, this actually makes mandatory membership in the association even more frustrating by removing any safeguards.

NO RECOURSE

The Davis-Stirling Act clearly defines and identifies architectural guidelines and operating rules and regulations as governing documents.  Corporations Code does not.  Both codes provide that boards of directors have authority to change operating rules and policies.  Enforcement Procedures are policies; Construction & Usage Standards are not.  The latter are not the actual governing documents, but rather, the board and DERC’s interpretation of the governing CC&Rs and, therefore, are rules based on the governing documents.  The Enforcement Procedures are policies allowing the fining of members for which it has no legal basis; Davis-Stirling gives the authority…

The Davis-Stirling Act provides provisions on rule changes requiring a 30-day prior written notice to be given, the notice (within 15 days) of the change decided on after members comments are considered; and the option of members calling a meeting to reverse rule changes.  Corporate codes and the DBPOA’s Bylaws provide no such provisions…

Therefore, the DBPOA Board of Directors changes rules and regulations (particularly its Construction and Usage Standards) whenever they feel it’s necessary, without any membership input or recourse.  So, can we agree that it’s hard to hit a moving target?  You can be in violation at any time…

What happened in 1985 even caused discrepancies in the CC&Rs:

Why is the Board currently interpreting the CC&Rs and again changing the Construction and Usage Standards?  This violates the CC&Rs which state in Article 1.4 that DERC, in its sole discretion, can interpret the intent of the CC&Rs.  (Click here:  1985 CC&Rs)  Pertinent areas are highlighted.   

It must be remembered that, in the original CC&Rs, DERC had sole authority to administer and enforce the CC&Rs.  Since no Notice of Assignment was given to the DBPOA; the original CC&Rs were hurriedly copied word for word and primarily amended by omitting what was thought could contradict its new authority or by merely adding its name, to confer it, wherever it was thought appropriate.  Many mistakes were made…

Original 1970 CC&Rs, Article LVII – INTERPRETATION:

     In case of any uncertainty as to the meaning of any of the provisions of this Declaration, the Committee [DERC] shall in all cases interpret the same and such interpretation shall be final and conclusive on all interested parties.

Amended DBPOA 1985 CC&Rs, Article 4.3:  INTERPRETATION:

     In case of any uncertainty as to the meaning of any of the provisions of this Declaration, DERC and/or the Association shall in all cases interpret the same and such interpretation shall be final and conclusive on all interested parties.

So, is Article 1.4 to be believed in saying DERC has sole discretion in interpreting the CC&Rs; or, does DERC share its sole authority with the Board of Directors as in Article 4.3?

All of the above examples are only some of the troubling aspects of belonging to an association which is based on fraud and operates on deception; for both the association and its members.  When people buy a home within the DBPOA’s jurisdiction, they are not aware that they are handing over their property rights to an organization which owns or maintains no common interest property and puts not a dollar back into the community, has complete control over how you can enjoy your property, and spends all its efforts and your money on enforcing how you must live within its definitions of a “desirable” community?  This is simply wrong…  If you agree with us, we’d love to hear your comments…  Please see our CONTACT US page.

“Power tends to corrupt, and absolute power corrupts absolutely.”
            -Lord Acton