Court Opinion

ID: 9750931
Source: CourtListenerOpinion
Date Created: 2023-08-28 15:48:45.975356+00
Date Added: 2024-06-11T07:26:29.415960
License: Public Domain

MOSK, J.,
Concurring. — I concur.
Originally a stock cooperative held title to the residential property at issue. (Civ. Code, § 1351, subd. (m).)1 Each occupant of a unit in the premises acquired shares of stock for a price and executed a lease. The shareholders acquired their shares for different sums of money, presumably reflecting the market prices at the time of purchase. Thus, the shareholders’ interests in the cooperative varied based on the *128number of shares of stock they purchased. Stock ownership determined voting rights.
The cooperative was then converted into a condominium. Under the terms of the declaration of the newly formed condominium, the amount of stock each unit holder owned determined the percentage of the “undivided interests in common area possessed by each unit holder” in the condominium. The amount of each undivided interest in the common area of the condominium determined the number of votes accorded to a unit holder, and in turn, the amount of assessments to be paid by that unit holder. The assessments are not restricted to common area expenses. They are for “common expenses” that include expenses “for all other items incurred by the Association, for any reason whatsoever in connection with the Property.”
The only possible justifications for the differences in assessments for comparable units in the condominium are the differing percentages of undivided interests in the common area and voting power. There is no indication that a larger undivided interest in the common area has any more tangible value than a smaller interest or is related to the assessments. Attributing value to the percentage of interest in the common area would be theoretical.2 Thus, defendant relies primarily on voting power to justify the differences in assessments. Plaintiff contends that the direct correlation between the amount that the unit owner is assessed and the unit owner’s voting right is “wholly arbitrary.” “Wholly arbitrary” is a ground for determining that a covenant, condition, or restriction in the governing documents of a condominium is not enforceable. (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 382 [33 Cal.Rptr.2d 63, 878 P.2d 1275] {Nahrstedt).)
For historical reasons, identical units pay different assessments. Whether or not the correlation between votes and assessments made sense in 1923 when the stock cooperative was established, the connection seems more tenuous today for the condominium. Yet, voting power appears to be of some significance. Each member may cast the number of votes he or she has for the board of directors, which elects officers and administers the affairs of the condominium association. The members may also cast their votes for matters that come to the membership. Plaintiff argues that realistically the members having more votes than others cannot dictate their positions on issues. But this assumes bloc voting based on assessment amounts. More voting power is undeniably better than less voting power.
*129I recognize that many condominium owners in the place of plaintiff would forgo the increased voting power for lower assessment amounts. But the Supreme Court has stated that under section 1354, a use restriction for a common interest development set forth in a recorded declaration is an enforceable equitable servitude unless “unreasonable” and that “unreasonableness” means a restriction that is “wholly arbitrary, violate[s] a fundamental public policy, or impose[s] a burden on the use of affected land that far outweighs any benefit.” (Nahrstedt, supra, 8 Cal.4th at p. 382.) Although the term “arbitrary” is “extremely complex in law” and its sense “not readily encapsulated” (Gamer, Diet, of Modem Legal Usage (2d ed. 1995) p. 73), the Supreme Court’s use of the word “wholly” to modify “arbitrary” suggests that if arbitrariness can have gradations, it would have to be egregious to result in the invalidation of a restriction.
The Supreme Court listed a number of public policy reasons for its test for unreasonableness in connection with the issue of enforceability of condominium restrictions. These reasons include the reliance of the members, the reduction in litigation, and the “strain on the social fabric of the common interest development” if enforcement of provisions was on a case-by-case basis. (Nahrstedt, supra, 8 Cal.4th at p. 384.) The relationship between interests in common areas and voting power on the one hand and assessments on the other hand may be slender, but a methodology based on that relationship has not been established in this case to be “wholly arbitrary.”
Plaintiff points to Department of Real Estate regulation No. 2792.16 that states, “(a) Regular assessments to defray expenses attributable to the ownership, operation and furnishing of common interests by the Association shall ordinarily be levied against each owner according to the ratio of the number of subdivision interests owned by the owner assessed to the total number of interests subject to assessments. [¶] (b) In the case of a subdivision offering in which it is reasonable to anticipate that any owner will derive as much as 10% more than any other owner in the value of common services supplied by the Association, the assessment against each owner may be determined according to a formula or schedule under which the assessments against the various subdivision interests bear a relationship which is equitably proportionate to the value of the common services furnished to the respective interests.” To the extent this regulation is of significance in view of the Supreme Court’s interpretation of section 1354, the regulation does permit assessments based on interests owned. Here plaintiff has a greater interest than others in the common areas. Moreover, the regulation does not purport to restrict the methods of allocating assessments.
*130My sympathy with plaintiff’s plight is tempered by the fact that when he purchased his unit, he should have considered the governing documents to determine his rights and liabilities.
The petition of appellant John Gebular for review by the Supreme Court was denied November 15, 2006, S147039.

 All further statutory references are to the Civil Code unless otherwise stated.

 The percentage of interests conceivably could have some significance in the event of condemnation of the entire premises and other means of termination of the condominium, (See § 1351, subd. (e)(3)(B), (C), (D).)