Fountain Valley Chateau Blanc Homeowners Association v. Department of Veterans' Affairs

California Court of Appeal · 1998 · Property

Propertynew trialJNOVsubstance over formCC&Rshomeowners associationreasonablenessCal-Vet

Facts

Robert Cunningham bought a home subject to the association's CC&R's through the state Cal-Vet program, under which the Department of Veterans Affairs held legal title while Cunningham was the real purchaser in possession. After complaints about debris and alleged fire hazards, the association inspected Cunningham's home and, despite local housing and fire inspectors finding no hazardous conditions, continued litigation and sent a letter demanding that Cunningham clear papers and books from his bed and floor, remove boxes and papers from interior rooms, stop using a bathroom for storage, donate outdated clothing, and keep only books considered 'standard reading material.' Cunningham cross-complained against the association, and the jury found the association acted unreasonably in its demands concerning the interior of his residence. The trial judge then granted a new trial before damages, while separately entering judgment for the Department on the ground that it was a lender, not an owner, under the Cal-Vet arrangement.

Issue

First, whether the trial court could grant what was labeled a new trial order when the record showed the court had effectively decided the association acted reasonably as a matter of law and that Cunningham could never prevail. Second, whether the Department of Veterans Affairs, which held legal title under a Cal-Vet installment contract, was an owner bound by the CC&R's or instead a lender not responsible for compliance with them.

Rule

When a trial court grants a new trial on insufficiency grounds but the record shows the court is actually using the motion as a dispositive ruling that the prevailing party must lose, the appellate court will treat the order according to its substance as a judgment notwithstanding the verdict and review it under JNOV standards rather than deferential new-trial standards. Under Civil Code section 2920, a security device other than a deed of trust that confers a power of sale after breach is treated as a mortgage for default purposes; thus a Cal-Vet installment sales contract is in substance a mortgage, making the Department a lender rather than an owner, so it is not bound by CC&R obligations imposed on owners.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a bifurcated civil trial in San Diego, a jury found for tenant Omar Ruiz on liability against a neighborhood association. Before the damages phase began, the judge granted the association's motion labeled "new trial," explaining on the record that the association's conduct was reasonable as a matter of law and that he would keep granting new trials if Omar kept winning on the same evidence.

If Omar seeks appellate relief, how should the reviewing court most likely characterize and review the trial court's order?

Explanation. When the record shows the judge used a purported new trial order as a dispositive ruling that the prevailing party must lose, the appellate court looks to substance over form and treats the order as a de facto JNOV. The majority emphasized that a true new trial presupposes the party may still win on retrial; it cannot be used where the judge has already decided the party can never prevail.