Glen Properties Corp. v. KCN A Management, LLC CA4/3, G062851A

Background

Koll Center Newport is a master-planned mixed-use development governed by 1972–73 CC&Rs and city Development Standards; KCN is successor Declarant. 4910 Birch (Olen) is a Building Site with an appurtenant perpetual easement to use Common Parking Areas. 6.216 acres of on-grade Common Parking historically bordered Olen’s building.
KCN created Parcel 1 from Common Parking Area and sold it (Shopoff, then TPG). TPG proposed a 312‑unit, five‑story apartment building with an underground (273-space) podium parking level and a separate 4‑level freestanding garage; the proposal would remove 452 on‑grade Common Parking spaces adjacent to Olen.
TPG obtained City entitlements (including a public park) and closed purchase; KCN and TPG signed a Development Cooperation Agreement (DCA) providing KCN cooperation and commitments to (attempt to) convert certain podium spaces into Common Parking via a future license/agreement. DCA expressly preserved CC&Rs.
Olen sued alleging CC&R violations and sought injunctive/declaratory relief; bench trial addressed declaratory relief. Trial court issued findings: KCN’s approval violated CC&Rs (procedural Phase issues, 4.06 two‑year construction limit, and failure to dedicate 273 podium spaces as Common Parking); injunction conditioned completion of CC&R‑compliant approvals and formal dedication/agreement for replacement parking.
On appeal the court affirmed in part, reversed in part, and remanded: key holdings include (a) KCN owes fiduciary duties and its approvals are not automatically entitled to Lamden deference; (b) “complete working drawings” in §4.02(c) means construction‑ready working drawings and TPG’s Phase III submission was not; (c) Common Parking Areas must be on‑grade and on Development Areas, cannot be on Parcels, and a mere license does not satisfy the CC&R easement rights of Building Site owners.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Declarant (KCN) decisions get Lamden deference or owe fiduciary duties	Olen: KCN (as successor declarant controlling approvals) owed fiduciary duties to owners; its approvals are not entitled to deference and must be just and reasonable	KCN: no fiduciary duty (no HOA); approvals entitled to Lamden deference	Court: KCN owes fiduciary duties like a developer/declarant; its decisions not entitled to Lamden deference here (Cohen/Raven’s Cove applied)
Meaning of “complete working drawings” and whether TPG’s Phase III complied (§4.02(c))	Olen: Phase III requires construction‑ready working drawings; TPG did not submit such drawings	KCN/TPG: their submissions sufficed; Declarant could specify required detail; approvals valid	Court: "complete working drawings" has technical construction‑ready meaning; substantial evidence that TPG’s Phase III was incomplete and approval violated §4.02(c)
Sequential approval process (§4.01–4.04): must phases I→II→III be separately approved?	Olen: KCN failed to follow mandatory sequential approval, prejudicing owners	KCN: process was cumulative/reasonable; no harm because KCN reviewed full info	Court: KCN did not follow sequencing, but failure was procedural and harmless here; no injunction solely on that ground
Construction time limit (§4.06): Whether approving a project with >2‑year estimated construction violates CC&Rs and warrants injunction	Olen: approval with >2‑year estimate breaches §4.06 and supports injunction	KCN: estimate not controlling; enforcement discretionary; injunction unnecessary	Court: Approving a project with a >2‑year estimate violated §4.06, but trial court did not abuse discretion in denying injunctive relief on this ground because damages may be adequate and duration might change
Whether Declarant may grant non‑utility easements (e.g., construction easements) over property it does not own (§2.04; DCA easements)	Olen: §2.04 limits Declarant to nonexclusive utility easements; DCA construction easements over land Declarant does not own are impermissible	KCN/TPG: DCA construction easements permissible and consistent with CC&Rs/intent	Court: §2.04 authorizes only nonexclusive utility easements over property the Declarant does not own; DCA construction easements over land Declarant lacks title are not authorized by CC&Rs
Whether Common Parking Areas may be relocated to podium/subterranean or freestanding structured parking; whether podium spaces can be licensed vs. dedicated as Common Parking (§1.03(e), §7.02; DCA)	Olen: Common Parking Areas are defined as on‑grade and on Development Areas; subterranean/freestanding structures and mere licenses do not satisfy CC&Rs; conversion to Parcel does not eliminate Common Parking rights	KCN/TPG: CC&Rs let Declarant reconfigure/replace surface parking with structures; DCA commitments (license + later dedication) are sufficient	Court: Common Parking Areas must be on‑grade and on Development Areas; CC&Rs do not allow relocation off Development Areas or replacement with non‑on‑grade parking as Common Parking; a license is insufficient — formal dedication consistent with CC&Rs (easement/development designation) required; at approval time, no enforceable dedication/agreement existed, so CC&Rs were violated
Whether TPG pressured KCN and whether TPG breached CC&Rs (e.g., failure to dedicate podium spaces)	Olen: TPG pressured KCN and breached CC&Rs by failing to dedicate podium spaces as Common Parking	TPG: communications privileged or protected; DCA only required negotiating a license, not immediate dedication	Court: Substantial evidence TPG pressured KCN; DCA obligation to “work to negotiate” did not meet CC&R requirements — TPG breached by failing to effectuate a CC&R‑compliant dedication when approval occurred

Key Cases Cited

Lamden v. La Jolla Shores Clubdominium Homeowners Assn., 21 Cal.4th 249 (Cal. 1999) (board deference principle for community associations; different standard for developers/declarants)
Cohen v. S & S Construction Co., 151 Cal.App.3d 941 (Cal. Ct. App.) (developer/declarant owes fiduciary duty to homeowners and may not self‑deal)
Raven’s Cove Townhomes, Inc. v. Knuppe Development Co., 114 Cal.App.3d 783 (Cal. Ct. App.) (developer control can create fiduciary obligations)
Coley v. Eskaton, 51 Cal.App.5th 943 (Cal. Ct. App.) (standard requiring decisions to be ‘‘just and reasonable’’ where CC&R discretion is exercised)
Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc., 109 Cal.App.4th 944 (Cal. Ct. App.) (extrinsic evidence and contract interpretation; substantial‑evidence review on disputed technical terms)