FILED JUL 12 2018 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: BAP No. EC-16-1169-KuBH BAP No. EC-16-1283-KuBH GOLD STRIKE HEIGHTS (Related) HOMEOWNERS ASSOCIATION, Bk. No. 15-90811-E-7 Debtor. Adv. No. 15-09062-E DON E. LEE,

Appellant, MEMORANDUM* v.

GARY FARRAR, Chapter 7 Trustee,

Appellee.

Argued and Submitted on June 21, 2018 at Sacramento, California

Filed – July 12, 2018

Appeal from the United States Bankruptcy Court

* This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. for the Eastern District of California

Honorable Ronald H. Sargis, Chief Bankruptcy Judge, Presiding

Appearances: Appellant Don E. Lee argued pro se; Joshua P. Hunsucker of Neumiller & Beardslee argued for Appellee Gary Farrar, chapter 7 trustee

Before: KURTZ, BRAND, and HURSH,** Bankruptcy Judges.

INTRODUCTION

Appellant Don E. Lee filed a state court complaint against Gold Strike

Heights Association (Gold Strike 2002) and Gold Strike Heights Homeowners

Association (Gold Strike 2007), alleging that the associations had improperly

foreclosed on real property which Mr. Lee leased from Indian Village, LLC

(Indian Village).

After Gold Strike 2007 filed a chapter 71 petition, appellee Gary Farrar,

the chapter 7 trustee (Trustee), removed the case to the bankruptcy court and

filed a motion for judgment on the pleadings. The bankruptcy court granted

Trustee’s motion, finding that Mr. Lee lacked standing because he failed to

** Hon. Benjamin P. Hursh, Chief Bankruptcy Judge for the District of Montana, sitting by designation. 1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code,

, all “Rule” references are to the Federal Rules of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of Civil Procedure.

2 allege sufficient facts to show an injury in fact on any of his claims, and was

attempting to litigate the rights of third parties not before the court. The

bankruptcy court gave Mr. Lee thirty days to file a motion to amend the

complaint or dismiss the case without prejudice prior to the entry of the

judgment in favor of Trustee. Mr. Lee did neither. Accordingly, the court

entered judgment for Trustee on all claims for relief alleged in the complaint.

Thereafter, Trustee moved for attorneys’ fees under

which authorizes fees to a prevailing party in a lawsuit relating to the

enforcement of rights and interests under the Covenants, Restrictions, and

other documents by which a homeowners association operates (Governing

Documents). The bankruptcy court found that the gravamen of Mr. Lee’s

complaint was to enforce Gold Strike 2007’s Governing Document and

awarded Trustee $11, 236 in prevailing party attorneys’ fees against Mr. Lee.

Mr. Lee appeals from the bankruptcy court’s order granting Trustee’s

motion for judgment on the pleadings (BAP No. 16-1169) and from the order

awarding attorneys’ fees to Trustee (BAP No. 16-1283). We AFFIRM both

orders on appeal.

FACTS

A. Background Facts And Allegations In Mr. Lee’s Complaint

Since 2008, Mr. Lee has leased a manufactured home on a lot in the Gold

Strike Heights Subdivision (Property) which was owned by Indian Village.

Mr. Lee’s complaint against Gold Strike 2002 and Gold Strike 2007 arose from

3 the non-judicial foreclosure of 31 lots owned by Indian Village, including the

Property leased by Mr. Lee. The factual background as alleged in the

complaint is as follows.

In 2001, Westwind Development, Inc. (WDI) began developing a small

residential subdivision in Calaveras County, California. As part of the

development process for what is known as the Gold Strike Heights

Subdivision, a homeowners association by the name of Gold Strike Heights

Association was formed; i.e., Gold Strike 2002. By 2004, WDI was experiencing

financial problems and sold 31 lots located within the subdivision to Indian

Village which amounted to 63% of the lots in the subdivision. In 2006, Indian

Village developed one lot with a manufactured home located at 145 Jasper

Way, San Andreas, California, where Mr. Lee resides. Indian Village did not

develop the remaining 30 lots.

In early 2007, Indian Village decided to form a new homeowners

association (HOA) because Gold Strike 2002 was suspended for failing to file

the required forms with the California Secretary of State and pay the required

annual fees to the California Franchise Tax Board. In May 2007, the new

HOA with the name Gold Strike Heights Homeowners Association; i.e., Gold

Strike 2007, was incorporated. Indian Village paid its monthly assessments

to Gold Strike 2007 for a number of years and then ceased making payments

for various reasons, including the alleged mismanagement of the HOA.

In March 2013, Community Assessment Recovery Services (CARS), on

4 behalf of Gold Strike 2002, recorded a Notice of Delinquent Assessment

against each of the 31 lots owned by Indian Village, including Mr. Lee’s

Property. Allegedly, Indian Village notified CARS that Gold Strike 2002 was

a suspended corporation and lacked the right to carry out the foreclosure.

In September 2014, CARS held a foreclosure sale in which Gold Strike

2002 bid its claims for delinquent assessments against each lot and thus

became the putative purchaser of all 31 lots owned by Indian Village. The next

month, CARS recorded 31 documents entitled Certificate of Foreclosure Sale

Subject to Redemption with the Calaveras County Recorder indicating that

Gold Strike 2002 was the purchaser of each of the 31 lots owned by Indian

Village. In January 2015, CARS recorded 31 documents entitled Trustee’s

Deeds Upon Sale with the Calaveras County Recorder indicating that Gold

Strike 2007 was the new owner of each of the 31 lots owned by Indian Village.

After the foreclosure, Mr. Lee had various communications with Mike

Cooper, the president of Gold Strike 2007. Mr. Lee demanded documentation

as to who his new landlord was. He maintained that Gold Strike 2002 was a

distinct entity from Gold Strike 2007. He further asserted that Gold Strike 2002

was a suspended corporation and had no authority to foreclose or transfer the

lots to Gold Strike 2007. Mr. Lee contended that he did not owe rent to Gold

Strike 2007, and had never rented property owned by Gold Strike 2007. In a

March 9, 2015 letter, Gold Strike 2007 gave Mr. Lee 7 days from the receipt of

the letter to pay $2,645.14 owed in rent or it would take steps to recover the

5 rent, including eviction.

On March 20, 2015, Mr. Lee filed the instant lawsuit against Gold Strike

2002 and Gold Strike 2007 in the California Superior Court. He alleged three

causes of action in the complaint. Mr. Lee’s first cause of action for declaratory

relief was based on his allegations that (1) Gold Strike 2002 and Gold Strike

2007 were separate and distinct entities that were not merged; (2) Gold Strike

2002 was a suspended California corporation that could not exercise its

corporate rights and powers and thus was barred from concluding the non-

judicial foreclosure of the 31 lots owed by Indian Village; and (3) Gold Strike

2002 could not legally transfer its interest in Mr. Lee’s Property to Gold Strike

2007. 2 Accordingly, Mr. Lee requested the court to determine the rightful

owner of the Property.

Mr. Lee’s second cause of action for negligent infliction of emotional

distress alleged that under federal law and California law, any new owner of

properties acquired by way of a foreclosure had to provide no less than ninety

(90) days notice before terminating any tenant residency. Mr. Lee alleged that

the president of Gold Strike 2007, Mr. Cooper, and another officer, Paul

2 On the same date, Indian Village also filed a lawsuit against Gold Strike 2002 and 2007, and others. Indian Village sought the identical declaratory relief as Mr. Lee, and alleged causes of action for wrongful foreclosure and sought to quiet title. Trustee also removed this case to the bankruptcy court. After two motions for summary judgment and a trial, the bankruptcy court found in favor of Trustee and quieted title to the 31 lots in favor of Gold Strike 2007 and its successor bankruptcy estate. Indian Village appealed this ruling to the district court where it is apparently still pending.

6 Quent, threatened to immediately evict Mr. Lee if he did not pay them the

rent demanded. Mr. Lee maintained that he suffered “substantial emotional

distress and anguish” when faced with this unreasonable and unlawful

demand from the board members. Mr. Lee’s allegations in the third cause of

action for intentional infliction of emotional distress were similar.

In his prayer for relief, Mr. Lee sought a declaration of various facts

which would essentially render the foreclosure of the lots invalid and make

Indian Village the owner of the lots and Mr. Lee’s landlord. He also sought

compensatory and punitive damages.

B. Gold Strike 2007’s Bankruptcy

After Gold Strike 2007 filed its chapter 7 petition, Trustee removed

Mr. Lee’s state court action to the bankruptcy court. Trustee filed a motion for

judgment on the pleadings, asserting that Mr. Lee did not have standing to

challenge the non-judicial foreclosure sale because he was a tenant and had

no ownership interest in the Property. Trustee further argued that Mr. Lee had

no basis for any claim against the bankruptcy estate (as the successor to Gold

Strike 2007 against whom such claims would be asserted).

Mr. Lee responded, asserting that Trustee misstated the substance of his

claims. Mr. Lee contended that the “gist” of his complaint was for the court

to declare which party was correct as to several “controversial landlord-tenant

issues.” He argued that his action was based on his claims that Gold Strike

2002 and Gold Strike 2007 were separate and distinct entities. Accordingly, the

7 non-judicial foreclosure which was initiated and concluded by Gold Strike

2002, a suspended California corporation, was unlawful. Gold Strike 2002 also

had no authority to transfer its interest in Mr. Lee’s Property to Gold Strike

2007. Mr. Lee concluded that Gold Strike 2007 was not the true owner of the

property and thus had no right to evict him. He argued that any rents he

owed should be paid to the creditor having a deed of trust against the

Property. Finally, Mr. Lee stated that if necessary, he could amend the

complaint to establish standing.

On May 26, 2016, the bankruptcy court entered judgment in favor of

Trustee on all claims in the complaint and against Mr. Lee. In granting the

relief, the bankruptcy court found that Mr. Lee lacked standing because he

failed to allege sufficient facts to show an injury in fact on any of his claims

and was attempting to litigate the rights of third parties not before the court.

The bankruptcy court expressly ordered that Mr. Lee could elect to file a

stipulation or ex parte motion (if a stipulation could not be reached) to dismiss

this adversary proceeding. Additionally, the court afforded Mr. Lee the

opportunity to file a motion for leave to file an amended complaint. Mr. Lee

failed to file either a stipulation or an ex parte motion to dismiss, or a motion

for leave to file an amended complaint.

Trustee filed a timely motion for attorneys’ fees and costs under Civil

Rule 54, as incorporated by Rule 7054. The motion was based on

which authorizes fees to the prevailing party in an action to

8 enforce the governing documents of an HOA. Trustee alleged that Mr. Lee’s

action was to enforce the Governing Documents as shown by various

allegations in the complaint and the prayer for relief. Trustee argued that

Mr. Lee put at issue whether Gold Strike 2007 was the owner of the property

and whether the foreclosure sale had been properly conducted. Trustee

requested $11,236 in attorneys’ fees as the prevailing party.

Mr. Lee opposed, contending that the bankruptcy court had found that

he lacked standing to set aside a non-judicial foreclosure because he had no

interest in the Property. Mr. Lee argued that lack of standing was the sole

ground for the dismissal of the declaratory relief cause of action and there was

no mention of any attempt by him to enforce Governing Documents of any

HOA.

In a Memorandum Opinion And Decision issued after the hearing on

the matter, the bankruptcy court found that based on numerous allegations

in Mr. Lee’s complaint, he asserted a claim to “enforce the Governing

Documents” and thus

applied. The court found

Trustee’s request for fees in the amount of $11,326 reasonable and granted

Trustee’s motion.

Mr. Lee filed a timely appeal from the bankruptcy court’s order granting

Trustee’s motion for judgment on the pleadings and from the order awarding

Trustee prevailing party fees under

.

9 JURISDICTION

The bankruptcy court had jurisdiction pursuant to

and

157(b)(2)(A) and (O). We have jurisdiction under

.

ISSUES

Whether the bankruptcy court erred in granting Trustee’s motion for

judgment on the pleadings; and

Whether the bankruptcy court erred in granting Trustee’s motion for

attorneys’ fees under

.

STANDARDS OF REVIEW

We review de novo whether the bankruptcy court erred when it granted

Trustee judgment on the pleadings. Lyon v. Chase Bank USA, N.A.,

(9th Cir. 2011).

We review the factual determinations underlying an award of attorneys’

fees for clear error, and the legal premises a bankruptcy court uses to

determine an award de novo. Ferland v. Conrad Credit Corp.,

(9th Cir. 2001). The bankruptcy court’s interpretation and

application of a state statute governing the award of attorneys’ fees is also

reviewed de novo. Kona Enters. v. Estate of Bishop,

, 883 (9th Cir.

2000).

If we conclude that the bankruptcy court applied the proper legal

principles and did not clearly err in any factual determination, then we review

the award of attorneys’ fees for an abuse of discretion. Ferland,

1147-1148. A bankruptcy court abuses its discretion if it applies an incorrect

legal standard or misapplies the correct legal standard, or if its factual

findings are illogical, implausible or unsupported by evidence in the record.

Trafficschool.com, Inc. v. Edriver Inc.,

(9th Cir. 2011).

DISCUSSION

A. The bankruptcy court did not err in granting Trustee’s motion for judgment on the pleadings.

1. Legal Standard: Civil Rule 12(c) Motion For Judgment On The Pleadings

Rule 7012, which incorporates Civil Rule 12(c), provides: “After the

pleadings are closed—but early enough not to delay trial—a party may move

for judgment on the pleadings.” The standard governing a Civil Rule 12(c)

motion for judgment on the pleadings is functionally identical to that

governing a Rule 12(b)(6) motion. United States ex rel. Caffaso v. Gen. Dynamics

C4 Sys., Inc.,

, 1054 n. 4 (9th Cir. 2011); Dworkin v. Hustler

Magazine, Inc.,

(9th Cir. 1989). For a complaint to withstand

a Civil Rule 12(c) motion for judgment on the pleadings, it must contain more

detail than “bare assertions” that are “nothing more than a formulaic

recitation of the elements” required for the claim. Ashcroft v. Iqbal,

(2009). Courts must draw upon their “experience and common sense”

when evaluating the specific context of the complaint to determine whether

it contains the necessary detail to state a plausible claim for relief.

.

11 When evaluating a Civil Rule 12(c) motion, the court must construe

factual allegations in a complaint in the light most favorable to the nonmoving

party. Fleming v. Pickard,

(9th Cir. 2009). “‘A judgment on the

pleadings is properly granted when, taking all the allegations in the pleadings

as true, [a] party is entitled to judgment as a matter of law.’” Lyon,

; Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc.,

(9th Cir. 1989).

Although Civil Rule 12(c) does not mention leave to amend, courts have

the discretion in appropriate cases to grant a Civil Rule 12(c) motion with

leave to amend, or to simply grant dismissal of the action instead of entry of

judgment. Cagle v. C&S Wholesale Grocers Inc.,

(E.D. Cal.

2014).

2. Constitutional and Prudential Standing

To invoke the jurisdiction of the federal courts, a plaintiff must establish

“the irreducible constitutional minimum of standing,” consisting of three

elements: injury in fact, causation, and a likelihood that a favorable decision

will redress the plaintiff's alleged injury. Lopez v. Candaele,

(9th Cir. 2010) (citing Lujan v. Defenders of Wildlife,

, 560–61 (1992)).

The injury in fact element is met if it is shown that there has been “‘an

invasion of a legally protected interest which is (a) concrete and

particularized, and (b) actual or imminent, not conjectural or hypothetical.’”

The causation element requires a showing of “a causal connection between

12 the injury and the conduct complained of,” meaning that “the injury has to be

fairly trace[able] to the challenged action of the defendant, and not th[e] result

[of] the independent action of some third party not before the court.”

Under the third element, “it must be likely, as opposed to merely speculative,

that the injury will be redressed by a favorable decision.”

In addition to satisfying constitutional standing, a plaintiff must also

satisfy prudential standing principles. Prudential standing requires that “a

plaintiff . . . assert its own legal rights and . . . not assert the legal rights of

others.” Veal v. Am. Home Mortg. Servicing, Inc. (In re Veal),

(9th Cir. BAP 2011).

3. Analysis

Mr. Lee’s First Cause Of Action For Declaratory Relief: Declaratory

relief is an equitable remedy distinctive in that it allows adjudication of rights

and obligations on disputes regardless of whether claims for damages or

injunction have arisen. See

. The court “may declare the rights

and other legal relations of any interested party seeking such a declaration,

whether or not further relief is or could be sought.”

Mr. Lee’s declaratory relief cause of action asked the bankruptcy court

to declare who the rightful owner of his Property was as between Gold Strike

2002, Gold Strike 2007, and Indian Village. He alleged that: (1) Gold Strike

2002 and Gold Strike 2007 were separate and distinct entities; (2) the non-

judicial foreclosure was initiated and concluded by Gold Strike 2002, a

13 suspended corporation, which could not lawfully foreclose on Indian Village;

and (3) Gold Strike 2002 could not lawfully transfer its interest in Mr. Lee’s

Property to Gold Strike 2007. In his prayer for relief, Mr. Lee sought a

declaration that Gold Strike 2002/2007 could not exercise its corporate rights

and powers and thus was barred from first initiating and then concluding the

non-judicial foreclosure.

As the bankruptcy court found, these allegations constituted a challenge

to the validity of the non-judicial foreclosure sale. As a result of the alleged

wrongful foreclosure, Mr. Lee sought to have the bankruptcy court declare the

rights of parties not before the court, i.e., Indian Village. Nowhere in this

cause of action does Mr. Lee allege an injury in fact that constitutes an

invasion of a legally protected interest as to him. Under California law, the

general rule is that only parties with an interest in a loan secured by real

property or in the underlying property may attempt to set aside a non-judicial

foreclosure. Bank of Am. Leasing Capital LLC v. 3 Arch Tr. Servs. Inc.,

(2009). As a tenant, Mr. Lee does not have an interest

in the loan or in the underlying Property. Accordingly, he does not have

standing to question the validity of the non-judicial foreclosure.

Further, although Mr. Lee asserted in his response to Trustee’s motion

that he had an option from a third party to purchase the Property from that

party, that also is not sufficient to give him standing. A contract conferring an

option to purchase is an irrevocable and continuing offer to sell, and conveys

14 no interest in land to the optionee, but vests in him only a right in personam

to buy at his election. Warner Bros. Pictures v. Brodel,

, 772 (1948).

Finally, absent an interest in the Property, Mr. Lee does not have standing to

ask the court to quiet title in the Property. Chao Fu, Inc. v. Chen,

(2012).

In the end, Mr. Lee cannot show that he was personally injured. Instead,

he was asserting the rights and claims of Indian Village which was not a party

to the litigation. The general prohibition against allowing litigants to enforce

rights of third parties exists for two reasons: First, courts should shy away

from adjudicating rights unnecessarily, specifically because the purported

holders of those rights may choose not to enforce them “or will be able to

enjoy them regardless of whether the in-court litigant is successful or not.”

Singleton v. Wulff,

, 113–14 (1976). Second, permitting parties to

assert the rights of third parties will frustrate the court’s efforts to properly

determine issues as “courts depend on effective advocacy” and “third parties

themselves usually [are] the best proponents of their own rights.”

There

was thus good reason for the bankruptcy court to conclude that Mr. Lee

lacked standing on this cause of action.

Mr. Lee’s Second Cause Of Action for Negligent Infliction of Emotional

Distress: Under California law, negligent infliction of emotional distress is a

form of the tort of negligence, to which the elements of duty, breach of duty,

causation, and damages apply. Huggins v. Longs Drug Stores Cal., Inc.,

4th 124, 129 (1993). A right to recover for emotional distress as a “direct

victim” arises from the breach of a duty that is assumed by the defendant or

imposed on the defendant as a matter of law, or that arises out of the

defendant’s preexisting relationship with the plaintiff. Burgess v. Super. Ct.,

, 1072 (1991). With rare exceptions, a breach of the duty must

threaten physical injury, not simply damage to property or financial interests.

Potter v. Firestone Tire & Rubber Co.,

(1992).

The “serious emotional distress” required for negligent infliction of

emotional distress is functionally the same as the “severe emotional distress”

required for intentional infliction of emotional distress. Wong v. Tai Jing,

(2010). The California Supreme Court has set a “high

bar” for what can constitute severe emotional distress. Hughes v. Pair,

(2009). Severe emotional distress means emotional distress

of such substantial or enduring quality that no reasonable person in civilized

society should be expected to endure it. Wong,

.

The allegations in Mr. Lee’s complaint under this cause of action are

nothing more than bare assertions and legal conclusions without factual

allegations to support them. Mr. Lee has not pled that any defendant in this

action owes him a duty of any kind. In his opposition filings, Mr. Lee provides

no further argument regarding any purported duty owed to him by the

defendants. Even if there were such a duty, which he did not allege, Mr. Lee’s

complaint contained no allegations that he was at risk of physical harm.

16 Where there is no accompanying personal, physical injury, the plaintiff must

show that the emotional distress was “serious.” Wong,

. Mr. Lee does not allege any facts that show the type of severe emotional

distress required for negligent infliction of emotional distress, instead making

the bare allegation that he has suffered “substantial emotional distress and

anguish.” This conclusory statement is insufficient to raise a right to relief

above the speculative level.

Mr. Lee attached correspondence between Mr. Cooper and himself to

his complaint. But none of this correspondence demonstrates emotional

turmoil or the sort of outrageous conduct necessary for this kind of claim.

In the end, Mr. Lee failed to establish the necessary injury in fact for

standing. Even if Mr. Lee had established the requirements for standing,

construing the complaint in a manner most favorable to Mr. Lee, his bare

assertions do not state a cause of action for negligent infliction of emotional

distress. Accordingly, the bankruptcy court properly granted Trustee’s motion

for judgment on the pleadings on this cause of action.

Mr. Lee’s Third Cause Of Action For Intentional Infliction of Emotional

Distress: Under California law, the elements of the tort of intentional

infliction of emotional distress are: (1) extreme and outrageous conduct by the

defendant with the intention of causing, or reckless disregard of the

probability of causing, emotional distress; (2) the plaintiff’s suffering severe

or extreme emotional distress; and (3) actual and proximate causation of the

17 emotional distress by the defendant’s outrageous conduct. Christensen v.

Super. Ct.,

(1991).

The bankruptcy court properly noted that Mr. Lee’s cause of action for

intentional infliction of mental distress suffers from the same defect as his

claim for negligent infliction of emotional distress. He did not plead any facts

that may constitute “severe emotional distress.” Moreover, neither Mr. Lee’s

correspondence with Mr. Cooper nor his response to Trustee’s motion show

any facts which demonstrate conduct so extreme as to exceed all bounds of

that usually tolerated in a civilized community.

Both severe or extreme emotion distress and outrageous conduct are

elements required for an intentional infliction of emotional distress claim.

Both those elements are not met here.

Leave to Amend: Although Civil Rule 12(c) does not mention leave to

amend, courts have the discretion in appropriate cases to grant a Civil Rule

12(c) motion with leave to amend. Here, the bankruptcy court gave Mr. Lee

ample time and opportunity to dismiss his complaint without prejudice or to

file a motion for leave to amend his complaint prior to entry of judgment for

Trustee. He did neither. Accordingly, the bankruptcy court did not err in

entering judgment in favor of Trustee.

18 B. The bankruptcy court did not err by awarding Trustee attorneys’ fees under

.

(c) provides:

In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorneys’ fees and costs.

defines what is a governing document:

Governing documents means the declaration and any other documents, such as bylaws, operating rules, articles of incorporation, or articles of association, which govern the operation of the common interest development or association.

Whether attorneys' fees may be allowed under the statute is not

dependent on a determination of the dispute concerning the governing

documents but that it was put at issue in the action. For the attorneys’ fees

provision of

to apply, the court must find that a

plaintiff’s complaint asserts a claim to “enforce the governing documents.” A

“claim based on a right or remedy under the governing documents,” is an

action to enforce the governing documents. Salawy v. Ocean Towers Hous.

Corp.,

(2004).

To determine whether an action is “an action to enforce the governing

documents,” courts look to the gravamen of the complaint. Salehi v. Surfside

III Condo. Owners’ Ass’n,

(2011); see also Rancho

Mirage Country Club Homeowners Ass’n v. Hazelbaker,

,

19 259–260 (2016) (in determining whether an action is one “‘to enforce the

governing documents’ in the meaning of section 5975,” courts should focus

on the “gravamen” of the complaint, the “nature of the dispute between the

parties,” and “the nature of the relief sought”); Salawy,

(an action is one to enforce the governing documents if “the essence of the

claim falls within the enforcement of the governing documents”). The court

is therefore required to do more than review the allegations of the operative

pleading to see if it references duties under the CC & R’s. Rather, it must

ascertain the overall gist or “essence” of the action. Farber, 141 Cal.App.4th at

1012.

The question before us is how to apply the statutory language in

to a given factual and procedural context. Initially, we

review the general allegations in Mr. Lee’s complaint which were

incorporated in each cause of action. These general allegations, as relevant to

Plaintiff's contention that the bankruptcy estate's asserted interests in the

Property are defective, include the following:

A. (36) “Under California law, an HOA can only collect assessments from its membership and thus compel their payment if certain acts are undertaken, the most critical one being that the board of directors must meet and set the annual dues each year. If it fails to meet each year and set a new rate, the existing dues rate continues until changed.” Complaint ¶ 36.

B. (37) “The 2002 HOA, the ‘Gold Strike Heights Association’, never set any rate for annual dues. The 2007 HOA, the ‘Gold

20 Strike Heights Homeowners Association’, has never set any rate for annual dues and lacks the right to do so. The governing documents filed by Frank Meager in 2002 did not set a rate for dues and no board of directors has ever done so.” Complaint ¶ 37.

C. (39) “It appears that the non-judicial foreclosure is based entirely upon a failure of Indian Village to pay monthly assessments on 31 lots based upon a monthly rate of $84.00. However, such a rate was never set by the 2002 HOA nor the 2007 HOA. In fact, no rate of any kind has ever been set by either HOA.” Complaint ¶ 39.

D. (40) “The 2002 HOA, the ‘Gold Strike Heights Association’, may have the right under the 2002 governing documents recorded with the County of Calaveras to set a monthly or annual rate for assessments but it never has. The 2007 HOA, the ‘Gold Strike Heights Association’, does not have the right to set such an assessment and has never tried to do so.” Complaint ¶ 40.

E. (44) “However, because the 2007 HOA lacked any right to collect such assessments, the foreclosure process was begun in 2013 under the name of Defendant GOLD STRIKE 2002 which may have had such rights at one time but could not legally exercise them as a suspended corporation.” Complaint ¶ 44.

F. (50) “All notices and documents recorded with the Calaveras County Recorder in the years 2013 and 2014 and served upon Indian Village in regard this assessment dispute and the subsequent illegal foreclosure action clearly indicated that the foreclosing entity was the ‘Gold Strike Heights Association’ (Defendant GOLD STRIKE 2002) formed in 2002. It was only when the illegal foreclosure was finally completed in early 2015

21 with recording of a trustee's deed that ownership of 145 Jasper Way was illegally transferred into the 2007 corporate entity, the ‘Gold Strike Heights Homeowners Association’.” Complaint ¶ 50.

G. (51) “At all times when this foreclosure was carried out, the senior deeds of trust in existence on each of 31 lots, far exceeded the value of each lot by large margins. Thus, there was no valid reason to take the foreclosure action initiated by the Defendant GOLD STRIKE 2007 except to strip Indian Village of its property and voting rights and thus pave the way for the Defendant to dissolve the HOA and thus attempt to avoid all liability for their years of misconduct.” Complaint ¶ 51.

H. (59) “On October 31, 2014, Plaintiff LEE sent a letter to Mike Cooper in which LEE challenged the claim that the new owner of the property located at 145 Jasper Way was the ‘Gold Strike Heights Homeowners Association’ (Defendant GOLD STRIKE 2007). LEE told Cooper that the ‘Gold Strike Heights Association’ and the ‘Gold Strike Heights Homeowners Association’ were not the same entity and in fact were distinct and separate corporate entities and thus not interchangeable as was contended by Mike Cooper. Attached as Exhibit ‘O’ to this complaint is a true and correct copy of this letter.” Complaint ¶ 59.

I. (73) “When ‘Gold Strike Heights Homeowners Association’ (Defendant GOLD STRIKE 2007) contracted with ‘Community Assessment Recovery Services' to start the non-judicial foreclosure process against Indian Village on the basis that Indian Village owed thousand of dollars in delinquent assessments, there was no possibility whatsoever of collecting any money from such a foreclosure proceeding as the senior liens on each of the properties far exceed the market value of

22 any of the 31 lots.” Complaint ¶ 73.

J. (74) “Thus, the non-judicial foreclosure action orchestrated by ‘Gold Strike Heights Homeowners Association’ (Defendant GOLD STRIKE 2007) was for purposes other than collecting any delinquent dues.” Complaint ¶ 74.

K. (75) “As this non-judicial foreclosure applied to Indian Village Estates, the actual purpose was to take way ownership of all the land owned by Indian Village Estates and thus take away any opposition by Indian Village to plans to dissolve Defendant GOLD STRIKE 2007.” Complaint ¶ 75.

L. (86) “Defendants GOLD STRIKE 2002 and GOLD STRIKE 2007 never had the legal authority to foreclose, i.e., the authority to exercise the power of sale under California law to collect the alleged delinquent assessments, resulting in the non-judicial foreclosure sale being void ab initio.” Complaint ¶ 86.

M. (88) “None of the Defendants were ever a beneficiary or assignee of any beneficiary of any delinquent assessments recorded against the subject property. Accordingly, they wrongfully caused the recording or the Notice of Default, Notice of Trustee's Sale, and any Trustee's Deed Upon Sale against the subject property.” Complaint ¶ 88.

N. (99) “Defendants GOLD STRIKE 2002 and GOLD STRIKE 2007 never had the legal authority to foreclose, i.e., the authority to exercise the power of sale under California law to collect the alleged delinquent assessments, resulting in the non-judicial foreclosure sale being void ab initio.” Complaint ¶ 99.

O. (101) “None of the Defendants were ever a beneficiary or

23 assignee of any beneficiary of any delinquent assessments recorded against the subject property. Accordingly, they wrongfully caused the recording of the Notice of Default, Notice of Trustee's Sale, and any Trustee's Deed Upon Sale against the subject property.” Complaint ¶ 101.

P. Prayer for Relief Paragraph 1: “For a declaration that the 2002 and the 2007 Gold Strike corporation are now and have always been separate and distinctive corporate entities and that have not been merged either by official action or by operation of law,. . . .”

The bankruptcy court correctly found that these allegations put at issue

the rights arising from the Governing Documents: (1) Gold Strike 2007 could

not make assessments (which are rights arising under the Governing

Documents); (2) No assessments were ever set by either Gold Strike 2002 or

Gold Strike 2007 (which are issues arising under the Governing Documents);

(3) Gold Strike 2007 does not have the right to set assessments (which are

rights arising under the Governing Documents); (4) The non-judicial

foreclosure is based on assessments that were not set by Gold Strike 2002 or

Gold Strike 2007 (which are rights arising under the Governing Documents);

(5) The notices and documents relate to disputed assessments and subsequent

illegal foreclosure based on such disputed assessments (which are rights

arising under the Governing Documents); (6) There was no valid reason for

Gold Strike 2007 to conduct the non-judicial foreclosure actions (which are

rights relating to the assessments which are asserted by Plaintiff not to be

24 proper under the Governing Documents); (7) The non-judicial foreclosure

actions were taken to dissolve the homeowners association (which relates to

the rights and powers of the homeowners association and relationship to the

member arising under the Governing Documents); (8) Gold Strike 2002 and

Gold Strike 2007 were separate entities (and Gold Strike 2007 is not permitted

to exercise the powers under the Governing Documents); (9) The non-judicial

foreclosure sale was based on asserted unpaid assessments (which Plaintiff

asserts were not properly made under the Governing Documents); (10) The

non-judicial foreclosure sales were conducted by Gold Strike 2007 for

purposes of then collecting delinquent dues (which are rights and powers

arising under the Governing Documents); (11) The purpose of the non-judicial

foreclosure was to take ownership of the land away from Indian Village , to

remove opposition (to the conduct of Gold Strike 2007 management under the

Governing Documents), and dissolve the homeowners association; (12) The

action of Gold Strike 2007 was not for the purposes of collecting delinquent

assessments (which are rights and powers arising under the Governing

Documents); (13) Gold Strike 2002 and Gold Strike 2007 never had the legal

authority to foreclose (which are rights and powers arising under the

Governing Documents); (14) Gold Strike 2002 and Gold Strike 2007 were not

beneficiaries of any delinquent assessment (which are rights arising under the

Governing Documents); (15) Gold Strike 2002 and Gold Strike 2007 did not

have authority under California law to collect the alleged delinquent

25 assessments (which are rights and powers arising under the Governing

Documents); and (16) Plaintiff requests that the court determine that Gold

Strike 2002 and Gold Strike 2007 were and are separate legal entities (and

thereby Gold Strike 2007 cannot exercise and enforce the rights and powers

under the Governing Documents).

The bankruptcy court’s findings support the conclusion that Mr. Lee’s

complaint was an action to enforce the Governing Documents. Contrary to

Mr. Lee’s contentions on appeal, the essence of the allegations in the

complaint is that Gold Strike 2002 and 2007 participated in the foreclosure

process in violation of the Governing Documents and that their enforcement

of the foreclosure provisions of the Governing Documents were otherwise

invalid.

Mr. Lee argues that the gravamen of his complaint was to resolve

landlord/tenant issues. He further asserts that he was not seeking to enforce

the Governing Documents but mentioned them only to provide a context for

his concerns over who was the proper owner of his Property. The fact that

Mr. Lee did not expressly allege a violation of the Governing Documents or

claim that he was seeking to enforce the Governing Documents in any of his

causes of action does not change the nature of the claim asserted. Regardless

of how he titled his causes his action, the gravamen or gist of his complaint

was to enforce the Governing Documents with respect to the non-judicial

foreclosure. See Rancho Mirage Country Club Homeowners Assn.,

at 259–260 (even though the complaint “was framed as an action to enforce [a

settlement] agreement,” the “gravamen” of the complaint was to enforce the

Governing Documents because the plaintiff claimed the defendants did not

take steps to bring the property into compliance with the CC & Rs); see also

Cutujian v. Benedict Hills Estates Assn.,

(1996) (for

statute of limitations purposes, even though the plaintiff labeled his cause of

action “nuisance,” the association's violation of its duty to the plaintiff under

the CC & Rs “gave rise to liability for the nuisance”).

Mr. Lee also contends that Trustee is judicially estopped from arguing

that the complaint was an action to enforce the Governing Documents because

the bankruptcy court entered judgment for Trustee on his motion for

judgment on the pleadings based on Mr. Lee’s lack of standing. For judicial

estoppel to apply:

Several factors typically inform the decision whether to apply the doctrine in a particular case: First, a party's later position must be ‘clearly inconsistent’ with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create ‘the perception that either the first or the second court was misled,’ Absent success in a prior proceeding, a party's later inconsistent position introduces no ‘risk of inconsistent court determinations, and thus poses little threat to judicial integrity. A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.

27 New Hampshire v. Maine,

(2001) (citations omitted).

see also Power Agent, Inc. v. Electronic Data Sys. Corp.,

(9th

Ci5r. 2004) (defining judicial estoppel as “[t]he principle that a litigant may

not benefit by making directly contradictory arguments regarding the same

dispute in different tribunals.”).

The doctrine of judicial estoppel is not applicable under these

circumstances. Trustee’s motion for a judgment on the pleadings under Civil

Rule 12(c) based on lack of standing is a distinct dispute from one seeking

attorneys’ fees under

. Furthermore, even if an action is

dismissed for lack of standing,

(c) still applies such that

the prevailing party is entitled to reasonable attorneys’ fees. Farber v. Bay View

Terrace Homeowners Ass’n,

(2006) (“The

mandatory attorney's fees and costs award under section [5975], applies when

a plaintiff brings an action to enforce such governing documents, but is

unsuccessful because he or she does not have standing to do so.”) .

Finally, Mr. Lee argues that the bankruptcy court improperly considered

factors outside the complaint that “convinced” the court that he was

attempting to attack the foreclosure and enforce the Governing Documents.

Specifically, the court noted Mr. Lee’s active participation in other aspects of

the bankruptcy case. Mr. Lee contends that this was error because “the

complaint at issue says what it says and this appeal can be properly decided

within the four corners of the complaint and the attached exhibits.”

28 Mr. Lee’s argument is without merit. The bankruptcy court throughly

examined Mr. Lee’s complaint and looked at the substance of the claims

asserted and relief sought in determining whether his action was one to

enforce the Governing Documents within the meaning of

. Upon our own review, the detailed allegations of the complaint show

that Mr. Lee was seeking to enforce the Governing Documents in order to

prove that neither Gold Strike 2002 or Gold Strike 2007 had the authority to

foreclose under those documents. In any event, to the extent that the court

relied on Mr. Lee’s extracurricular activities for its decision, it was harmless

error that we ignore. Van Zandt v. Mbunda (In re Mbunda),

(9th Cir. BAP 2012), aff'd,

(9th Cir. 2015).

Because Mr. Lee makes no arguments regarding the reasonableness of

Trustee’s fees, those arguments are waived. Smith v. Marsh,

(9th Cir. 1999).

In sum, we conclude that the bankruptcy court properly awarded

Trustee prevailing party attorneys’ fees under

.

CONCLUSION

For the reasons discussed above, we AFFIRM both orders on appeal.

29