The Ninth Circuit's taken the week off thus far. And the California Court of Appeal has been light.
But today nonetheless grants us an opportunity to look at how condo development sometimes works. In the present case, the development of condos at Ninth and Flower in LA -- next to the Staples Center. Surely a hot commodity in the present market.
One entity develops the condos and a related entity develops the parking structure next door. The parking structure grants an irrevocable license that runs with the land to the condo HOA, which permits the owners of the condos to park there -- a license of no small importance during basketball games if your condo's next door to the Staples Center, I imagine. The license further provides that it shall be at no cost.
Makes sense. Develop condos. Develop parking. Make sure the former has access to the latter. Include parking spaces for free, built into the cost of the condos.
But shortly after the HOA gets formed it's allegedly "dominated" by insiders at the developer. Presumably because no one else has yet moved in, so the developer owns all the condos. At which point the developer allegedly takes away all (or nearly all) of the HOA's rights under the "irrevocable" parking license. Agreeing that parking will no longer be free, but will instead cost the HOA $75/month per space. Which the HOA will pass on to the condo owners. Eventually, as people buy the condos, a "real" HOA board is created, at which point it discovers what the developer did, and sues.
The trial court dismisses the lawsuit for lack of standing. The Court of Appeal reverses.
That seems right to me. The contract was expressly for the benefit of the HOA and the condo owners. If they can't sue for its breach, who can?! Standing too often gets in the way of adjudication on the merits, and often in settings in which there's little reason not to permit people to bring suit. This seems a perfect example.
One benefit of state courts is that they're not limited by the "case and controversy" requirement of Article III, alongside the overly strict interpretation of that provision articulated by federal courts.
