Smart Corner Owners Assn. v. CJUF Smart Corner LLC ( 2021 )


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  • Filed 5/20/21
    CERTIFIED FOR PUBLICATION
    COURT OF APPEAL, FOURTH APPELLATE DISTRICT
    DIVISION ONE
    STATE OF CALIFORNIA
    SMART CORNER OWNERS                        D076775
    ASSOCIATION,
    Plaintiff and Appellant,
    (Super. Ct. No. 37-2017-
    v.                                  00037690-CU-CD-CTL)
    CJUF SMART CORNER LLC et al.,
    Defendants and Respondents.
    APPEAL from a judgment of the Superior Court of San Diego County,
    Ronald L. Styn, Judge. Reversed and remanded with directions.
    Epsten, Anne L. Rauch, Trinette S. Sachrison, Gordon A. Walters;
    Kasdan Lippsmith Weber Turner, Kenneth S. Kasdan, Michael D. Turner
    and Brittany L. Grunau for Plaintiff and Appellant.
    Lorber, Greenfield & Polito, Bruce W. Lorber, Robert B. Titus;
    McCormick, Barstow, Sheppard, Wayte & Carruth and Scott M. Reddie for
    Defendants and Respondents.
    INTRODUCTION
    Plaintiff Smart Corner Owners Association (the Association), a
    California nonprofit mutual benefit corporation, filed a construction defect
    action against the developers of a residential condominium tower. In 2019,
    the trial court granted the developers’ motion for summary judgment on the
    ground that the Association failed to obtain the consent of more than 50
    percent of its condominium owner members before filing the instant action as
    required by the governing declaration of covenants, conditions, and
    restrictions (CC&Rs). In concluding the Association’s complaint was invalid,
    the court rejected the Association’s argument that a subsequent vote of
    ratification, held after the filing of the operative complaint, could satisfy the
    member consent requirement. The court applied the holding of Branches
    Neighborhood Corp. v. CalAtlantic Group, Inc. (2018) 
    26 Cal.App.5th 743
    (Branches), which involved a similar member vote requirement, and also
    resulted in dismissal of an association’s construction defect claims.
    After the Association filed its notice of appeal, the Legislature enacted
    Civil Code section 5986,1 effective January 1, 2020. Section 5986 renders
    prelitigation member vote requirements⎯like those at issue here and in
    Branches⎯null and void. The newly enacted statute abrogates the defense
    that noncompliance with such conditions defeats a construction defect claim.
    (§ 5986, subd. (b).) The Legislature also expressly provided the statute would
    apply retroactively “to claims initiated before the effective date of this
    section, except if those claims have been resolved through an executed
    settlement, a final arbitration decision, or a final judicial decision on the
    merits.” (§ 5986, subd. (d), italics added.)
    1    All undesignated statutory references are to the Civil Code unless
    otherwise specified.
    2
    The Association seeks reversal of the judgment on the ground that its
    claims had not yet been resolved through a “final judicial decision on the
    merits” when section 5986 became effective, and it is therefore entitled to the
    benefits of the new legislation. It also contends the prelitigation vote
    requirement violates state public policy. We agree.
    We conclude a “final judicial decision on the merits” within the
    meaning of section 5986, subdivision (d), does not encompass a judgment that
    was not final on appeal as of the statute’s effective date. Section 5986
    therefore applies retroactively to the Association’s claims and compels
    reversal of the judgment entered against it. We also hold, as an independent
    ground for reversal, that the prelitigation vote requirement at issue in this
    case violates fundamental state public policy. Accordingly, we reverse the
    judgment and direct the trial court to enter a new order denying the
    developers’ motion for summary judgment.
    FACTUAL AND PROCEDURAL BACKGROUND2
    I.
    The Smart Corner Project
    CJUF Smart Corner, LLC (CJUF), Canyon-Johnson Realty Advisors,
    LLC, Canyon-Johnson Urban Fund, LP, Smart Corner, LLC (collectively, the
    CJUF Group), and Lankford & Associates, Inc. (together with the CJUF
    2     Consistent with the standard of review that applies to an order
    granting summary judgment, we present the facts in the light most favorable
    to the Association as the nonmoving party, “liberally construing [its]
    evidentiary submission while strictly scrutinizing [Developers’] own showing,
    and resolving any evidentiary doubts or ambiguities in [the Association’s]
    favor.” (Saelzler v. Advanced Group 400 (2001) 
    25 Cal.4th 763
    , 768; Light v.
    Dept. of Parks & Recreation (2017) 
    14 Cal.App.5th 75
    , 81.)
    3
    Group, the Developers) are an associated group of real estate owners and
    developers.3 In 2004, CJUF contracted with Hensel Phelps Construction
    Company (Hensel Phelps) for the construction of the Smart Corner
    condominium project (Smart Corner or project) at 1080 Park Boulevard in
    downtown San Diego. Smart Corner is a 19-story mixed-use development
    with 301 residential units and common areas.
    On May 24, 2007, the project architect issued its certificate of
    substantial completion for the project. On May 24, the City of San Diego (the
    City) issued a temporary certificate of occupancy for the project, although this
    temporary certificate of occupancy was not extended and lapsed after 30
    days. As of May 24, all but 25 of the project’s residential units lacked flooring
    or appliances and could not be lawfully occupied. As of May 24, the City had
    not yet completed its inspections of the project. Structural, fire alarm, fire
    sprinklers, and electrical inspections were completed after May 24.
    On July 6, 2007, the building failed its electrical system inspection. On
    July 10, the building failed structural inspection; it did not pass structural
    inspection until July 17. The City issued certificates of occupancy for 25
    residential units and the common areas on July 6, and for the project
    generally on July 17. The City continued to issue certificates of occupancy for
    the remaining residential units in the months that followed. On July 10,
    2007, CJUF recorded a notice of completion for the project.
    3    CJUF was the developer of the Smart Corner project. Canyon-Johnson
    Urban Fund, LP is a member and 85 percent owner of CJUF. Smart Corner,
    LLC is a member and 15 percent owner of CJUF. Canyon-Johnson Realty
    Advisors, LLC is the general partner of Canyon-Johnson Urban Fund, LP.
    Lankford & Associates, Inc. entered into a development agreement with
    CJUF to provide development services for the project.
    4
    On August 27, 2007, CJUF, as declarant,4 caused an amended and
    restated declaration of CC&Rs to be recorded for Smart Corner. Among the
    enumerated powers of the Association was the power under section 4.3.11 of
    the CC&Rs to “initiate, defend, release, settle or intervene in mediation,
    arbitration, judicial or administrative proceedings on behalf of the
    Association in matters pertaining to . . . any and all claims, causes of action,
    damages and suits for defects relating in any way to the design or
    construction of the Association Property or Common Area or any portion
    thereof, on behalf of the Owners . . . .”
    Before the Association could initiate an action against CJUF, however,
    the Association was required to comply with a prelitigation vote provision set
    forth in section 4.4.4 of the CC&Rs (section 4.4.4), which stated:
    “Members’ Approval of Certain Actions. In the event that any
    claim or other actions brought by the Association against
    Declarant, including, but not limited to, claims brought under
    California Civil Code Section 895 et seq., or any other applicable
    laws involving allegations of construction defects relating to the
    Association Property or the Common Area that are not resolved
    pursuant to the non-adversarial procedures set forth in California
    Civil Code Sections 910 through 938, the Association shall not
    4     The CC&Rs defined “declarant” to mean CJUF as well as its successors
    or assigns, “if such successors and assigns acquire any or all of Declarant’s
    interest in the Property for the purpose of purchase or sale, excluding any
    Owners, and Declarant has expressly transferred or assigned to such
    successors or assigns its rights and duties as Declarant to a portion or all of
    the Project. For any successor or assignee of ‘Declarant’ to be deemed a
    Declarant under the terms of this Declaration, Declarant shall record in the
    County a certificate so designating said successor or assignee as Declarant.”
    5
    initiate a further action or procedure under Section 17.4 [5] or
    otherwise without first obtaining the consent of the Owners other
    than Declarant, constituting more than fifty percent (50%) of the
    Owners of the Association at a meeting or election of the
    Association conducted in accordance with the provisions of
    California Corporations Code Sections 7510 et seq. and 7613.”
    (Italics added.)
    II.
    The Construction Defect Action
    A.    The Association’s Notice of Construction Defect Claims
    On July 6, 2017, the Association provided the CJUF Group and Hensel
    Phelps with notice of a construction defect claim and notice of commencement
    of legal proceedings under sections 895, et seq. and 910, et seq. of the Right to
    Repair Act and section 6000 of the Davis-Stirling Common Development Act
    5     Section 17.4, “Alternative Dispute Resolution,” provided that “[t]he
    purpose of this Section 17.4 is to provide an expedited means of resolving any
    claims, disputes and disagreements which may arise between an Owner and
    the Association and Declarant after the close of escrow or other conveyance of
    any portion of the Property by Declarant concerning the Property, that are
    not resolved pursuant to any applicable statutory dispute resolution
    procedures (individually referenced to herein as ‘Dispute’ and collectively as
    ‘Disputes.’).” It set forth provisions requiring mediation and arbitration of
    Disputes.
    6
    (Davis-Stirling Act).6 The notice included a preliminary list of numerous
    alleged defects, including defects in the project’s exterior barrier coating,
    windows, door casings and doors, private decks, waterproofing, concrete,
    bathtubs and showers, roof membrane and roof flashing, roof laps and seals,
    tower floors, plumbing, venting, garage, and parking structure.
    On September 5, 2017, the parties stipulated to extend until September
    29 the deadline for completing statutory prelitigation requirements for
    conducting a first visual inspection, and for the Developers’ service of
    responses to the Association’s request for documents and production of
    documents to the Association. On September 27, the CJUF Group and
    Hensel Phelps notified the Association of their election to opt out of the Right
    to Repair Act and Davis-Stirling Act prelitigation procedures.
    On October 6, 2017, the Association filed a complaint against the CJUF
    Group and Hensel Phelps, alleging causes of action for negligence, strict
    liability, breach of warranties, and violation of construction standards set
    forth in sections 896, et seq. In its operative first amended complaint filed
    February 14, 2018, the Association asserted a single cause of action against
    6     The Davis-Stirling Act was enacted in 1985 and “consolidated the
    statutory law governing condominiums and other common interest
    developments.” (Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 
    33 Cal.4th 73
    , 81 (Villa De Las Palmas).) The Davis-Stirling Act is now codified
    at sections 4000 to 6150 of the Civil Code, formerly sections 1350 to 1376.
    (See Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 
    2 Cal.App.5th 252
    , 258.) Section 6000 imposes requirements with which an
    association must comply before filing construction defect claims against a
    builder, developer, or general contractor of a common interest development.
    (See § 6000, subds. (a) - (r).) Service of a notice of commencement of legal
    proceedings under section 6000 tolls all applicable statutes of limitation and
    repose. (§ 6000, subd. (b).)
    7
    the Developers7 and Hensel Phelps for violation of construction defect
    standards under section 896, et seq.
    In their respective answers to the first amended complaint, the
    Developers asserted defenses based on the Association’s alleged non-
    compliance with CC&R requirements for maintaining a claim, and based on
    the running of the statute of repose in section 941, subdivision (a).8
    On May 14, 2018, the Association filed the declaration of its attorney,
    David Peters, who averred that while the Association did not agree that the
    prelitigation voting provision in section 4.4.4 was enforceable, “by February
    15, 2018, more than a majority of the members voted: (1) in favor [of] making
    a claim under Article IV, Section 4.4.4, (2) filing a lawsuit and/or (3) to ratify
    any past actions by the Board regarding the pursuant [sic] of construction
    defect claims against the Declarant and other responsible entities.”
    B.    The Branches Decision
    On August 24, 2018, Division Three of the Fourth District Court of
    Appeal published Branches, a case involving alleged noncompliance with a
    pre-claim vote requirement in the CC&Rs of a residential condominium
    development. (Branches, supra, 26 Cal.App.5th at p. 749.) The association
    filed a demand for arbitration of construction defect claims against a
    developer without first obtaining the vote of at least 51 percent of its
    7     Lankford & Associates, Inc. was not named as a defendant in the first
    amended complaint. It was added as a defendant on October 18, 2018, when
    the Association filed a Doe amendment substituting it as Doe 1 to the first
    amended complaint.
    8      Subdivision (a) of section 941 provides, “[e]xcept as specifically set forth
    in this title, no action may be brought to recover under this title more than 10
    years after substantial completion of the improvement but not later than the
    date of recordation of a valid notice of completion.”
    8
    members as required by the community’s CC&Rs. (Id. at pp. 748–749.) The
    association later held a membership meeting during which 92 of 93 members
    present voted to ratify the prosecution of the construction defect claim
    against the developer. (Id. at p. 748.)
    The developer moved for summary judgment on the ground that the
    association had failed to comply with the CC&Rs by obtaining owners’
    consent to arbitration before the claim was filed. (Branches, supra, 26
    Cal.App.5th at p. 749.) The arbitrator agreed, reasoning that because the
    CC&Rs specified the requisite consent was to be obtained “prior to” initiating
    a claim, the later ratification vote was ineffective. (Ibid.) The trial court
    entered judgment confirming the arbitration award.
    On appeal, the association argued the arbitrator had exceeded his
    powers by issuing an award that violated the association’s “ ‘unwaivable’ ”
    statutory right to ratification. (Branches, supra, 26 Cal.App.5th at p. 751.)
    The appellate court found that none of the statutes cited by the association
    established a right to ratification or prevented an association’s CC&Rs from
    requiring member approval “[p]rior to” the board instituting a legal claim.
    (Id. at pp. 753–757.)
    The Branches court also rejected the association’s position that the
    arbitrator’s decision violated state public policy favoring ratification.
    (Branches, supra, 26 Cal.App.5th at pp. 757–758.) Rather, the court
    concluded public policy favored placing limits on the authority of community
    development associations. (Id. at pp. 757–758, citing §§ 4065, 4070, 4230,
    4350, 4360, 4365, 5300, 5305, 5310 & 6150.)
    The Branches court found particular relevance in section 6150, which
    requires notice to the membership and a meeting before legal action may be
    instituted against a developer. (Branches, supra, 26 Cal.App.5th at p. 758.)
    9
    In the court’s view, the member voting requirement in the CC&Rs merely
    went “a step further” than section 6150 by “requiring affirmative consent of a
    quorum of the members ‘prior to’ instituting such action.” (Ibid.) It viewed
    the member voting requirement to be “consistent with the aims of the [Davis-
    Stirling] Act⎯to balance the association’s need to operate efficiently with the
    rights of its members to be informed and participate in decisions that could
    impact the association for years, if not decades, to come.” (Ibid.) The court
    further stated: “[The association] would have us believe that there is a ‘right
    to ratify’ after the fact, as if that confers some benefit on the owners. It does
    not; it ignores their explicit right to consent beforehand, before a road has
    been taken that will be difficult, expensive, and time consuming.” (Ibid.)
    Accordingly, the court affirmed confirmation of the arbitrator’s award
    dismissing the association’s construction defect claims. (Ibid.)
    C.    The Developers’ Motion for Summary Judgment
    In December of 2018, the Developers moved for summary judgment,
    arguing there were no disputed issues of fact and the first amended
    complaint failed as a matter of law, on two independent grounds. First, they
    argued the statute of repose under section 941, subdivision (a), had started to
    run on May 24, 2007, which they argued was the date of substantial
    10
    completion of the project using the prime construction contract’s definition of
    “substantial completion,”9 and the action was therefore time-barred.
    Second, relying on Branches, the Developers argued the complaint was
    “invalid” because the Association had filed it without first obtaining consent
    from the majority of its members, as required by section 4.4.4. They further
    argued strict compliance with the CC&Rs was required under Branches and
    therefore the February 15, 2018 member ratification vote was ineffective to
    cure the original noncompliance. The Developers also claimed that because
    the original complaint was invalid, the statute of repose had continued to run
    and had lapsed, such that the Association had no time remaining in which to
    bring a valid action based on the February 15 vote of ratification.
    The Association opposed the Developers’ motion for summary
    judgment. First, in response to the Developers’ statute of repose defense, the
    Association argued the date of “substantial completion” for purposes of
    section 941, subdivision (a), could not be contractually defined. The
    Association also submitted evidence that it argued created triable issues of
    fact as to whether the prime contract definition of “substantial completion”
    had been satisfied by May 24, 2007. This evidence included that as of May
    24, most units could not be lawfully occupied; the building had failed certain
    9     According to the Developers’ summary judgment motion, “substantial
    completion” was defined in the prime contract as occurring “when: (1) the
    Work is sufficiently complete in accordance with the Contract Documents to
    permit lawful occupancy and use thereof for its intended purpose, (2) a
    temporary certificate of occupancy has been issued, (3) all Project utilities
    have been installed and approved, (4) the Architect has issued its Certificate
    of Substantial Completion, and (5) the Contractor has certified that all
    remaining work will not interfere with the Owner’s use of the Project and is
    capable of being completed within sixty (60) calendar days.”
    11
    inspections; subcontractors had not completed their work; and certificates of
    occupancy were yet to be issued for most of the residential units.
    Second, the Association argued that its complaint had not been
    invalidated by alleged noncompliance with section 4.4.4. It claimed section
    4.4.4 applied only to initiation of a mediation or arbitration, and not to the
    filing of a civil action in superior court. It further argued that section 4.4.4
    was unenforceable because it was procedurally and substantively
    unconscionable. Section 4.4.4 had “maximum procedural unconscionability,”
    the Association argued, because it was drafted before the Association came
    into existence and was therefore akin to a contract of adhesion. And it was
    substantively unconscionable because it forced the Association to “jump over
    unnecessary hurdles before it can prosecute a claim against the Declarant for
    construction defects.”
    Finally, the Association argued the February 15, 2018 vote of
    ratification by a majority of its members was effective to meet the member
    consent requirement. The Association asserted that to the extent section
    4.4.4 precluded members from validating board actions through ratification,
    it violated public policy and amounted to an unreasonable servitude within
    the meaning of section 5975, subdivision (a).10 It argued Branches was not
    dispositive of its right to comply with a member consent requirement through
    ratification, because the court in Branches considered only the narrow issue
    of whether the arbitrator had exceeded his powers by violating an
    “unwaivable” right of ratification, and had not been called to consider more
    10    Civil Code section 5975, subdivision (a), provides, in part, that “[t]he
    covenants and restrictions in the declaration shall be enforceable equitable
    servitudes, unless unreasonable, and shall inure to the benefit of and bind all
    owners of separate interests in the development.”
    12
    generally the scope of an association’s ability to cure non-compliance with
    CC&Rs through ratification of board decisions.
    D.    The Trial Court’s Ruling
    On July 22, 2019, the trial court issued a written ruling granting in
    part and denying in part the Developers’ motion for summary judgment.11
    The court denied the motion insofar as it was based on the alleged running of
    the statute of repose. The court was unpersuaded that the agreed definition
    of “substantial completion” in the construction contract governed
    interpretation of section 941, subdivision (a). Even assuming the contractual
    definition applied, the court found the Developers had failed to establish an
    absence of triable issues of material fact that the project was substantially
    completed by May 24, based on the evidence submitted by the Association.
    The court noted the parties agreed that absent establishing a date of
    substantial completion, the date of recording the notice of completion
    commences the running of the statute of repose under section 941,
    subdivision (a). The court further noted there was no dispute that the
    Association’s notice of claim tolled the statute pursuant to section 927 and
    the Developers argued “the 10-year statute of repose, as tolled by [the
    Association’s] Notice of Claim, ran on November 17, 2017.” The court
    11     Hensel Phelps filed a motion for summary judgment that was described
    by the trial court as “substantially similar” to the summary judgment motion
    filed by the Developers. As we discuss in footnote 13, post, in the same
    written ruling in which it resolved the Developers’ summary judgment
    motion, the court also ruled on Hensel Phelps’s summary judgment motion.
    13
    concluded that under this analysis, the Association’s original complaint was
    timely filed on October 6, 2017.12
    The court found merit, however, in the Developers’ contention that the
    action was barred for noncompliance with section 4.4.4. The court found
    Branches controlling. It rejected the Association’s contention that the holding
    of Branches should be confined to cases involving confirmation of an
    arbitration award. Rather, “Branches analyzes the substantive, legal issue of
    enforcement of a CC&R member consent requirement and, as such, applies
    irrespective of the forum.” “Under Branches,” the court concluded, “Plaintiff’s
    failure to obtain the requisite consent of the membership prior to bringing
    this action against the [Developers] renders [the Association’s] original
    complaint invalid. The First Amended Complaint was also filed before [the
    Association] obtained membership approval. Thus, the First Amended
    Complaint is also invalid.” The court also rejected the Association’s public
    12     Section 927 provides: “If the applicable statute of limitations has
    otherwise run during this process, the time period for filing a complaint or
    other legal remedies for violation of any provision of this title, or for a claim
    of inadequate repair, is extended from the time of the original claim by the
    claimant to 100 days after the repair is completed, whether or not the
    particular violation is the one being repaired. If the builder fails to
    acknowledge the claim within the time specified, elects not to go through this
    statutory process, or fails to request an inspection within the time specified,
    the time period for filing a complaint or other legal remedies for violation of
    any provision of this title is extended from the time of the original claim by
    the claimant to 45 days after the time for responding to the notice of claim
    has expired. If the builder elects to attempt to enforce its own nonadversarial
    procedure in lieu of the procedure set forth in this chapter, the time period for
    filing a complaint or other legal remedies for violation of any provision of this
    part is extended from the time of the original claim by the claimant to 100
    days after either the completion of the builder’s alternative nonadversarial
    procedure, or 100 days after the builder’s alternative nonadversarial
    procedure is deemed unenforceable, whichever is later.”
    14
    policy and ratification arguments on the ground that identical arguments had
    been rejected in Branches.
    The court also rejected the Association’s contention that section 4.4.4
    did not apply to civil claims, reasoning that the words “ ‘or otherwise’ ” in
    section 4.4.4 were unambiguous and made clear the provision applied to civil
    actions and not only to mediation or arbitration. Finally, the court found the
    Association failed to establish that section 4.4.4 was procedurally
    unconscionable based on Pinnacle Museum Tower Assn. v. Pinnacle Market
    Development (US), LLC (2012) 
    55 Cal.4th 223
     (Pinnacle),13 and that both
    procedural and substantive unconscionability were required to render the
    provision unenforceable.
    13     In Pinnacle, the California Supreme Court explained that even if
    CC&Rs could “perhaps be viewed as adhesive, a developer’s procedural
    compliance with the Davis-Stirling Act provides a sufficient basis for
    rejecting an association's claim of procedural unconscionability.” (Pinnacle,
    supra, 55 Cal.4th at p. 248.)
    15
    On August 14, 2019, the court entered judgment for the Developers.
    On August 15, the Developers filed a notice of entry of judgment. The
    Association filed its notice of appeal on September 26.14
    III.
    Enactment of Section 5986
    A.    Senate Bill No. 326 (2019–2020 Reg. Sess.)
    On August 30, 2019, after passage by the Legislature, the Governor
    signed Senate Bill No. 326 (2019–2020 Reg. Sess.) (Senate Bill 326), which
    added section 5986 to the Davis-Stirling Act, effective January 1, 2020.
    (Stats. 2019, ch. 207, § 2.) The new legislation nullifies prelitigation member
    vote provisions like those at issue here and in Branches and eliminates the
    assertion of noncompliance with such requirements as a defense to
    construction defect actions. (See § 5986, subd. (b).)
    14     In the same July 22, 2019 minute order in which the trial court granted
    in part and denied in part the Developers’ motion for summary judgment, the
    court also denied Hensel Phelps’s summary judgment motion in its entirety.
    Hensel Phelps then petitioned this court for a writ of mandate directing the
    trial court to vacate its order denying the motion and enter an order granting
    the motion. (Hensel Phelps Construction Co. v. Superior Court (2020) 
    44 Cal.App.5th 595
    , 601 (Hensel Phelps).) Hensel Phelps “primarily argued that
    the date of substantial completion adopted by the parties to the contract
    ‘conclusively establishe[d]’ the date of substantial completion” under section
    941, subdivision (a). (Hensel Phelps, at p. 601.) In Hensel Phelps, another
    panel of this court denied the petition, holding the terms of the construction
    contract did not conclusively establish the date of substantial completion
    under section 941, and that “[s]ubstantial completion under the statute is a
    factual issue, to be determined by the trier of fact based on competent
    evidence concerning the actual state of construction of the improvement.”
    (Hensel Phelps, at p. 616.)
    16
    The analysis in support of Senate Bill 326 described the need for
    section 5986.15 Section 5986 was enacted to “ensure[ ] that developers cannot
    use the governing structure of a homeowners association to escape liability.”
    (Assem. Com. on Judiciary, Analysis of Sen. Bill 326, as amended June 24,
    2019, p. 9.) One legislative analysis report explained:
    “As part of the creation of a new HOA, the developer
    typically begins laying the groundwork for the HOA’s future self-
    governance. This includes establishing the initial governing
    documents for the HOA, including the HOA’s ‘declaration’ [of]
    covenants, conditions, and restrictions (CCRs). While the HOA
    developer is still selling off the separate properties within the
    HOA to homeowners, it is also common for the developer to serve,
    or appoint people to serve, on the HOA board of directors. In
    these ways, HOA developers exercise a great deal of control over
    how the HOA will operate going forward, even though, over time,
    the developer’s direct involvement with the HOA typically fades
    away.
    15    On April 2, 2021, we granted the Association’s unopposed amended
    motion for judicial notice as to the following materials from the legislative
    history of Senate Bill 326, which were presented as separate exhibits:
    Exhibits A through G to the Association’s amended motion (consisting of
    proposed and amended versions of Sen. Bill 326); Exhibit H (Sen. Com. on
    Judiciary, Analysis of Sen. Bill 326, Mar. 27, 2019); Exhibit I (Sen. Com. on
    Housing, Analysis of Sen. Bill 326, Mar. 27, 2019); Exhibit K (Sen. Rules
    Com., Off. of Sen. Floor Analyses, 3d reading analysis of Sen. Bill 326, as
    amended May 1, 2019); Exhibit L (Assem. Com. on Housing and Community
    Development, Analysis of Sen. Bill 326, as amended June 12, 2019); Exhibit
    M (Assem. Com. on Housing and Community Development, Background
    Information Request for Sen. Bill 326); Exhibit N (Assem. Com. on Judiciary,
    Analysis of Sen. Bill 326, as amended June 24, 2019); Exhibit O (Assem.
    Judiciary Com., Mandatory Information Worksheet on Sen. Bill 326) Exhibit
    P (Assem. Com. on Housing and Community Development, 3d reading
    analysis of Sen. Bill 326, as amended July 3, 2019); and Exhibit Q (Sen.
    Rules Com., Off. of Sen. Floor Analyses, Unfinished Business Analysis of Sen.
    Bill 326, as amended July 3, 2019).
    17
    “The involvement of HOA developers in the creation of the
    HOA’s initial government documents and the appointment of
    early HOA board members can sometimes create conflicts of
    interest because the HOA and the developer’s interests are not
    necessarily aligned.
    “[T]his bill addresses one such circumstance. In drafting
    the governing documents for the HOAs they are creating,
    developers sometimes add provisions that make it quite difficult
    for the HOA to sue the developer in the event that construction
    defects are discovered at the HOA. [¶] While it could be argued
    that requiring a vote of the HOA members prevents the board of
    directors from spending the HOA’s money on legal disputes
    without the support of the members, the fact that these provisions
    are limited to construction defect claims against the developer
    suggests that more is afoot. Moreover, Civil Code Section 6150
    already provides some protections against an overly litigious
    board bent on suing the developer: it requires an HOA board to
    hold a meeting of the members 30 days prior to filing a lawsuit,
    stating its reasoning and laying out the options available to the
    HOA. [¶] This bill ensures that developers cannot reap the benefit
    of having taken advantage of their participation in the creation of
    the HOA in this way.” (Sen. Rules Com., Off. of Sen. Floor
    Analyses, 3d reading analysis of Sen. Bill 326, as amended May
    1, 2019, pp. 6–7, italics added.)
    Proponents of Senate Bill 326 pointed out that the bill “would be
    consistent with a recent Supreme Court of Massachusetts ruling that
    invalidated governing document provisions designed to inoculate the
    developer against construction defect claims. That court found such
    provisions to be void as against public policy, writing: [¶] ‘[i]t is overreaching
    for a developer to impose a condition precedent that, for all practical
    purposes, makes it extraordinarily difficult or even impossible for the [Board
    of Directors] to initiate any litigation against the developers regarding the
    common areas and facilities of a condominium. Such a provision has all the
    same flaws as a waiver of liability provision — which we would find void as
    18
    contravening public policy — but without the transparency of such a
    provision.’ (Trustees of the Cambridge Point Condominium Trust v.
    Cambridge Point, LLC (2018) 
    478 Mass. 697
    , 709[(Cambridge Point)].)” (Sen.
    Com. on Judiciary, Analysis of Sen. Bill 326, Mar. 27, 2019, p. 10.)
    The legislative materials described developer-inserted preconditions to
    litigation as “ ‘poison pill’ ” provisions that “make it prohibitively difficult for
    HOAs to pursue claims against [developers].” (Assem. Judiciary Com.,
    Mandatory Information Worksheet on Sen. Bill 326, pp. 1–2.) Branches was
    cited as an example of a developer using such a provision to its benefit.
    (Assem. Judiciary Com., Mandatory Information Worksheet on Sen. Bill 326,
    pp. 1–3.)
    B.    Section 5986
    Section 5986 has five subdivisions. Subdivision (a) confers the board of
    an association with authority to commence and pursue a legal proceeding
    against a declarant, developer, or builder of a common interest development,
    and vests that authority solely in those board members that are unaffiliated
    with the declarant, developer, or builder. (See § 5986, subd. (a).)
    Subdivision (b) reads as follows: “The governing documents shall not
    impose any preconditions or limitations on the board’s authority to commence
    and pursue any claim, civil action, arbitration, prelitigation process pursuant
    to Section 6000 or Title 7 (commencing with Section 895) of Part 2 of Division
    2, or other legal proceeding against a declarant, developer, or builder of a
    common interest development. Any limitation or precondition, including, but
    not limited to, requiring a membership vote as a prerequisite to, or otherwise
    providing the declarant, developer, or builder with veto authority over, the
    board’s commencement and pursuit of a claim, civil action, arbitration,
    prelitigation process, or legal proceeding against the declarant, developer, or
    19
    builder, or any incidental decision of the board, including, but not limited to,
    retaining legal counsel or incurring costs or expenses, is unenforceable, null,
    and void. The failure to comply with those limitations or preconditions, if
    only, shall not be asserted as a defense to any claim or action described in this
    section.” (Italics added.)
    Subdivision (c) of section 5986 provides that provisions imposing
    limitations or preconditions on the board’s authority to initiate claims are
    valid and enforceable if “adopted solely by the nondeclarant affiliated
    members of the association . . . in accordance with the requirements
    necessary to amend the governing documents of the association.”
    Subdivision (d) states: “This section applies to all governing documents,
    whether recorded before or after the effective date of this section, and applies
    retroactively to claims initiated before the effective date of this section, except
    if those claims have been resolved through an executed settlement, a final
    arbitration decision, or a final judicial decision on the merits.” (Italics
    added.)
    Subdivision (e) provides, in part, that “[n]othing in this section extends
    any applicable statute of limitation or repose to file or initiate any claim, civil
    action, arbitration, prelitigation process, or other legal proceeding.”
    DISCUSSION
    The Association contends section 5986 applies retroactively to this case
    and compels reversal of the trial court’s order granting summary judgment to
    the Developers based on its failure to obtain a membership vote before filing
    its complaint under section 4.4.4 of the CC&Rs. It argues its claims had not
    been resolved by “final judicial decision on the merits” within the meaning of
    subdivision (d) when section 5986 became effective on January 1, 2020, and
    20
    that they are therefore not excluded from the general rule of retroactivity in
    subdivision (d). The Association also seeks reversal on the ground that
    section 4.4.4 is unenforceable because it violates public policy to the extent it
    does not allow its members to consent to litigation by a vote of ratification.
    The Developers argue the benefits of section 5986 are unavailable to
    the Association because this action was resolved in a “final judicial decision
    on the merits” before the effective date of the statute, when the trial court
    entered judgment on August 14, 2019. The Developers also claim section
    4.4.4 is not violative of fundamental state public policy, even if it excludes the
    possibility of members consenting to construction defect litigation through a
    vote of ratification.
    I.
    “Final Judicial Decision on the Merits” Means Appellate Finality
    A.    Standard of Review
    A trial court’s grant of summary judgment is reviewed de novo. (Coral
    Construction, Inc. v. City and County of San Francisco (2010) 
    50 Cal.4th 315
    ,
    326.) “On appeal from the granting of a motion for summary judgment, we
    examine the record de novo, liberally construing the evidence in support of
    the party opposing summary judgment and resolving doubts concerning the
    evidence in favor of that party.” (Miller v. Department of Corrections (2005)
    
    36 Cal.4th 446
    , 460.) “The trial court’s stated reasons for granting summary
    judgment are not binding because we review its ruling not its rationale.”
    (Canales v. Wells Fargo Bank, N.A. (2018) 
    23 Cal.App.5th 1262
    , 1268
    (Canales).) “To the extent issues on appeal from a summary judgment
    involve the interpretation of a statute, they are issues of law subject to
    independent review.” (City of Malibu v. Santa Monica Mts. Conservancy
    (2002) 
    98 Cal.App.4th 1379
    , 1383; see Bruns v. E-Commerce Exchange, Inc.
    21
    (2011) 
    51 Cal.4th 717
    , 724 [“[s]tatutory interpretation is a question of law
    that we review de novo”]; Sacks v. City of Oakland (2010) 
    190 Cal.App.4th 1070
    , 1082 [where the pertinent facts are undisputed and the issue is one of
    statutory interpretation, “ ‘the question is one of law and we engage in a de
    novo review of the trial court’s determination’ ”].) The interpretation of the
    terms of CC&Rs is also subject to our independent review where, as here, the
    interpretation does not turn on the credibility of extrinsic evidence. (Harvey
    v. The Landing Homeowners Assn. (2008) 
    162 Cal.App.4th 809
    , 817; Starlight
    Ridge South Homeowners Assn. v. Hunter-Bloor (2009) 
    177 Cal.App.4th 440
    ,
    445.)
    B.      Principles of Statutory Interpretation
    Civil statutes are presumed to operate prospectively “in the absence of
    a clear indication of a contrary legislative intent.” (Quarry v. Doe 1 (2012) 
    53 Cal.4th 945
    , 955 (Quarry); see § 3 [“No part of [this code] is retroactive,
    unless expressly so declared.”].) “In construing statutes, there is a
    presumption against retroactive application unless the Legislature plainly
    has directed otherwise by means of ‘ “express language of retroactivity or . . .
    other sources [that] provide a clear and unavoidable implication that the
    Legislature intended retroactive application.” ’ ” (Quarry, at p. 955.)
    The parties do not dispute that subdivision (d) of section 5986 is a clear
    expression of legislative intent for section 5986 to apply retroactively. They
    also do not dispute the retroactive reach of section 5986 extends to claims
    that were initiated and that remained pending at the time the statute
    became effective. Where they differ, however, is on the scope of pending
    claims to which the new legislation applies.
    As we have noted, the dispute arises from the parties’ disagreement
    over the meaning of the subdivision (d) phrase “final judicial decision on the
    22
    merits.” The Association contends that a judgment is not “final” under
    California law as long as it remains subject to appeal, and since its appeal
    was pending on January 1, 2020, when the statute became effective, its
    claims had not yet been resolved through a “final judicial decision” within the
    meaning of subdivision (d). The Association also argues that “on the merits”
    in subdivision (d) means resolution “on substantive law grounds” and
    excludes claims terminated for failure to comply with a developer-drafted
    prelitigation vote requirement.
    The Developers, unsurprisingly, offer a different interpretation of “final
    judicial decision on the merits.” Citing Sullivan v. Delta Air Lines, Inc.
    (1997) 
    15 Cal.4th 288
    , 303–304 (Sullivan), they argue that “final” can refer to
    a trial court ruling that has become “final” because it has been reduced to
    judgment. Under their view, the Association’s claims were resolved by a
    “final judicial decision” when judgment was entered on August 14, 2019,
    before the effective date of section 5986, making section 5986 inapplicable to
    the Association’s claims. The Developers also contend that if a trial court
    “substantively” addresses whether voting requirements in CC&Rs were met,
    then its ruling is a decision “on the merits.”
    In Aldea Dos Vientos v. CalAtlantic Group, Inc. (2020) 
    44 Cal.App.5th 1073
     (Aldea), Division Six of the Court of Appeal, Second Appellate District
    interpreted and applied the subdivision (d) phrase “final arbitration
    decision.” However, no court of review of this state has yet interpreted the
    phrase “final judicial decision on the merits.”
    Our goal in interpreting statutes is “ ‘to ascertain the intent of the
    enacting legislative body so that we may adopt the construction that best
    effectuates the purpose of the law.’ ” (Klein v. United States of America
    (2010) 
    50 Cal.4th 68
    , 77 (Klein), quoting Hassan v. Mercy American River
    23
    Hospital (2003) 
    31 Cal.4th 709
    , 715.) A step-by-step process of statutory
    interpretation has been developed by the courts of this state. (See Mt.
    Hawley Ins. Co. v. Lopez (2013) 
    215 Cal.App.4th 1385
    , 1396 (Lopez); Alejo v.
    Torlakson (2013) 
    212 Cal.App.4th 768
    , 786-787 (Alejo).) The “ ‘key to
    statutory interpretation is applying the rules of statutory construction in
    their proper sequence . . . as follows: “we first look to the plain meaning of
    the statutory language, then to its legislative history and finally to the
    reasonableness of a proposed construction.” ’ ” (Lopez, at p. 1396.)
    In the initial step, we examine “the words of the statute, ‘because the
    statutory language is generally the most reliable indicator of legislative
    intent.’ ” (Klein, supra, 50 Cal.4th at p. 77.) “When the statutory text is
    ambiguous, or it otherwise fails to resolve the question of its intended
    meaning,” we proceed to the second step, and “look to the statute’s legislative
    history and the historical circumstances behind its enactment.” (Ibid.) “In
    this step, courts may ‘turn to secondary rules of interpretation, such as
    maxims of construction, “which serve as aids in the sense that they express
    familiar insights about conventional language usage.” ’ ” (Alejo, supra, 212
    Cal.App.4th at p. 787, quoting Flannery v. Prentice (2001) 
    26 Cal.4th 572
    , 579
    (Flannery).)
    “ ‘If ambiguity remains after resort to secondary rules of construction
    and to the statute’s legislative history, then we must cautiously take the
    third and final step in the interpretive process. [Citation.] In this phase of
    the process, we apply “reason, practicality, and common sense to the
    language at hand.” [Citation.] Where an uncertainty exists, we must
    consider the consequences that will flow from a particular interpretation.’”
    (Alejo, supra, 212 Cal.App.4th at p. 788.)
    24
    C.    Application to Section 5986
    1.    Step One—Plain Meaning
    In considering the text of section 5986, we give its words “a plain and
    commonsense meaning.” (Flannery, 
    supra,
     26 Cal.4th at p. 577.) In doing so,
    we do not “consider the statutory language in isolation”; “[r]ather, we look to
    ‘the entire substance of the statute . . . in order to determine the scope and
    purpose of the provision . . . .’ ” (Id. at p. 578.) “When statutory language
    includes words or terms that courts have previously construed, ‘the
    presumption is almost irresistible’ that the Legislature intended them to
    have the same ‘precise and technical’ meanings given by the courts.” (Hughes
    v. Pair (2009) 
    46 Cal.4th 1035
    , 1046 (Hughes); accord, Richardson v. Superior
    Court (2008) 
    43 Cal.4th 1040
    , 1050.) Thus, where the Legislature uses terms
    “that have a well-settled judicial construction,” we may presume it intends
    “that the terms retain the same meaning that the courts have placed upon
    them . . . .” (Hughes, at p. 1046.)
    With these concepts in mind, we consider the phrase “final judicial
    decision on the merits.” The words “on the merits” have an accepted legal
    meaning. They refer to the substantive elements of a claim or defense, as
    distinguished from technical or procedural impediments to proceeding with a
    claim. (Black’s Law Dict. (11th ed. 2019) p. 1185, col. 2 [defining “merits” as
    “[t]he elements or grounds of a claim or defense; the substantive
    considerations to be taken into account in deciding a case, as opposed to
    extraneous or technical points, esp[ecially] of procedure”].) A ruling that a
    claim is time-barred under the statute of limitations, for example, is
    considered a “ ‘technical or procedural’ ” ground for disposing of a claim,
    rather than a determination “ ‘on the merits.’ ” (Boyd v. Freeman (2017) 
    18 Cal.App.5th 847
    , 856; Koch v. Rodlin Enterprises (1990) 
    223 Cal.App.3d 1591
    ,
    25
    1596 [“Termination of an action by a statute of limitations is deemed a
    technical or procedural, rather than a substantive, termination. [Citation.]
    ‘Thus . . . dismissal on limitations grounds is in no way dependent on nor
    reflective of the merits—or lack thereof—in the underlying action.’ ” ].)
    Dismissal of a construction defect claim for failure to comply with the
    timing requirement of a condition precedent to suit is analogous to
    disposition on statute of limitations grounds, and is equally amenable to
    being described as a technical or procedural resolution rather than a
    resolution “on the merits.” Although the Developers characterize a court’s
    adjudication of the defense of noncompliance with a vote requirement as a
    “substantive” decision, they fail to cite any authority supporting their
    assertion, and we find it unpersuasive.
    Moreover, when considered in light of the full text of section 5986 and
    its express intent to nullify prelitigation vote requirements and eliminate
    their use as a defense, it seems highly unlikely the Legislature would exclude
    from the statute’s retroactive reach claims that are disposed of on the very
    defense it sought to abrogate. In Aldea, the court reasoned that the
    subdivision (d) phrase “on the merits” modified “final arbitration decision” as
    well as “final judicial decision,” and concluded that an arbitral award
    dismissing an association’s construction defect claim for failure to strictly
    comply with a member consent requirement “was not on the merits.” (Aldea,
    supra, 44 Cal.App.5th at pp. 1079–1080.) We read the phrase similarly and
    conclude the Legislature included the phrase “on the merits” in subdivision
    (d) to indicate that claims terminated for noncompliance with prelitigation
    voting requirements were not meant to be excluded from the statute’s
    retroactive reach.
    26
    Although we find the phrase “on the merits” unambiguous, we cannot
    say the same of the phrase “final judicial decision.” The term “final,” used as
    it is here to describe a “judicial decision,” has more than one possible
    meaning. The Association cites Manco Contracting Co. (W.L.L.) v. Bezdikian
    (2008) 
    45 Cal.4th 192
    , 202 (Manco Contracting) for the proposition that “in
    California a judgment is not final and conclusive between the parties when it
    is on appeal, or for as long as it remains subject to appeal . . . .”
    As the Developers point out, however, “finality on appeal is not the only
    meaning of the phrase ‘final judgment.’ ” (Sullivan, 
    supra,
     15 Cal.4th at p.
    303.) “In its most fundamental sense, ‘finality’ is an attribute of every
    judgment at the moment it is rendered; indeed, if a judicial determination is
    not immediately ‘final’ in this sense it is not a judgment, no matter what it is
    denominated. The Legislature has incorporated this meaning of finality into
    the very definition of a judgment: ‘A judgment is the final determination of
    the rights of the parties in an action or proceeding.’ (Code Civ. Proc., § 577,
    italics added.).” (Id. at p. 304.) “Finality in this sense not only makes a
    judicial determination a judgment, it also makes that judgment appealable.”
    (Ibid.) The Developers thus argue the Association’s claims were resolved by
    “final judicial decision” when the trial court’s minute order granting their
    dispositive motion was reduced to judgment. Given the discussion in
    Sullivan of the different meanings of finality, we cannot disagree that “final”
    can reasonably mean finality after appeal, as advocated by the Association, or
    a trial court decision reduced to final judgment, as urged by the Developers.
    The Legislature’s use of the words “judicial decision” suggests the
    Association’s interpretation is probably the one the Legislature intended.
    “Judicial” is a general term that refers equally to a trial court, appellate
    court, or a high court of review. (See Cal. Const., art. VI, § 1 [“The judicial
    27
    power of this State is vested in the Supreme Court, courts of appeal, and
    superior courts, all of which are courts of record.”].) Had the Legislature
    meant to exclude from the retroactive reach of section 5986 claims that had
    already been resolved in the trial court, it could easily have done this by
    inserting the words “trial court” in place of “judicial.” (See, e.g., Manco
    Contracting, 
    supra,
     45 Cal.4th at p. 203 [interpreting California’s Uniform
    Foreign-Country Money Judgments Recognition Act; reasoning that “[i]f the
    Legislature had intended to restrict the meaning of ‘final’ ” to refer “only to
    finality in the trial court, i.e., a judgment that is not interlocutory,” “it could
    have easily added the phrase ‘in the trial court’ after ‘final’ ”].)
    Similarly, the Legislature’s use of the word “decision” rather than
    “judgment” suggests it had a broader scope of tribunals in mind, since
    judgments are issued only by trial courts (see, e.g., Code Civ. Proc., § 577 [“A
    judgment is the final determination of the rights of the parties in an action or
    proceeding.”]; Aixtron v. Veeco Instruments Inc. (2020) 
    52 Cal.App.5th 360
    ,
    384 [under the “ ‘ “one final judgment rule,” ’ ” “ ‘ “ ‘an appeal may be taken
    only from the final judgment in an entire action’ ” ’ ”]), whereas courts of all
    levels issue decisions (Vazquez v. Jan-Pro Franchising Internat. (2021) 
    10 Cal.5th 944
    , 952–953 [referring to Dynamex Operations W. v. Superior Court
    (2018) 
    4 Cal.5th 903
     as a “judicial decision”]; Martinez v. Combs (2010) 
    49 Cal.4th 35
    , 66 [describing United States v. Silk (1947) 
    331 U.S. 704
    , 713 as a
    “judicial decision”]; In re Thomas (2018) 
    30 Cal.App.5th 744
    , 761–762
    [referring to “ ‘decisions’ ” of the California Courts of Appeal]).
    However, although we find it likely the Legislature intended “final
    judicial decision on the merits” to have the meaning advanced by the
    Association, we cannot confidently reject the Developers’ interpretation based
    solely on an examination of the statutory text. Accordingly, we proceed to the
    28
    next step and consider the legislative history of section 5986. (Jones v. Lodge
    at Torrey Pines Partnership (2008) 
    42 Cal.4th 1158
    , 1162–1163 [“statutory
    language is not plain” where “[i]ts language does lend itself to plaintiff’s
    interpretation, but . . . that is not the only reasonable interpretation . . . .”].)
    2.     Step Two—Legislative History and Maxims of Construction
    (i)   Legislative History
    “If [a statute] is susceptible of multiple interpretations . . . we will
    divine the statute’s meaning by turning to a variety of extrinsic sources,
    including the legislative history [citation], the nature of the overall statutory
    scheme [citation], and consideration of the sorts of problems the Legislature
    was attempting to solve when it enacted the statute [citation].” (Clayworth v.
    Pfizer, Inc. (2010) 
    49 Cal.4th 758
    , 770.) “In addition, an ‘examination of the
    original text of the statute and the evolution of the language’ of a statute that
    has been amended is ‘useful in ascertaining its current meaning.’ ” (Lopez,
    supra, 215 Cal.App.4th at p. 1400, quoting Ailanto Properties, Inc. v. City of
    Half Moon Bay (2006) 
    142 Cal.App.4th 572
    , 586 (Ailanto Properties).)
    As detailed above, legislative analyses of Senate Bill 326 explained that
    section 5986 was enacted to end a trend of developers taking advantage of
    their ability, early in the formation of condominium associations, to insert
    provisions into CC&Rs which make it more difficult for the association to sue
    them for construction defects. (Assem. Com. on Judiciary, Analysis of Sen.
    Bill 326, as amended June 24, 2019, p. 9; Sen. Rules Com., Off. of Sen. Floor
    Analyses, 3d reading analysis of Sen. Bill 326, as amended May 1, 2019, pp.
    6–7.) The bill was meant to “ensure[ ] that developers cannot reap the
    benefit of having taken advantage of their participation in the creation of the
    HOA in this way.” (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading
    analysis of Sen. Bill 326, as amended May 1, 2019, p. 7.) Cambridge Point,
    29
    the Massachusetts Supreme Court case, was cited favorably for its holding
    that developer-drafted conditions precedent to a suit that increased the
    difficulty of initiating litigation against developers contravened public policy.
    (Sen. Com. on Judiciary, Analysis of Sen. Bill 326, Mar. 27, 2019, p. 10.)
    Branches was offered as an example of a developer’s successful employment
    of the disfavored defense. (Assem. Judiciary Com., Mandatory Information
    Worksheet on Sen. Bill 326, pp. 1–3.)
    Subdivision (d) was proposed to make the statutory nullification of such
    provisions, and the defenses based on them, retroactive. (Sen. Com. on
    Judiciary, Analysis of Sen. Bill 326, Mar. 27, 2019, p. 10.) As originally
    drafted, the text of subdivision (d) of section 5986 stated: “This section
    applies to all governing documents, whether recorded before or after the
    effective date of this section, and applies retroactively to any claims initiated
    before the effective date of this section.” (Sen. Amend. to Sen. Bill 326, Mar.
    27, 2019, p. 6, original italics omitted; our italics added.)
    The bill’s author later proposed an amendment to subdivision (d)
    “strik[ing] out ‘section’ and insert[ing]: [‘]section, except if those claims have
    been resolved through an executed settlement, a final arbitration decision, or
    a final judicial decision on the merits.[’] ” (Sen. Com. on Judiciary, Analysis
    of Sen. Bill 326, Mar. 27, 2019, p. 13, amend. 21.)
    An analysis report prepared for the Senate Committee on Judiciary
    explained the impetus for the proposed amendment:
    “As it appears in print, the bill would apply retroactively,
    not just to any governing documents sitting around out there, but
    also to pending construction defect claims. Even if it makes
    policy sense for the bill to nullify these self-serving provisions
    within existing HOA governing documents generally, this general
    rule becomes more problematic when applied to pending claims.
    Historically, this Committee has sought to avoid interfering with
    or altering the outcome of pending litigation. Nonetheless, as the
    30
    Massachusetts Supreme Court’s decision [in Cambridge Point]
    suggests, these provisions raise such concern that the courts
    might well find them void as against public policy regardless of
    whether this bill passes. The Committee might find retroactive
    application to pending claims appropriate under that narrow
    circumstance.
    “At the same time, the language in the bill is written so
    broadly that it could be interpreted to allow for the revival of
    lapsed claims or claims that have already been resolved on their
    merits. That this is not the bill’s intent and the author proposes
    to offer an amendment in Committee that would limit the bill’s
    retroactivity to claims that are not time-barred and that have not
    been resolved on their merits.” (Sen. Com. on Judiciary, Analysis
    of Sen. Bill 326, Mar. 27, 2019, pp. 10–11, italics added.)
    To address the issues set forth in the foregoing comments, amendments
    were proposed to “clarify that the bill’s provisions regarding nullification of
    specified provisions within an HOA’s governing documents do not apply to
    claims that are time-barred or that have reached final resolution on their
    merits.” (Sen. Com. on Judiciary, Analysis of Sen. Bill 326, Mar. 27, 2019, p.
    11, italics added.)
    The proposed amendment to subdivision (d) was approved in committee
    and voted into the bill on May 1, 2019. The amendment remained in Senate
    Bill 326 through passage by the Legislature without further change. (See §
    5986, subd. (d).)
    Two aspects of this history draw our attention. First, developer-
    drafted, prelitigation member vote requirements were viewed as clearly
    violative of public policy. Retroactive abrogation of defenses based on failure
    to comply with these requirements, even in the context of “pending litigation”
    or “pending claims,” was considered appropriate under the circumstances.
    Second, subdivision (d) was amended to ensure the statute’s retroactivity
    provision was appropriately circumscribed so it did not result in “reviv[ing]”
    31
    claims that had “reached final resolution on their merits.” (Sen. Com. on
    Judiciary, Analysis of Sen. Bill 326, Mar. 27, 2019, p. 11.)
    We believe the separation of powers doctrine lends clarity to the line
    the Legislature was attempting to draw in amending subdivision (d) to
    restrict the scope of its retroactive application. The separation of powers
    doctrine holds that one branch of the government cannot exercise essential
    powers that our state Constitution has delegated to another branch. (Perez v.
    Roe 1 (2006) 
    146 Cal.App.4th 171
    , 176–177 (Perez).) “A core function of the
    Legislature is to make statutory law . . . . A core function of the judiciary is
    to resolve specific controversies between parties.” (Id. at p. 177.) Thus,
    “[w]hen cases become final for separation of powers purposes, the Legislature
    may not . . . bind the courts with an after-the-fact declaration of legislative
    intent.” (Ibid.) As the United States Supreme Court has explained in the
    context of the parallel federal separation of powers doctrine, “[w]hen
    retroactive legislation requires its own application in a case already finally
    adjudicated, it does no more and no less than ‘reverse a determination once
    made, in a particular case.’ ” (Plaut v. Spendthrift Farm, Inc. (1995) 
    514 U.S. 211
    , 225 (Plaut); see People v. Bunn (2002) 
    27 Cal.4th 1
    , 5 (Bunn) [following
    Plaut, and finding Plaut “both consistent with California law and persuasive
    for state separation of powers purposes”].)
    However, “[s]eparation of powers principles do not preclude the
    Legislature from amending a statute and applying the change to both
    pending and future cases, though any such law cannot ‘readjudicat[e]’ or
    otherwise ‘disregard’ judgments that are already ‘final.’ ” (Bunn, supra, 27
    Cal.4th at p. 17.) “Because the judicial branch consists of a hierarchy of
    courts—from district courts and appellate courts to the Supreme Court
    itself—a judgment has no conclusive effect for separation of powers purposes
    32
    until the time for appeal has passed, or an appeal has been pursued and the
    review process is completed. Therefore, separation of powers principles are
    not implicated, and a lower court decision has not been unconstitutionally
    altered, when a reviewing court applies a new retroactive statute to cases
    still pending on appeal.” (Perez, supra, 146 Cal.App.4th at p. 179, citing
    Plaut, 
    supra,
     514 U.S. at pp. 226–227.) “[O]nly those decisions that represent
    ‘the final word of the [judicial] department as a whole,’ as expressed by ‘the
    last court in the hierarchy that rules on the case’ ” are constitutionally
    protected from the effects of retroactive legislation. (Bunn, at p. 21.)
    The Legislature is presumed to have been aware of the relevant law (In
    re W.B. (2012) 
    55 Cal.4th 30
    , 57) and of the limits of its powers (Young v.
    Department of Fish & Game (1981) 
    124 Cal.App.3d 257
    , 277). We infer from
    these presumptions and from the legislative history discussed above, that in
    amending subdivision (d), the Legislature was attempting to avoid
    overstepping the limits of its constitutional legislative authority while still
    allowing for the broadest possible scope of pending claims to be affected by
    section 5986. The Legislature’s concern about the overbreadth of subdivision
    (d) as originally drafted, together with the statements that affecting “pending
    litigation” was acceptable under the “circumstances” while “reviv[ing]” claims
    that had been finally resolved was not, support this view. Likewise, that
    Senate Bill 326 was designed to “ensure[ ] that developers cannot reap the
    benefit of having taken advantage of their participation in the creation of the
    HOA . . . ,” the citation to Branches in the legislative materials as an example
    of a developer benefitting from such a misuse of authority, and the expressed
    view that developer-inserted “ ‘poison pill’ ” provisions violated public policy
    by making it more difficult for associations to hold developers accountable for
    construction defects, are all indications of legislative intent for section 5986
    33
    to affect pending construction defect litigation to the extent of its authority to
    do so. (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of
    Sen. Bill 326, as amended May 1, 2019, p. 7; Assem. Judiciary Com.,
    Mandatory Information Worksheet on Sen. Bill 326, pp. 1–2.)
    We thus conclude from our analysis of the legislative history of section
    5986 in general, and the amendment to subdivision (d) of section 5986 in
    particular, that the Legislature intended “final judicial decision” to refer to a
    judgment for which the time to appeal had passed, or, if an appeal was taken,
    had reached finality after completion of the process of appellate review.
    (ii)   Maxims of Construction
    This interpretation is further supported by the structure of subdivision
    (d), which establishes retroactivity as the general rule, and makes claims
    resolved through “final judicial decision on the merits” the exception. At the
    second stage of statutory interpretation, we may consider maxims of
    construction. (See Lopez, supra, 215 Cal.App.4th at p. 1411.) One such
    principle holds that statutory exceptions are to be narrowly or strictly
    construed. (See Carter v. Cohen (2010) 
    188 Cal.App.4th 1038
    , 1051
    [“Exceptions to the general rule of a statute are to be strictly construed and,
    in interpreting exceptions to the general statute, courts include only those
    circumstances which are within the words and reason of the exception.”];
    Maracich v. Spears (2013) 
    570 U.S. 48
    , 60 [“An exception to a ‘general
    statement of policy’ is ‘usually read . . . narrowly in order to preserve the
    primary operation of the provision.’ ”]; C.I.R. v. Clark (1989) 
    489 U.S. 726
    ,
    739 [“In construing provisions . . . in which a general statement of policy is
    qualified by an exception, we usually read the exception narrowly in order to
    preserve the primary operation of the provision.”].)
    34
    Applying this principle and construing “final judicial decision” narrowly
    supports the view that “final judicial decision” encompasses only those claims
    resolved to appellate finality. This interpretation results in fewer cases being
    excluded from the statute’s retroactive reach, and thus serves subdivision
    (d)’s primary purpose of retroactivity. The Developers’ interpretation, by
    contrast, excludes a greater range of cases from the statute’s retroactive
    effects, frustrating the overall purpose of the statute and contravening the
    rule favoring a narrow interpretation of exclusionary clauses.
    3.    Step Three—Reason, Practicality, and Common Sense
    After considering the statute’s legislative history and the structure of
    subdivision (d), we are persuaded that “final judicial decision” means a
    decision that has been reduced to judgment and has reached finality after
    completion of the appellate process, or that has become final because the time
    to appeal has passed.
    Although it is unnecessary to do so, we note that this interpretation is
    consistent with reason and common sense. (See, e.g., Lopez, supra, 215
    Cal.App.4th at p. 1417 [“Although it is not necessary to do so, we confirm our
    interpretation of [the statute], by applying ‘reason, practicality, and common
    sense to the language’ of the statute.”], citing Ailanto Properties, supra, 142
    Cal.App.4th at p. 591 [“Although our review of the legislative history suffices
    to support our conclusion, applying ‘reason, practicality, and common sense to
    the language at hand’ confirms that conclusion.”].)
    Interpreting “final judicial decision” to encompass claims resolved to
    finality in the trial court, but to exclude claims pending on appeal, makes
    little sense. Doing so would create the possibility of judicial enforcement of a
    provision that our Legislature has already declared in the strongest possible
    terms⎯through explicit statutory directive⎯should be treated as null and
    35
    void. It would also raise the potential for affirming a ruling that disposed of
    a case for noncompliance with such a provision, despite the legislative
    declaration that such defenses can no longer be asserted. In practical terms,
    this would mean that associations chronologically advantaged because their
    claims, for whatever reason, were not reduced to final judgment by January
    1, 2020, would be entitled to the full benefits of section 5986 and would see
    previously-dismissed claims restored, whereas associations whose claims
    were resolved before that point and were pending on appeal on January 1,
    2020, would not. We see little to be gained, as a matter of policy or
    pragmatics, from drawing such a distinction. Accordingly, we decline to do
    so.
    4.    Conclusion—Interpretation of “Final Judicial Decision on the
    Merits”
    Our examination of the text, legislative history, and structure of section
    5986, subdivision (d), as confirmed by considerations of reason and common
    sense, leads us to conclude that a “final judicial decision” under subdivision
    (d) means a judgment for which the time to appeal had passed, or, if an
    appeal was taken, had reached finality after completion of the process of
    appellate review. We have already found that “on the merits” does not
    encompass a claim disposed of for noncompliance with a condition precedent
    to litigation like the one contained in section 4.4.4.
    Thus, the Association’s claims had not been resolved by a “final judicial
    decision on the merits” when section 5986 became effective, and they are not
    excluded from the statute’s retroactive reach. Accordingly, subdivision (b) of
    section 5986 applies. Under subdivision (b), “[a]ny limitation or precondition
    [in the governing documents of an association], including, but not limited to,
    requiring a membership vote as a prerequisite to . . . the board’s
    commencement and pursuit of a claim . . . is unenforceable, null, and void.
    36
    The failure to comply with those limitations or preconditions, if only, shall
    not be asserted as a defense to any claim or action described in this section.”
    The trial court granted summary judgment based on the Developers’
    defense that the Association failed to comply with section 4.4.4 by filing its
    complaint and first amended complaint without first obtaining the consent of
    a majority of owners. Subdivision (b) abrogates this defense and renders the
    member vote precondition on which it was based null and void. As the
    judgment is now without a legal basis, we will reverse it.
    II.
    Section 4.4.4 Violates Fundamental State Public Policy
    As an independent ground for reversal of the judgment, the Association
    argues that section 4.4.4, as interpreted by the trial court to require the
    Association to obtain member approval before filing suit and to disallow
    member approval by a later vote of ratification, violates fundamental state
    public policies. The Association notes that the trial court was compelled to
    follow Branches, which was controlling law at the time it ruled on the
    Developers’ summary judgment motion. It urges that we should now reject
    the holding of Branches and follow Aldea instead.
    We agree. As an independent basis for reversing the judgment, we
    conclude, like the court in Aldea, that section 4.4.4 “contravenes explicit
    legislative expressions of public policy.” (Aldea, supra, 44 Cal.App.5th at p.
    1077.) We also join Aldea in registering our disagreement with Branches to
    the extent it held otherwise.
    Civil Code section 5975, subdivision (a), provides, in relevant part, that
    “[t]he covenants and restrictions in the declaration shall be enforceable
    equitable servitudes, unless unreasonable, and shall inure to the benefit of
    and bind all owners of separate interests in the development.” “[C]ovenants
    37
    and restrictions in recorded declarations of common interest developments
    are presumptively reasonable [citation], and are enforceable ‘unless they are
    wholly arbitrary, violate a fundamental public policy, or impose a burden on
    the use of affected land that far outweighs any benefit’ [citation].” (Villa De
    Las Palmas, supra, 33 Cal.4th at p. 88.) “Equity will not enforce any
    restrictive covenant that violates public policy. [Citations.] Nor will courts
    enforce as equitable servitudes those restrictions that are arbitrary, that is,
    bearing no rational relationship to the protection, preservation, operation or
    purpose of the affected land.” (Nahrstedt v. Lakeside Village Condominium
    Assn. (1994) 
    8 Cal.4th 361
    , 381 (Nahrstedt); Pinnacle, supra, 55 Cal.4th at p.
    239 [“Although Nahrstedt spoke specifically in terms of land use restrictions,
    its analysis logically extends to all covenants in a declaration, which by
    statute are also enforceable as equitable servitudes unless unreasonable.”].)
    In Aldea, the court examined a voting requirement, much like the one
    at issue here, that required a condominium association to obtain the consent
    of a majority of owners before filing a claim. (Aldea, supra, 44 Cal.App.5th at
    p. 1076.) The association failed to obtain owner consent prior to filing its
    demand for arbitration, but later obtained the approval of 99 percent of its
    members to continue with the arbitration. (Ibid.) The arbitrator granted the
    developer’s motion to dismiss based on the association’s failure to comply
    with the vote requirement prior to beginning arbitration, and the trial court
    confirmed the award. (Ibid.)
    On appeal, Division Six of the Second Appellate District found the vote
    requirement, and the arbitral award enforcing it, violative of explicit
    legislative expressions of state public policy. (Aldea, supra, 44 Cal.App.5th at
    pp. 1077–1079.) The policies it identified included those supporting quality
    residential construction. (Id. at p. 1077, citing Health & Saf. Code, § 50001
    38
    [“ ‘housing is of vital statewide importance to the health, safety, and welfare
    of the residents of this state . . . .’ ”]; §§ 896 [listing construction defects for
    which the developer is liable], 897 [developer liable for defects not expressly
    listed], 941, subd. (a) [10-year statutory period in which to bring a
    construction defect action].)
    The Aldea court also found the vote requirement unreasonable and
    unconscionable and thus violative of the prohibition in section 5975,
    subdivision (a), against enforcement of unreasonable provisions in CC&Rs,
    particularly as interpreted by the arbitrator to prohibit consent through
    ratification after the claim was filed. (Aldea, supra, 44 Cal.App.5th at p.
    1077.) The provision gave the developer “veto power over the Association’s
    claims in spite of the members’ vote to proceed with the arbitration.” (Ibid.)
    The court disagreed with Branches that such a requirement benefits
    members and “ ‘balance[s] the association’s need to operate efficiently with
    the rights of its members to be informed and participate in decisions that
    could impact the association for years, if not decades, to come.’ ” (Id. at p.
    1078, quoting Branches, supra, 26 Cal.App.5th at p. 758.) The Aldea court
    had a pithy response: “But the members voted to ratify the Association’s
    decision to arbitrate. It is an odd benefit that deprives the members of the
    right to proceed with an arbitration they voted to undertake.” (Aldea, supra,
    44 Cal.App.5th at p. 1078.) The Aldea court further noted that the vote
    provision did not “inform the Association or its members of the devastating
    effect the failure to comply will have on its rights, or that the initial failure to
    comply, no matter how inadvertent, will be irremediable.” (Id. at pp. 1078–
    1079.)
    We agree with the Aldea court’s discussion and adopt its reasoning. We
    find its assessment of state public policy particularly persuasive since it is
    39
    consonant with the legislative history of Senate Bill 326 and the concerns
    that motivated the Legislature to enact section 5986. The commentary in the
    relevant legislative analysis noted that at the time of the bill’s authorship,
    common interest developments accounted for “approximately a quarter of the
    state’s overall housing stock . . . .” (Sen. Com. on Judiciary, Analysis of Sen.
    Bill 326, Mar. 27, 2019, p. 5.) “[T]he laws overseeing such developments have
    a large impact on the population.” (Ibid.) In this case alone, the Association
    stands for the interests of the inhabitants of 301 residential units. Within
    this context, the identified trend in developer-created impediments to
    construction defect suits by condominium associations becomes a matter of
    public welfare. The same legislative analyses looked askance at the notion
    that developers insert such provisions for the rational purpose of fostering
    informed decision-making. “[T]he fact that these provisions are limited to
    construction defect claims against the developer suggests that more is afoot.”
    (Id. at p. 9.)
    We conclude, like Aldea, that the requirement in section 4.4.4 that
    prohibited the Association from instituting litigation against the Developers
    without first obtaining the consent of a majority of the owners violates
    fundamental state policy by making it more difficult for the Association to
    hold Developers accountable for construction defects. We also find section
    4.4.4 unreasonable, unconscionable and violative of the fundamental state
    policy against unreasonable servitudes insofar as it requires strict
    compliance as a precondition to suit and prohibits members from providing
    their consent later through a vote ratifying a board decision to file suit.
    Thus, even if we were to conclude that section 5986 did not apply
    retroactively to the Association’s claims, we would reverse the judgment on
    the basis that section 4.4.4 violates fundamental public policy.
    40
    III.
    Developers’ Remaining Arguments
    The Developers oppose reversal on certain grounds we have not yet
    addressed.
    First, the Developers contend the Association, in its opening brief on
    appeal, failed to challenge the trial court’s ruling that the complaint and first
    amended complaint were invalid as a matter of law for failure to comply with
    section 4.4.4, and the Association has therefore forfeited this challenge to the
    judgment. Because we find the Developers’ contention to be an obvious
    mischaracterization of the Association’s appellate brief, we need not and do
    not address it further.
    Next, the Developers advance a complicated argument that we
    summarize as follows: the Association’s original complaint was unauthorized
    for failure to comply with section 4.4.4; the 10-year statute of repose under
    section 941, subdivision (a), started to run no later than July 10, 2007 (the
    date of recordation of the notice of completion), and because the original
    complaint was invalid, it continued to run to expiration before the February
    15, 2018 ratification vote; the ratification vote was therefore ineffective to
    cure the original complaint’s invalidity; because subdivision (e) of section
    5986 does not extend statutes of repose, it is now too late for the Association
    to file a new complaint based on the February 15, 2018 ratification vote;
    therefore, the Association’s complaint remains unauthorized and invalid, and
    we should affirm the judgment.
    The chief, but not the only, problem with this logic emerges at step one.
    Since we have concluded section 5986 applies retroactively to the
    Association’s claims, its original complaint can no longer be characterized as
    unauthorized for noncompliance with section 4.4.4. Since the remainder of
    41
    the Developers’ argument depends on the validity of this first step, we reject
    the argument in its entirety.
    Finally, the Developers contend that in the event we reverse the trial
    court’s grant of summary judgment, we should remand for further
    proceedings so they can conduct discovery to determine whether the
    Association amended its CC&Rs to add a new provision with a valid member
    consent precondition to suit. We decline to do so. The Developers cite no
    authority that would support allowing them this opportunity. Essentially,
    the Developers seek to conduct additional discovery under Code of Civil
    Procedure section 437c, subdivision (h), but this provision only applies to the
    party opposing summary judgment; the Developers were the moving party.
    The Developers also fail to indicate how evidence of a new voting provision in
    the CC&Rs would be relevant to the summary judgment motion they already
    filed, which was based on section 4.4.4.
    42
    DISPOSITION
    The judgment is reversed and the matter is remanded with directions
    that the trial court vacate its order granting the Developers’ motion for
    summary judgment and issue a new order denying that motion. The
    Association is entitled to its costs on appeal.
    DO, J.
    WE CONCUR:
    HUFFMAN, Acting P. J.
    GUERRERO, J.
    43