Condo Court

Facts Of The Case. Certain homes within the Marquesa at Monarch Beach Homeowners Association had beautiful ocean and/or golf course views for which the owners had paid a premium. Over time, some of these ocean/golf course views became blocked by palm trees which had been planted on neighboring lots, and which were allowed to grow far above the height of the adjacent houses.

CC&R section 7.18 required that “all trees” must be “trimmed” by their Owner so that the trees “shall not exceed the height of the house on the Lot”. However, that section also stated that any tree which the Architectural Committee determined did not obstruct the view from any of the other Lot did not have to be trimmed.

Since trimming the top off a palm tree would effectively kill it, the board enacted rule excluded palm trees from CC&R section 7.18’s trimming requirements. Another board rule narrowly defined the views which were entitled to protection under section 7.18, thereby allowing many of the palm trees to remain.

After several homeowners complained that certain palm trees were obstructing their views, the board determined that under all of the circumstances, it would be unreasonable to require that the palm trees be trimmed or removed.

The complaining homeowners proceeded to sue the Association for failing to fully enforce CC&R section 7.18. The Association argued that the board’s decisions allowing the palm trees to remain and adopting the narrow view rule must be upheld because these decisions were protected by the judicial deference/business judgment doctrine.

The Court’s Decision. The court of appeal ruled in favor of the homeowners in the unpublished case of Ekstrom v Marquesa at Monarch Beach HOA (November 3, 2008), and ordered the Association to enforce CC&R section 7.18 as to the view obstructing palm trees.

The Court’s Reasoning. The court found that section 7.18 was not ambiguous since it expressly applied to all trees: “Nothing in the CC & Rs permits the Association to simply exclude an entire species of trees from section 7.18’s application simply because it prefers the aesthetic benefit of those trees to the community….The Board’s interpretation of the CC & Rs was inconsistent with the plain meaning of the document and thus not entitled to judicial deference.”

Furthermore, since the board’s rule narrowly defining a view also was in direct conflict with the clear language in CC&R section 7.18, that rule was unenforceable. As the court noted, “[e]ven if the Board had some discretionary authority to define what was meant by view, it was not free to fashion a definition that rendered section 7.18 meaningless.”

Comment. Boards should be careful not to make decisions or enforce rules which are directly inconsistent with express enforceable provisions of the CC&Rs. Such board actions are subject to challenge in the courts, and may not be protected by the business judgment/judicial deference doctrine.

The Facts of the Case. An employer, Aramark Facility Services, received letters from Social Security stating that the social security numbers of certain employees did not match the Social Security Administration’s database.  Aramark advised the affected employees about the no-match letters, and gave them three days to bring in either a new social security card or verification that a new card was being processed. If that deadline was not met, the employees were told that their employment would be terminated. Thirty-three employees failed to timely comply and were fired.

After a labor arbitrator held that the employer did not have cause to fire the workers, a federal district court rejected the arbitrator’s ruling. The case was then appealed to the Ninth Circuit Court of Appeals for a decision.

The Issue: Did the employer properly discharge its employees based on the receipt of no-match letters and the employees subsequent failure to bring in clarifying information about their social security numbers?

The Court’s Decision. In Aramark Facility Services v. Service Employees Int. Union Local 1877, 530 F.3d 817 (2008), the Ninth Circuit ruled in favor of the employees and ordered each of them reinstated with back pay.

The Court’s Reasoning. The court noted that federal law subjects employers to civil and criminal penalties if they employ an undocumented worker “knowing” or having “constructive knowledge” of the employee’s undocumented status.

Nevertheless, the Ninth Circuit explained that an employer’s mere receipt of a no-match letter “does not automatically mean that an employee is undocumented or lacks proper work authorization” because such mismatches “could generate a no-match letter for many reasons, including typographical errors, name changes, compound last names prevalent in immigrant communities, and inaccurate or incomplete employer records.” Rather, a no-match letter “merely indicate[s] that the worker’s earnings were not being properly credited” and does not contain “positive information” of the worker’s undocumented status.

The court also criticized the employer’s decision to give the employees an extremely short three-day window to clear up the Social Security issues, which made it likely that many of the employees simply stopped trying to comply with the deadline because they realized it could not be met.

Since the employer did not have sufficient constructive knowledge to establish that the employees were undocumented, the court decided that the terminations were improper. All the fired employees were reinstated to their jobs with full back pay, even though the justices acknowledged that “it seems reasonable to suspect that some of the fired workers were undocumented…”

Comments. This case illustrates the difficult position Associations are in when they receive “no-match” letters from the Social Security Administration about their employees. Aramark makes it clear that employers may not automatically assume that any employee is an undocumented worker based solely upon the receipt of a “no-match” letter. Rather, additional corroborating evidence is necessary. Furthermore, employees should be given a reasonable period of time (three days is definitely too short) to resolve the discrepancies raised by a no-match letter.  Because of the many gray areas and potential liability for wrongful termination, Associations should consult with their legal counsel upon receipt of a no-match letter to determine the appropriate course of action to take.