James F. O'Toole Company, Inc. v. Los Angeles Kingsbury Court Owners Association

In 1994 the Los Angeles Kingsbury Court condominium was damaged in an earthquake. The condominium’s owners’ association (the association) (defendant) hired an insurance adjuster, James F. O’Toole Company, Inc. (the adjuster) (plaintiff), to deal with the association’s insurer and agreed to pay the adjuster a percentage of the proceeds paid by the insurer. When the association refused to pay the adjuster, the adjuster sued the association for breach of contract and won a judgment. The association refused to pay the judgment, and the adjuster obtained a writ of execution ordering the association to pay the judgment from sums collected from the association’s regular and special assessments. The association filed a claim of exemption. The trial court ruled that the association’s regular assessments were exempt but ordered the association to convene a meeting of its members to consider an emergency assessment to satisfy the judgment. The association convened the meeting, but the members refused to adopt an emergency assessment. The adjuster then filed a motion for and was granted an order appointing a receiver to levy and administer a special emergency assessment, which the court stayed to permit the association to appeal. Under a provision of state law, a condominium association could levy a special assessment for an emergency for purposes of covering an extraordinary expense required by a court order. Under another provision of state law, an association’s regular assessments were exempt from execution by a judgment creditor only to the extent necessary for the association to perform its essential services. On appeal, the association argued that the trial court’s order was invalid because the exemption applied to special emergency assessments.