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Lamden v. La Jolla Shores Clubdominium Homeowners Assn.

Supreme Court of California

August 9, 1999, Decided

No. S070296.

Opinion

 [*252]  [**942]  [***238]    WERDEGAR, J. 

A building in a condominium development suffered from termite infestation. The board of directors of the development's community association 3 decided to treat the infestation locally ("spot-treat"), rather than fumigate. Alleging the board's decision diminished the value of  [*253]  her unit, the owner of a condominium in the development sued the community association. In adjudicating her claims, under what standard should a court evaluate the board's decision?

 [****3]  As will appear, we conclude as follows: ] Where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development's common areas, courts should defer to the board's authority and presumed expertise. Thus, we adopt today for California courts a rule of judicial deference to community association board decisionmaking that applies, regardless of an association's corporate status, when owners in common interest developments seek to litigate ordinary maintenance decisions entrusted to the discretion of their associations' boards of directors. (Cf. Levandusky v. One Fifth Ave. Apt. Corp. (1990) 75 N.Y.2d 530, 537-538 [554 N.Y.S.2d 807, 811, 557 N.E.2d 1317, 1321] [analogizing a similarly deferential rule to the common law "business judgment rule"].)

Accordingly, we reverse the judgment of the Court of Appeal.

 [***239]  BACKGROUND

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21 Cal. 4th 249 *; 980 P.2d 940 **; 87 Cal. Rptr. 2d 237 ***; 1999 Cal. LEXIS 4999 ****; 99 Daily Journal DAR 8073; 99 Cal. Daily Op. Service 6358

GERTRUDE M. LAMDEN, Plaintiff and Appellant, v. LA JOLLA SHORES CLUBDOMINIUM HOMEOWNERS ASSOCIATION, Defendant and Respondent.

Prior History:  [****1]  Superior Court of San Diego County. Super. Ct. No. 677082. Mack P. Lovett, Judge. 1 

Disposition: For the foregoing reasons, the judgment of the Court of Appeal is reversed.

CORE TERMS

community association, termite, Declaration, repair, common interest development, common area, homeowner, trial court, business judgment rule, condominium, courts, good faith, fumigation, deference, landlord, board of directors, judicial review, decisions, termite infestation, associations, restrictions, damaged, judicial deference, covenants, equitable servitude, business judgment, individual member, cause of action, use restriction, public policy

Business & Corporate Compliance, Contracts Law, Types of Contracts, Covenants, Real Property Law, Encumbrances, Restrictive Covenants, General Overview, Common Interest Communities, Condominiums, Homeowners Associations, Business & Corporate Law, Cooperatives, Management Duties & Liabilities, Fiduciary Duties, Business Judgment Rule, Directors & Officers, Compensation, Causes of Action, Defenses, Condominium Associations, Management