Ridley v. Rancho Palma Grande Homeowners Assn. CA6
H052560
| Cal. Ct. App. | Aug 29, 2025Background
- Plaintiffs (Ridley and Shen) owned a condominium unit in the Rancho Palma Grande complex in Santa Clara, beneath which flooding occurred in the crawlspace, a common area managed by the homeowners’ association (HOA).
- The flooding was initially believed to be caused by a plumbing leak, but subsequent expert and official investigations indicated the likely presence of an undestroyed well beneath or near the unit.
- Despite repeated expert recommendations and warnings, the HOA failed to conduct a thorough investigation or timely initiate remediation, instead pursuing less effective or delayed measures.
- Severe water, mold, and termite damage resulted from the HOA’s inaction and mishandling; the homeowners’ unit remained uninhabitable for years.
- Plaintiffs sued for breach of the HOA's duties under the condominium CCRs and other claims, ultimately prevailing at a lengthy bench trial where the court found gross negligence, awarded damages and punitive damages, and issued an injunction compelling repairs and ongoing payments until full remediation.
- The HOA and its former president, Moritz, appealed the injunction, primarily arguing the HOA did not breach its CCR duties or that defenses like the business judgment rule and exculpatory clauses applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of CCRs - Duty to Investigate | HOA failed to reasonably investigate source of water in common area under CCRs | HOA conducted sufficient investigation; expert and cost weighing justified their choices | Substantial evidence supported breach; HOA failed in investigation duties |
| Timeliness of Repairs | HOA failed to remediate mold, water, and termite damage in a timely manner | CCRs didn't impose specific repair deadlines; delays reasonable under circumstances | Repairs must be within a reasonable time; HOA failed to do so |
| Business Judgment Rule & Judicial Deference | Not applicable due to HOA's lack of good faith and unreasonable investigation | HOA acted in good faith and exercised discretion in maintenance decisions | Rule/defenses unavailable where no good faith or reasonable investigation |
| Exculpatory Clause (Gross Negligence) | Not a bar; HOA’s gross negligence in handling repair and investigation | Clause shields HOA from liability in these circumstances | Gross negligence defeated exculpatory clause defense |
Key Cases Cited
- Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, 55 Cal.4th 223 (Cal. 2012) (condominium CCRs are contractual and enforceable against the association)
- Lamden v. La Jolla Shores Clubdominium Homeowners Association, 21 Cal.4th 249 (Cal. 1999) (judicial deference is owed to condo board decisions if made in good faith and upon reasonable investigation)
- City of Santa Barbara v. Superior Court, 41 Cal.4th 747 (Cal. 2007) (defines gross negligence as want of even scant care or an extreme departure from ordinary standard of conduct)