Lamden v. La Jolla Shores Clubdominium Homeowners Assn

In Lamden v. La Jolla Shores Clubdominium Homeowners Assn, 21 Cal. 4th 249, 980 P.2d 940 (Cal. 1999), the plaintiff sued her homeowners association, alleging that its decision to "spot treat" for termites, as opposed to fumigating the entire building in which her condominium was located, diminished the value of her unit. 980 P.2d at 942. On review, the California Supreme Court noted that the declaration governing Lamden's common interest development gave the development's association broad discretion in deciding how to maintain the complex. Id. at 950. The court held that when a declaration gives an association discretion to select among various means to accomplish an obligation imposed by the declaration or by law, California courts will deferentially review the Association's choice of means. Id. at 942. 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. Id. Finding that the decision to "spot treat" the termites did not violate the association's obligations under the deferential standard of review it adopted, the court affirmed the superior court's entry of judgment against the plaintiff. Id. at 950. In Lamden v. La Jolla Shores Clubdominium Homeowners Ass'n, a condominium unit owner sued her community association, alleging that its discretionary decision to spot-treat for termites rather than fumigate diminished the value of her unit. Id. at 942. The trial court deferred to the association's decision under a "business judgment" standard of review. Id. at 944. The court of appeals reversed the judgment of the trial court because, in its view, an "objective standard of reasonableness" was the appropriate standard by which to assess the association's actions. Id. On review, the California Supreme Court adopted the following approach: We hold that, 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. Id. at 950. Because the association had considered its options in good faith, including obtaining a bid for fumigation, the court determined that deference was appropriate and affirmed the trial court's judgment in favor of the association. Id.