980 P.2d 940 (Cal. 1999)
Gertrude M. Lamden owns a condominium unit in one of three buildings comprising the La Jolla Shores Clubdominium condominium development in La Jolla, California.1 The development was built in 1971.2 Lamden and her husband bought unit 375 in 1973.3 Until 1977 the Lamdens used their unit only as a rental.4 From 1977 until 1988 they lived in the unit.5 Since 1988 the unit has again been used only as a rental.6 The development is governed by defendant La Jolla Shores Clubdominium Homeowners Association, an unincorporated community association.7
In the late 1980's the Association hired a contractor to renovate exterior siding on all three buildings.8 The contractor replaced the siding on the southern exposure of Building Three and removed damaged drywall and framing.9 Where the contractor encountered termites a termite extermination company provided spot-treatment and replaced damaged material.10 Lamden remodeled the interior of her condominium in 1990.11 At that time the Association's manager arranged for a termite extermination company to spot-treat areas where Lamden had encountered termites.12
The following year both Lamden and the Association obtained termite inspection reports recommending fumigation but the Association's Board decided against that approach.13 The Board based its decision not to fumigate on concerns about the cost of fumigation, logistical problems with temporarily relocating residents, concern that fumigation residue could affect residents' health and safety, awareness that upcoming walkway renovations would include replacement of damaged areas, pet moving expenses, anticipated breakage by the termite company, lost rental income and the likelihood that termite infestation would recur even if primary treatment were utilized.14 In 1991 and 1992 the Association engaged a company to repair water intrusion damage to four units in Building Three.15 The company removed siding in the balcony area, repaired and waterproofed the decks, and repaired joints between the decks and the walls of the units.16 Where termite infestation or damage became apparent during this project spot-treatment was applied and damaged material removed.17
In 1993 and 1994 the Association commissioned major renovation of the Development's walkway system.18 The $1.6 million walkway project was monitored by a structural engineer and an on-site architect.19 In 1994 Lamden brought this action for damages, an injunction and declaratory relief.20 She purported to state numerous causes of action based on the Association's refusal to fumigate for termites naming as defendants individual members of the Board as well as the Association.21 Her amended complaint included claims sounding in breach of contract, breach of fiduciary duty, and negligence.22
At trial Lamden waived any damages claims and dismissed with prejudice the individual defendants.23 Presently she seeks only an injunction and declaratory relief.24 After both sides had presented evidence and argument the trial court found there was no question from all the evidence that Mrs. Lamden's unit has had a serious problem with termites.25 The evidence was overwhelming that termites had been a problem over the past several years.26 The trial court found that the Board did have a rational basis for their decision to reject fumigation and do what they did.27 Ultimately the court gave judgment for the Association applying what it called a business judgment test.28 Lamden appealed.29
Citing Frances T. v. Village Green Owners Assn. the Court of Appeal agreed with Lamden that the trial court had applied the wrong standard of care in assessing the Association's actions.30 Accordingly the Court of Appeal reversed the judgment of the trial court.31 We granted the Association's petition for review.32
Whether a court should apply a deferential standard to a community association board's selection of termite treatment methods for common areas when the board acts upon reasonable investigation, in good faith, and within the scope of its authority under the governing documents and statutes?33
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.34
Yes. The board's decision to continue spot-treatment satisfies each element of the rule of judicial deference.35 The board acted upon reasonable investigation when it obtained termite inspection reports in 1991 and considered the full range of practical consequences before rejecting fumigation.36 The board proceeded in good faith and with regard for the best interests of the Association and its members.37 The trial court expressly found that the board possessed a rational basis for its choice and had taken appropriate action to address the infestation.38
The decision fell within the scope of the board's authority under Civ. Code, § 1364, subd. (b)(1), and the Declaration.39 Both assign the Association responsibility for maintenance and repair of common areas occasioned by wood-destroying pests while conferring broad discretion over the means of discharge.40 Because all elements of the rule are met on these facts, the trial court correctly deferred to the board and entered judgment for the Association.41
The court should apply the deferential standard to the board's selection of termite treatment methods.42