Practical Takeaways from California’s 2025 Case Law
By Anne T. Acuña, Esq.
This article first appeared in our Communicator Magazine, Winter 2026 Issue.
In 2025, several California court decisions offer valuable guidance for common interest developments. The four cases summarized below address key issues, including association boards’ fiduciary duties, the circumstances under which individual directors may be held personally liable for gross negligence, disputes involving insurance coverage and exclusions, the classification of association disciplinary fines under the Fair Debt Collection Practices Act, and the types of evidence that may be used to prove emotional distress in disability discrimination claims. Practical takeaways from each ruling are also outlined to help associations navigate these important developments.
RIDLEY V. RANCHO PALMA GRANDE HOMEOWNERS ASSN.
114 CAL.APP.5TH 788 (2025)
This is a case where the appellate court found that the HOA failed to conduct a reasonable investigation into water intrusion under a condominium unit, in breach of the HOA’s CC&Rs.
The underlying case decided on appeal involves an injunction action filed by condominium unit owners Doug Ridley and Sherry Shen to get their homeowners’ association, Rancho Palma Grande Homeowners Association (HOA), to supplement repairs to their condominium. The crawlspace beneath the owners’ unit flooded, and because the crawlspace is a common area controlled by the HOA, the HOA was responsible for investigating and remedying the water intrusion. The HOA took more than 19 months to remove the water and begin making meaningful repairs, and in the interim, the homeowners’ unit suffered severe damage. Accordingly, the homeowners sued the HOA and its now-former board president.
In April 2018, tenants in the home- owners’ unit reported flooding in the crawlspace underneath the unit. The homeowners and the HOA initially thought that the water was from a leaky pipe, which is the owners’ responsibility. However, a plumber hired by the home- owners did not see anything wrong with the plumbing and concluded that the water came from an underground well or spring. In addition, a plumber hired by the HOA learned from the City of Santa Clara (city) that the water was likely caused by an abandoned but undestroyed well. Because the crawl space is a common area, the HOA accepted responsibility for remedying water intrusion from outside the homeowners’ unit. However, the HOA permitted the homeowners to finish installing a sump pump to remove some of the water.
In May 2018, hoping to get the city or the Santa Clara Valley Water District to pay for remediating water in the crawlspace, the HOA hired a law firm. The firm contacted the water district, which reported that it, too, believed that the water was from “an unknown, unregistered well.” The water district also gave the firm a map showing where there likely was an abandoned but undestroyed well from a farm previously on the land where Rancho Palma Grande is now located. In addition to giving the map to the HOA, the law firm advised the HOA to take “all steps [...] to avoid further damages from the water flow under the unit” because of the “exponential costs involved if not properly addressed.”
In early June, a water restoration consultant retained by the HOA recommended that the HOA dry out the crawlspace to reduce the risk of mold developing in the homeowners’ unit. The consultant proposed the use of air movers, scrubbers, and filtration devices at a total cost of a little over $7,000. The HOA rejected the expert’s proposal. The HOA also received a report finding high moisture levels and mold in the homeowners’ unit and recommending remediation measures. However, the HOA did not implement the expert’s recommendations.
A series of drilling contractors con- firmed to the HOA that there was likely an undestroyed well underneath or near the homeowners’ unit. One of the drilling contractors estimated that it would cost $7,500 to open the floor of the homeowners’ unit with a mini-excavator, dig into the crawlspace, and expose the suspected wellhead. The HOA rejected this contractor’s proposal. Other investigation and mitigation proposals were received by the HOA but were also rejected.
Consistent with the opinions of the city, the water district, and the drilling contractors, the HOA board president at the time initially believed that water in the crawlspace was from a well, and the HOA took the position that there was likely an undestroyed well underneath the crawlspace. Sometime later in the year, the HOA changed course. The HOA stopped trying to locate and destroy a well underneath the crawlspace and decided instead to pursue the previously rejected option of installing a French drain, which would cause less damage to the homeowners’ unit and thus be less expensive. Later on, the board president took the position with the homeowners that the suspected well under the unit did not exist, there was no mold beneath the unit, and that the previously consulted experts were unreliable.
The following year, after claiming that the water intrusion in the crawl- space was a one-time event, the crawl- space flooded again. This flooding was worse than the year before, and three to four feet of water remained in the crawlspace for several months. Nevertheless, the HOA took no steps to remove the water beyond operating the sump pump that the homeowner had installed. During this time period, plumbers hired by the HOA dug exploratory trenches in the backyard of the homeowners’ unit but found no water in the trenches.
The HOA proceeded to have an engineer design a French drain, but did not tell the engineer that other experts had indicated there was a well underneath the unit and, therefore, the plans that he created did not address the prob- lems that a well and the debris sur- rounding it would create. The engineer eventually informed the HOA that he believed that there was a well under the crawlspace. Nevertheless, the HOA did not reconsider its decision that there was no well underneath the homeowners’ unit.
In July 2019, after the homeowners sued and sought a preliminary injunction, the board president continued to assert that the water in the crawlspace was most likely not from an abandoned well but rather from “a high groundwater table under the subject property,” despite this theory being contradicted by the HOA’s experts. Later that year, an engineering contractor discovered a sinkhole in the crawlspace. The city prohibited the use of the homeowners’ unit and ordered the HOA to correct the violation. Rather than resume searching for the suspected well, the HOA decided to remove soil from the crawlspace and pour concrete on top of the sinkhole.
Although tests showed mold in the homeowners’ unit by June 2019, the HOA did not immediately take any action to prevent or remediate mold. Later inspections found visible mold in the kitchen. In addition, testing showed several types of mold, some toxic, in patterns consistent with growth from condensation. However, even by the time of trial in 2023, this mold had not been fully remediated.
Evidence presented in the trial showed other termite, dry rot, and other issues being reported to the HOA, and the HOA not timely addressing them.
The HOA’s CCRs contained an exculpation clause limiting the HOA’s liability. Under the clause, the HOA generally is not liable for property damage or personal injury “caused by the elements” or “resulting from electricity, water, rain, dust, or sand which may leak or flow from outside or from any parts of the buildings.” However, this limitation on liability does not apply to damage or injury “caused by gross negligence of the Association.”
COURT’S RULING: The damage to the condominium was severe, as more than nineteen (19) months had passed before the HOA removed the water and made any meaningful repairs. It was noted that the HOA had engaged in “a pattern of falsehood [and] deception.” Thus, there was substantial evidence showing bad faith and a failure to conduct a reasonable investigation. The trial court and appeals court found the HOA and its board president grossly negligent and thus in breach of their duties as they acted in bad faith and failed to conduct a reasonable investigation. Therefore, judicial deference did not apply, and the HOA could not rely on the exculpatory clause in its CC&Rs to protect itself from liability. The homeowners were awarded $250,000 in damages against the HOA and $25,000 against the board president.
PRACTICAL TAKEAWAYS: Associations should promptly address repair issues, especially water intrusion or other issues that can cause major property damage and health issues if not timely corrected. Most importantly, boards should not ignore or manipulate their experts’ findings and recommendations.
11640 WOODBRIDGE CONDO HOA V. FARMERS INSURANCE EXCHANGE
110 CAL.APP.5TH 211 (2025)
REVIEW GRANTED
This case involves a lawsuit filed by a homeowners association against its property insurer. The association alleged the insurer breached an all-perils insurance policy and engaged in bad faith after the insurer denied a claim for interior water damage that occurred during re-roofing and rainstorms penetrated the partially constructed roof.
In 2021, while a building owned by 11640 Woodbridge Condominium Homeowners’ Association (HOA) was being reroofed, two rainstorms penetrated the partially constructed roof and caused extensive interior damage. The HOA made a claim under its condominium policy, which was underwritten by respondent Farmers Insurance Exchange (Farmers). Farmers denied the claim, concluding that the HOA’s losses resulted from non accidental faulty workmanship, which the policy did not cover.
The HOA then brought a lawsuit against Farmers, alleging breach of con- tract and breach of the implied covenant of good faith and fair dealing against Farmers. Farmers moved for summary judgment to dismiss the lawsuit. The trial court granted the motion, concluding there was no coverage under the con- dominium policy as a matter of law, and dismissed the lawsuit. The HOA appealed the ruling.
On appeal, the court analyzed the HOA’s insurance policy and the factual basis of the claim. The court also reviewed the exclusions under the pol- icy to determine if any of them could apply to justify the denial of the claim. The legal review standard in insurance coverage disputes is that, “in cases of ambiguity, basic coverage provisions are construed broadly in favor of affording protection, but clauses setting forth specific exclusions from coverage are interpreted narrowly against the insurer. The insured has the burden of establishing that a claim, unless specifically excluded, is within basic coverage, while
the insurer has the burden of establishing that a specific exclusion applies.”
COURT’S RULING: The appellate court reversed the trial court’s ruling and held that the condominium insurance policy was “all risks” or “open peril”; that the case can’t be dismissed in summary judgment because there was an actual issue as to whether the water damage exclusion applied to the claim; that there was a genuine issue of mate- rial fact as to whether the faulty workmanship exclusion applied to the claim; and whether the insurer breached its implied covenant to deal fairly and in good faith with its insured; and that there was a genuine issue of material fact as to whether the insurer denied or delayed payment of benefits unreasonably or without proper cause such that punitive damages are warranted.
PRACTICAL TAKEAWAYS: There could be a lot of uncertainty as to whether the denial of a claim is justified, and it will be based on the language in the policy and how the facts fit in. Therefore, it is important for HOA boards and their managing agents to work with their insurance agent and legal counsel to fully understand insurance coverage and exclusions under their policy.
C.R. V. PLB MGMT., LLC.
2024 WL 5482654 (UNITED STATES COURT OF APPEALS, NINTH CIRCUIT) This is a case involving a management company’s denial of a resident’s request for a parking space closer to their home to accommodate a child with autism.
The Plaintiff-Appellant, C.R., has severe Autism Spectrum Disorder and lives in Los Angeles with his mother, Tracey Joffe. Their apartment complex is managed by Defendant-Appellee PLB Management, LLC (“PLB”). PLB refused Joffe’s request to reserve the parking space directly in front of her apartment for her exclusive use to accommodate C.R.’s disability-related needs. PLB only offered a reserved parking spot farther away from their apartment.
PLB was then sued by the plaintiff (through her mother) for violating various provisions of the Fair Housing Act (FHA) and its California corollary, the California Disabled Persons Act. The jury found that PLB failed to grant the Plaintiff a reasonable accommodation for their dis- ability and awarded the plaintiff $250,000 in emotional distress damages. On appeal, the district court overturned the jury‘s verdict, ruling that there was no legally sufficient evidence that PLB caused the plaintiff any harm. The plaintiff appealed, and the 9th Circuit Court of Appeals disagreed.
COURT’S RULING: In its holding, the 9th Circuit Court of Appeals concluded that the plaintiff presented sufficient evidence for the jury to infer that C.R. experienced emotional distress caused by PLB’s actions. Although C.R. did not pro- vide personal testimony since he is non- verbal, his mother competently testified on his behalf. The appellate court noted that personal testimony is often used to prove causation in discrimination cases. Although personal testimony is often used to prove causation in discrimination cases, causation can also be inferred from sur- rounding circumstances. Thus, the appellate court remanded the case back to the district court for a new trial.
PRACTICAL TAKEAWAYS: Emotional distress damages are available under the FHA and do not require quantifying evidence for emotional distress damages in discrimination cases. Causation for such damages can also be proven from the testimony of other witnesses and circumstantial evidence. Therefore, association boards and their managing agents should understand their obligations under fair housing laws to reasonably accommodate persons with a qualifying disability and should work with legal counsel if they are inclined to deny the requested accommodation. Legal counsel can help ensure the basis for denial is legitimate under the law and properly documented.
NABATMAMA V. ROSS MORGAN & CO., INC.
2025 WL 1257350 (UNITED STATES DISTRICT COURT, C.D. CALIFORNIA)
This is a case involving a resident of a homeowners’ association who sued the association’s property management company over its collection actions for the fines levied by the association.
In the underlying action, the plaintiff, Jeffrey Nabatmama, who resides at a property within the Shenandoah Villas Homeowners Association (“HOA”) filed a lawsuit against the HOA’s property manager, Ross Morgan & Company. In late March 2024, the HOA held a meeting where it imposed fines of over $106,000 against the plaintiff for alleged violations of the HOA’s CC&Rs. The plaintiff alleged that the HOA did not provide the owner of the property with proper notice of this
meeting. Shortly thereafter, the plain- tiff received a letter from the defendant management company notifying him of the fines and threatening that the unpaid fines would be collected through monetary judgment, imposition of liens, and foreclosure proceedings.
The plaintiff alleged that the defendant, acting as a debt collector for the HOA, has wrongfully billed plaintiff for these fines, despite plaintiff having no legal owner- ship interest in the property. The plaintiff alleged that the defendant continued to invoice and threaten him with collection of the fines despite knowing or having reason to know the plaintiff is not responsible for the debts. The plaintiff further alleged that the defendant failed to send disclosures required under the Fair Debt Collection Practices Act (“FDCPA”). The plaintiff generally alleged this conduct violated eight provisions of the FDCPA and that he has suffered actual damages, emotional dis- tress, and is entitled to statutory damages.
COURT’S RULING: The court granted the defendant’s motion to dismiss the FDCPA claims because violations and the imposition of fines are not consensual by either party and are not transactions that arise from the initial purchase of the property, which is a consensual trans- action. The court further accepted the defendant’s argument that the FDCPA is limited to debts that arise from consensual transactions between negotiating parties. Thus, an HOA fine is not a debt under the FDCPA.
PRACTICAL TAKEAWAY: Although the collection of fines is clearly not subject to the FDCPA, an association’s collection efforts must still conform to the requirements of state law and the association’s governing documents. ■
Anne Acuña is a partner and principal with Angius & Terry LLP and has been specializing in community association law for over a decade. Ms. Acuña works with homeowners associations throughout California as their general corporate counsel, in addition to litigating matters affecting common interest developments. Ms. Acuña also regularly speaks in community association conferences and has authored several articles in industry publications.