One of the advantages of owning a condominium rather than a single-family home is that repairs to common areas are handled by the homeowner’s association. But what happens if the HOA ignores that responsibility?

That was the issue at the core of a case recently decided by the California Court of Appeal (Ridley v Rancho Palma Grande Homeowners Association.)

Rancho Palma Grande is a condominium complex in Santa Clara with over 100 units. Its Declaration of Covenants, Conditions and Restrictions (CCRs), drawn up in 1981, established a Home-Owners Association and granted the HOA various powers and duties, including to “manage, operate, maintain, repair, paint, landscape, care for and preserve the Common Area.”

Doug Ridley, now 85, bought a unit in Rancho Palma Grande in 1991. He later married Sherry Shen. The couple lived there for a decade, then moved and began renting out the unit.

In April of 2018 Ridley’s tenants reported flooding in the crawlspace under the unit. The source of the water, and who was responsible for abating it, became the focus of a dispute between Ridley and the HOA that eventually ended up in a lawsuit.

A plumber hired by Ridley found no leaks in the unit’s pipes and said the water was probably from an underground well or spring. The city told the HOA’s plumber the water was likely leaking from an abandoned water well.

The HOA accepted responsibility for abating the water in the crawlspace, a common area. It permitted Ridley to install a sump pump to remove the water.

The HOA tried to get the City or the water district to pay for correcting the issue. They declined, saying the water was probably from an abandoned farm well that had been on the land before Rancho Palma Grande was built.

Over the following months, then years, various consultants hired by the HOA agreed that an abandoned but intact well was the likely source of the flooding. They recommended various approaches, including excavating the crawlspace – which could require ripping up floors in the Ridley unit. The HOA rejected these proposals.

Ridley suggested installing a drain to remove the water, but the president of the HOA told him this would not eliminate the well, “which the Association is now required to do, by law.”

The HOA then changed its approach. In September of 2018 it hired a new attorney, who brought in hydrologists. It did not inform the attorney or the water experts that the city, water district and previous plumbers had said the likely cause of the water was an abandoned well. It also did not tell them that there had been multiple floodings, nor about the mold in the Ridley unit. The new group recommended installation of a drain.

Later, when the dispute went to trial, they HOA president admitted that the statements made to the attorney and the water consultants were false.

In March of 2019, the crawlspace flooded again, to a depth of three to four feet, and the water remained in the crawlspace for months. The HOA took no steps to remove the water, other than operating the sump pump installed by Ridley.

Three months later, Ridley and his wife sued the HOA, claiming it had breached its own CCRs as well as its fiduciary duty, had violated the Davis-Stirling Common Interest Development Act (which governs HOAs in California), and had failed the homeowners in other ways. They later added allegations of fraud and included the HOA president as a defendant.

Shortly after the homeowners filed their lawsuit, the association president told the court that he believed the likely source of the water in the crawlspace was “a high ground water table,” not an abandoned well. This was despite having been told by the city, the water agency, and the HOA’s own consultants that a well was the probable source.

Two months later a sinkhole appeared in the crawlspace. The city ordered the HOA to fix the problem. Two hours after the HOA’s workers began work, their shovels uncovered the source of the water: an abandoned wellhead.

The case went to trial in April of 2022. The hearing lasted for 67 court days, producing a transcript of some 7,700 pages.

The court issued its ruling two years later, finding in favor of the homeowners on all claims. It ordered the HOA to perform the necessary repair work, and awarded damages to the plaintiffs for restoration costs, lost rent or use of the apartment, and emotional distress.

In addition, finding the defendants’ behavior “despicable,” it awarded the homeowners $250,000 in punitive damages against the HOA and $25,000 against the HOA president.

The HOA appealed, challenging the claims made by the homeowners.

The appellate court focused on whether the HOA had breached its duties under its CCRs.

Citing the many times the HOA ignored evidence of serious, ongoing damage caused by water and the likelihood that this was caused by an abandoned well, as well as its failure to perform repairs to the dwelling within 60 days as required by the CCRs, the justices found that the association had violated the condominium’s governing documents.

They also concluded that the HOA had acted in bad faith by disseminating false information to its homeowners, to workers who would be endangered if the crawlspace soil had collapsed or the abandoned well had exploded, and to the trial court.

The justices affirmed the lower court decision and awarded the homeowners their costs on appeal.

By Robert C. Weiss