[Insurance; Exclusions] A condominium association’s insurance carrier providing an “all risks” policy has the burden to prove a specific coverage exclusion applies.
Shernoff Bidart Echeverria, William M. Shernoff, Travis M. Corby and Cooper Johnson for Plaintiff and Appellant.
Woolls Peer Dollinger & Scher, Galil S. Cooper and H. Douglas Galt for Defendant and Respondent.
OPINION
EDMON, P. J.—
In 2021, while a building owned by appellant 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 nonaccidental faulty workmanship, which the policy did not cover.
The HOA then brought the present action, alleging breach of contract and breach of the implied covenant of good faith and fair dealing against Farmers. Farmers moved for summary judgment, and the trial court granted the motion, concluding there was no coverage under the condominium policy as a matter of law.
We reverse. As we discuss, the condominium policy was an “all-risks” policy, which covered all damage to the HOA’s property unless specifically excluded. There are triable issues of material fact as to whether the exclusions relied on by Farmers—the water damage exclusion and the faulty workmanship exclusion—preclude coverage in the present case. We thus reverse the summary judgment.
215*215 FACTUAL AND PROCEDURAL BACKGROUND
I. The roof replacement and property damage.
In 2021, the HOA hired Nelson Alcides Bardales, doing business as Local Roofer (Bardales), to replace the roof of the condominium complex building (the building).[1] The proposal prepared by Bardales identified the following scope of work:
“Tear off Existing Roof Down to Wood Sheeting
“Inspect and Replace any Dry Rot Wood
“Prepare Surface to Receive New Roof System
“Build New Wood Platforms for A/C Units
“Install One Layer #28 Glass Ply[[2]]
“Hot Mop[[3]] 3 Layers #11 Glass Ply
“Install All New Vent and Pipes with 509 Roof Cement
“Hot Mop One Layer of 72 Cap Sheet Over A/C Unit Platforms and Walls
“Install New Sheet Metal Pans Under A/C Units
“Top Mop and Seal with #5 Granite Rock”
Bardales began the job on about September 29, and over the next five days he removed approximately 80 percent of the roof membrane.[4] Bardales intended to replace those portions of the plywood sheets that showed evidence of dry rot, and then to install new layers of the new roof membrane. However, on October 4, after the roof membrane was removed, there was a 216*216 rainstorm that damaged the exposed insulation and plywood. As a result, water entered about half the condominium units.
Because of the damage caused by the rain, Bardales had to remove and replace about 80 percent of the insulation and plywood. He then added a layer of “base paper” and “base felt,” hot-mopped and tarred much of the roof, and covered the entire roof with tarps before the next rain was expected. However, a second heavy rainstorm on about October 25, 2021, blew off some of the tarps and penetrated the exposed felt layer. As a result, water entered all of the condominium units, causing significant damage.
II. The condominium policy.
The HOA was insured under a Condo/Townhome Premier Policy (policy) written by Farmers for the period October 14, 2020, to October 14, 2021. Under the policy, Farmers agreed to pay for “direct physical loss of or damage to Covered Property” at the HOA’s premises “caused by or resulting from any Covered Cause of Loss.” The policy defined the relevant terms as follows:
—”Covered Property” includes any “[b]uilding and structure described in the Declarations,” including “[c]ompleted additions,” “[p]ersonal property owned by [the HOA],” and, if not covered by other insurance, “[a]dditions under construction, alterations[,] and repairs to the building or structure.” “Covered Property” excludes, among other things, “[p]ersonal property owned by, used by[,] or in the care, custody[,] or control of a unit-owner.” (Italics added.)
—”Covered Causes of Loss” are “Risks of Direct Physical Loss” unless the loss is “[e]xcluded in Section B” or “[l]imited in Paragraph A.4.” (Italics added.)
The policy also contained two coverage exclusions that are relevant to our analysis:
—Water damage exclusion: Farmers will not pay for loss or damage caused directly or indirectly by “[w]ater,” “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” However, Farmers will pay for “[w]ater damage to the interior of any building or structure caused by or resulting from rain, … whether driven by wind or not, if … [t]he building or structure first sustains damages by a Covered Cause of Loss to its roof or walls through which the rain … enters.”
—Faulty workmanship exclusion: Farmers will not pay for loss or damage “caused by or resulting from” specified exclusions, including, among others, 217*217 “[f]aulty, inadequate or defective … [p]lanning, zoning, development, surveying, siting … [and] workmanship, repair, construction [or] renovation.” (Italics added.) However, “if an excluded cause of loss … results in a Covered Cause of Loss,” Farmers “will pay for the loss or damage caused by that Covered Cause of Loss.”
III. The insurance claim.
The HOA made a claim for water damage under the policy on October 6, and again after the October 25 rain. As part of its investigation of the claim, Farmers retained Pete Fowler Construction Services, Inc. (Fowler), to inspect the HOA’s roof. Fowler reported that Bardales failed to follow industry standards by removing nearly the entire roof membrane at once, rather than in small sections. Bardales did not have the capacity to quickly tar the areas where the roof had been removed, and tarps placed over the building did not provide sufficient temporary rain protection. The building thus was completely exposed during subsequent rainstorms.
Based on Fowler’s investigation, Farmers denied the HOA’s claim on November 1. Its denial letter said: “[O]ur investigation found that roofing company Local Roofer was retained for a roof replacement operation. Local Roofer removed the existing roof down to the roof deck sheathing before a storm approached. During the storm events, rainwater entered into the building through the partial remaining roof elements not intended or expected to be an effective barrier against a rainstorm. Rainwater entered the building through openings in the roof intentionally made by Local Roofer during their reroof processes and not as a result of a covered accidental event. While the roof was tarped, and a section of the tarp blew off the roof, the blowing of a tarp off a roof does not create an opening in the roof. Instead, the roof sheathing with or without a tarp is not a roof and the opening in the roof was caused by the roofers replacing the roof, not wind. Further, Local Roofer did not meet the standard of care in their roofing processes. Thus, the removal of roof surfacing in addition to not being accidental, excludes faulty workmanship. Unfortunately, your E3422-3 Condominium Property Coverage Form excludes water in any form, and negligent work. There is no coverage for the loss sustained.”
IV. The present action.
The HOA filed the present action against Farmers and Bardales in January 2022. The complaint alleged that Bardales removed the entire top layer of the building’s roof down to the plywood decking that served as the roof’s foundation. Because the roof was not fully protected from the elements, when storms hit the area on October 4 and 25, “the building’s roof was damaged[,] 218*218 ultimately resulting in water intrusion to the walls and its interior.” Specifically, “[m]any of the complex’s 31 units suffered collapsed ceilings and water-logged walls, forcing the residents to move out. The common areas and great room also suffered extensive damage. The cost of remediation and repair has been estimated at more than $3.5 million.”
As against Farmers, the HOA asserted causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing.[5] Specifically, the HOA alleged that the water exclusion to the policy did not apply because the HOA’s building “sustained damage first to its roof and walls, through which the rain entered.” The HOA also alleged that the faulty workmanship exclusion did not apply because California courts have interpreted this provision not to apply to “faulty processes” employed by a contractor, and because the building “first sustained damage to its roof before water entered the building.” Therefore, “whether [the HOA’s] loss was caused by the storm or by Local Roofer’s faulty process, or by both, the loss was covered by the Policy,” and Farmers “knowingly and intentionally misconstrued the Policy’s exclusions … to deny coverage.”
V. Farmers’ motion for summary judgment.
Farmers filed a motion for summary judgment in February 2023, urging that coverage was excluded by both the water damage exclusion and the faulty workmanship exclusion. First, Farmers noted that the HOA’s policy specifically excluded coverage for damage caused by water unless the water damage was caused by “a Covered Cause of Loss” to the insured’s roof or walls. Although the damage in the present case unquestionably was caused by water, Farmers asserted that the water did not enter the building as the result of a covered cause of loss. Farmers said: “In the first rain event, the water entered through the sheathing exposed by Bardales’ removal of the entire roof at once. It rained while the roof was off. In the second rain event, the water entered through gaps between tarps placed as temporary covering over unwaterproofed areas of the incomplete roof. Covered by a tarp or not, there was no damage to the building through which the rain entered. The rain entered through openings intentionally created by Bardales. In California, insurance is not available for losses that are not fortuitous and accidental.” Further, Farmers urged: “Plaintiff cannot defeat application of the exclusion by contending that the roof decking or sheathing was a `roof’, since it admits that the sheathing without tarps was not impervious to water penetration. Nor does it defeat application of the exclusion if Plaintiff contends that the tarps were blown off the unfinished roof by wind (contrary to Bardales’ personal percipient observation). A tarp is not a roof as a matter of California law. It is merely a temporary covering, or … a `nonstructural band-aid.'”
219*219 Farmers also contended that the policy did not cover the HOA’s water damage under the faulty workmanship exclusion. It urged that Bardales was negligent, and his negligence caused rainwater to penetrate the interior of the building. Specifically, Farmers asserted: “Bardales’ work was faulty, inadequate and defective in at least the following ways: by planning to remove the entire roof all at once rather than one section at a time; by workmanship in removing entire roof all at once yet failing to protect against water penetration in the event of rain knowing the sheathing was not impervious to such penetration by itself; by failing to timely repair the wet insulation; by constructing the lower layers of the roof without protection of the building from water penetration; and by using inadequate materials used in repair and construction in that the tarps used were inadequate to protect the building from water penetration.”
In support of its motion for summary judgment, Farmers submitted the declaration of claims adjuster Taylor Von Ahlefeld. He explained: “Section B, Exclusions, section B.1.f(1)(a) and (2)(b)(i), excludes all damage from water, directly or indirectly, except in specified limited circumstances. The policy further states: `Such loss or damage is excluded … regardless of any other cause or event that contributes concurrently or in any sequence to the loss.’ For coverage to apply, the water must enter the building through physical damage first caused to the building (usually the roof) by a covered cause of loss. Typically, that covered cause of loss is wind, hail, or a falling tree or object. Here, there was no such covered cause of loss. Based on the facts developed at the time of my investigation, it was clear that the water entered through openings intentionally uncovered or created by a contractor during re-roofing operations. Intentionally created openings are not a covered cause of loss. Even if tarps blew off the roof, the tarps were not a roof, but only temporary coverings of exposed areas….
“In addition, to prevent this first party property policy issued to the property owner from becoming a liability policy that protects negligent third-party contractors—who are not even the company’s insureds—from the consequences of their own negligence, under section B.3.c.(2), negligent or faulty workmanship is also and separately excluded. That exclusion states that the Policy `will not pay for loss or damage caused by or resulting from’ … `Faulty, inadequate, or defective’ … `planning,’ `workmanship,’ `repair,’ `construction,’ `renovation,’ `remodeling,’ or … `maintenance.’ All those things applied to this situation in my judgment…. While the roofer’s negligent work did cause damage, that damage did not result from a covered cause of loss under the plain terms of the Woodbridge Policy…. [¶] … Therefore, I was unable to find coverage for this loss.”
The HOA opposed the motion for summary judgment. It asserted that Bardales’s negligence—namely, his “flawed process”—was a covered cause 220*220 of harm and was the efficient proximate cause of the damage. Alternatively, the HOA urged that there was coverage under the water damage exception because the roof was damaged before rainwater entered the building.
The trial court granted the motion for summary judgment, concluding that the policy did not cover the HOA’s losses because both the water damage exclusion and the faulty workmanship exclusion applied. The trial court entered judgment on July 13, 2023. The HOA timely appealed.
DISCUSSION
I. Legal principles.
A. Standard of review.
Summary judgment is proper if the papers submitted show there is no triable issue as to any material fact and the moving party is entitled to prevail on a cause of action as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 [107 Cal.Rptr.2d 841, 24 P.3d 493] (Aguilar).) A defendant moving for summary judgment has the initial burden to show the plaintiff cannot establish one or more elements of the challenged cause of action or there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).) A defendant meets its burden by presenting affirmative evidence that negates an essential element of the plaintiff’s claim, or by submitting evidence that demonstrates “the plaintiff does not possess, and cannot reasonably obtain, needed evidence” to prove an essential element of the plaintiff’s claim. (Aguilar, at p. 855.)
If the defendant makes a sufficient showing, the burden then shifts to the plaintiff to demonstrate a triable issue of material fact exists. (Code Civ. Proc., § 437c, subd. (p)(2).) A triable issue of fact exists if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion. (Aguilar, supra, 25 Cal.4th at p. 850.)
On appeal from a summary judgment, we review the record de novo and independently determine whether triable issues of material fact exist. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767 [107 Cal.Rptr.2d 617, 23 P.3d 1143]; Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334 [100 Cal.Rptr.2d 352, 8 P.3d 1089].) We “view the evidence in a light favorable” to the nonmoving party, resolving any evidentiary doubts or ambiguities in that party’s favor. (Saelzler, at p. 768.)
B. Principles of insurance interpretation.
The principles governing the interpretation of insurance policies in California are well settled. “`Our goal in construing insurance contracts, as 221*221 with contracts generally, is to give effect to the parties’ mutual intentions. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264 [10 Cal.Rptr.2d 538, 833 P.2d 545]; see Civ. Code, § 1636.) “If contractual language is clear and explicit, it governs.” (Bank of the West, at p. 1264; see Civ. Code, § 1638.) If the terms are ambiguous [i.e., susceptible of more than one reasonable interpretation], we interpret them to protect “`the objectively reasonable expectations of the insured.'” (Bank of the West, at p. 1265, quoting AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822 [274 Cal.Rptr. 820, 799 P.2d 1253].) Only if these rules do not resolve a claimed ambiguity do we resort to the rule that ambiguities are to be resolved against the insurer. (Bank of the West, at p. 1264).’ (Boghos v. Certain Underwriters at Lloyd’s of London (2005) 36 Cal.4th 495, 501 [30 Cal.Rptr.3d 787, 115 P.3d 68].) The `tie-breaker’ rule of construction against the insurer stems from the recognition that the insurer generally drafted the policy and received premiums to provide the agreed protection. (See Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 552 [79 Cal.Rptr.3d 721, 187 P.3d 424]; La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co. (1994) 9 Cal.4th 27, 37-38 [36 Cal.Rptr.2d 100, 884 P.2d 1048].)” (Minkler v. Safeco Ins. Co. of America (2010) 49 Cal.4th 315, 321 [110 Cal.Rptr.3d 612, 232 P.3d 612] (Minkler).)
To ensure that coverage conforms to the objectively reasonable expectations of the insured, “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.” (Minkler, supra, 49 Cal.4th at p. 322.) The court is not required “`to select one “correct” interpretation from the variety of suggested readings'”; instead, where there are multiple plausible interpretations of a policy, a court must find coverage if there is a “`reasonable interpretation under which recovery would be permitted.'” (MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635, 655 [3 Cal.Rptr.3d 228, 73 P.3d 1205].)
II. The present policy: all-risks coverage, with exclusions for water damage and faulty workmanship.
A. Background.
First party property insurance indemnifies property owners against loss to property. (Another Planet Entertainment, LLC v. Vigilant Ins. Co. (2024) 15 Cal.5th 1106, 1122 [320 Cal.Rptr.3d 843, 548 P.3d 303] (Another Planet), citing 10A Couch on Insurance (3d ed. 2024) § 148:1.) There are two 222*222 general categories of first party property insurance. “Named perils” or “specific perils” policies provide coverage only for the specific risks enumerated in the policy and exclude all other risks. (7 Couch on Insurance, supra, § 101:7.) “All-risk” policies provide coverage for all risks unless the specific risk is excluded. (Ibid.; Another Planet, at p. 1122.)
“`Historically, property insurance grew out of the insurance against the risk of fire which became available for ships, buildings, and some commercial property at a time when most of the structures in use were made wholly or primarily of wood.’ (10A Couch on Insurance, supra, § 148:1.) `On this side of the Atlantic, fire insurance first developed in the middle of the eighteenth century…. [T]his was insurance against only one cause of loss, or peril—fire. Over time other insured perils, such as wind and hail, were added. These insured perils were each specified in the insurance policy. For this reason, such insurance came to be known as “specified-risk” coverage. It insured property against the risk of damage or destruction resulting from specified causes of loss.’ (Abraham, Peril and Fortuity in Property and Liability Insurance (2001) 36 Tort Trial & Ins. Prac. L.J. 777, 782-783, fn. omitted.) By contrast, marine insurance developed `standardized forms that insured an ocean-going vessel and its cargo against “perils of the high seas.” Whereas the development of fire insurance for property on land focused on the danger presented by a specified cause of loss, marine insurance typically provided coverage for all risks associated with a particular shipment or voyage.’ (5 New Appleman on Insurance Law Library Edition (2023) § 41.01[1], fn. omitted.) `[B]y the middle of the twentieth century, insurers adopted the marine insurance approach by offering all-risk commercial and homeowners’ property insurance. The operative phrase in such policies is contained in the section labeled “Perils Insured Against,” and provides coverage against the risk of “direct physical loss” to covered property.’ (Abraham, at p. 783, fn. omitted.)
“`As with any insurance, property insurance coverage is “triggered” by some threshold concept of injury to the insured property. Under narrow coverages like theft, the theft is itself the trigger. Under most coverages, however, the policy specifically ties the insurer’s liability to the covered peril having some specific effect on the property. In modern policies, especially of the all-risk type, this trigger is frequently “physical loss or damage” … (10A Couch on Insurance, supra, § 148:46.)” (Another Planet, supra, 15 Cal.5th at pp. 1122-1123.)
B. The condominium policy.
The condominium policy at issue in this case covers “direct physical loss of or damage to Covered Property … caused by or resulting from any 223*223 Covered Cause of Loss.” “Covered Causes of Loss” are defined as “Risks of Direct Physical Loss unless the loss is Excluded in Section B…. [¶] or Limited in Paragraph A.4.” This language is far from a model of clarity— read literally, the policy says Farmers will pay for “direct physical loss of or damage to” the HOA’s property caused by “[r]isks of [d]irect [p]hysical loss.” Nonetheless, the language unquestionably gives rise to an “all risks” or “open peril” policy. (See Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 751 & fn. 2 [27 Cal.Rptr.3d 648, 110 P.3d 903] [property policy insuring against “`risks of direct physical loss to property'” unless excluded or caused by one of several specifically named perils was an “`open peril'” policy]; Jordan v. Allstate Ins. Co. (2004) 116 Cal.App.4th 1206, 1218-1219 [11 Cal.Rptr.3d 169] [“the Allstate policy is an `all-risk’ policy (i.e., it provides coverage for all risks of loss, except those expressly excluded)”].) The policy thus insures the HOA against all physical loss or damage to the HOA’s covered property unless specifically excluded.
In support of its motion for summary judgment, Farmers asserted that there was no coverage for the HOA’s losses under two policy exclusions: (1) the water damage exclusion, and (2) the faulty workmanship exclusion. We discuss these exclusions below.
III. The water damage exclusion.
As noted above, the policy provides that Farmers will not pay for loss or damage caused directly or indirectly by “[w]ater,” “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” However, Farmers will pay for “[w]ater damage to the interior of any building or structure caused by or resulting from rain … if … [t]he building or structure first sustains damages by a Covered Cause of Loss to its roof or walls through which the rain … enters.”
Farmers contends that the water damage exclusion bars coverage because “[t]he roof at the subject property had been entirely removed,” and thus “[t]here was no roof to be damaged when it started to rain.” Alternatively, Farmers contends that even if a “roof” remained, water entered through deliberately created openings in the roof, which was not “damage” within the meaning of the policy. The HOA disagrees, urging that “the building did suffer damage that allowed water to enter”—specifically, “the roof was damaged by [Bardales] stripping down the existing roof and exposing it to rain.” The HOA urges that this damage to the roof rendered the interior rain damage a covered cause of loss.
As we discuss, there are triable issues of material fact as to coverage under the water damage exclusion. This exclusion therefore cannot support summary judgment for Farmers.
224*224 A. Case law addressing property coverage during roof repairs.
We are aware of just one California case that has addressed all-risk property coverage for losses that occur during roof repairs. In Diep v. California Fair Plan Assn. (1993) 15 Cal.App.4th 1205 [19 Cal.Rptr.2d 591] (Diep), a contractor removed a portion of the roof of a warehouse while making roof repairs and covered the opening with plastic sheeting. The plastic sheeting was torn during two rain storms, allowing rain to enter the warehouse and damage the plaintiff’s merchandise. (Id. at p. 1206.) The plaintiff made a claim under an insurance policy that provided, in relevant part, that the insurer “`shall not be liable for loss to the interior of the building(s) or the property covered therein caused: [¶] (1) by rain, snow, sand or dust, whether driven by wind or not, unless the building(s) covered or containing the property covered shall first sustain an actual damage to roof or walls by the direct action of wind or hail and then shall be liable for loss to the interior of the building(s) or the property covered therein as may be caused by rain, snow, sand or dust entering the building(s) through openings in the roof or walls made by direct action of wind or hail.'” (Id. at p. 1208.) The insurer moved for summary judgment, contending there was no coverage because the plastic sheeting did not constitute a “roof.” The trial court agreed and granted the motion for summary judgment. (Id. at p. 1207.)
The Court of Appeal affirmed. (Diep, supra, 15 Cal.App.4th at p. 1206.) It noted that the loss would be covered if the plastic sheeting constituted a “roof” because it was undisputed that wind blew the sheeting open, allowing the rain to enter and damage the plaintiff’s inventory. However, the court reasoned that while “roof” has many different meanings, it “is commonly considered to be a permanent part of the structure it covers.” (Id. at p. 1208.) In the case before it, the court found that the plastic sheeting was “a nonstructural band-aid,” not a “roof,” and thus the policy did not cover the resulting water damage. (Id. at pp. 1209, 1211.)
Some courts in other jurisdictions have similarly concluded. (See, e.g., Fourth Street Place, LLC v. Travelers Indemnity Co. (2011) 127 Nev. 957, 966 [270 P.3d 1235, 1241] [“tarps used to cover the areas of the Building’s roof exposed by removal of the waterproof membrane did not constitute a `roof’ for purposes of the Policy’s rain limitation”]; Lobell v. Graphic Arts Mut. Ins. Co. (N.Y.App.Div. 2011) 83 A.D.3d 911, 913 [921 N.Y.S.2d 306, 308] [“Contrary to the plaintiffs’ contention, the tarps that had been placed over the openings in the first floor ceiling of their building did not come within the definition of the term `roof’ as used in the `windstorm or hail’ provision of the policy, which provided that damage to personal property caused by rain was not covered unless the rain entered the home as a result of wind or hail causing an opening in a `roof'”]; New Hampshire Ins. Co. v. Carter (Fla. Dist. 225*225 Ct. App. 1978) 359 So.2d 52, 53 [policy did not cover damage caused by rain that entered through partially constructed roof]; Camden Fire Ins. Assn. v. New Buena Vista Hotel Co. (1946) 199 Miss. 585, 593-600 [24 So.2d 848, 848-851] [same].)
Other courts, however, have differently interpreted the water exclusion language of all-risk property policies. In Dewsnup v. Farmers Ins. Co. of Or. (2010) 349 Or. 33 [239 P.3d 493] (Dewsnup), the plaintiff undertook repairs to his home’s roof, which was made up of a plywood sublayer and an outer layer of wood shakes, by removing the outer layer and replacing it temporarily with plastic sheets stapled to the plywood. That night, a storm blew off the plastic sheets, allowing rain to enter the plaintiff’s home through the joints between the plywood. (Id. at p. 495.) The plaintiff made a claim under his homeowner insurance policy, but the insurer denied it, concluding that the property damage was not covered because the plastic tarp was not a “roof” within the meaning of the policy. (Ibid.) The trial court granted the insurer’s motion for summary judgment, and the Court of Appeal affirmed. (Id. at p. 495.)
The Oregon Supreme Court reversed. It explained that “[t]he ordinary meaning of the terms `roof’ and `roofing’ do not expressly require that a roof must be permanent, as defendant argues. To be sure, a `roof,’ which consists, in part, of `roofing’ materials, should be reasonably suitable to `maintain a cover upon [a building’s] walls’ in order to serve its function. [Citation.] `Roofing,’ to do the same, must provide some level of `protection from the weather.’ [Citation.] Taken together, those definitions imply requirements of structural integrity and protection from the elements.” (Dewsnup, supra, 239 P.3d at p. 497.) However, the court noted, “those are functional elements, not necessarily durational ones. No roof is permanent. When a roof is sufficiently durable to serve the functional purposes described above, it is still a `roof’ within the ordinary understanding of that term, even if it is not necessarily permanent.” (Ibid.) In the case before it, the court concluded that a reasonable juror could conclude that plastic sheeting secured to a plywood sublayer was a “roof” because it was “suitable to protect the house for the duration of the repair.” (Id. at p. 500.) Accordingly, the insurer’s motion for summary judgment should have been denied. (Ibid.)
The New Jersey Court of Appeal similarly concluded in Victory Peach Group, Inc. v. Greater New York Mutual Ins. Co. (App.Div. 1998) 310 N.J. Super. 82 [707 A.2d 1383] (Victory Peach). There, the insured attempted to repair his roof by cutting troughs in the roof to improve drainage. Because the repairs were not completed at the end of the day, the insured covered the area with vinyl tarpaulins nailed to the roof. That night, a rainstorm ripped off the tarpaulins, allowing rain to enter the building and damage its contents. (Id. 226*226 707 A.2d at p. 1384.) The property insurer denied coverage for the damage, and a jury returned a liability judgment for the insured. The insurer appealed. (Id. at p. 1383.)
The appellate court affirmed the judgment for the insured. It noted that the applicable insurance policy covered rain damage to a building’s interior if “`[t]he building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain … enters,'” and also covered “`[a]dditions under construction, alterations[,] and repairs to the building or structure.'” (Victory Peach, supra, 707 A.2d at pp. 1386, 1384.) Thus, the court reasoned: “[W]ere the rain to have entered through the old defects in the roof observed by [the insured] and which necessitated the repairs, that would be a `Covered Cause of Loss.’ [Fn. omitted.] Likewise, the entry of the rain through the unfinished repairs would seem to be a `risk of direct physical loss’ and, thus, a `Covered Cause of Loss.’ No exclusions apply. The limitation cannot apply by its own terms, since the roof did sustain damage by a `Covered Cause of Loss.'” (Id. at p. 1386.)
In reaching this conclusion, the court rejected the insurer’s assertion that there could be no coverage because the damage was to temporary repairs, not to the roof. The court explained: “First, since the repairs themselves are `covered property,’ the entry of the rain through the damage to those repairs would constitute a `Covered Cause of Loss’…. Second, we simply do not accept the factual proposition that the repairs to the roof made the roof something other than a roof. At the least, the provision is ambiguous.” (Victory Peach, supra, 707 A.2d at p. 1386.) Moreover, the court said, the burden was on the insurer, as the drafting party, to bring the case within an exclusion or limitation. In the case before the court, the insurer “[q]uite simply … has not done so.” (Id. at p. 1387.)
The court also similarly concluded in Wellsville Manor LLC v. Great American Ins. Co. (E.D.N.Y., Oct. 1, 2024, No. 22-CV-1229 (MKB)) 2024 WL 4362599, p. *1 (Wellsville Manor). There, the insured retained a contractor to replace the entire roof of a commercial property. (Id. at p. *2.) During construction, the contractor removed the gravel ballast, which was one of four layers of the roof and the layer responsible for preventing upward movement of the roof membrane due to wind. (Ibid.) A storm subsequently loosened the roof membrane and allowed water to enter the premises. (Ibid.) The insurer denied coverage for the water damage, concluding that the damage was not caused by a covered cause of loss, and the insured sued for breach of contract. (Id. at p. *3.)
The insurer moved for summary judgment of the insured’s claim, asserting that the premises were not covered by a “roof” because the contractor had 227*227 removed the roof’s top layer and had failed to install a temporary ballast. (Wellsville Manor, supra, 2024 WL 4362599 at p. *7.) The district court disagreed and denied the insurer’s motion for summary judgment. It explained: “The Court finds that the removal of the permanent ballast is insufficient to establish that there was no roof on the Premises the day of the loss. First, `roof’ is not defined in the Policy. Second, it is defined in the dictionary as `the cover of a building,’ [citation], or `the covering that forms the top of a building,’ [citation]. Under these definitions, the three remaining layers of protection, even without the permanent ballast, were sufficient to constitute a covering over the Premises such that there was a `roof’ on the Premises the day of the loss.” (Id. at p. *8.) Moreover, “even if the Court were to conclude that the term `roof’ is ambiguous and subject to two meanings, the Court is required to construe the term in favor of Plaintiff. [Citations.] The Court therefore finds that the membrane and remaining two layers were sufficient to constitute a `roof’ within the meaning of the roof limitation provision of the Policy.” (Ibid.; see also Sloan v. Allstate Ins. Co. (Mo. Ct. App. 1998) 977 S.W.2d 72 [summary judgment for insurer reversed; although half of roof had been removed, the insured’s contention that water damage occurred after wind damaged both the remaining and temporary roof created triable issues of material fact as to coverage]; Homestead Fire Ins. Co. v. De Witt (1952) 1952 OK 189 [206 Okla. 570, 245 P.2d 92] [affirming judgment for insured; where wind blew off canvas covering opening in roof during renovation, resulting interior rain damage was covered by property policy].)
B. Analysis.
Consistent with Dewsnup, Victory Peach, and Wellsville Manor, we conclude that there are triable issues of fact as to whether the water exclusion applied in the present case.
As an initial matter, we reject Farmers contention that the property was without a “roof” when it suffered rain damage in October 2021.[6] The policy does not define “roof,” and we agree with the cited cases that a common sense meaning of “roof” includes a covering over a building that provides structural integrity and protection from the elements. We note in this regard that because no roof is permanent, all roofs must be periodically replaced. Replacing a roof requires removing worn outer layers and replacing them with new materials, thus leaving a structure not fully protected from the elements for a least a short time. Yet, nothing in the relevant condominium policy informed an insured that it would be without coverage for rain damage during periodic reroofing. To the contrary, the policy defines “covered property” to include “[a]dditions under construction, alterations and repairs to 228*228 the building or structure,” unless covered by other insurance. In view of this language, we conclude that a roof under repair remains a “roof” within the meaning of the policy.
In the present case, therefore, the property was never without a “roof” because Bardales removed just some of the roof’s outer layers, leaving the lower layers intact. Specifically, at the time of the first rainstorm, Bardales had removed much of the roof’s top layers, but other layers, including the plywood sheathing and insulation, remained. By the time of the second rainstorm, Bardales had replaced about 80 percent of the insulation and plywood, added a layer of “base paper” and “base felt,” hot-mopped and tarred much of the roof, and covered the entire roof with tarps. Like the courts in Dewsnup, Victory Peach, and Wellsville Manor, we conclude that the remaining layers of roof, even without the roof membrane, were sufficient to constitute a “roof” within the meaning of the policy.
Having concluded that the property had a “roof” at all points during the repairs, we must consider whether rain entered the property through “damage” to the roof caused by a “Covered Cause of Loss.” Farmers asserts that the policy covers only losses caused by “perils”—i.e., by “`fortuitous … forces … which bring about the loss.'” It thus urges there is no coverage here because rainwater entered the property through openings in the roof deliberately created by Bardales, not as the result of fortuitous weather damage. But the words “perils” and “fortuities” do not appear anywhere in the policy. Instead, the policy defines “Covered Cause of Loss” to mean any cause of physical damage to the property not otherwise excluded, and nowhere in the policy’s several pages of exclusions is there an exclusion for losses that result from deliberate conduct.
Moreover, the policy does not purport to exclude losses that result from workmanship generally, but only from such “workmanship, repair [or] construction” that is “faulty, inadequate or defective.” Under the maxim expressio unius est exclusio alterius, “[t]he fact that [a] contract expressly so provides tends to negate any inference that the parties also intended another consequence to flow from the same event.” (Stephenson v. Drever (1997) 16 Cal.4th 1167, 1175 [69 Cal.Rptr.2d 764, 947 P.2d 1301]; see G & W Warren’s, Inc. v. Dabney (2017) 11 Cal.App.5th 565, 576 [218 Cal.Rptr.3d 75].) Accordingly, the exclusion for damages caused by negligent workmanship suggests that the policy does not exclude damages caused by workmanship that was not negligent.
We therefore conclude that rain damage resulting from roof repairs are covered unless expressly excluded by another provision of the policy, such as the faulty workmanship exclusion. We turn now to that question.
229*229 IV. The faulty workmanship exclusion.
The policy’s faulty workmanship exclusion says that Farmers will not pay for loss or damage “caused by or resulting from” specified exclusions, including from “negligent work,” defined as “[f]aulty, inadequate or defective… workmanship, repair, construction, renovation [or] remodeling” and “[p]lanning, zoning, development surveying, siting.” Farmers urges this exclusion applies because it is undisputed that all of the HOA’s losses were “caused by or result[ed] from” faulty workmanship—namely, by Bardales’s decision to remove the entire roof before replacing any part of it.[7]
The HOA urges that the term “faulty workmanship” is ambiguous because it “is reasonably susceptible to at least two different interpretations: (1) the flawed quality of a finished product or (2) a flawed process.” The HOA suggests that in the present case, only Bardales’s process was faulty because the roof repairs were uncompleted at the time of the rain damage. The HOA thus contends that the faulty workmanship exception should not apply because it is reasonable to interpret “faulty workmanship” to apply only to a flawed product. Alternatively, the HOA urges that even if “faulty workmanship” applies to both faulty products and processes, Farmers was not entitled to summary judgment because it did not establish that Bardales’s alleged faulty workmanship was the sole cause of the HOA’s losses.
To support its proposed distinction between a faulty “product” and a faulty “process,” the HOA relies on the Ninth Circuit’s analysis in Allstate Ins. Co. v. Smith (9th Cir. 1991) 929 F.2d 447 (Allstate). There, the insured bought an all-risk policy covering his business property for “`loss or damage resulting from direct physical loss,'” with exceptions for, among other things, faulty workmanship. The insured suffered a property loss as the result of a rainstorm that occurred after a contractor had removed most of the roof of the insured’s building to make repairs. The insured filed an insurance claim, and the insurer sought a declaratory judgment that the insured’s losses were not covered because they were caused by faulty workmanship. The district court agreed and entered judgment for the insurer. The insured appealed. (Id. at pp. 448-449.)
The Ninth Circuit reversed, concluding that “faulty workmanship” was ambiguous because it could mean either a flawed product (a negligently constructed roof) or a flawed process (failing to properly cover the exposed 230*230 roof during construction). (Allstate, supra, 929 F.2d at p. 449.) The court therefore interpreted “faulty workmanship” in the manner most favorable to the insured and concluded that the exclusion did not apply because the insured’s losses “were not caused by a flawed product, but by failure to protect the premises during the roof repair process.” (Id. at p. 450.)
We are unpersuaded by Allstate‘s analysis, as we conclude, in line with other cases that have declined to follow Allstate, that “workmanship” unambiguously refers both to the way a contractor creates a finished product and the finished product itself. (See, e.g., Fourth Street Place, LLC v. Travelers Indemnity Co., supra, 270 P.3d at p. 1242 [“the plain and ordinary meaning of the term `workmanship’ encompasses the quality of the process utilized to achieve the finished product and the quality of the finished product itself” (italics added)]; Wider v. Heritage Maintenance, Inc. (N.Y. 2007) 14 Misc.3d 963, 975 [827 N.Y.S.2d 837] [“An ordinary business-person applying for a commercial property insurance policy and reading the language of this exclusion would understand that, depending on the type of work done, the faulty workmanship exclusion could apply to the process of doing the work or the finished product”]; Schultz v. Erie Ins. Group (Ind. Ct. App. 2001) 754 N.E.2d 971, 976 [“while the term `faulty workmanship’ allows at least two definitions, we see no reason why it must mean either a `flawed product’ or a `flawed process.’ Since `workmanship’ denotes both `process’ and `product,’ an insurer could just as likely have both perils in mind when it drafts a policy’s list of exclusions”].)
However, although we do not adopt Allstate‘s reasoning, we nonetheless conclude that the faulty workmanship exclusion does not unambiguously exclude coverage in this case. To establish the absence of coverage, Farmers had to demonstrate that there were no triable issues regarding the cause of the damage to the HOA’s property—or, stated differently, that the undisputed evidence established that the damage to the HOA’s property was “caused by or result[ed]” from Bardales’s negligence. But there was evidence that roof damage was caused not only by Bardales’s alleged negligence, but also by wind and rain. Specifically, Bardales testified that rain damaged the exposed plywood and insulation layers on October 4, and wind blew off tarps Bardales placed over the partially constructed roof on October 25. Farmers did not establish that the damage to the plywood, insulation, and tarps—that is, to the “roof”—did not contribute, at least in part, to the interior water damage.
Moreover, as the HOA notes, Farmers introduced no evidence that the roof repairs could have been done in a way that would have fully protected the property in the event of a rainstorm. That is, while Farmers evidence suggested that Bardales failed to follow industry standards by removing nearly the entire roof membrane at once, it did not establish that compliance 231*231 with industry standards would have avoided rain damage entirely—and thus that the damage resulted entirely from Bardales’s alleged negligence.
Farmers suggests that the HOA has admitted that Bardales’s negligence caused all of its damages, but the portions of the record Farmers cites do not bear out that assertion. Specifically, Farmers notes that when asked in an interrogatory to describe “the location and nature of all physical damage first sustained to the building roof and walls through which the rain entered,” the HOA responded that “[t]he physical damage first sustained to the building and walls through which the rain entered the building was from the methods and construction, and flawed process undertaken by [Bardales] in removing the entire top layer of the building’s roof down to the roof decking instead of removing it part by part.” But nothing in that response suggests that Bardales’s alleged negligence was the sole cause of roof damage; to the contrary, the response identifies both “construction” and a “flawed process undertaken by [Bardales]” as causes of damage. Moreover, in the next sentence of the interrogatory response, the HOA identified a third cause of damage—namely, that “[w]ind also blew off the temporary roof coverings put in place by [Bardales].”
Farmers also suggests that the HOA’s complaint alleged that Bardales’s alleged negligence was the sole cause of loss. Specifically, Farmers quotes the HOA’s allegation that the roof was not fully protected by the elements “[b]ecause the processes employed by [Bardales] were faulty” and its “processes for protecting the roof were not sufficient.” Unquestionably, the HOA alleged that Bardales was negligent, but these allegations do not, as Farmers suggests, constitute a judicial admission that his negligence was the sole cause of damage. To the contrary, the HOA also alleged that roof decking “[g]enerally … can provide adequate protection against wind and rain,” “the building’s roof was damaged” by “storms,” and “the water damage was not excluded since the building first sustained damage to its roof before water entered the building.” In short, the complaint alleged that Bardales’s negligence was a cause, but not the sole cause, of the HOA’s losses.
For the foregoing reasons, therefore, Farmers did not establish that but for Bardales’s alleged negligence, no rain would have entered the HOA’s property. It thus did not demonstrate that it was entitled to summary judgment under the faulty workmanship exclusion.[8]
232*232 V. Farmers is not entitled to summary adjudication of the HOA’s bad faith cause of action.
Farmers contends that even if this court were to reverse the grant of summary adjudication on the HOA’s breach of contract claim, we nonetheless should affirm summary adjudication of the HOA’s bad faith claim. Specifically, Farmers urges that, even if it misconstrued the policy language, its denial of the HOA’s claim was based on an objectively reasonable interpretation, and thus it cannot be charged with insurance bad faith.
We disagree. “An insurer is said to act in `bad faith’ when it not only breaches its policy contract but also breaches its implied covenant to deal fairly and in good faith with its insured. `A covenant of good faith and fair dealing is implied in every insurance contract. [Citations.] The implied promise requires each contracting party to refrain from doing anything to injure the right of the other to receive the agreement’s benefits. To fulfill its implied obligation, an insurer must give at least as much consideration to the interests of the insured as it gives to its own interests. When the insurer unreasonably and in bad faith withholds payment of the claim of its insured, it is subject to liability in tort.'” (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1071-1072 [56 Cal.Rptr.3d 312], italics omitted.)
As discussed above, “in cases of ambiguity, basic coverage provisions are construed broadly in favor of affording protection.” (Minkler, supra, 49 Cal.4th at p. 322; see also MacKinnon v. Truck Ins. Exchange, supra, 31 Cal.4th at p. 655 [where there are multiple plausible interpretations of a policy, a court must find coverage if there is a “`reasonable interpretation under which recovery would be permitted'”].) Here, there is a reasonable interpretation under which recovery would be permitted, and thus Farmers is not entitled to summary adjudication of its bad faith claim.
We reach a similar conclusion with regard to punitive damages. An insurer may be liable for punitive damages if the insured can prove not only that the insurer denied or delayed the payment of policy benefits unreasonably or without proper cause, but, in doing so, was guilty of malice, oppression or fraud. (Jordan v. Allstate Ins. Co., supra, 148 Cal.App.4th at p. 1080, citing Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 305 [250 Cal.Rptr. 116, 758 P.2d 58].) Farmers has not demonstrated by undisputed evidence that this standard was unmet in the present case. Accordingly, it is not entitled to summary adjudication of its punitive damages claim.
233*233 DISPOSITION
The judgment is reversed. Appellant 11640 Woodbridge Condominium Homeowners’ Association is awarded its appellate costs.
Adams, J., and Hanasono, J.,[*] concurred.
[1] All subsequent date references are to 2021 unless otherwise stated.
[2] “Glass Ply” is a roofing layer consisting of a fiberglass membrane coated with waterproofing asphalt. ( [as of Mar. 28, 2025].)
[3] “Hot mopping” is a method of installing a roof that involves laying down a base layer of felt, which is then saturated with hot liquid asphalt. ( [as of Mar. 27, 2025], archived at .)
[4] The reference to the roof membrane appears to originate in Bardales’s deposition testimony, but nothing in the summary judgment record or the parties’ appellate briefs describes which layers of the roof constitute the “membrane.”
[5] The HOA also asserted a cause of action against Bardales for professional negligence.
[6] In so concluding, we reject the contrary analysis of Diep, supra, 15 Cal.App.4th 1205.
[7] The parties disagree about the proper characterization of Bardales’s alleged negligence: The HOA asserts Bardales’s alleged negligence was “faulty workmanship,” while Farmers characterizes it as defecting “planning.” We need not decide whether the alleged negligence constitutes faulty “workmanship” or faulty “planning” because both are excluded under the policy if they are direct causes of loss.
[8] Having so concluded, we need not consider whether the rain damage was a covered “resulting” or “ensuing” loss within the meaning of section B.3 of the policy.
[*] Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Related Links
Risk Management for HOAs & Large-Scale Repair Projects – Lessons from the Woodbridge Decision – Published on HOA Lawyer Blog (October, 2025)
Civil Code Section 1714. Negligence Liability for Injuries.
(a) Everyone is responsible, not only for the result of his or her willful acts, but also for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person, except so far as the latter has, willfully or by want of ordinary care, brought the injury upon himself or herself. The design, distribution, or marketing of firearms and ammunition is not exempt from the duty to use ordinary care and skill that is required by this section. The extent of liability in these cases is defined by the Title on Compensatory Relief.
(b) It is the intent of the Legislature to abrogate the holdings in cases such as Vesely v. Sager (1971) 5 Cal.3d 153, Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313, and Coulter v. Superior Court (1978) 21 Cal.3d 144 and to reinstate the prior judicial interpretation of this section as it relates to proximate cause for injuries incurred as a result of furnishing alcoholic beverages to an intoxicated person, namely that the furnishing of alcoholic beverages is not the proximate cause of injuries resulting from intoxication, but rather the consumption of alcoholic beverages is the proximate cause of injuries inflicted upon another by an intoxicated person.
(c) Except as provided in subdivision (d), no social host who furnishes alcoholic beverages to any person may be held legally accountable for damages suffered by that person, or for injury to the person or property of, or death of, any third person, resulting from the consumption of those beverages.
(d)
(1) Nothing in subdivision (c) shall preclude a claim against a parent, guardian, or another adult who knowingly furnishes alcoholic beverages at his or her residence to a person whom he or she knows, or should have known, to be under 21 years of age, in which case, notwithstanding subdivision (b), the furnishing of the alcoholic beverage may be found to be the proximate cause of resulting injuries or death.
(2) A claim under this subdivision may be brought by, or on behalf of, the person under 21 years of age or by a person who was harmed by the person under 21 years of age.
Related Links
Asked & Answered: Liability for Injured Trespassers in an HOA – Published on HOA Lawyer Blog (August, 2025)
Franklin v. Marie Antoinette Condominium Owners Assn.
[CC&Rs; Exculpatory Clause] An exculpatory clause in the CC&Rs limiting the HOA’s liability is not against public policy.
Schlegel, Stone & Manning, Michael H. Manning, Brian G. Hummel, Horvitz & Levy, Daniel J. Gonzalez, Richard L. Hasen and Gerald M. Serlin for Defendant and Appellant.
Greenberg, Glusker, Fields, Claman & Machtinger and Jeffrey Spitz for Plaintiff and Respondent.
OPINION
ORTEGA, J.
This appeal concerns an exculpatory clause contained in the declaration of covenants, conditions and restrictions (CC&R’s) governing the relationship between an association of condominium homeowners and the condominium owners. If applied to this case, the exculpatory clause will relieve the association of its contractual liability to pay the plaintiff condominium owner for water damage to her unit caused by a central plumbing [19 Cal.App.4th 826] leak. We reverse the judgment with directions to enter judgment for the defendant association.
I. FACTS AND PROCEDURAL BACKGROUND
The condominium project, known as the Marie Antoinette Tower (the Tower), is a 16-floor residential building on Wilshire Boulevard near Westwood Village in Los Angeles. The Tower was originally built as apartments in 1962, and was converted to condominiums in 1978.
Defendant Marie Antoinette Condominium Owners Association, Inc. (the Association), a nonprofit corporation duly organized and existing under California law (see Civ. Code, § 1363) (unless otherwise indicated, all further statutory references are to the Civil Code), is comprised of all Tower condominium owners. The CC&R’s provide that the owners own the Tower’s common area as tenants in common. (See §§ 1351, subds. (b) and (f), 1362.) The CC&R’s further provide that the Association is responsible for maintaining and repairing the common area, and the owners are responsible for maintaining and repairing their individual units. (See § 1364, subd. (a).) fn. 1
In 1984, plaintiff Florence Franklin purchased a condominium in the Tower. After painting and remodelling her unit by installing new hardwood floors, crown and base moldings, bathroom fixtures, doors and frames, plaintiff moved into the Tower in March 1985.
The water damage to plaintiff’s hardwood floors became apparent in mid-1986 beginning with a small area at the threshold leading from the hallway to the master bedroom. The damage later spread to other parts of the floor. fn. 2 [19 Cal.App.4th 827] The moisture underneath the floorboards caused the wood to rise, swell or buckle. fn. 3
Plaintiff notified the Tower’s manager about the water damage to her hardwood floors in mid-1986. The manager told plaintiff the damage was caused by a leak beneath the sink in her master bedroom bathroom and was her sole responsibility. After the manager reported his opinion on plaintiff’s claim to the Association’s board (the Board), the Board asked the Association’s insurer to send out an investigator. fn. 4
After receiving the insurance investigator’s report of “no evidence of [a] central plumbing breakdown,” the Board decided “it would be inappropriate to either make an offer to pay [plaintiff’s] claim … or to have [the Association’s] insurance company process” plaintiff’s claim.
Plaintiff filed suit against the Association in February 1987, alleging its failure to maintain and repair the central plumbing had caused water damage to her hardwood floors.
During this period, the Association was repairing various leaks in the Tower’s plumbing system as they occurred. By about mid-1987, most of the Board members (including plaintiff, who served on the Board from early summer 1985 through August 1987) realized the building’s rusting steel pipes needed replacement. Eventually, the Board successfully lobbied a majority of the owners to obtain approval of a special assessment of approximately $20,000 per owner to repipe the Tower’s plumbing system and renovate the heating and air conditioning system. fn. 5 The replacement and repairs were completed in 1990. [19 Cal.App.4th 828]
This case was tried in July 1991 without a jury on three causes of action: breach of contract, negligence, and nuisance. fn. 6
The parties presented conflicting expert opinion testimony on causation. The Association’s witnesses attributed the water damage to a leak under the sink in plaintiff’s master bedroom bathroom. Plaintiff’s witnesses, on the other hand, attributed the water damage to a leak in the central plumbing system.
The trial court found the damage was caused by a leak in the central plumbing system. The court concluded the system had deteriorated to the point of constituting a breach of the contractual duty to maintain and repair the common area, but not to the point of constituting a nuisance or establishing negligence on the part of the Association. The court found for plaintiff on her breach of contract claim only. The court entered judgment for plaintiff awarding her damages of $74,015 and costs and attorney fees of $169,315.30. Defendant Association has appealed.
II. BREACH OF CONTRACT
[1] The Association contends, as it did at trial, that plaintiff’s cause of action for breach of contract is barred by the exculpatory clause contained in the CC&R’s.
Preliminarily, we note the parties assume the CC&R’s formed a contract between the Association and the condominium owners. (See Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 512 [229 Cal.Rptr. 456, 723 P.2d 573, 59 A.L.R.4th 447], which discussed a condominium owner’s breach of contract allegation without expressly deciding whether CC&R’s constitute a contract between the association and the owners. See also Sproul & Rosenberry, Advising Cal. Condominium and Homeowners Associations (Cont.Ed.Bar 1991) § 6.43, pp. 295-297, which cites cases in other jurisdictions which have refused to treat CC&R’s as contracts between the owners and the association under different fact situations.)
Although the CC&R’s require the Association to maintain and repair the common area (see § 1364, subd. (a)), the CC&R’s do not require the [19 Cal.App.4th 829] Association to reimburse a condominium owner for property damage caused by a central plumbing leak which occurred in the absence of negligence by the Association. The CC&R’s contain an exculpatory clause which states in relevant part: “[T]he Association … shall [not] be liable for … damage to … property in the project … resulting from … water … which may leak or flow from outside of any unit or from any part of the building, or from any pipes, drains, conduits, appliances or equipment or from any other place or cause, unless caused by the gross negligence of … the Association, its Board, officers, the manager or his staff.” fn. 7
In ascertaining the parties’ intent, we are guided by the following principles. “The language of the instrument must govern its interpretation if it is clear and explicit. [Citation.] Generally, the words of a contract are to be understood in their ordinary and popular sense [citations] unless a contrary intent is shown, such as a specialized meaning due to trade custom and practice or a prior course of dealing [citations]. [] The interpretation of a written contract is solely a judicial function unless the interpretation turns on the credibility of extrinsic evidence. [Citations.]” (Appalachian Ins. Co. v. McDonnell Douglas Corp., supra, 214 Cal.App.3d at p. 11.)
On appeal, neither party contends the exculpatory clause is ambiguous or that its interpretation turns on the credibility of extrinsic evidence. Both parties assume the exculpatory clause, if enforced according to its terms, relieves the Association of any contractual liability to pay for property damage to plaintiff’s floors caused by a leak in the common plumbing system.
Plaintiff contends the exculpatory clause is unenforceable, however, because it affects the public interest. fn. 8 Plaintiff relies primarily upon Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642 [191 Cal.Rptr. 209], a [19 Cal.App.4th 830] suit between homeowners and a homeowners association. fn. 9 In Cohen, the court held plaintiffs’ cause of action (for breach of the duty to act in good faith and to avoid arbitrary decisions in applying the CC&R’s) was not barred by the exculpatory clauses contained in the CC&R’s. We quote at length the passages from Cohen which plaintiff contends are applicable to this case:
“The law has traditionally viewed with disfavor attempts to secure insulation from one’s own negligence or wilful misconduct, and such provisions are strictly construed against the person relying on them, particularly where such person is their author. [Citations.] Here, the Association is the creation and successor of the author, S & S Construction Company, and therefore subject to this rule of strict construction. fn. 10 [19 Cal.App.4th 831]
“Furthermore, it is the express statutory policy of this state that ‘[a]ll contracts which have for their object, directly or indirectly, to exempt any[ ]one from the responsibility for his own fraud[,] or willful injury to [the] person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.’ (Civ. Code, § 1668.)
“This public policy applies with added force when the exculpatory provision purports to immunize persons charged with a fiduciary duty from the consequences of betraying their trusts. [Citations.]
“Moreover, the California Supreme Court has evinced a clear policy of enforcing only those exculpatory provisions which do not affect ‘the public interest.’ (Tunkl v. Regents of the University of California (1963) 60 Cal.2d 92, 96 ….) Factors to be considered in determining whether a business or transaction affects a public interest include: (a) whether the matter is suitable for public regulation; (b) whether the party provides a service of importance to the public; (c) whether the party invoking it possesses a bargaining advantage against any member of the public who seeks such service; (d) and whether one party is particularly subject to the other’s control and the risk of his or her carelessness. (Id., at pp. 98-101.) [19 Cal.App.4th 832]
“Applying one or more of these criteria, the courts have invalidated exculpatory clauses invoked by banks (Hiroshima v. Bank of Italy (1926) 78 Cal.App. 362 …; Vilner v. Crocker National Bank (1979) 89 Cal.App.3d 732 …), hospitals (Tunkl v. Regents of the University of California, supra, 60 Cal.2d 92; Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465 …), and apartment complexes (Henrioulle v. Marin Ventures, Inc. (1978) 20 Cal.3d 512 …).
“For the reasons earlier stated, we view the Association of homeowners as occupying a particularly elevated position of trust because of the many interests it monitors and services it performs. Therefore, we hold that the exculpatory provisions contained in the Declaration constitute no bar to suit against the Association.” (Cohen v. Kite Hill Community Assn., supra, 142 Cal.App.3d at pp. 654-655.)
Plaintiff contends this case “presents almost an identical situation to that before the court in Cohen.” The exculpatory clauses in Cohen, however, purported to relieve the association of its responsibility to adhere to the architectural standards set forth in the CC&R’s. As the court in Cohen recognized, the issue there was “whether the exculpatory clauses effectively cancelled out that duty and thereby immunized the Association from suit.” (Cohen v. Kite Hill Community Assn., supra, 142 Cal.App.3d at p. 654.)
Here, on the other hand, the Association will be required to maintain the common area whether or not it is liable for breach of contract damages in this case. Enforcing the exculpatory clause in this case will not relieve the Association of its statutory duty to maintain and repair the common area. (§ 1364, subd. (a).) Moreover, a condominium owner may enforce the CC&R’s under the law of equitable servitudes without resorting to a breach of contract cause of action. (§ 1354; see Sproul & Rosenberry, Advising Cal. Condominium and Homeowners Associations, supra, § 6.43, p. 297.) fn. 11
Although the exculpatory clause purports to provide immunity from negligence liability, that is now a moot issue due to the trial court’s finding of [19 Cal.App.4th 833] no negligence. Plaintiff’s dire prediction that enforcing the exculpatory clause in this case “would place every condominium owner at the mercy of their homeowners’ association, which would be free to disregard its obligations with impunity” is simply unfounded. This is not an action for declaratory relief to establish the extent of the Association’s immunity from liability under the exculpatory clause. Accordingly, we need not decide whether the release from negligence liability is valid. fn. 12
The narrow issue before us is whether the nonnegligent Association may contractually shift the risk of loss to the condominium owner, who may look only to the insurance proceeds for her recovery against the Association. fn. 13
Although plaintiff disputes the merits of the exculpatory clause, we find this contractual allocation of risk to be reasonable and fair to the condominium owners as a whole. Here, the condominium owners voluntarily agreed to bear the risk of loss and limit their recovery against the nonnegligent Association to that which is recoverable under the insurance policy. Any condominium owner who desires to purchase additional insurance may do so.
By reducing the Association’s risk of liability, the condominium owners have reduced their own risk. The condominium owners are, after all, the ones who are assessed to pay for improvements, insurance premiums, liability judgments not covered by insurance, and the like. Plaintiff is only one of many owners who collectively entered into the contract (CC&R’s) with the Association. A reasonable and fair reduction of the Association’s risk which mutually benefits the condominium owners as a whole does not suddenly become violative of public policy upon the nonnegligent infliction of property damage to an individual unit. While plaintiff may bear the loss in this case, she may benefit in the next. As was pointed out by our Supreme Court, “no public policy opposes private, voluntary transactions in which one party, for a consideration, agrees to shoulder a risk which the law would [19 Cal.App.4th 834] otherwise have placed upon the other party ….” (Tunkl v. Regents of University of California (1963) 60 Cal.2d 92, 101 [32 Cal.Rptr. 33, 383 P.2d 441, 6 A.L.R.3d 693].)
In discussing the somewhat related “question of the individual unit owner’s tort liability in cases arising in the common areas,” Presiding Justice Roth suggested that insurance taken out by the association for the protection of the condominium owners provides “[o]ne practical answer.” (White v. Cox (1971) 17 Cal.App.3d 824, 832 [95 Cal.Rptr. 259, 45 A.L.R.3d 1161] (conc. opn. of Roth, P. J.).) Presiding Justice Roth further reflected: “It might then be argued depending on the terms of the written declaration between unit owners that, at least as between suing and defendant unit owners, the maximum amount of liability of defendant unit owners has been contractually limited to the maximum of the insurance taken out by the association.” (Ibid.) We believe this sound reasoning carries equal force when applied to the question of the nonnegligent Association’s ability to avoid contractual liability for property damage caused by a central plumbing leak.
The Association, unlike commercial or residential landlords in business to make a profit, is a nonprofit corporation. (See Sproul and Rosenberry, Advising Cal. Condominium and Homeowners Associations, supra, § 6.4, pp. 250-251.) As the trial court pointed out below in its statement of decision, the Board “was made up of unpaid volunteers from among the owners of condominiums in the building, who despite the strict contractual obligations of the CC&Rs did their conscientious best to attend to the problems and complaints that came to them. To effectuate major and expensive repairs as ultimately transpired with the repiping of the building, the Board of the Association needed the approval of a majority of the condominium owners in the building. To accomplish this critical requirement, they literally had to politic and campaign. These volunteers were not professionals in the skills of building management and maintenance, and their efforts while perhaps less than proficient, are not demonstrative of individual or group negligence.”
The Legislature recognized the need to provide immunity under appropriate conditions to the individual volunteer board members who manage residential condominiums. (§ 1365.7.) The exculpatory clause in this case takes the additional reasonable step of providing immunity under appropriate conditions to the Association. We conclude the exculpatory clause does not, as applied to this case, violate public policy. [19 Cal.App.4th 835]
DISPOSITION
We reverse the judgment and direct the trial court to enter judgment for the defendant. Defendant is awarded costs on appeal.
Spencer, P. J., and Vogel (Miriam A.), J., concurred.
FN 1. “Unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, or maintaining the common areas, other than exclusive use common areas, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest.” (§ 1364, subd. (a).)
FN 2. The damage was first noticed while plaintiff was away on a four-month vacation in mid-1986. During her absence, the daughter of a friend (Anderson) stayed in the condominium. Anderson discovered a leak beneath the sink in the master bedroom bathroom, which she reported to the Tower doorman and had repaired. About six weeks later, Anderson began to notice some raising, swelling or buckling of the floorboards, beginning with the area at the threshold leading from the hallway to the master bedroom. After plaintiff returned from her vacation, the damage began to spread to other parts of the floor.
FN 3. In addition to the floors, plaintiff’s complaint listed other areas that were damaged. In November 1986 the interior condominium walls, crown moldings, base moldings, doors and kitchen cabinets began cracking or warping. In December 1986 water began leaking from the heating and air conditioning vents into plaintiff’s condominium, which she testified did not receive adequate heating or cooling. The trial court’s statement of decision did not, however, mention the damaged walls, moldings, doors, cabinets, leaking vents, and faulty heating and air conditioning. The statement of decision mentioned only the damaged floors. Accordingly, we will limit our discussion in this opinion to the damaged floors.
FN 4. The CC&R’s require the Association to purchase a “blanket policy or policies of fire and casualty insurance with a special form all-risk coverage endorsement for the full insurable replacement cost of the Common Area and the units … insuring the Board, the Association, the owner or owners of each unit … and their mortagagee(s) … against loss due to fire and other casualty customarily insured against by homeowners ….”
FN 5. After the completion of this project in 1990, plaintiff no longer had water leaking into her unit from the heating and air conditioning vents.
FN 6. Plaintiff’s causes of action for intentional infliction of emotional distress and breach of fiduciary duty were dismissed after the trial court sustained a demurrer without leave to amend.
FN 7. We do not suggest, nor do the parties, that the exculpatory clause relieves the Association of its duty under another provision of the CC&R’s to purchase casualty insurance on behalf of the condominium owners. Even if relieved of its contractual liability to pay for property damage, the Association must still provide insurance for the condominium owners. “A court must view the language in light of the instrument as a whole and not use a ‘disjointed, single-paragraph, strict construction approach.’ [Citation.] If possible, the court should give effect to every provision. [Citations.] An interpretation which renders part of the instrument to be surplusage should be avoided. [Citations.]” (Appalachian Ins. Co. v. McDonnell Douglas Corp. (1989) 214 Cal.App.3d 1, 12 [262 Cal.Rptr. 716].)
FN 8. In Frances T. v. Village Green Owners Assn., supra, 42 Cal.3d at page 500, footnote 9, the court took “judicial notice of the fact that a rapidly growing share of California’s population reside in condominiums, cooperatives and other types of common-interest housing projects. Homeowner associations manage the housing for an estimated 15 percent of the American population and, for example, as much as 70 percent of the new housing built in Los Angeles and San Diego Counties. [Citation.] Nationally, ‘[t]hey are growing at a rate of 5,000 a year and represent more than 50 percent of new construction sales in the urban areas. Projects average about 100 units each, so the associations affect some 10 million owners,’ [citation]. [H]ousing experts estimate that there already are 15,000 common-interest housing associations in California. While in some projects the maintenance of common areas is truly cooperative, in most of the larger projects control of the common area is delegated or controlled by ruling bodies that do not exercise the members’ collective will on a one-person, one-vote basis. [Citation.]”
FN 9. In Cohen, article VII, section 1 of the CC&R’s set forth standards by which the association’s architectural committee was to approve or deny an individual homeowner’s construction or improvement plans. At the same time, however, the CC&R’s purported to release the association from its duty to comply with the provisions of article VII, section 1. Moreover, the CC&R’s purported to absolve the association, its board, its committees, and its members from liability to any member, homeowner, or the association for ” ‘any damage, loss or prejudice suffered or claimed on account of any decision, approval or disapproval of plans or specifications (whether or not defective), course of action, act, omission, error, negligence or the like made in good faith within which such Board, committee, or persons reasonably believed to be the scope of their duties.’ ” (Cohen v. Kite Hill Community Assn., supra, 142 Cal.App.3d at p. 650.)
The solid slump stone fence at issue in Cohen was approved by the architectural committee despite the neighboring owners’ (plaintiffs) objection that the fence would obstruct their view and violate the CC&R’s. The CC&R’s called for a two-foot slump stone base topped by a three-foot wrought iron fence to preserve the surrounding view. After failing to persuade their neighbor and the association to modify or prevent the construction of the nonconforming fence, the plaintiffs filed suit.
The trial court in Cohen sustained the association’s demurrer, but the appellate court reversed the judgment of dismissal.
FN 10. We note section 1370, enacted in 1985 (two years after Cohen was decided), provides: “Any … declaration … for a common interest development shall be liberally construed to facilitate the operation of the common interest development, and its provisions shall be presumed to be independent and severable….” (Italics added.)
In criticizing Cohen, Sproul and Rosenberry stated: “The authors believe that California courts should recognize that California developments need 30,000-40,000 residents each year to serve on boards (most of whom serve without compensation), and should therefore not adhere to such a strict interpretation of exculpatory clauses as that taken in Cohen. Although exculpatory clauses were not at issue in Jaffe v Huxley Architecture (1988) 200 [Cal.App.]3d 1188, 1193, …, the court acknowledged that board members are seldom professional managers and that ‘the specter of personal liability would serve to greatly discourage active and meaningful participation by those most capable of shaping and directing homeowner activities.’ [] Courts in other jurisdictions have upheld exculpatory clauses. See Nido v Ocean Owners’ Council (Va 1989) 378 SE2d 837; Kelley v Astor Investors, Inc. (Ill 1985) 478 NE2d 1346; Kleinman v High Point of Hartsdale I [Condominium] (Sup Ct 1979) 438 NYS2d 47.” (Sproul & Rosenberry, Advising Cal. Condominium and Homeowners Associations, supra, § 6.34, p. 280.)
We note that of the three decisions cited by Sproul and Rosenberry, only one is similar to our case. Nido v. Ocean Owners’ Council (1989) 237 Va. 664 [378 S.E.2d 837], involved water leakage from the common areas which caused damage to the plaintiff’s condominium. The plaintiff filed suit against the condominium owners’ council to recover damages under two of the same theories raised here, breach of contract and negligence. As in this case, the owners’ council was found to be not negligent. As for the breach of contract cause of action, the owners’ council was found to be immune under an exculpatory clause. Section 6.5 of the association’s by-laws provided: “The Council shall not be liable for any failure of water supply or other services … or for injury or damage to person or property caused by the natural elements … or resulting from electricity, water, snow or ice which may leak or flow from any portion of the Common Elements.” (Id. at p. 838.)
FN 11. Section 1354 provides: “The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both. In any action to enforce the declaration, the prevailing party shall be awarded reasonable attorney’s fees and costs.”
FN 12. Section 1370 provides that CC&R’s “shall be liberally construed to facilitate the operations of the common interest development, and its provisions shall be presumed to be independent and severable….”
FN 13. The trial court found the damage was caused by a leak in the central plumbing, which had deteriorated to the point that the Association had breached its contractual duty to maintain and repair the common area. While the Association challenges on appeal the sufficiency of the evidence to support these findings, we do not reach that issue since the findings are not necessary to our decision of whether the Association may contractually shift the risk of loss to the condominium owner.
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Utility Service Interruptions
Association Responsibility to Repair
Civil Code section 4775 generally makes an association responsible for any repairs or replacements necessary to restore interrupted gas, heat, water or electrical services that begin in the common area regardless of whether the matter extends into an owner’s property (i.e., into an owner’s lot or unit) or any exclusive use common area appurtenant to the owner’s property. (Civ. Code § 4775(a)(2)(A).)
Exceptions
The association is not responsible for repairs or replacements in either of the following situations:
-
- Where the CC&Rs provide that the owner is responsible for such repair/replacement. (Civ. Code § 4775(a)(2)(A).)
- Where the utility service that failed is required to be maintained by a utility service provider. (Civ. Code § 4775(a)(2)(A).)
14 Day Timeline for Commencing Repairs
The association’s board of directors is required to “commence the process to make the repairs” within fourteen (14) days of the interruption of the utility service. (Civ. Code § 4775(b)(1).)
Inability to Meet Quorum for a Board Meeting within 14 Days
If the board is unable to meet quorum to hold a board meeting necessary to comply with the 14 day commencement of repair timeline, then at the next board meeting following the 14th day, the requirements of quorum are reduced so that the total number of directors at that meeting constitute quorum. This reduction in quorum applies only for the vote to commence the repair process, and the notice of the board meeting must contain a provision indicating the use of a reduced quorum. (Civ. Code § 4775(b)(3).)
Board Vote Through Electronic Means
If the directors are required to vote to initiate repairs, such voting may be performed by electronic means, including but not limited to, email. All records of the vote are deemed “association records” and subject to inspection procedures under Civil Code section 5210. (Civ. Code § 4775(b)(4).)
Funding Repairs Through a Loan
If an association does not have sufficient funds to make the repairs necessary to restore the interrupted utility service, the association may obtain a loan to pay for the costs of the repairs or replacements. (Civ. Code § 4775(b)(2).)
Approval & Assessment Authority
No membership approval is required for the association to take out a loan to fund the repairs/replacements. The association may also levy an emergency assessment as needed to allow for the repayment of the loan. (Civ. Code § 4775(b)(2).)
Resolution Requirement
Prior to taking out the loan, the board must pass a resolution containing written findings regarding the nature of the association’s expenses and how the association’s reserves do not cover the necessary costs. The resolution must be distributed to the members together with the notice of any emergency assessment, and together with notices that are otherwise required by law or the governing documents pertaining to the board’s action (if any). (Civ. Code § 4775(b)(2).)
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Understanding SB 900: HOA Repair of Utility Service Interruptions
– Published on HOA Lawyer Blog (May 2025)
SB-681 (Wahab) Housing.
Would cap fines at $100 per violation.
Current Status: Pending
FindHOALaw Quick Summary:
If an association adopts or has adopted a policy imposing any monetary penalty on any association member for a violation of the governing documents, existing law requires the board to adopt and distribute to each member a schedule of the monetary penalties that may be assessed for those violations and prohibits an association from imposing a monetary penalty on a member for a violation of the governing documents in excess of that schedule.
Existing law also requires the board to notify a member 10 days before a meeting to consider or impose discipline on the member and requires the board to provide a member with written notification of a decision to impose discipline within 15 days.
This bill would amend Civil Code Section 5850 to prohibit monetary fees from exceeding the lesser of that specified schedule or $100 per violation. The bill would also amend Civil Code Section 5855 to require the board to give a member the opportunity to cure a violation prior to the meeting to consider or impose discipline. The bill would reduce the time to provide written notification of a decision to impose discipline from 15 days to 14 days.
**AB-130, which contains similar language, was signed by the Governor and became effective July 1, 2025. CAI-CLAC continues to work with author to make amendments to SB-681 in the next session.
View more info on SB 681from the California Legislature's website
SB-625 (Wahab) Housing developments: disasters: reconstruction of destroyed or damaged structures.
Would streamline the architectural approval process for owners to rebuild a residential structure that is damaged or destroyed during a declared disaster or state of emergency. Would also provide for streamlined ministerial approval to building a housing development on a parcel on which a residential structure was destroyed or damaged in a disaster.
Current Status: Chaptered
FindHOALaw Quick Summary:
If the governing documents require association approval before a member may make a physical change to the member’s separate interest or to the common area, existing law requires an association to satisfy specified requirements, including to provide a fair, reasonable, and expeditious procedure for making its decision in reviewing and approving or disapproving a proposed physical change.
This bill would add Civil Code Section 4752 to make any provision of a governing document void and unenforceable to the extent that it prohibits, or includes conditions that have the effect of prohibiting, a substantially similar reconstruction of a residential structure that was destroyed or damaged in a disaster. The bill would require a court to award reasonable attorney’s fees to the owner of a separate interest in a common interest development who prevails in an action to enforce the above provisions.
This bill would add Civil Code Section 4766 to require any provision of a governing document that subjects a modification to a separate interest to review by an association or architectural review commission to be processed and approved. The bill would require the association or commission to determine whether an application is complete or incomplete and to provide written notice of this determination to the applicant no later than 15 business days after the association receives the application. Once an application is deemed complete, the bill would require the association to conduct any review of the proposed modification to the separate interest within 30 business days. If an association finds that a complete application is noncompliant, the bill would require the association to provide the applicant with a list of items that are noncompliant and a description of how the application can be remedied by the applicant. If an application is determined to be incomplete or noncompliant, the bill would require the association to provide a process for the applicant to appeal that decision. The bill would require a court to award reasonable attorney’s fees to the applicant who prevails in an action to enforce the above-described provisions.
The Planning and Zoning Law authorizes a development proponent to submit an application for a development that is subject to a specified streamlined, ministerial approval process if the development satisfies certain objective planning standards and certain procedures are followed, including that the proponent of the development project requires in contracts with construction contractors that specified standards will be met in project construction, as specified.
This bill would add Government Code 65914.201 to authorize a housing development proponent to submit an application for a housing development that is subject to a specified streamlined, ministerial approval process if the housing development satisfies certain objective standards, including that the development is located on a parcel on which a residential structure was destroyed or damaged in a disaster. The bill would require a local agency to expedite the review and approval of a nondiscretionary permit related to a housing development subject to that streamlined, ministerial approval process, as prescribed.
The bill would add Government Code Section 65914.202 to provide that an ordinance that precludes specified placements and uses of manufactured homes, mobilehomes, or recreational vehicles for use during the reconstruction or repair of any home damaged or destroyed in a disaster is unenforceable for a period of 3 years following the disaster declaration.
**SB-625 was signed into law October 10, 2025, and takes effect January 1, 2026.
View more info on SB 625from the California Legislature's website
AB-21 (DeMaio) Common interest developments: association management and meeting procedures.
Would enact the Homeowner Association Accountability and Transparency Act of 2025 to make substantive changes to the Open Meeting Act, association records, and records inspection, and would impose additional penalties for violations of these provisions.
Current Status: Dead
FindHOALaw Quick Summary:
The Davis-Stirling Common Interest Development Act governs the management and operation of common interest developments by an association. If a provision of the Act requires an association to deliver a document by “individual delivery” or “individual notice,” the Act requires the association to deliver that document in accordance with the preferred delivery method specified by the member. Existing law also requires the board of an association to provide general notice of a proposed rule change at least 28 days before making the rule change, in accordance with certain procedures.
This bill would amend Civil Code Section 4360 to require the board to provide individual notice of a proposed rule change.
Existing law prohibits the board of a common interest development from taking action on any item of business outside of a board meeting. Existing law also prohibits the board from conducting a meeting via a series of electronic transmissions, except in specified emergency circumstances.
This bill would amend Civil Code Section 4910 to prohibit a majority of the members of the board, outside an authorized meeting, from conducting communications of any kind, directly or through intermediaries, to discuss, deliberate, or take action on any item of business within the board’s subject matter jurisdiction.
Existing law requires an association to generally give notice of the time and place of a board meeting at least 4 days before the meeting and requires the notice to contain the agenda for the meeting.
This bill would amend Civil Code Section 4920 to require the notice containing the agenda to have instructions on how a member may get a copy of the agenda packet for the open session portion of the meeting and would establish procedures for the board to follow in responding to those requests. This bill would also amend Civil Code Section 5200 to include all documents constituting the agenda packet of meetings of the members, the board, and any committees appointed by the board as association records.
Existing law authorizes the board to adjourn to, or meet solely in, executive session to consider litigation and other specified matters. Existing law requires any matter discussed in executive session to be generally noted in the minutes of the immediately following meeting that is open to the entire membership.
This bill would add Civil Code Section 4921 to require the board, if the association becomes involved in litigation, to announce the litigation at its subsequent meeting, including stating the name of the court and case number in the meeting minutes. The bill would also require the board, if the association files an insurance claim or has an insurance policy change, to announce the claim or policy change at its subsequent meeting. The bill would further amend Civil Code Section 4935 to require discussions regarding ongoing litigation to have the case name included as part of the executive session meeting minute notes.
This bill would add Civil Code Section 4941 to require open session meetings of the board to be electronically recorded using audio, or audio and video, and would consider the recordings to be a record of the association and to be available to members on the same basis as written meeting minutes. The bill would require notice to be given at the beginning of every open session of the board that the meeting is being recorded.
Existing law requires the minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes of a board meeting, other than an executive session, to be available to members within 30 days of the meeting and distributed to a member upon request and upon reimbursement of the association’s cost for making that distribution.
This bill would amend Civil Code Section 4950 to prohibit a charge for minutes distributed electronically. The bill would require the minutes, or proposed minutes, to include specified information, including the date and time of the meeting and whether a quorum of directors was established.
Existing law authorizes a member to bring a civil action for declaratory or equitable relief for a violation by the association of specified provisions governing board meetings within one year of the date the cause of action accrues. Existing law entitles a member who prevails in a civil action under these provisions to reasonable attorney’s fees and court costs.
This bill would amend Civil Code Section 4955 to require a court to void any action taken by the board at a meeting shown to be conducted in violation of the Open Meeting Act. The bill would authorize a cause of action under those provisions to be brought in either superior court or small claims court. The bill would also require a member who prevails in a civil action brought in small claims court to be awarded court costs and reasonable attorney’s fees incurred.
Under the Davis-Stirling Act, the operating rules are a part of the governing documents of a common interest development. The Act requires an amendment to the governing documents to be held by secret ballot.
This bill would amend Civil Code Section 5100 to exclude an amendment to the operating rules from the requirement that the amendment be held by secret ballot. The bill would also prohibit a member from being denied a ballot for any reason other than not being a member at the time when the ballots are distributed.
Existing law requires the board provide individual notice of the tabulated results of the election within 15 days of the election. This bill would amend Civil Code Section 5120 to require the meeting minutes and the individual notice of the election results to state the term for each elected director.
This bill would also amend Civil Code Section 5200 to include signature-redacted copies of voter outer envelopes to association election materials. It would further amend Civil Code Section 5205 to require the association to make available election records in the custody of an association’s vendors for inspection and copying by a member of the association. The association may not charge for the emailing of documents already in electronic format and which do not require any redacting.
Existing law authorizes a member to bring a civil action to enforce that member’s right to inspect and copy association records.
This bill would amend Civil Code Section 5235 to authorize a member to bring a civil action for declaratory, injunctive, and equitable relief and civil penalties. The bill would authorize a cause of action under those provisions to be brought in either superior court or small claims court. The bill would also require a member who prevails in a civil action brought in small claims court to be awarded court costs and reasonable attorney’s fees incurred. A prevailing association may not recover any costs unless the action is found to be frivolous, unreasonable, or without foundation.
The bill amend Civil Code Sections 5105, 5145, and 5230 to update definitions and would make various other related and conforming changes to the act.
View more info on AB 21from the California Legislature's website
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SB-770 (Allen) Common interest developments: EV charging stations.
Would delete the requirement that the insurance policy for an EV charging station name the association as an additional insured party.
Current Status: Chaptered
FindHOALaw Quick Summary:
Existing law imposes various requirements regarding the installation and use of an electric vehicle (“EV”) charging station placed in a common area or an exclusive use common area of a common interest development, including that the owner is required to provide a certificate of insurance that names the association as an additional insured party.
This bill would amend Civil Code Section 4745 to delete the requirement that the insurance policy name the association as an additional insured party, and would correct an erroneous cross-reference regarding the amount of that insurance.
**SB-770 was signed into law on October 10, 2025, and takes effect January 1, 2026.
View more info on SB 770from the California Legislature's website
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SB-410 (Grayson) Common interest developments: disclosures to prospective purchasers: exterior elevated elements inspection.
Would add a copy of the inspection report of the exterior elevated elements to the list of disclosures to prospective purchasers.
Current Status: Chaptered
FindHOALaw Quick Summary:
Existing law requires the board of a condominium association to cause a visual inspection to be conducted, at least every 9 years, of the exterior elevated elements for which the association has maintenance or repair responsibility. Existing law requires the owner of a separate interest to provide specified documents to a prospective purchaser, as provided, and an association to provide to the owner of a separate interest, upon request, those specified documents. Existing law requires an association to distinguish and bill separately any fee charged for providing those specified documents to the owner and provides a form for billing disclosures.
This bill would amend Civil Code Section 4525 to include in the list of documents that an owner is required to provide to a prospective purchaser with a copy of the most recent inspection report of any exterior elevated elements, and would modify the Civil Code Section 4528 form to reflect this requirement.
**SB-410 was signed in to law October 10, 2025, and takes effect January 1, 2026.
View more info on SB 410from the California Legislature's website
SB-811 (Caballero) Common interest developments: document delivery.
Most likely a spot bill, this bill would make nonsubstantive changes related to document delivery.
Current Status: Dead
FindHOALaw Quick Summary:
Existing law makes delivery of a document pursuant to the Davis-Stirling Act to be complete upon either its deposit into the United States mail or upon electronic transmission.
Most likely a spot bill, this bill would make non-substantive changes to Civil Code Section 4050.
**SB-811 was gutted and amended on January 5, 2026, and no longer applies to common interest developments.
View more info on SB 811from the California Legislature's website