[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)
Affan v. Portofino Cove Homeowners Association
[Maintenance; Board Deference] The deference afforded to HOA Boards may not extend to situations where the Board fails to act or to investigate the scope of required maintenance or repairs.
[Opinion certified for partial publication. FN. * ]
Allen B. Weiss & Associates, Allen B. Weiss, Allen L. Thomas, and Sivi G. Pederson for Plaintiffs and Appellants.
Jerome M. Jackson and Doran B. Richart for Defendant and Appellant.
Jay D. Fullman for Defendant and Respondent.
OPINION
ARONSON, J.-
Plaintiffs Akil and Cenan Affan, husband and wife homeowners in a condominium complex, sued their homeowners association and its managing agent for damages after their unit was flooded with sewage. The Affans’ complaint alleged that defendants breached their duty to maintain and repair the common area plumbing, which resulted in a sewage blockage that caused the flooding. According to the complaint, not only did defendants fail to prevent the sewage eruption through proper maintenance of the common area plumbing, but they also failed to repair and remediate the resulting damage and contamination within the Affans’ unit.
Based on the “judicial deference” standard applicable to the ordinary maintenance decisions of homeowners associations (Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249 (Lamden)), the trial court entered judgment against the plaintiffs on all but one cause of action. The court found the [933] homeowners association liable for breaching an equitable servitude and awarded the Affans their remediation costs of $33,800 as damages. The court denied all parties’ requests for attorney fees and costs. Both the Affans and the homeowners association appealed.
We conclude the trial court erred in applying the Lamden rule of deference. The homeowners association failed to establish the factual prerequisites for applying the judicial deference rule. Additionally, the managing agent of the homeowners association has no claim to judicial deference under Lamden. Consequently, we reverse the judgment in part and remand for further proceedings in accord with the views expressed in this opinion. In the unpublished portion of this opinion, we affirm the damage award for plaintiffs on the equitable servitude claim.
I. BACKGROUND FACTS AND PROCEDURE
Recurrent Plumbing Problems
In 1986, Akil and Cenan Affan bought unit 107 in the Portofino Cove Condominiums as a vacation home. [FN. 1] They usually spent a few weeks a year vacationing in their condo. Since 1999, the Affans experienced a series of plumbing backups in their unit. From 1999 to 2005, every time they arrived at their condo, they found sewage residue in their kitchen sink or in the sink and tub in their master bathroom. This happened nine times in that six-year span.
Upon discovering each sewage backup, the Affans reported the problem to the property manager for the complex. They also consistently reported each plumbing incident to at least one member of the board of directors of defendant Portofino Cove Condominium Association (the Association), the common interest association for the complex. After each reported backup, the Association manager hired a plumber to snake the Affans’ drain line.
The Affans’ unit is on the first floor of a three-story building with an underground parking garage. Each ground floor unit shares vertical drain pipes with the units stacked above. The vertical drain pipes run through the shared common area walls and connect to lateral drain pipes running below the units [189 934] and along the ceiling of the underground garage. Two of the Affans’ first floor neighbors are members of the board of directors and also experienced similar sewage problems.
After finding a sewage backup in April 2003, Cenan wrote a letter to the Association’s board of directors. In the letter, she complained of the persistent problem and reported that the plumber who responded to the latest call had recommended annual maintenance of the drain lines serving the building.
When the kitchen sink backed up on April 21, 2005, Akil telephoned the onsite property manager, Kevin Brown, to report the problem. Akil told Brown, an employee of defendant Huntington West Properties (Huntington West), that sewage backup into his unit was “a very chronic situation,” and that he and his wife had complained in a letter to the Association, but had received “no answer.” He requested that management send a “master plumber” to investigate the cause of the backups.
Huntington West had become the Association’s managing agent in early 2004. Brown testified that in January or February of 2005, the Association began to consider whether it might save money by hiring a plumber to regularly maintain the main drain lines, rather than continually responding in a “piecemeal” fashion to backup problems. The board directed Brown to develop a “scope of work” for a regular maintenance contract for the complex, and to collect bids. The board asked him “to figure out what direction they should go in.”
There is some documentary evidence suggesting the Association earlier considered arranging for maintenance of a main plumbing line. Minutes from an Association board meeting in 2001 stated, “The board would like to see a bid on a year contract” to “hydro[-]jet” a main line, which meant blasting the lines with a high-pressure stream of water. But no evidence showed the board ever contracted for that maintenance work, or took any action to maintain the drain lines before May 2005.
When Akil reported the April 21, 2005, sewage backup to Brown, the property manager suggested that Akil attend the Association board meeting the next day to discuss the issue, which he did. After listening to Akil’s complaint, the board told him it had “signed off on a maintenance agreement” for the main plumbing lines at the complex. According to trial testimony, the Association entered into a five-year contract with Rescue Rooter, a plumbing contractor, to perform annual, “routine” maintenance on the main plumbing lines. [935]
The May 14, 2005 Sewage Damage
On May 3, 2005, Rescue Rooter conducted a hydro-jet cleaning of the main lines. Less than two weeks later, on May 14, a major sewage backup damaged the Affans’ condo. Kitchen sink debris and grease from the upstairs units erupted in the Affans’ master bathroom sink, tub, and vanity closet. The sewage also overflowed onto the floors of the master bathroom and adjoining bedroom.
In response, Huntington West hired Rescue Rooter to snake the bathroom drain and retained Emergency Service Restoration, Inc., to clean up the spill. The emergency clean up company extracted waste water, removed and disposed of the carpet, carpet pad, damaged baseboard and drywall, and steam cleaned and sanitized surfaces, and placed air scrubbers, dryers, and dehumidifiers throughout the unit.
In the immediate aftermath of the damage to the Affans’ condominium, Association board members assured them the Association would “take care” of the situation. Brown met with the Association’s casualty insurance adjuster to find out “what needed to be done,” but apparently the Association encountered a “snag” with its insurer over coverage issues. Specifically, because the Affans had begun experiencing plumbing backup problems in 1999, and the Association switched to a new insurer in 2000, a dispute arose concerning which of the two insurers would cover the damage resulting from the 2005 eruption.
When the Affans filed their complaint against the Association and Huntington West on October 12, 2005, the defendants had not done any additional repair or remediation work beyond the emergency clean up of the unit. The parties agree the unit was uninhabitable.
The Affans’ complaint stated five causes of action against the Association: breach of the CC&R’s (the covenants, conditions, and restrictions governing the Association and its members), enforcement of equitable servitude, negligence per se, negligence, and private nuisance. The essence of their claims was that the Association had a duty under the CC&R’s, the common law, and the Civil Code, [FN. 2] to maintain and repair the condominiums’ common areas, including the sewer pipes, and the Association’s failure to do this resulted in the sewage eruption that damaged the Affans’ unit. The plaintiffs further claimed the Association breached its duty to promptly repair and remediate that [936] damage. Finally, they alleged the sewage eruption created a private nuisance that the Association failed to abate. The Affans sued Huntington West only for negligence and private nuisance based on its failure both to prevent and to clean up the sewage eruption.
Over the next few months, the Affans received various bids for the remediation and restoration work needed in the unit. But they did not hire anyone to make the necessary repairs because the Association had not yet investigated the cause of the repeated backups nor taken any steps to prevent a recurrence.
The Plumbing Expert’s Opinion
In April 2007, there was another sewage backup into the Affans’ sink. At that point, the Association hired Thomas Hoffman, a forensic plumber, to investigate the cause of the numerous drain backups into the Affans’ unit. Hoffman testified as a plumbing expert at trial. [FN. 3]
Hoffman testified a blockage of one of the main sewer lines serving the Affans’ unit and the two units stacked above it caused the repeated sewage backups. The blockage occurred in a lateral drain line running through the parking garage beneath the stacked units. This was a common area that the CC&R’s obligated the Association to maintain. [FN. 4] Hoffman diagnosed this blockage by using a camera to conduct a “video inspection” of the main lines; he also cut a cross section of one of the pipes.
Hoffman determined that debris, accumulated over a 10-year period, blocked the main lines. He concluded that Rescue Rooter did not clean the pipes properly on May 3, 2005, and that these pipes never had been cleaned properly. In Hoffman’s opinion, Rescue Rooter used the wrong equipment to clear the main lines: Rescue Rooter should have used a “scour jet” with a motorized spinning head for mechanical boring, rather than simply trying to hydro-jet the lines. According to Hoffman, had Rescue Rooter properly cleaned the pipes on May 3, 2005, the May 14 sewage backup into the Affans’ unit would not have occurred.
Hoffman testified about what should have been done at the condo complex to address the repeated first floor backups. He explained that “if there was [937] more than one backup [into a ground floor unit in a stacked-unit complex] in a year, there was some kind of problem in the pipes.” He testified that the “accepted general practice” for assuring that pipes are “operating and functioning safely” after repeated backups into a ground floor unit from a shared sewer line is to “get a video inspection or . . . do a regular maintenance on the lines.”
The Association eventually hired Hoffman to clean the main lines in May 2008. He cleared the lines using a motorized, spinning scour jet. At that point, the Affans hired a remediation company to repair and restore their condo at a cost of approximately $34,000.
The Trial and Judgment
The parties agreed to a bench trial. During the trial, the Association stipulated that Rescue Rooter negligently performed the maintenance on the main lines. At the conclusion of the Affans’ case, the Association moved for judgment in its favor. The trial court made tentative findings in favor of both defendants on four of the five causes of action. The court announced it found for plaintiffs on only their nuisance claim and proceeded to hear argument on damages. The court then invited the parties into chambers for an off the record discussion. Upon returning to the courtroom, the court announced: “The record will reflect the defense rests. [¶] Both defendants rest . . . subject to a briefing schedule with respect to closing arguments relative to damages resulting from nuisance.”
With the presentation of evidence concluded, the parties submitted briefs arguing both liability and damage issues. The court subsequently entered judgment against the Affans on all causes of action save one: The trial court held the Association liable to the Affans for breach of an equitable servitude, and awarded the Affans $33,800 in damages. The court further determined that all parties should bear their own attorney fees.
In its statement of decision, the trial court explained it applied the rule of judicial deference to the maintenance decisions of homeowner associations recognized in Lamden, supra, 21 Cal.4th 249. The court stated, “Based upon Lamden, defendants were not negligent nor have they breached the CC&R[‘]s in connection with their duty to maintain the common areas of the project.” Further, the court ruled the nuisance claim was untenable because it “depends upon the establishment of negligence or a breach of the CC&R[‘]s with respect to the contractual obligation to maintain the premises.”
While the statement of decision rejected any negligence liability on the defendants’ part for failing to maintain the common areas, the trial court did [938] find the Association contractually liable for breaching an equitable servitude, created by the CC&R’s, “to promptly indemnify plaintiffs as a result of a casualty loss originating in a common area.”[FN. 5]
As damages for this breach, the trial court awarded the Affans only the cost of remediation and restoration of the unit — $33,800. The court denied their claim for loss of use and emotional distress because the CC&R’s limited the Association’s liability to “restor[ing] the premises per [s]ection 10.01, to its ‘former condition[.]'”
The trial court denied the Affans’ and the Association’s requests for attorney fees, available to the prevailing party under the CC&R’s and § 1354, subd. (c), finding “neither party has prevailed in this matter.” The court explained that although the Affans prevailed on the equitable servitude cause of action, they received far less in damages than they sought.
Both the Affans and the Association appealed from the judgment [FN. 6] and from an order after judgment denying their attorney fees requests.
II. DISCUSSION
The primary issue in this appeal is whether the trial court erred in applying the judicial deference rule to shield both the Association and Huntington West from liability for the Affans’ damages. Because this issue effectively dictates the handling of most other issues, we begin with an examination of the judicial deference rule established in Lamden, supra, 21 Cal.4th 249.
A. The Rule of Judicial Deference
In Lamden, a condominium development experienced a persistent problem with termites. At various points, the homeowners association consulted with contractors and pest control experts and “[o]ver some years . . . elected to spot treat . . . rather than fumigate . . . for termites[.]” (Lamden, supra, [939] 21 Cal.4th at p. 253.) The plaintiff, an owner of a condominium in the development, disagreed with that choice and sued for damages, an injunction, and declaratory relief. She alleged that in opting only to spot treat the infestation, the Association failed to maintain and repair the development’s common areas as required by the CC&R’s and the Civil Code. (Id. at pp. 254-255.) At trial, she waived damages and sought only an injunction and declaratory relief.
The trial court applied a “‘business judgment test'” in evaluating the Association’s decision to spot treat rather than fumigate. (Lamden, supra, 21 Cal.4th at p. 256.) The trial court found the Association, after ordering extensive remedial and investigative work, weighed the costs and benefits of both treatment methods, including the “possible problems entailed by fumigation,” such as “relocation costs, lost rent, concerns about pets and plants, human health issues and eventual termite reinfestation.” (Lamden, supra, at p. 255.) The trial court concluded the board’s deliberative process provided it with “‘a rational basis for their decision to reject fumigation and do . . . what they did,'” and entered judgment for the Association. (Id. at p. 256.)
The Court of Appeal reversed, holding that the trial court should have analyzed the Association’s actions using “an objective standard of reasonableness” rather than the more easily-met business judgment test. (Lamden, supra, 21 Cal.4th at p. 256.) The California Supreme Court granted review to answer the following question: “In adjudicating [the homeowner’s] claims, under what standard should a court evaluate the board’s decision?” (Id. at p. 253.)
[1] In answering that question, the Supreme Court rejected the approaches of both lower courts and announced a new rule of “judicial deference” to the ordinary maintenance decisions of homeowners associations. The Lamden opinion made clear, however, that the rule applies only in limited circumstances. The court described those specific circumstances as follows: “Where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development’s common areas, courts should defer to the board’s authority and presumed expertise.” (Lamden, supra, 21 Cal.4th at p. 253.) As justification for this deference, the court noted “the relative competence, over that of courts, possessed by owners and directors of common interest developments to make the detailed and peculiar economic decisions necessary in the maintenance of those developments.” (Lamden, supra, 21 Cal.4th at pp. 270-271.)[940]
It is important to note the narrow scope of the Lamden rule. It is a rule of deference to the reasoned decisionmaking of homeowners association boards concerning ordinary maintenance. It does not create a blanket immunity for all the decisions and actions of a homeowners association. The Supreme Court’s precise articulation of the rule makes clear that the rule of deference applies only when a homeowner sues an association over a maintenance decision that meets the enumerated criteria. (See Lamden, supra, 21 Cal.4th at p. 269 [rejecting assertion that judicial deference rule will “insulate . . . boards’ decisions from judicial review,” citing Fountain Valley Chateau Blanc Homeowner’s Assn. v. Department of Veterans Affairs(1998) 67 Cal.App.4th 743, 754-755, as example of where association’s decision is not entitled to judicial deference because association acted in the “absence of . . . good faith”]; see also Ekstrom v. Marquesa at Monarch Beach Homeowners Assn. (2008) 168 Cal.App.4th 1111, 1123 (Ekstrom) [judicial deference rule does not apply where board decision was inconsistent with CC&R’s and thus beyond board’s authority]; see also Ritter & Ritter, Inc. Pension & Profit Plan v. The Churchill Condominium Assn.(2008) 166 Cal.App.4th 103, 122 [Lamden applies only “to ‘ordinary’ decisions involving repair and maintenance actions”; Lamden “‘gives no direction'” where lawsuit challenges “‘a board action involving an extraordinary situation (e.g., major damage from an earthquake) or one not pertaining to repair and maintenance actions'”].)
As for the facts in Lamden, the Supreme Court concluded “the trial court was correct to defer to the Board’s decision” to spot treat rather than fumigate because the prerequisites for judicial deference were met: “Here, the Board exercised discretion clearly within the scope of its authority,” and “[t]he trial court found that the Board acted upon reasonable investigation, in good faith, and in a manner the Board believed was in the best interests of the Association and its members. [Citations.]” (Lamden, supra, 21 Cal.4th at p. 265.)
B. The Trial Court Erred in Applying the Judicial Deference Rule
[2] Turning to whether the trial court properly applied the rule of judicial deference in the case before us, we begin by noting the judicial deference rule is an affirmative defense. (Ekstrom, supra, 168 Cal.App.4th at pp. 1122-1123 [“Just as the corporate business judgment rule” is a defense, “so to[o] is the rule of judicial deference to decisions of homeowner association boards articulated in Lamden“].) Thus, the defendant has the burden of establishing [941] the requisite elements for applying the rule. (Seltzer v. Barnes(2010) 182 Cal.App.4th 953, 969 [defendant bears burden of proof on affirmative defense].) [FN. 7]
Here, the trial court did not require any particular showing to invoke the judicial deference doctrine, either by way of pretrial motion or at trial. The statement of decision contains no explicit findings concerning the judicial deference rule and instead simply states, “Based upon Lamden, defendants were not negligent nor have they breached the CC&R[‘s.]” From this, we infer the trial court found the defendants met their burden of proving the Lamden judicial deference rule applies. We limit our review of that finding to the question of whether substantial evidence supports it. (Winograd v. American Broadcasting Co.(1998) 68 Cal.App.4th 624, 632 (Winograd).)
1. Huntington West Has No Claim to Judicial Deference Under Lamden
The trial court mistakenly assumed the Lamden rule of judicial deference applies equally to both defendants. It does not, because the two defendants are not similarly situated.
The Supreme Court’s careful articulation of the rule makes clear that judicial deference is due only to the ordinary maintenance decisions of homeowners associations. (See Lamden, supra, 21 Cal.4th at p. 253.) Huntington West is not a homeowners association. In a tacit admission that it has no claim to judicial deference, Huntington West does not mention Lamden in its brief, but instead relies solely on the substantial evidence rule to support the judgment. (See Winograd, supra, 68 Cal.App.4th at p. 632.) Because Huntington West is merely the managing agent of a homeowners association, the trial court erred in concluding the Lamden rule of deference applied to shield it from liability.
2. The Association Failed to Establish the Factual Prerequisites for Applying the Judicial Deference Rule
At trial, the Association failed to establish the factual prerequisites for applying the rule of judicial deference. In fact, the Association did not prove the most fundamental element of this defense: that the Affans’ lawsuit concerns a maintenance decision made by the Association. (See Lamden, [ 942] supra, 21 Cal.4th at p. 253 [rule of judicial deference applies “when owners in common interest developments seek to litigate ordinary maintenance decisions entrusted to the discretion of their associations’ boards”].) Where Lamden involved the propriety of an association board’s choice between alternative methods of dealing with a persistent termite infestation, the Affans sued the Association for its 10-year failure to undertake any maintenance of the condominium complex’s main plumbing lines, despite knowledge of a recurring plumbing problem in first-floor units.
Though the Association considered hydro-jetting a main line in 2001, and then four years later, in early 2005, discussed whether annual maintenance of the main lines might be a more cost-effective way to deal with the recurring first-floor sewage backups, the Association took no action to maintain the lines until April 2005. To put the Association’s inaction into perspective, it would be as if the association board in Lamden did nothing for years to address the condominium development’s termite infestation and simply allowed the pest problem to fester, heedless of the risk posed to individual units.
[3] The judicial deference doctrine does not shield an association from liability for ignoring problems; instead, it protects the Association’s good faith decisions to maintain and repair common areas. In Lamden, the Supreme Court recognized the essence of an association’s duty to maintain and repair is a duty to act based on reasoned decisionmaking The court observed, “[T]he Declaration [of CC&R’s] here, in assigning the Association a duty to maintain and repair the common areas, does not specify how the Association is to act, just that it should.” (Lamden, supra, 21 Cal.4th at p. 270, original italics.)
There may be some rare situations in which an association’s decision to do nothing to address a common area maintenance issue deserves judicial deference. For example, we can envision a scenario in which an association faces two extreme choices: doing nothing or adopting a prohibitively expensive course of action. A court may decide to extend judicial deference to an association’s choice of inaction in that narrow context, if the choice stemmed from deliberations that carefully weighed the alternatives and gave primacy to the best interests of the association and its members. The present case, however, does not present that scenario. As already noted, the Association’s inaction was not the result of any deliberative process.
A question arises concerning the significance of the Association’s April 2005 decision to begin annual maintenance. Does that decision trigger application of the judicial deference doctrine? It does not. As events unfolded, the Association’s decision to hire Rescue Rooter to clean the main [943] lines was inconsequential because Rescue Rooter’s ineffectual hydro-jetting on May 3, 2005, had no discernable effect on the main lines: The hydro-jetting left the main lines choked with the same debris that had been accumulating for a decade. [FN. 8] Plaintiffs’ lawsuit looked past that futile, last-minute cleaning effort and sought to hold the Association liable for its 10-year failure to address the maintenance needs of the common area plumbing lines. Put simply, the clogged drain lines and resulting sewage eruption do not implicate any decision by the Association, but rather reflect the Association’s abiding indecision and inattention to plumbing maintenance issues.
Even if we could view the Association’s failure to implement any maintenance of the drain lines as a “decision”, other key prerequisites for application of the Lamden rule of deference are unmet here. For example, there was no evidence the board engaged in “reasonable investigation” (Lamden, 21 Cal.4th at p. 253) before choosing to continue its “piecemeal” approach to sewage backups (i.e., sending plumbers to snake both drains in individual units), rather than servicing the main drain lines for the building. Instead, there was evidence the Association never sought to investigate the cause of the repeated backups until it hired Hoffman to do so in 2008.
Nor was there evidence the Association acted “in good faith and with regard for the best interests of the community association and its members” (Lamden, supra, 21 Cal.4th at p. 253), because no one testified about the board’s decisionmaking process. The Association failed to present evidence the board weighed the costs and benefits of a particular course of action, or considered any other factors in choosing to snake drains in individual units rather than clear main drain lines. Finally, the Association did not meet its burden of proving its “decision” not to engage in maintenance was an exercise of its “discretion . . . to select among means for discharging an obligation to maintain and repair” common areas. (Ibid.) The record contains no evidence the board selected “among means” when it responded to each of the Affans’ nine sewage eruptions by simply hiring a plumber to snake their drain.
This dearth of evidence on the nature of the Association’s decisionmaking stands in stark contrast to the evidence presented in Lamden. There, the homeowners association consulted with contractors and pest control experts for several years in attempting to control termites in the plaintiff’s building. (Lamden, supra, 21 Cal.4th at pp. 253-254.) The board ordered a significant [944] amount of “[r]emedial and investigative work,” and “‘seriously consider[ed]'” fumigation, a treatment method for which it obtained a bid. (Id. at p. 255.) The board ultimately chose spot treatment over fumigation because of concerns about “possible problems entailed by fumigation, including relocation costs, lost rent, concerns about pets and plants, human health issues and eventual termite reinfestation.” (Ibid.) Thus, in Lamden, ample evidence demonstrated the association board engaged in the sort of reasoned decisionmaking that merits judicial deference. There is no such showing in the case before us.
[4] In conclusion, the record contains no evidence showing the Association’s nonmaintenance of the main plumbing lines was the result of a good faith decision, based upon reasonable investigation. Accordingly, the trial court erred in allowing the Association to invoke Lamden’s judicial deference rule.
C. Applying the Judicial Deference Rule Constituted Prejudicial Error
The trial court’s erroneous application of the judicial deference rule had dire consequences for plaintiffs’ case. The trial court never decided, based on theevidence, whether the defendants’ failure to investigate the cause of the repeated first floor sewage eruptions, or to undertake any effective maintenance program for the main plumbing lines, constituted negligence or a breach of the CC&R’s. Instead, the court simply concluded as a matter of law, “[b]ased upon Lamden,” that defendants were not liable for negligence, negligence per se, breach of the CC&R’s, or a private nuisance. Consequently, plaintiffs suffered prejudice when the trial court erroneously applied the judicial deference rule. It follows that we must reverse that part of the judgment entered in favor of defendants. (Red Mountain, LLC. v. Fallbrook Public Utility Dis.(2006) 143 Cal.App.4th 333, 347-348 [prejudicial error requires reversal]; Cal. Const. art. VI, § 13; Code Civ. Proc., § 475.)
Ordinarily, when the trial court gives an incorrect legal reason for its ruling, we look for any correct legal basis on which to sustain the judgment. (Kemp Bros. Const., Inc. v. Titan Elec. Corp. (2007) 146 Cal.App.4th 1474, 1477 (Kemp).) To that end, Huntington West urges us to affirm the judgment because substantial evidence supports the trial court’s implied finding that it acted with reasonable care in responding as manager to the plumbing problems in the complex. The substantial evidence rule, however, is unavailing as an alternative ground for affirming the judgment for either defendant.
As the court explained in Kemp, supra, 146 Cal.App.4th 1474, “[W]here . . . a respondent argues for affirmance based on substantial [945] evidence, the record must show the court actually performed the factfinding function. Where the record demonstrates the trial judge did not weigh the evidence, the presumption of correctness is overcome. [Citation.] . . . ‘The [substantial evidence] rule thus operates only where it can be presumed that the court has performed its function of weighing the evidence. If analysis of the record suggests the contrary, the rule should not be invoked.'” (Id. at pp. 1477-1478, original italics.) Here, the trial court did not weigh the evidence, but instead ruled the defendants had no liability based on the rule of judicial deference. Because that conclusion was erroneous, we must reverse the judgment for defendants.
The Affans urge this court to order entry of judgment in their favor on the negligence cause of action because the Association had a nondelegable duty to maintain the common areas, making it vicariously liable for the stipulated negligence of Rescue Rooter. (See Srithong v. Total Investment Co. (1994) 23 Cal.App.4th 721, 726 [landlord held liable for injuries to tenant caused by contractor’s negligent roof repair]; Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 499 [condominium association held to landlord’s standard of care regarding common areas]; White v. Cox (1971) 17 Cal.App.3d 824, 830 [condominium owner may sue association for personal injuries caused by association’s negligent maintenance of common area].)
The doctrine of nondelegable duty does not support entry of judgment in Affans’ favor as a matter of law. Negligence liability depends on more than breach of duty. Causation and damages, for instance, are issues of fact that remain to be determined. On remand, the trial court must determine whether the plumber’s negligence on May 3 constituted a substantial factor in causing the sewage eruption on May 14. If so, then the Association will be liable for the ensuing damage under the doctrine of nondelegable duty, assuming that Rescue Rooter’s negligence is established by stipulation or competent evidence.
D. Substantial Evidence Supports the Judgment for Plaintiffs on the Breach of Equitable Servitude Claim [ FN. *]
…………………………………………………………………………………………………………………….
E. Denial of Attorney Fees
Both the appeal and cross-appeal challenge the trial court’s decision not to award attorney fees to either party. That part of the judgment is reversed. [946]
III. DISPOSITION
The judgment is reversed in all respects except as to the finding that the Association is liable to the Affans for damages of $33,800 for breach of an equitable servitude. The case is remanded for further proceedings in accord with the views expressed in this opinion. The Affans are entitled to costs on appeal.
Rylaarsdam, Acting P. J., and Fybel, J., concurred.
FN *. Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of part II.D.
FN †. Retired judge of the Orange Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.
FN 1. When referring to the spouses individually, we use their first names. We intend no disrespect but simply aim for clarity and convenience. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, fn. 1.)
FN 2. Civil Code section 1364, subdivision (a), provides, in pertinent part: “Unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, or maintaining the common areas . . . .” (All further statutory references are to the Civil Code unless otherwise noted.)
FN 3. In an unusual move, both sides designated Hoffman as an expert witness.
FN 4. Section 2.07 of the CC&R’s sets forth the Association’s duty as to “Repair and Maintenance” of the common areas: “[T]he Association shall . . . maintain, repair and replace the Common Property . . . to assure maintenance of the Common Property . . . in a clean, sanitary and attractive condition[.]” Section 1.13 defines the “Common Property” or common areas as including “all gas, water and waste pipes, all sewers, . . . of the Project Improvements wherever located[.]”
FN 5. The trial court’s equitable servitude analysis is explained in part II.D. of this opinion.
FN 6. The trial court entered judgment on October 22, 2008, but a week later entered an amended judgment to correct a clerical error: The original judgment was entered against both defendants on the equitable servitude cause of action though Huntington West was not named as a defendant on that claim. A month later, on November 24, the trial court entered a second amended judgment that corrected another clerical error. The second amended judgment clarified that Huntington West prevailed against the Affans not on all claims, but only on the negligence and nuisance causes of action — the only ones in which it was named. In an abundance of caution, the parties appealed from all three judgments.
FN 7. The Association unsuccessfully tries to turn this burden of proof on its head, arguing the Affans failed to prove the Association did not meet the prerequisites for judicial deference. The contention lacks merit. The Association cannot dodge its burden of proving the facts needed to support this affirmative defense.
FN 8. In this, the Association was unlucky. According to plumbing expert Hoffman, had Rescue Rooter used the proper “scour jet” method to clean the lines, the May 14 sewage eruption would not have occurred. But, of course, the Association’s failure to maintain and repair the drain lines for so many years courted just such a disaster.
FN *. See footnote, ante, page 930
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Dover Village Association v. Jennison
[Maintenance; Board Deference] The deference afforded to HOA Boards for maintenance decisions does not extend to the Board’s interpretation as to the scope of the HOA’s maintenance responsibilities under its CC&Rs.
Feldsott & Lee, Martin L. Lee and Erika M. Hsu for Plaintiff and Appellant.
Michael Maguire & Associates, Paul Kevin Wood and Brian Y. Fujita for Defendants and Respondents
OPINION
RYLAARSDAM, Acting P. J.-
Patrick Jennison had a leaky sewer pipe two feet beneath the concrete slab underlying his Newport Beach condo. The homeowner association said he was responsible for the repair bill on the theory that the sewer pipe was “exclusive use common area” for which he was responsible. On cross-motions for summary judgment, the trial court disagreed, and entered a judgment declaring that the association should bear the expense of the repair cost. The court later awarded Jennison about $17,000 in attorney fees and court costs. The association has appealed from the ensuing judgment.
We affirm. Under a natural reading of the CC&R’s, the sewer pipe was a genuine common area to be maintained and repaired by the association, as distinct from “an exclusive use common area appurtenant” to an individual owner’s separate interest.
FACTS
A. Brief Overview
The Dover Village Association (Association) is a 38-unit condominium complex in Newport Beach. For some time before the summer of 2007, a deteriorated four-inch cast iron sewage pipe beneath Patrick Jennison’s condo had been venting sewage. Finally, in late July 2007 the leak seeped up into [126] the floors and carpet of Jennison’s unit and the unit of another. Jennison’s tenant reported the leak to the Association’s president, who called property management, who then sent a plumber to make repairs.
The repairs were extensive, costing about $15,000. It was necessary to cut through Jennison’s floor, jack hammer the concrete slab underneath, and trench out and replace the 50 feet or so of sewer pipe that connected Jennison’s condo with the main service line. A dispute soon arose as to who was responsible. In October the Association sent Jennison a letter asserting that because the sewer pipe exclusively serviced Jennison’s condo, it was his responsibility “to maintain and repair” the sewer pipe. The letter directed Jennison to pay the $15,000 plus repair cost. Jennison did not send a check. The Association filed this action.
The parties agreed to have the issue decided on cross-motions for summary judgment. The trial court ruled that, as a matter of law under both the Davis-Stirling Common Interest Development Act (the Davis-Stirling Act), codified as sections 1350 et seq. of the Civil Code, and the CC&R’s, the sewer pipe is common area to be maintained and repaired by the Association. (All statutory references will be to the Civil Code.
B. Governing Texts
This case involves the interaction between the two sets of texts. First, the Davis-Stirling Act set forth in sections 1350 et seq. of the Civil Code provides general rules for the governance of condominium associations. Second, there are the particular rules set forth the Association’s own CC&R’s. We examine each in turn
1. The Act
[1]The way the Davis-Stirling Act is structured, a homeowner’s association is normally responsible for repairs to “common areas,” but the individual unit owner is responsible for repairs to “any exclusive use common area appurtenant to the separate interest.” Section 1364, subdivision (a) provides both the general rule and the exception for exclusive use common areas: “(a) 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 [127] owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest.”
The definitions section of the Davis-Stirling Act is set out in section 1351. Subdivision (i) defines “exclusive use common area.” The definition is: “‘Exclusive use common area’ means a portion of the common areas designated by the declaration for the exclusive use of one or more, but fewer than all, of the owners of the separate interests and which is or will be appurtenant to the separate interest or interests. (1)Unless the declaration otherwise provides, any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patio, exterior doors, doorframes, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest, are exclusive use common areas allocated exclusively to that separate interest.” (Italics added.)
2. The CC&R’s
There is no question under the CC&R’s that sewer pipes are not within any individual owner’s separate interest. Article I, section 6 of the CC&Rs for Dover Village says: “The following are not a part of the Unit: roofs, foundations, below finished pad elevation, pipes, ducts, flues, chutes, conduits, wires and other utility installations wherever located, except the portions thereof located within the physical boundaries of the Unit.” (Italics added.)The question is whether a given pipe that can be said to exclusively service a unit is a “exclusive use common area appurtenant” for purposes of section 1364.
Two exclusive use common areas are expressly mentioned in the CC&R’s: Patio and garage areas. Article XIX expressly designates patio and garage areas for the exclusive use and enjoyment of a single unit: Unit owners “shall . . . be entitled to the exclusive use and possession of the patio area and garage area designated for the use of said unit. . . . It shall be the duty of the unit owner . . .to maintain the interior of said patio and garage.”
Finally, the CC&R’s give the Association power to make repairs and structural alterations to particular units, and then assess the costs to the individual owner. Article V is generally devoted to the Association board’s powers. Section 5 of Article V, subdivision (l), provides that the board shall [128] have power “To acquire and pay for any other materials, supplies, furniture, labor, services, maintenance, repairs, structural alterations, insurance, taxes or assessments which the Board is required to secure or pay for pursuant to the terms of these restrictions or by law, or which in its opinion shall be necessary or proper for the operation of the common area or for the enforcement of these restrictions, provided that if any such materials, supplies, furniture, labor, services, maintenance, repairs, structural alterations, insurance, taxes or assessments are provided for particular units, the costs thereof shall be specifically addressed to the owners of such units.” (Italics added.)
DISCUSSION
As shown above, under the Association’s by-laws, garage and patio areas are expressly classified as “exclusive use common areas appurtenant.” Such a conclusion, of course, makes sense: Ordinary condominium buyers might expect a secure place to park and exclusive use of the patio immediately adjacent to their units. The question is whether sewer lines also come within the same category.
[2]Under the rule of “expressio unius est exclusio alterius” — say one thing and impliedly exclude the other — the most natural reading of the CC&R’s is that sewer lines are not “exclusive use common areas appurtenant.” By expressly saying patio and garage areas come within the category, the CC&R’s impliedly say that sewer lines do not.(Cf. People v. Palacios(2007) 41 Cal.4th 720, 732 [as applied to statutory construction, expressio unius maxim means that “‘if exemptions are specified in a statute, we may not imply additional exemptions unless there is a clear legislative intent to the contrary'”].)
The Association asserts two counterarguments, one based on language in the CC&R’s and the other on language in the Davis-Stirling Act.
A. The Structural Alteration Clause
The argument from the CC&R’s is based on Article V’s structural alteration clause. The Association reasons that because unit owners can be individually charged for structural alterations, they can similarly be charged for sewer pipes outside their units.
The argument fails because it is circular; that is, it proves nothing. If one begins with the premise that sewer pipes servicing a particular unit already fall into the category of “exclusive use common area appurtenant,” then one can say that repairs to such pipes are indeed “for particular units.” But one [129] must first establish that a sewer pipe is such an “exclusive use common area appurtenant,” and, as we have seen, the only explicit mention of such exclusive use areas in the CC&R’s are the patio and garage areas.
B. The Fixture Statute
[3] The argument based on the Davis-Stirling Act is rooted in section 1351, subdivision (i)’s inclusion of fixtures as “exclusive use common areas.” This argument fails for two reasons. First and most fundamentally,interconnected sewer pipes cannot really be said to be the “fixtures” of any particular unit. A sewer system is a series of interconnected pipes which ultimately feed into one common line. Differentiating parts of that interconnected system is unreasonable. The portion of piping coming from one unit is no more affixed to that unit than it is to the sewer system and other pipes or piping within that system.
[4] In this regard, another fancy Latin phrase, ejusdem generis, operates. (See In re Tobacco Cases I (2010) 186 Cal.App.4th 42, 48 [“‘the general term or category is “restricted to those things that are similar to those which are enumerated specifically”‘”].) Under the canon of ejusdem generis, one determines whether a given thing comes within a more general category — here, “other fixtures designed to serve a single separate interest” — by comparing it to other things specifically mentioned in that category.
In section 1351, subdivision (i), here are the things specifically mentioned as being exclusive use common areas: “shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patio, exterior doors, doorframes, and hardware incident thereto, screens and windows.”
Some pipes — for example, drain pipes exclusively servicing one unit and not connected to any other system of piping — might indeed come within the category, because they can be said to be, like shutters and window boxes, “designed to serve a single separate interest.” But a piece of a system of interconnected sewer piping does not fit: It is, literally, physically connected to every other piece of the system. Every unit’s sewer pipes are a “fixture” of every other unit’s sewer pipes.
The second reason the argument fails is the clause in section 1351, subdivision (i) that allows for a different result if the CC&R’s so provide. As shown above, the most natural reading of these CC&R’s is that sewer pipes, as distinct from patio and garages, are not contemplated as exclusive use common areas. [130]
C. Confirmation in Other Sections of the CC&R’s
Our conclusion, that the portion of piping connecting Jennison’s condo with the sewer system is not an exclusive use common area, is confirmed by language in Article VIII of the CC&R’s that indicate that common areas — including exclusive use common areas — are areas to which owners generally have access. Section 2 of Article VIII precludes individual owners from any “obstruction of the common area without prior consent of the Board.” Section 6 of Article VIII precludes any “noxious or offensive activity” in any common area. And significantly, section 7 provides: “Nothing shall be altered or constructed in or removed from the common area, except upon the written consent of the Board.” Such language is perfectly consistent with normal patio and garage use. It is not consistent with the idea that individual unit owners somehow control the sewer lines beyond the boundaries of their unit.
D. The Argument from Deference
Finally, the Association makes what we might call a “deference argument,” i.e., it asserts that its determination of whether a portion of sewer line was exclusive use common area is a matter committed to its discretion, to which the courts should accord it deference. The argument fails because it confuses a legal issue governed by statutory and contract text with matters that genuinely do lend themselves to board discretion.
The case primarily relied on by the Association for its discretion argument is, in fact, a nice illustration of matters genuinely within a board’s discretion. In Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249, a unit owner disputed the homeowner association’s preferred method of treating termite infestation. The owner, supported by inspection reports, wanted fumigation. The board decided on “spot-treatment.” (Id. at pp. 253-254.) The board’s decision was ultimately upheld by the Supreme Court because it was a matter “entrusted” to the board’s “discretion.” (Id. at p. 265.)
There is an obvious difference between a legal issue over who precisely has the responsibility for a sewer line and how a board should go about making a repair that is clearly within its responsibility. But we know of no provision in the Davis-Stirling Act or the CC&R’s that makes the Association or its board the ultimate judge of legal issues affecting the development.
CONCLUSION
Because our decision today is solely a matter of the applicable texts, we need not deal with issues raised by the Association as to issues of parol evidence or estoppel. By the same token, there are no issues involving the [131] reasonableness of the attorney fee and cost award assuming a judgment in Jennison’s favor. The judgment and fee and cost awards are affirmed. Respondent Jennison shall recover his appellate fees and costs.
Moore, J., and Fybel, J., concurred.