The Ridley v. Rancho Palma Grande Homeowners Association case is a story of common area maintenance gone wrong. There are several lessons to be learned from Ridley.
Plaintiff homeowners Doug Ridley and Sherry Shen owned a condominium unit within Rancho Palma Grande Homeowners Association. In 2018, the unit’s tenants reported flooding in the crawlspace beneath the unit. Various professionals informed the association that the leak may have been emanating from an abandoned well under the crawlspace (the land on which the association was built was previously a farm): a plumber, the city of Santa Clara, the Santa Clara Valley Water District, several drilling contractors, and an engineer. The association’s law firm advised the association to take “all steps … to avoid further damages from the water flow under the unit” because of the “exponential costs involved if not properly addressed.” A water restoration consultant also recommended that the association dry out the crawlspace to reduce the risk of mold developing in the homeowners’ unit.
Unfortunately, the association ignored this advice. Despite admitting in initial communications that there was a suspected well underneath the crawlspace, the association subsequently reversed course. Instead of attempting to find and destroy the suspected well, the association decided to pursue the less costly option of installing a French drain within the crawlspace. The association also hired a new attorney, who sent the city and water district a letter, which the court later described as part of a pattern of “falsehood” and “deception,” claiming the water intrusion was a one-time event caused by a high groundwater table under the condominium complex rather than an abandoned well. The association’s board president forwarded the attorney’s letter to the plaintiff homeowners and asserted there likely was not an abandoned well or mold within the Unit. The board president admitted later during trial that many of his statements were false.
In March 2019, two months after the association claimed the flooding was a one-time event, the crawlspace flooded again. The association continued to insist the flooding was due to a high groundwater table rather than an abandoned well. In September, an engineer discovered a sinkhole in the crawlspace. The city prohibited occupation of the unit and ordered the association to correct the issue. However, rather than searching for the suspected well, the association decided to pour concrete on top of the sinkhole. Workers hired by the association to do so cut a hole in the floor of the unit and began removing soil. After about two hours, the workers found the abandoned well. The workers were not told ahead of time there might be a well underneath the soil they were removing, which the trial court later found put the workers at physical risk.
Tests indicated mold in the homeowners’ unit by June 2019, and a consultant recommended drying out the crawlspace. However, by the time of trial in 2023, the mold still had not been fully remediated.
The homeowners sued the association and the board president. The trial court found in favor of the plaintiff homeowners on all claims. The trial court awarded plaintiffs damages for restoration costs, lost rent, utility, and emotional distress. Additionally, finding the defendant association and board presidents’ conduct “despicable,” the trial court awarded plaintiffs $275,000 in punitive damages. The trial court additionally issued an injunction ordering the association to perform specified work on the crawlspace and the unit. The defendants appealed the injunction.
The appellate court took the defendants to task in a blistering decision. The appellate court found the association failed to conduct a reasonable investigation of the water intrusion, failed to act in good faith, and acted without regard to the health and safety of others. The appellate court additionally affirmed the trial court’s finding that the association was grossly negligent. The appellate court affirmed the injunction on that basis and awarded the plaintiff homeowners their costs on appeal.
Associations facing common area maintenance conundrums should consult (and listen to!) their community association counsel.
What are the Lessons We Can Learn from Ridley?
Listen to your experts! The defendant association in Ridley ignored multiple experts who indicated there was likely an abandoned well underneath the crawlspace. The association even fired the lawyer who advised the association to address the issue promptly. The association’s decision to ignore that advice did not make the well disappear. Instead, the unaddressed maintenance only resulted in additional time, expense, and liability for the association.
Associations have a duty to investigate common area maintenance issues in a reasonably timely fashion. That duty is typically triggered when the board becomes aware of a common area maintenance issue requiring attention. In Ridley, the association failed to fully remediate the mold in the unit by the time of trial in 2023, five years after the water intrusion first occurred. The association also otherwise delayed investigating and undertaking necessary repairs and faced liability on that basis.
Integrity is important. The court saved its most blistering commentary for the association’s pattern of “falsehood” and “deception,” specifically finding that the association withheld crucial information from its own experts, hired workers, membership, and the plaintiff homeowners regarding the source of the water intrusion. The plaintiffs were also awarded hefty punitive damages as a result of the defendant association and board president’s “despicable” behavior. Associations’ duty to turn over documents to homeowners, as well as associations’ common area maintenance obligations, are nuanced legal topics. However, associations cannot mislead or misstate facts with impunity. Honesty is the best, and really only, policy
