The trial court dismissed the suit citing a 1999 ruling by the California Supreme Court in Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249. In that case, the California high court applied the business judgment rule to HOAs, holding that courts are to defer to the "presumed expertise" of HOA boards when it comes to their decisions on maintaining common areas. That means these decisions by HOA boards are not subject to second guessing by the courts when owners challenge them.
But in Affan, the Court of Appeal found the HOA failed to establish the factual prerequisites for applying the deference rule. In addition, it held, since the HOA manager is not the HOA, the rule does not apply to the manager.
Here's a key excerpt from the ruling:
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.The full decision can be read here.