2026-09-09 · California · Courts

California now has published authority that a homeowners association board's denial of an accessory dwelling unit application is protected by the business judgment rule — and that judicial deference under Lamden is not confined to maintenance decisions.

Eng v. Opperman (Portola Ranch Association), Nos. A170737 and A171745 consolidated, (2025) 117 Cal.App.5th 354, was filed December 19, 2025 and certified for publication three days later.¹

The follow-on is as newsworthy as the opinion. At its petition conference of April 15, 2026, the California Supreme Court acted on a combined petition for review and for depublication (S295059) and the result was “Denied (review & depublish)”. Both were refused, so the opinion stays on the books.²

What happened

Craig and Michelle Opperman applied to Portola Valley Ranch's Design Review Committee to convert a detached garage into an ADU and relocate the garage into the front building envelope.

The committee declined to review the application, saying it lacked ADU expertise, and formally referred it to the Board. The Board investigated, retained an independent architect, and twice asked the Oppermans to split the ADU application from the garage application. They twice refused.

On December 13 the Board denied the application, citing concerns about traffic and fire safety — specifically emergency access and vehicle maneuvering on an adjacent common-area lot.

The Oppermans cross-complained against the association for breach of governing documents, breach of fiduciary duty, interference with prospective economic advantage, and declaratory relief. The association won summary judgment, and the amended judgment included $113,531.50 in attorney's fees.

Affirmed on three grounds

The Board could take up the application. A CC&R provision making the Board the Design Committee “if, for any reason, no Design Committee exists” reasonably permits the Board to act when the existing committee refuses to and formally refers the matter.

Lamden is not maintenance-only. The rule of judicial deference in Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249 reaches discretionary operational decisions including approval or rejection of improvement plans — “most courts have broadly construed the Lamden rule.”

The business judgment rule applies. As a nonprofit mutual benefit corporation, the association gets the presumption under Corporations Code sections 309 and 7231 that directors' decisions rest on sound business judgment — rebuttable only by fraud, bad faith, overreaching, or an unreasonable failure to investigate material facts.

The Oppermans raised no triable issue of bad faith. The Board had asked them to split the applications, and it approved their second ADU application in June 2023 during the litigation.

Civil Code section 4765 was central: architectural decisions must comply with law, building codes, land use and public safety regulations.

1. Eng v. Opperman (Portola Ranch Association), Nos. A170737, A171745 — slip opinion, Court of Appeal, First Appellate District, Division Two (certified for publication) ↩
2. California Supreme Court, results of the petition conference of April 15, 2026 (S295059 — review and depublication both denied) ↩
3. Civil Code § 4765, California Legislative Information — architectural review decisions and compliance with public safety regulations ↩
4. Ridley v. Rancho Palma Grande Homeowners Assn., No. H052560 — slip opinion, Court of Appeal, Sixth Appellate District (business judgment rule and Lamden deference defeated) ↩