2026-09-27 · Federal · Courts

What happened. A federal magistrate judge in the Eastern District of California, sitting by consent, denied class certification without prejudice on August 28, 2026 in Riva on the River Homeowners Ass'n v. The Management Association, Inc. The association sought to represent other associations against a management company it alleged kept undisclosed bank “earnings credits” generated by pooled association deposits. The court also dismissed the fiduciary-duty and unfair-competition claims with leave to amend.¹

The allegation

The complaint alleged that the manager “received over $33 million in earnings credit payments and failed to ever disclose” them, and passed none to client associations. Earnings credits are value a bank extends to a depositor on balances, typically offset against fees; the claim was that associations' money generated them and associations never saw them.¹

Why the court ruled as it did

• No concrete injury shown. The plaintiff offered “no evidence that banks would have provided better interest rates to HOAs,” or that individual associations could have earned credits on their own.
• Disclosure alone is not enough. An informational injury “that causes no adverse effects cannot satisfy Article III,” and a “bare procedural violation” of California's manager conflict-of-interest disclosure statute, Civil Code § 5375.5, did not establish standing.
• What survives. The association's own breach-of-contract and unjust-enrichment claims proceed individually unless the complaint is amended within 30 days.¹

Why it matters

This is the first federal ruling HOA Weekly has located on earnings-credit arrangements between association managers and banks. It does not decide whether such arrangements are lawful or had to be disclosed; it holds that, on this record, the association did not show a concrete harm that federal court jurisdiction requires for a class of associations. State courts apply their own standing rules, and California's disclosure statute remains in force.

What to watch next

An amended complaint was due roughly 30 days after the order.

1. Riva on the River Homeowners Ass'n v. The Management Association, Inc., No. 2:24-cv-02782-CSK (E.D. Cal. Aug. 28, 2026), ECF 81 ↩