## Facts

- A homeowners association managed a 328-unit condominium complex and sued the developers for alleged construction defects in common areas (e.g., roofs, walkways, decks) under theories including breach of contract, negligence, and misrepresentation.
- The association also alleged that developer-affiliated directors breached fiduciary duties by failing to assess or collect adequate fees, leaving insufficient funds for repairs.
- The developers answered and filed a cross-complaint for equitable indemnity against contractors/subcontractors and more than 700 current or former unit owners, including Scott Wilson.
- As to unit owners, the developers alleged owners’ conduct (e.g., misuse, alterations, negligent maintenance) caused or worsened damage and sought total or partial equitable indemnity for any sums the developers might owe the association.
- Wilson demurred, arguing the indemnity claim against individual owners was improper and unnecessary because the developers could obtain equivalent relief through defenses in the main action.
- The association conceded it would be responsible for any portion of damages attributable to past or present unit owners.
- The trial court sustained Wilson’s demurrer without leave to amend and entered judgment for Wilson (and similarly situated owners) on the cross-complaint.

## Issues

1. Whether developers sued by a homeowners association for common-area construction defects and related fiduciary breaches may cross-complain for equitable indemnity against individual unit owners based on alleged owner-caused damage, where the association concedes responsibility for such damage.

## Decision

- The Court of Appeal affirmed the judgment sustaining the demurrer without leave to amend.
- Under the facts presented, the developers could not maintain an equitable indemnity cross-complaint against individual unit owners.
- The developers’ interests in limiting liability to their comparative share could be protected through defenses in the main action, given the association’s concession.
- Allowing cross-complaints against hundreds of association members would create unnecessary internal conflict and litigation burden without materially advancing equitable allocation of loss.

## Legal Principles

- Equitable indemnity generally requires a shared or common liability to the plaintiff and serves to allocate loss among responsible parties.
- When a homeowners association sues in a representative capacity for common-area damage and accepts responsibility for the portion attributable to unit owners, developers may rely on comparative fault and related defenses against the association rather than suing individual owners for indemnity.
- Courts may consider public policy in the homeowners association context, including avoiding litigation that fractures the association’s representative function by pitting the association’s members against one another in the same dispute.
- An indemnity cross-complaint may be disallowed when it is duplicative of available defenses and adds unnecessary parties and complexity without improving the fairness of fault allocation.

## Conclusion

The court held that, on these facts, developers sued by a homeowners association for common-area defects could not pursue equitable indemnity against individual unit owners because the association’s concession and the developers’ defensive comparative-fault theories adequately protected equitable apportionment, and direct claims against members would impose unnecessary conflict and burden.


Lauriedale Assocs., Ltd. v. Wilson, 7 Cal. App. 4th 1439, 9 Cal. Rptr. 2d 774 (Ct. App. 1992)