Gertrude Lamden (plaintiff) owned a condominium unit in the La Jolla Shores Clubdominium development complex (the development). The development’s Declaration of Restrictions (Declaration) gave the Board of Governors (the Board) (defendant) of the development’s homeowners association (defendant) broad powers over the management and maintenance of the development’s common areas. Over the course of several years, the development experienced termite problems. When the termite problems arose, the Board evaluated its options and obtained a bid for fumigation. The Board ultimately decided to spot treat for termites rather than fumigating. The Board based its decision on the cost of fumigating, the health and safety of the development’s residents, potential problems associated with relocating residents during fumigation, and the possibility that termite issues would persist even after fumigation. Lamden brought suit, claiming breach of the Declaration, breach of fiduciary duty, negligence, and violation of a California statute requiring proper maintenance of common areas. The trial court ruled in favor of the defendants based on the business judgment rule. The court of appeal reversed. The defendants appealed.