Court Opinion

ID: 9577634
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:36:41.752186+00
Date Added: 2024-06-11T13:20:58.477578
License: Public Domain

MOSK, J., Concurring and Dissenting.
I concur in the judgment insofar as it affirms the judgment of the trial court dismissing plaintiff’s causes of action for breach of contract and breach of fiduciary duty. I dissent, however, from the judgment insofar as it reverses the judgment of the trial court dismissing plaintiff’s negligence cause of action.
Once again the majority make condominium ownership—which, as they themselves impliedly recognize, is a preferred form of home ownership available to many Californians—much more difficult and risky than it reasonably need be. In Griffin Development Co. v. City of Oxnard (1985) 39 Cal.3d 256 [217 Cal.Rptr. 1,703 P.2d 339], they approved a local ordinance that made conversion of rental apartments to condominiums a practical impossibility in an entire city. Now, contrary to the common law principles applicable here, they impose on a voluntary nonprofit association of condominium owners the affirmative duty to protect the individual unit owner against the criminal acts of third parties committed outside common areas and within that person’s own unit, and thereby expose the association to unwarranted and potentially substantial civil liability. Worse still, contrary to statutory law, they impose a similar duty on, and expose to similar liability, the individual unit owners who serve as the association’s directors.
*520Plaintiff’s negligence cause of action presents two related questions: (1) Under the facts alleged in the complaint, may the Village Green Owners Association (the Association) be held liable to plaintiff for injury resulting from the criminal acts of a third party? (2) May the individual members of its board of directors (the directors) be held liable? As I shall explain, the answer to each question should be no.
Even though understandable sympathy is aroused for this plaintiff, the analysis employed by the majority does not withstand close scrutiny.
On the question of the Association’s potential liability, the analysis is unpersuasive because the claimed similarity between the relationship of condominium association to unit owner and that of landlord and tenant is not adequately probed. This is a crucial weakness since the potential liability of the Association to plaintiff is premised on the alleged similarity of these two relationships. Specifically, the majority’s reliance on O’Connor v. Village Green Owners Assn. (1983) 33 Cal.3d 790 [191 Cal.Rptr. 320, 662 P.2d 427], Kwaitowski v. Superior Trading Co. (1981) 123 Cal.App.3d 324 [176 Cal.Rptr. 494], and O’Hara v. Western Seven Trees Corp. (1977) 75 Cal.App.3d 798 [142 Cal.Rptr. 487], is ill founded.
O’Connor, on which the majority rely in holding condominium associations relevantly similar to landlords, has been subjected to strong criticism on its own terms. (Note, Condominium Age-Restrictive Covenants Under the Unruh Civil Rights Act: O’Connor v. Village Green Owners Association (1984) 18 U.S.F. L.Rev. 371; see Barnett, The Supreme Court of California, 1981-1982: Foreword: The Emerging Court (1983) 71 Cal.L.Rev. 1134, 1143-1146.) In any event it is plainly inapposite: whether a condominium association is similar to a landlord for the purposes of an antidiscrimination statute that covers “ ‘all business establishments of every kind whatsoever’ ” (O’Connor, supra, 33 Cal.3d at pp. 793-794) is irrelevant to the issue whether such an association is similar to a landlord for the purposes of the general common law of torts. Kwaitowski and O’Hara, which discuss the basis and scope of the landlord’s potential liability, constitute too slender a reed to support the majority’s extension of such potential liability to a condominium association.
On the question of the directors’ potential liability, a major weakness appears: Corporations Code section 7231, as I shall show, is misconstrued.
Contrary to the majority’s implied holding, the Association is not under a duty to protect unit owners against the criminal acts of third parties that result from its nonfeasance, or failure to act: such a duty arises generally *521from a “special relationship,” and the condominium association-unit owner is not such a relationship.
It is well settled that a private person has no duty to protect another against the criminal acts of third parties absent a special relationship between the person on whom the duty is sought to be imposed and either the victim or the criminal actor. (E.g., Davidson v. City of Westminster (1982) 32 Cal.3d 197, 203 [185 Cal.Rptr. 252, 649 P.2d 894]; Kline v. 1500 Massachusetts Avenue Apartment Corp. (1970) 141 App.D.C. 370 [439 F.2d 477, 481]; Reynolds v. Nichols (1976) 276 Ore. 597, 600 [556 P.2d 102, 104]; Cornpropst v. Sloan (Tenn. 1975) 528 S.W.2d 188, 191 [93 A.L.R.3d 979]; Rest.2d Torts (1965) § 315; Prosser & Keeton, The Law of Torts (5th ed. 1984) § 56 at p. 385 [hereafter Prosser & Keeton]; Schoshinski, American Law of Landlord and Tenant (1980) § 4:14 at p. 216 [hereafter Schoshinski]; Haines, Landlords or Tenants: Who Bears the Costs of Crime? (1981) 2 Cardozo L.Rev. 299, 306 [hereafter Haines]; Note, Landlord’s Duty to Protect Tenants from Criminal Acts of Third Parties: The View from 1500 Massachusetts Avenue (1971) 59 Geo. L.J. 1153, 1161 [hereafter Landlord’s Duty]; Harper & Kime, The Duty to Control the Conduct of Another (1934) 43 Yale L.J. 886, 887; Annot., (1972) 43 A.L.R.3d 331, 339.)
As a result, the traditional rule has been that the landlord is not subject to a duty “to protect the tenant from criminal acts of third parties absent a contract or a statute imposing the duty.” (Schoshinski, supra, § 4:14 at p. 216; accord, Kwaitowski, supra, 123 Cal.App.3d at p. 326; O’Hara, supra, 75 Cal.App.3d at p. 802; Totten v. More Oakland Residential Housing, Inc. (1976) 63 Cal.App.3d 538, 543 [134 Cal.Rptr. 29]; see, e.g., Pippin v. Chicago Housing Authority (1979) 78 Ill. 2d 204, 208 [399 N.Ed.2d 596, 598]; Scott v. Watson (1976) 278 Md. 160, 166 [359 A.2d 548, 552]; Goldberg v. Housing Auth. of Newark (1962) 38 N.J. 578, 583-588 [186 A.2d 291, 293-296, 10 A.L.R.3d 595].)
Since the landmark case of Kline v. 1500 Massachusetts Avenue Apartment Corp., however, the rule has been undermined (see, e.g., Prosser & Keeton, supra, § 63 at p. 442; Schoshinski, supra, § 4:15; Haines, supra, 2 Cardozo L.Rev. at pp. 314-322), and today several jurisdictions impose a limited duty on landlords to protect their tenants against the criminal acts of third parties. (See, e.g., Kwaitowski, supra, 123 Cal.App.3d at pp. 327-333; Kline, supra, 439 F.2d at pp. 480-485; Samson v. Saginaw Professional Building, Inc. (1975) 393 Mich. 393 [224 N.W.2d 843, 847-850]; Trentacost v. Brussel (1980) 82 N.J. 214, 220-223 [412 A.2d 436, 439-445]; see generally Schoshinski, supra, § 4:15, pp. 217-223 & 1985 Supp. at pp. 67-70, citing and discussing cases; see also Rest.2d Property (1976) § 17.3, *522com. l & Rptr.’s note 13 [landlord has a duty to use reasonable care to protect tenants from the criminal acts of third parties arising in or from parts of leased property, retained in landlord’s control, that tenant is entitled to use].)
Nevertheless, the emerging view that landlords may be under a limited duty to protect their tenants against the criminal acts of third parties—on which the majority here rely—does not appear to support excepting the Association from the traditional common law “no duty” rule: the five basic theories that support the landlord-tenant exception are largely inapplicable to the condominium association-unit owner relationship.
First, landlords have been subjected to a duty to protect on the theory that when, for consideration, a landlord undertakes to provide protection against the known hazard of criminal activity, he assumes a duty to protect. (See Sherman v. Concourse Realty Corporation (1975) 47 App.Div.2d 134, 139 [365 N.Y.S.2d 239, 243]; Pippin, supra, 78 Ill.2d at p. 209 [399 N.E.2d at p. 599].) Condominium associations, however, do not generally enter into such undertakings, and indeed the Association here is not alleged to have done so.
Second, landlords have been subjected to a duty to protect on the theory that the lease impliedly guarantees such protection: “the value of the lease to the modern apartment dweller is that it gives him ‘a well known package of goods and services—a package which includes not merely walls and ceilings, but also adequate heat, light and ventilation, serviceable plumbing facilities, secure windows and doors, proper sanitation, and proper maintenance.’” (Kline, supra, 439 F.2d at p. 481, italics in original; accord, Kwaitowski, supra, 123 Cal.App.3d at p. 333 [implied warranty of habitability]; Trentacost, supra, 82 N.J. at pp. 225-228 [412 A.2d at pp. 441-443] [same].) There is no lease, of course, between condominium association and unit owner. Nor apparently do the unit owner and the condominium association—between whom no consideration passes—impliedly agree on such a package of goods and services. No such agreement, moreover, is alleged here.
Third, landlords have been subjected to a duty to protect on the theory that the landlord-tenant relationship is similar to the special relationship of innkeeper and guest. (See Kwaitowski, supra, 123 Cal.App.3d at pp. 327-333; Kline, supra, 439 F.2d at pp. 482-483; see also O’Hara, supra, 75 Cal.App.3d at p. 802 [impliedly following Kline].) “In [special] relationships the plaintiff is typically in some respect particularly vulnerable and dependent upon the defendant who, correspondingly, holds considerable power over the plaintiff’s welfare. In addition, such relations have often *523involved some existing or potential economic advantage to the defendant.” (Prosser & Keeton, supra, § 56 at p. 374, fn. omitted.) Whatever the force of the analogy in the landlord-tenant context, it fails when applied to the condominium association-unit owner relationship. First, although the unit owner is dependent on the association for the general management of the complex, he is nevertheless a member of the association and can participate in its activities. Indeed, in the case at bar, as the allegations of the complaint show, plaintiff participated quite actively and successfully. Second, the condominium association-unit owner relationship involves no existing or potential economic advantage to the association. To be sure, no such advantage is alleged here.
Fourth, landlords have been subjected to a duty to protect on the theory that “traditional tort principles . . . [impose on] the landlord ... a duty to exercise reasonable care for the tenant’s safety in common areas under his control . . . .” (Haines, supra, 2 Cardoza L.Rev. at p. 333; accord, Scott, supra, 278 Md. at pp. 166-167 [359 A.2d at pp. 552-554].) Because the similarity of the landlord-tenant and condominium association-unit owner relationships is the issue here in question, to conclude that the condominium association should be subjected to such a duty under traditional tort principles governing the landlord-tenant relationship is, in effect, to beg the question. In any event, the existence of such a limited duty would be immaterial on the facts pleaded in the complaint: the criminal acts plaintiff alleges she suffered were committed not in common areas subject to the Association’s control, but within her own unit.
Finally, landlords have been subjected to a duty to protect on the theory that the criminal activity in question was foreseeable. (See, e.g., Kwaitowski, supra, 123 Cal.App.3d at pp. 328-333; Braitman v. Overlook Terrace Corp. (1975) 68 N.J. 368, 375-383 [346 A.2d 76, 79-84].) It is not at all clear, however, that the criminal activity alleged here falls within even the broad definition of foreseeability articulated in Kwaitowski, i.e., knowledge on the part of the defendant of prior criminal activity of the same general type in the same general area (id., at pp. 328-333). Rather, the criminal acts plaintiff alleges she suffered were rape and robbery; the prior criminal activity she alleges defendants had knowledge of included such offenses as automobile theft, purse snatching, and burglary.
In any event, foreseeability as the basis of the landlord’s duty is problematic. “[I]t is generally understood that foreseeability alone does not justify the imposition of a duty . . . .” (Haines, supra, 2 Cardozo L.Rev. at p. 339; accord, Comment, The Landlord’s Emerging Responsibility for Tenant Security (1971) 71 Colum.L.Rev. 275, 277; Goldberg, supra, 38 N.J. at p. 583 [186 A.2d at p. 293]; Trice v. Chicago Housing Authority *524(1973) 14 Ill.App.3d 97, 100 [302 N.E.2d 207, 209].) “[R]ather [foreseeability] defines and limits the scope of a pre-existent duty that is based on the relationship of the parties.” (Landlord’s Duty, supra, 59 Geo. L.J. at p. 1178, italics added.) Hence, to reason from the foreseeability of harm to the existence of a duty to prevent such harm again begs the question. It follows that if foreseeability cannot support the imposition of a duty on landlords, it cannot support the imposition of a duty on condominium associations.
Thus, insofar as the criminal acts of third parties in this case are alleged to result from the Association’s nonfeasance—in the majority’s words, the failure “to complete the investigation of lighting alternatives^] ... to present proposals regarding lighting alternatives to members of the Association, . . . [and] to respond to the requests for additional lighting”—they are not within the scope of any duty that the Association may have owed to plaintiff.
It is at least arguable that the Association may be under a duty to protect unit owners against the criminal acts of third parties that result from its misfeasance. (Cf. Haines, supra, 2 Cardozo L.Rev. at p. 311, fn. 55 [“Despite the general ‘no duty’ rule, a landlord at common law was nevertheless liable for third party criminal acts against his tenants if his direct act of negligence precipitated the injury”].) Nevertheless, the Association is not under such a duty on the facts pleaded in the complaint: the allegations fail effectively to state that the Association’s request that plaintiff remove the additional lighting she had installed—the only conduct alleged that rises above the level of nonfeasance—constituted misfeasance, or active misconduct.
“Misfeasance” evidently denotes conduct that is blameworthy in itself, apart from its alleged causal connection to the plaintiff’s injury. (See, e.g., Gidwani v. Wasserman (1977) 373 Mass. 162, 166-167 [365 N.E.2d 827, 830-831] [landlord liable for loss arising from burglary after he disconnected tenant’s burglar alarm during an unlawful entry to repossess premises for nonpayment of rent]; De Lorena v. Slud (N.Y. City Ct. 1949) 95 N.Y.S.2d 163, 164-165 [landlord liable for loss of property stolen by person who had obtained the key to the premises from landlord without tenant’s authorization].) The misconduct alleged here does not rise to such a level of blameworthiness—especially in view of plaintiff’s implied concession that the Association made the request on the ground that she had installed the additional lighting in violation of the declaration of covenants, conditions and restrictions (CC&R’s).
Again contrary to the majority’s implied holding, the directors are not under a duty to protect unit owners against the criminal acts of third parties *525that result from their nonfeasance or from such “misfeasance” as is alleged here.
Assuming for argument’s sake that the majority are correct in concluding that the potential liability of the directors is governed by the general common law of torts, the directors are not under a duty to protect: just as the relationship between the Association and the unit owner does not give rise to such a duty, neither does that between the directors as the Association’s agents and the unit owner.
But as for all directors, the potential liability of the directors here—which is created by the duty imposed on them and the standard of care to which they are held—is governed not by the common law but rather by statute. (See Corp. Code, § 300 & Assem. Select Com. Rep. on Revision of Corp. Code (1975) pp. 41-43 [hereafter Assem. Select Com. Rep.] [duty under General Corporation Law, which is the source of Nonprofit Corporation Law], § 7210 [same under Nonprofit Mutual Benefit Corporation Law], § 309 [standard of care under General Corporation Law], § 7231 [same under Nonprofit Mutual Benefit Corporation Law].)
The duty of the directors here, who direct a nonprofit mutual benefit corporation, is established in Corporations Code section 7231. Although the statute fails to describe the duty with specificity or to tell directors precisely what they must do (cf. Calfas, Boards of Directors: A New Standard of Care (1976) 9 Loyola L.A. L.Rev. 820, 821 [discussing the General Corporation Law, which is similar to the Nonprofit Corporation Law] [hereafter Caifas]), it does nevertheless set forth the substance of the directors’ obligation: to pursue the interests of the corporation before even their own (see Corp. Code, §§ 7231, 7233, 7235-7237).
Under the statute the directors apparently owe a duty to the corporation alone. (See Corp. Code, § 300 & Assem. Select Com. Rep., supra, at pp. 41-43 [General Corporation Law], § 7210 [Nonprofit Mutual Benefit Corporation Law].) Assuming, however, that a duty toward third parties derives from the duty toward the corporation, it must then be determined whether such a derivative duty is broad enough to embrace, on the facts alleged here, a duty to protect unit owners against the criminal acts of third parties. I do not believe that it is: the common law, as I have shown, imposes no such duty; and since the statute has as one of its purposes the limitation of directors’ potential liability (cf. Note, California’s New General Corporation Law: Directors’ Liability to Corporations (1976) 7 Pacific L.J. 613, 613 [discussing Corp. Code, § 309] [hereafter Directors’ Liability]), it should not be construed to impose such a duty.
*526I shall assume for argument’s sake, however, that the directors’ duty is in fact broad enough. But since in neither specific nor conclusory terms does plaintiff allege that the directors have failed to satisfy the standard of care to which the statute subjects them, they cannot be held personally liable.
Section 7231, subdivision (a), provides in relevant part that “[a] director shall perform the duties of a director ... in good faith, in a manner such director believes to be in the best interests of the corporation and with such care ... as an ordinarily prudent person in a like position would use under similar circumstances.” Subdivision (b) provides that the director is entitled to rely on information, opinions, and reports presented by certain specified persons. Finally, subdivision (c) provides in relevant part that “[a] person who performs the duties of a director in accordance with subdivisions (a) and (b) shall have no liability based upon any alleged failure to discharge the person’s obligations as a director . . . .” (Italics added.)
In other words, section 7231 declares that a director may not be held personally liable for acts or omissions as a director unless he breaches the duty imposed by the statute. As the Report of the Assembly Select Committee on the Revision of the Corporations Code states in discussing Corporations Code section 309, subdivision (c), which is the source and counterpart of section 7231, subdivision (c): “a person [is relieved] from any liability by reason of being or having been a director of a corporation, if that person has exercised his duties in the manner contemplated by this section.” (Assem. Select Com. Rep., supra, at p. 54.) Thus, “[i]t is clearly intended that the standard set forth is exclusive . . . .” (Directors’ Liability, supra, 7 Pacific L.J. at p. 615.)
Section 7231, in effect, imposes on directors a standard of care that is different from, and indeed somewhat lower than, that which the common law of torts imposes generally—specifically, a standard of care that is in significant aspect one of subjective reasonableness. (Cf. 1 Marsh, Cal. Corporation Law (2d ed. 1981) § 10.3 at pp. 572-576 [discussing Corp. Code, § 309].) Such a lower standard is consistent with what almost all courts have actually demanded of directors. (See Calfas, supra, 9 Loyola L.A. L.Rev. at pp. 829-830; Bishop, New Problems in Indemnifying and Insuring Directors: Protection Against Liability Under the Federal Securities Laws, 1972 Duke L.J. 1153, 1154; Bishop, Sitting Ducks and Decoy Ducks: New Trends in the Indemnification of Corporate Directors and Officers (1968) 77 Yale L.J. 1078, 1095-1101.)
Section 7231 imposes the same standard that section 309 of the General Corporation Law imposes on directors of commercial corporations. “This *527general standard has three elements: a director must perform duties as a director (1) in good faith, (2) in a manner the director believes is in the best interests of the corporation, and (3) with such care ... as an ordinarily prudent person in a like position would use under similar circumstances.” (1B Ballantine & Sterling, Cal. Corporation Laws (4th ed. 1985) § 406.01 [1] at p. 19-192 [hereafter Ballantine & Sterling].) This standard was based on the then proposed revision of section 35 of the Model Business Corporation Act (hereafter Model Act) (ABA, Rep. of Com. on Corporate Laws: Changes in the Model Business Corporation Act (1974) 29 Bus. Law. 947 [hereafter ABA Com. Rep.]), which was drafted by the Committee on Corporate Laws of the American Bar Association (hereafter the ABA Committee). (1B Ballantine & Sterling, supra, § 406.01 [1] at p. 19-192; Stern, The General Standard of Care Imposed on Directors Under the New California General Corporation Law (1976) 23 UCLA L.Rev. 1269, 1275 [hereafter Stern].)
That the standard of care imposed by section 7231 is in significant aspect one of subjective reasonableness appears from a consideration of the underlying intention of the statute. The purpose of Model Act section 35— the ultimate source of section 7231—was that “a director should not be liable for an honest mistake of business judgment.” (ABA Com. Rep., supra, 29 Bus. Law. at p. 951, italics added.) The purpose of Corporations Code section 309, which defines the statutory standard of care for directors of commercial corporations and is the immediate source of section 7231, is the same. (Assem. Select Com. Rep., supra, at p. 48.) Thus, it is clear that ‘ ‘ the drafters of the Nonprofit Corporation Law intended that the standard as imported into [the General Corporation Law] should have the same result.” (1B Ballantine & Sterling, supra, § 406.01[1] at pp. 19-192—19-193.)
That the standard of care imposed by section 7231 is one of subjective reasonableness appears also from an analysis of its three elements.
First, “good faith”—which is “[o]ne of the most basic elements of the general standard”—“is inherently largely subjective . . . .” (1B Ballantine & Sterling, supra, § 406.01(1) at p. 19-193.)
Second, “[t]he requirement that a director believe his or her action or inaction is in the best interests of the corporation is also subjective, since the requirement relates to the director’s actual belief rather than what the director ought to have believed or what a reasonable person might have believed under comparable circumstances.” (Id., at p. 19-194.) The subjective character of this requirement becomes all the more evident when we compare section 7231 to Model Act section 35 as it was approved by the *528ABA Committee. The latter provides in relevant part that a director shall perform his duties “in a manner he reasonably believes to be in the best interests of the corporation . . . .” (ABA, Rep. of Com. on Corporate Laws: Changes in the Model Business Corporation Act (1974) 30 Bus. Law. 501, 502, italics added.) Corporations Code section 309 adopted the requirement as articulated in section 35, but with the prominent omission of the word “reasonably.” Although the drafters do not explain the omission (Stern, supra, 23 UCLA L.Rev. at p. 1278), it seems fair to infer that they consciously intended the requirement to be subjective.
Finally, the requirement that the director use the degree of skill and attention that an ordinarily prudent person in a similar position would use under similar circumstances does not transform the standard of care imposed by section 7231 into one of objective reasonableness.
First, the phrase “ordinarily prudent person” was evidently intended not to introduce the generally applicable common law standard of the reasonably prudent man, but simply to preclude the imposition in certain cases of a duty to use expertise. Quoting from the ABA Committee Report (29 Bus. Law. at p. 954) with approval, the Assembly Select Committee Report states: “ ‘ [T]he reference to “ordinarily prudent person” emphasizes long traditions of the common law, in contrast to standards that might call for some undefined degree of expertise, like “ordinarily prudent businessman” ....’” (Assem. Select Com. Rep., supra, at p. 49, italics added.)
Second, the phrase “under similar circumstances” does not suggest that the statutory standard of care is reducible to objective reasonableness. The point is established by what the Assembly Select Committee Report chooses to say and by what it chooses not to say about the phrase.
The Assembly Select Committee Report quotes approvingly from the ABA Committee Report (29 Bus. Law. at p. 954) as follows: ‘“The phrase ... is intended both to recognize that the nature and extent of oversight will vary [depending on the circumstances] . . . and to limit the critical assessment of a director’s performance to the time of action or nonaction and thus prevent the harsher judgments which can invariably be made with the benefit of hindsight. . . .’” (Assem. Select Com. Rep., supra, at p. 49.)
The Assembly Select Committee Report, however, omits quoting the following portion of the ABA Committee Report: “The phrase also gives recognition to the fact that the special background and qualifications a particular director may possess, as well as his other responsibilities (or their absence) in the management of the business and affairs of the corporation, may place a measure of responsibility upon such director in passing on a *529particular problem which may differ from that placed upon another director . . . .” (ABA Com. Rep., supra, 29 Bus. Law. at p. 954.) “This omission was intentional. . . . The mere fact that a director is a lawyer, a person with accounting training or an investment banker, should not impose upon that director in the performance of his ordinary directorial functions a greater duty of care than that which is imposed upon directors generally.” (Stern, supra, 23 UCLA L.Rev. at p. 1277, fn. omitted.) By this intentional omission the drafters plainly imply that the standard of care imposed by section 7231 is different from, and indeed somewhat lower than, the generally applicable objective standard of the common law: under the common law, “if a person in fact has knowledge, skill, or even intelligence superior to that of the ordinary person, the law will demand of that person conduct consistent with it.” (Prosser & Keeton, supra, § 32 at p. 185.)
The somewhat lower standard of care imposed by section 7231 is intended to limit the director’s exposure to liability and thereby encourage qualified persons to assume and remain in directorship positions. (See Directors’ Liability, supra, 7 Pacific L.J. at p. 613.) Such encouragement appears particularly needed in the context of condominium associations, in which unit owners seem generally disinclined to serve as directors. (See Hanna, Cal. Condominium Handbook (1975) § 138 at p. 115.)
Plaintiff does not allege that the directors have failed to satisfy the statutory standard of care in fulfilling any duty they may have owed her. Indeed, with regard to the request that plaintiff remove the additional lighting she had installed, the allegations suggest quite the opposite—viz., that the directors were actually fulfilling their duty: they were obligated to enforce the provisions of the CC&R’s, and the additional lighting had evidently been installed in violation of such provisions.
The effect of section 7231 cannot be avoided by asserting, as the majority do, that whereas the directors’ duty to the corporation and the applicable standard of care is governed by the statute, their duty to third parties and the standard of care applicable to that duty is governed by the general common law. First, as I have explained, the statute establishes the potential liability of directors qua directors. Second, the language of section 7231, subdivision (c), which is quoted above, by its very terms precludes liability apart from the statute. Third, the provision was plainly intended to have such an effect: “[t]he purpose of [subdivision (c)] is to relieve a person from any liability by reason of being or having been a director of a corporation, if that person has exercised his duties in the manner contemplated by this section.” (Assem. Select Com. Rep., supra, at p. 54 [commenting on Corp. Code, § 309, subd. (c)].) Finally, the purpose of the provisions— to lower the standard of care somewhat in order to encourage qualified *530persons to assume and remain in directorship positions—would otherwise be frustrated. In practically every act or omission, directors necessarily affect both the corporation and third parties. To hold directors to a higher standard of care insofar as their acts or omissions affect third parties and to a lower standard insofar as they affect the corporation is, in effect, to hold them to the higher standard: they will not be free from liability unless they adhere to the higher standard.
But even if the statute were intended only to govern the potential liability of directors toward the corporation and hence did not directly govern their potential liability toward third parties, I would nevertheless conclude that under no circumstances should they be held to a standard of care higher than that established by the statute. The reason for this is plain: if directors were held to the somewhat higher common law standard, the purpose of section 7231, as I have shown, would manifestly be frustrated. To avoid such a result, I would hold that the common law standard was effectively modified in this respect.1
Because neither the Association nor the directors are potentially liable under applicable law, I would affirm the judgment in its entirety.
Lucas, J., concurred.

Against my conclusion that the statutory standard of care applies to the director’s duty to third parties as well as to his duty to the corporation, the majority make two arguments, neither of which has merit. The first is that the cases and treatises are to the contrary. They are not: none of the authorities cited by the majority considers statutory language or express legislative policy similar to ours—to the effect that a director is not subject to liability if he acts in good faith—and hence none is apposite.
The majority’s second argument runs in substance as follows: section 7237, subdivision (c), which authorizes indemnification in third party actions, implies that a director can be held liable even if he acts in good faith, and thereby necessarily suggests that the standard of care applicable to the director’s exercise of his duty to third parties is the general common law standard of reasonableness. But even assuming for argument’s sake that the majority’s premise is supported, the conclusion they draw is unsound. It is simply unreasonable to read the provision as impliedly contradicting the very words of section 7231, subdivision (c), and the underlying express legislative policy. Rather, the provision should be read as the Legislature’s authorization of indemnification for directors of California corporations against the costs of liability in jurisdictions—unlike California—that hold them to the general common law standard of care.