Healthy azalea roots should be white or off white. If the roots are white and matted around the sides of the container wall, the roots may be pot bound; make vertical cuts down the sides of the root ball to break the encircling roots. Brown roots can be a sign of a plant in trouble. Check for fungal diseases (e.g. Phytophthora Root Rot - brown or reddish brown roots) & for pests such as weevils and borer insects.

A lack of good drainage will cause root rot in azaleas. They need excellent drainage. Root rot is almost always fatal. It is much worse in warm weather. That is the reason that potted azaleas must have well draining material and good drain holes in the container and room to drain the water away from the container.

Here is a link that might be useful: How to grow azaleas.

Potted azaleas grown in peat often dry out after being shipped or purchased, the diligent watering being received at the production facility no longer being enjoyed. (You also have to really be on top of potted miniature roses brought home from stores, those seem to dry out and wilt if you look in the other direction for a few seconds). You may have had a situation develop where only the outside was being dampened with each watering, until finally the plant got dry enough to show top damage. Depending on what part of California you are in, perhaps another thing that may have happened is it eventually got burned by mineral salts in the tap water. Salt deposits on the leaf margins or the top of the potting medium would point to that.