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CCOC Decision Summary

Kreitner v. Grosvenor Park IV Condominium Association #04-16 (March 24, 2016) (Ethier, Fine, Winegar)

Several unit owners file a joint complaint (represented by an attorney) to prevent their Condo from installing a carpet that was different from the carpet that the community had approved. They argued that under their Bylaws “whenever in the judgment of the Board of Directors the Common Elements shall require additions, alterations or improvements costing in excess of $10,000 during any 12-month period, the making of such additions, alterations or improvements shall be approved by a majority of the Unit Owners…” The new carpet cost over $25,000. Apparently, after the contract was made between the Condo and the carpet installer, the wrong design of carpet was delivered. The installer offered incentives if the Condo would agree to accept the different design and the Board of Directors agreed to do so without seeking membership approval.

Under Section 10B-9 of the County Code, when a complaint is filed, performance of the disputed action is automatically stayed until the CCOC can decide the case. The Condo therefore filed a motion under Section 10B-9A to lift the automatic stay and allow the installation of the carpet although it had a different design than the one originally contracted for. The CCOC voted to accept jurisdiction and referred the motion to a special hearing panel as required by Section 10B-9A.

In response to the issues raised by the parties in the “lift stay” proceeding, the panel made several rulings:
1. Section 1-403 of the Maryland Corporations and Associations Article does not prevent the operation of the automatic stay even though the carpet contractor is not, and cannot be, a party to the CCOC case. The complaint does not seek to set aside the contract but only to prevent one party from carrying out the contract.
2. Section 10B-9A requires the special hearing panel to consider whether enforcing the stay would cause undue harm to the Condo and to balance that against whether lifting the stay would cause undue harm to the complainants.
3. As part of this balancing of interests, the panel will consider each party’s likelihood of success on the merits of the underlying dispute.
4. Enforcing the stay in this case would harm the Condo (and its members) because if installation is delayed the contractor will start charging fees to store the carpet.
5. The claimants are unlikely to succeed on the merits of the dispute if it goes to a formal hearing. The Bylaw section that the complainants rely on requires membership approval for “additions, alterations or improvements.” However, the immediately preceding Bylaw states that the Board can make contracts for the “maintenance, repair or replacement of all the Common Elements” without
membership approval. The carpet in dispute is not a new item where no carpet previously existed, but is the replacement of a worn-out carpet. Under Maryland and CCOC case law, the carpet is a “repair” or “replacement” and not an “addition, alteration or improvement.” Therefore the owners’ claim is likely to be dismissed.

The panel lifted the automatic stay and allowed the Condo to have the new carpet installed.
 

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