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CCOC Decision Summary

#215-O, Haight v. Horizon Run Condominium Association, Montgomery Village Association, and Washington Suburban Sanitary Commission (January 12, 1995) (Panel: Stevens, Blumberg, Fox)

The condominium owner (CO) filed a complaint against the condominium association (CA), the master association (MVF) and the water service company (WSSC).  The staff of the Commission rejected the complaint against WSSC.  [Under Chapter 10B, the only parties to a complaint can be owners and residents of common ownership communities and the governing bodies of those communities.]

The CA objected to the complaint on the grounds that the CO had not followed the dispute resolution procedures offered by the CA, and the staff closed the complaint until such time as the CO did so.  The CO did so, but was unsuccessful, and the staff reopened the complaint.  After additional proceedings and a prehearing conference, the issues were narrowed down to these:

1. Whether the CA's decision to grant a right-of-way to WSSC was a violation of the Maryland Condominium Act; 2. whether the denial of the right to vote to unit owners who are in default on their assessments, but against whom no liens have been filed, is a violation of the Act; 3. whether the CA's decision not to take legal action against the developer for the costs to repair the water and sewer system was a violation of the CA's master deed; 4. whether a quorum count must be taken at the start of the annual meeting; whether the CA had the right to refuse the CO access to the ballots of the 1992 elections; and 6. whether the amendment of the bylaws changing the size of the board from 5 to 7 members violated the Condominium Act.

The evidence at the hearing showed that the CA developer, Kettler Brothers, had installed the water and sewer facilities and that by 1990 expensive and "exceedingly unpleasant" problems had arisen; and that the CA had begun negotiations with WSSC to have WSSC assume control of the water and sewer services.  The CA held several public meetings to discuss the issue, and finally notifying the members that the CA board would vote on the issue on July 23, 1990.  That meeting was held and the board voted to turn over the utility to WSSC.  No petition was filed to challenge that decision.  In late 1991, the Condominium Act, effective July 1, 1978, allowed for amendments of bylaws bthe CA board made a contract under which WSSC would build a new system, and the CA would pay for it through assessment of a special benefit charge; in early 1992 the CA granted an easement and right of way to WSSC for the water and sewer service facilities.  The new system became operational in 1993.  The CA's Master Deed stated that the CA was responsible to maintain the common elements and facilities through assessments on its members, and this specifically included the "on-site water and sewer systems."

The evidence further showed that the CA's bylaws that all owners could vote at annual meetings if they fully paid all assessments due from them and all costs of collecting those assessments; that each unit had one vote; that there must be a quorum of owners in person or by proxy of a majority of the unit owners (defined as 51%) at any annual or special meeting of the owners; that  in 1976 the developer paid the CA $20,000 for repair costs related to the water and sewer systems on the understanding that it would have no further liability for that system; that the CA has not taken any action against the developer since that time.  Minutes of annual meetings showed that a quorum was counted immediately after the meetings were called to order.  The CA had rejected the CO's request to review the 1992 ballots on the grounds of privacy protection, because the ballots identified the unit owner and how the owner voted.  The CA's records show that an amendment to change the size of the board from 5 to 7 members was adopted by a vote of "75%" of the members in 1979; and the bylaws contained a provision allowing amendments by 75% of the votes; and that of 149 members in good standing, 114, or 76% of those in good standing, voted for the change.  Section 11-104(e) of y "75 per cent or more of the vote";  Section 11-104(d) of the Act allowed associations to prohibit an owner from voting "if the council of unit owners has recorded a lien on his unit" which has not been paid off at the time of the meeting.  However, the CA has a policy, adopted in 1991, of destroying the ballots 30 days after the elections, therefore it did not keep the 1992 ballots.

The panel held as follows: 1. the CA had the right to grant WSSC the right of way, because this action is specifically allowed under Section 11-125 (f) of the Condominium Act, and the board's decision must be upheld under the 'business judgment" rule of Black v. Fox Hills North Community Association, 90 Md. App. 75 (1992).  There was considerable evidence to support the board's decision.

2. The exclusion of members from voting who were behind in their assessments but against whom the CA had not filed liens was a violation of the Condominium Act, which overrides the bylaws on this point.  3. The board's decision not to pursue legal remedies against the developer was a matter within its "business judgment" and must be upheld.  4. The evidence shows that the CA was counting quorum at the start of its annual meetings and therefore in compliance with its bylaws.  5. The issue of access to the 1992 ballots is moot because they don't exist, and the panel refused to make a ruling on whether the CO had the right of access to ballots at this time.  6.  As to the bylaw amendment, the panel found that the vote count must be reviewed to determine whether any voters were improperly disqualified pursuant to its ruling on issue 2.  The panel held that unless the CA could prove that it had properly disqualified all the owners who were not allowed to vote, then the reduction in the number of votes needed was improper.  The panel ordered the CA to review its records, and if it found that the number of eligible voters was improperly reduced, to hold a new meeting of the members to ratify the amendment or take steps to reduce the board to 5 members.

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