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CCOC Decision Summary

#76-09, Chidel v. Dellabrooke Homeowners Association #76-09 (October 6, 2010) (Panel: Rosen, Farrar, Dubin)

The homeowner challenged a special assessment of $880 per member to pay for the costs of litigation between the HOA and another member.  He complained also that the HOA failed to give the proper amount of notice of the annual election, and that the board concealed the fact that one director was resigning so that only one position on the board was up for election rather than two.  The homeowner was an unsuccessful candidate for election to the board and argued that if there had been two positions up for election he might have been elected to the second one.

The evidence showed that one of the HOA's members had sued the HOA in over an alleged architectural violation.  The HOA defended itself at its own cost after having unsuccessfully tried to have its insurance carrier defend it.  The homeowner disagreed with the HOA's decision to defend itself and to spend so much money on the matter.  The evidence also showed that the homeowner had attended the annual election in spite of the defect in the election announcement.  The homeowner presented no evidence to show that a board member had resigned and that two directorships should have been up for election at the 2009 annual election.

The hearing panel held that the board's decision to defend itself in court in the dispute over the alleged architectural violation was protected by the business judgment rule.  The panel also held that the board's   decision to adopt a special assessment was within its authority under the covenants and was also protected by the business judgment rule.

The panel further found that the HOA had violated its bylaws by giving only 9 days notice of the annual election instead of the 15 days notice required by the bylaws.  However, the homeowner waived the defect in the notice by attending the election.  Under Section 2-504 of the Corporations & Associations Article of the Maryland Code (which applies to non-stock corporations such as this HOA pursuant to Section 2-501), a member who attends a meeting in person or by proxy waives any defect in the notice of the meeting.  The panel dismissed the complaint.

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