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Commission on Common Ownership Communities

Minutes of the Monthly Meeting

October 2, 2013

(Approved)

The monthly meeting of the Commission on Common Ownership Communities was called to order at 7:08 pm by Chairperson Elizabeth Molloy.

Present: Commissioners Molloy, Dubin, Whelan, Zajic, Fishbein, Alkon, Stone, Ethier, Cromwell, Weinstein, Brandes, Kabakoff, Fonoroff, Winegar (14).

Absent: Commissioner Coyle (1).

Also attending: Associate County Attorney Walter Wilson; CCOC Staff Ralph Vines and Peter Drymalski; Phyllis Shaw; Edith Genies, Eric Friedman, Paul Bessel, Barbara Braswell, Chris Gillis, Scott Silverman.

            1. MINUTES.  The minutes of the September 11, 2013 meeting were approved as drafted.

            2. COMMUNITY FORUM:

            Chairperson Molloy introduced the topic of Council Bill 19-13. She noted that the CCOC recently became aware that the bill’s sponsor, Mr. Leventhal, was proposing significant changes to the original bill, and in particular he was proposing to revoke the CCOC’s authority to award attorney fees when so required by the association documents, and informed the Council that the CCOC had not had an opportunity to provide its input on that option.  The Council postponed its consideration of the matter (scheduled for October 1) to allow the CCOC to discuss at its October 2 meeting and provide the Council with its opinion.  The new option was referred to as “Option D.” Option A was to leave the law as it currently stands (withdraw the pending proposals); Option B was the original bill, which would award fees only to prevailing homeowners when the governing documents were silent on the topic; Option C would award fees to either the prevailing homeowner or the prevailing association in certain cases when the governing documents were silent.  The Commission had previously recommended and supported Option C as an amendment to the original bill. 

            Prior to putting the matter before the CCOC for discussion, Ms. Molloy invited comments from the visitors. Scott Silverman, a County resident and attorney who represents associations, criticized Option D.  He pointed out that binding contracts can include a provision for attorney fees when the contract is broken and that the courts have a duty to enforce those terms.  He pointed out that most associations do not budget in advance for legal fees.  If the association cannot be reimbursed for its fees from the losing party, it must take those fees out of its existing budgets or raise assessments.

            Mr. Gillis, a staff member from the office of Councilmember Leventhal, explained that Option D was intended to prevent abusive tactics by associations, namely, that they threaten homeowners with the possibility that the homeowner will be liable for the association’s legal fees if the homeowner pursues his complaint.

            Paul Bessle, a resident of Leisure World, spoke for himself. He favored Option D because he himself was a victim of intimidation when he filed a complaint with the CCOC against his association.  He said legal fees could be used as a weapon; and he responded to Mr. Silverman’s point by saying that homeowners don’t budget for legal fees either, and that they cannot afford to pay them.

            Mr. Friedman, the Director of the Office of Consumer Protection,  noted that attorney fees are rarely awarded by the CCOC, so he did not believe that Option D would greatly affect matters.  He noted that County Executive Leggett supported Option D, and that the original bill (Option B) was introduced at the request of Mr. Leventhal’s constituents, and those constituents now favor Option D. Mr Friedman stated that he believes that fee awards have the effect of making CCOC a mere copy of the Circuit Court, and he has received an increasing number of complaints that the CCOC hearing process is too difficult and complicated.  Finally, he noted that the law allows associations to use the CCOC without lawyers, so he believes that if associations want to hold their legal costs down, they should represent themselves.  He supported Option D.

            Chairman Molloy then asked Commissioner Alkon to report on the discussion and recommendation of the CCOC Legislative Committee.  He stated that the issue of associations seeking legal fees is not caused by the existing law.  In some cases, association documents when they give the association the right to collect legal fees in certain conditions but do not award equal rights to homeowners.  Option D will not affect this in any way.  If the CCOC cannot review legal fees for reasonableness, associations can simply pass those fees to the member who lost his case.

            Chairman Molloy noted that intimidation by a board was never acceptable regardless of whether using the threat of legal fees or other means and the CCOC has spent considerable time over the last year or two working on education material to aid in helping boards act in responsible and professional manner.  She mentioned that the education committee was currently working on a video to address professionalism in dealing with homeowners. 

It was also discussed that this change may lead to associations who prevail before the CCOC may then bring an action in district court to recover attorney fees causing a homeowner to appear in two separate proceedings rather than one. 

            It also did not appear to the group that removing this authority would result in associations turning to board members rather than attorneys represent them as board members have a fiduciary duty to the association as a corporation and would in most cses err on the conservative side.

            In addition to the concerns directly related to the proposed amendment, several commissioners raised concerns regarding legal advice provided to associations and homeowners in general. Commissioner Fishbein suggested that there might be a beneficial use to having an independent source of advice for homeowners to consult about the merits of their positions and interests in the issues raised in complaints before the CCOC..

            Ms. Kabakoff suggested that it would be good practice for the board of an association, before it decides to take legal action against a member, to first consult with its property manager to find out what its options are and whether it has a strong case.

            After discussion, Chairperson Molloy called for motions. Commissioner Zajic proposed that the CCOC support Option D. There was no second.

            Commissioner Stone proposed that the CCOC support Option A over Option D.  Commissioner Cromwell seconded the motion. The CCOC voted 13 to 1  (Commissioner Zajic opposed) to support Option A over Option D.  Ms. Molloy will send a memorandum to the County Council stating its position and its reasons.

            3. NEW CASES PRESENTED FOR REVIEW:

            The Commission considered Case No. 21-13, Pearl Doye v. Tobeytown HOA.  The staff recommended that the Commission reject jurisdiction because it is unlikely that the matter raised was an issue that could be resolved by a hearing panel.  Mr. Wilson advised the CCOC that even though it has jurisdiction of a dispute, it is not required to accept jurisdiction because the law says the CCOC “may” accept jurisdiction, not that it “must.”   In response to a question from the Commission as to whether the CCOC could require a board to attend training, Mr. Wilson stated that although the CCOC as a body cannot order a board of directors to take training, a hearing panel could do so after a hearing in a formal order if the panel concluded that such relief was justified. The Commission voted unanimously to reject jurisdiction, and directed staff to offer free tickets to CCOC’s upcoming seminars on the Essentials of Volunteer Association Leadership.  Staff was also directed to try to arrange a meeting between Tobytown HOA and the Housing Opportunities Commission to discuss the HOA’s current issues.

            4. REQUESTS TO THE COMMISSION:

            None.

            5. DECISIONS AND ORDERS ISSUED; OTHER LITIGATION:

            None.

            6. COUNTY ATTORNEY'S REPORT:

            Mr. Wilson reported that the County Executive had not decided whether the County should intervene in the cross-appeals of #51-11,Brown v. Americana Finnmark.

            7. STAFF REPORTS:

            Mr. Drymalski circulated the September, 2013 staff statistical report, and noted that he was on a panel for Abaris Realty’s 1stAnnual Board Member Education Day, where he would discuss how the CCOC can serve communities.  He also noted that he spoke to the Maryland Attorney General’s consumer advisory committee about common ownership complaints and the CCOC’s dispute resolution program.

            8. COMMITTEE REPORTS:

             Commissioner Alkon reported for the Legislation Committee as part of the Community Forum.

            Chairperson Molloy reported that the Education Committee did not meet that month but had a number of items in the works.  She noted that the Committee has started assembling topics for the next set of videos and were in the process of organizing the logistics for the CCOC’s upcoming seminars on the Essentials of Volunteer Association Leadership

            Commissioners Ethier and Cromwell reported for the Annual Forum Committee.  It will hold the next Annual Forum on April 19, 2014, from 10am to 1pm either at Kings Farm or at Montgomery Village Foundation.  The topic will be Reserve Studies and Capital Expense planning.  They are looking for speakers, so commissioners are invited to send recommendations to them.

            9. OLD BUSINESS:

            Commissioner Ethier also reported on the topic of mandatory reserve studies.  From her discussions with others she believes that it will be important to gather information and statistics on the topic.  For example, how many associations actually perform reserve studies on a regular basis and how often?  Chairperson Molloy suggested that a survey be sent with the annual registration renewal notices that will go out in June, 2014.  Staff will look into this.

            10. NEW BUSINESS:

            The Commission considered a request by Vernard McBeth requesting that his complaint be assigned to a different hearing panel, that the panel’s order consolidating that case with a related case be withdrawn and that he be given another hearing.  Chairman Molloy denied his requests on the grounds that they were late, that he gave insufficient notice to the other parties of his requests, that the request prejudices the other parties, and because there are some overlapping issues in his case and in the other case.  Chairperson Molloy will draft a letter to this effect.

            11. NEXT MEETING:  The next meeting will be Wednesday, November 6, and the following meeting will be Wednesday, December 4, 2013.

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