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CCOC Decision Summary

# 114-O, Warshaw v. Derwood Station South Homeowners A ssociation (June 25, 1992) (Panel: Gardner, A bbott, Smith)

The homeowner (HO) challenged the refusal of the homeowners association (HO A ) to allow him to build a 6-foot fence and to add a portico to his house.  He alleged the decisions were unreasonable and in violation of the rules, and that the HO A 's treatment of his application was inconsistent with its treatment of other fences in the area.

The evidence at the hearing showed that the HO A Declaration stated that no fence can be more than 6 feet high and that all fences must be approved by the HO A ; the Declaration gave the board of directors the right to adopt more detailed rules.   The Declaration required HO A approval of all construction.   A t some point, the HO A adopted architectural rules that limited fences to 4 feet high, unless they surrounded a swimming pool in which case they could be 6 feet high.  The HO has no swimming pool.  There are several other fences in the community that are over 4 feet tall; however, some of those surround swimming pools, and others were townhouses whose fences were constructed before the adoption of the architectural rules.  There was one other 6-foot tall fence which the HO A had approved, because the owner stated in his application that he intended to construct a swimming pool; however, he never did build the pool, and as a result of this incident the HO A amended its rule to require the homeowners to submit detailed plans for swimming pools whenever they applied for permission to have a 6-foot fence.  The HO also applied for permission to construct a portico in front of his house, which the HO A denied because it was architecturally inconsistent with the rest of the community design and asked him for more information on the plans; however, he did not submit the necessary information. 

The hearing panel held that it must uphold the HO A decisions under the "business judgment" rule as set forth in Black v. Fox Hills North Community A ssociation Inc.,  90 Md. A pp. 75 (1992).  In that case the Court of Special A ppeals stated that a decision of a board of directors that was made within the scope of its legal authority must be upheld by the courts unless there was evidence of fraud, self-dealing, unconscionable conduct, dishonesty or incompetence; all that is required is that the board act reasonably and in good faith.  In this case the rules set a maximum fence height but allowed the HO A to create more detailed rules, which it did when it enacted house rules limiting fences to 4 feet.  The HO A 's enforcement of the 4-foot rule was consistent once it was adopted.  The portico application was incomplete and the board was within its authority to find that as submitted it was not consistent with the existing neighborhood design.  The panel upheld the board's rulings on the fence and portico.

A lthough finding that the HO's conduct in filing the complaint bordered on bad faith, since the HO was well aware of the fence rules and did not respond to the HO A 's request for a more detailed application on the portico, the panel refused to charge him attorney's fees.  A gain referring to Black v. Fox Hills, the panel noted that the award of attorney's fees against a losing party is, in most cases, an extraordinary remedy, intended to reach only intentional misconduct."  The panel found no evidence of such misconduct by either party.

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