#374-O & 375-O, Moore v. Churchill View Condominium Inc. (August 25, 1998) (Panel: Savage, Huson) (Wilson dissenting)

The condominium owners (CO) filed a complaint asking the condominium association (CA) to reimburse them for damages suffered to their unit when a water valve in another unit broke and flooded their unit.  The CA refused the claim because its master insurance policy had a $2500 deductible.

The evidence showed that the CA used to pay similar claims in the past, and that in response to increasing costs the CA had adopted a new policy requiring its members to pay any damage costs not covered by the master insurance policy, including the deductibles.  The CA formally adopted the new policy after the losses suffered by the CO's in this dispute.

The hearing panel invalidated the new rule because it violated the CA's bylaws.  In particular the panel found that the CA had not given the unit owners a copy of the proposed policy before its adoption, so that the unit owners did not have an opportunity to review and respond to it; nor did the CA offer an open meeting to discuss the rule before adopting it.  Thus the panel ruled that the policy in effect was the former policy.

The panel then addressed issues relating to the former policy.   Under that policy the CA had reimbursed unit owners when the proceeds of an insurance claim were less than the amount of the damages, but the bylaws were ambiguous about what should happen when the amount of the loss was less than the amount of the deductible.  However, the actual policy had been for the CA to pay the deductible as a common expense.  The panel ruled that the CA was still bound by that policy in the absence of a properly-adopted change.