Maryland Court Guidance on Access to Association Books and Records

by Tom Schild

Several recent Maryland appeals court decisions provide new guidance to  condominium and homeowner associations on owner inspection of association books and records.

Legal Advice and Billing Records

The Maryland Court of Special Appeals supported a Baltimore condo association’s refusal to provide a unit owner with the written legal advice of condominium attorney.  The court concluded, in 100 Harborview Drive Condominium v. Clark, that the common law and statutory attorney-client privilege — which recognizes the confidentiality of an attorney’s legal advice — pre-empts an owner’s right of inspection and copying the condominium “books and records” allowed by the Maryland Condominium Act, Section 11-116.  Based on the text and legislative history of the Condo Act, the court determined that all written legal advice is protected from disclosure, even if the owner requesting such records is the subject of the legal advice.

However, the July 2015 court decision also ruled that an attorney’s detailed billing records submitted in support of an invoice for legal services must be provided to owners, except to the extent such records include confidential information protected by the attorney-client privilege or work product doctrine.  For instance, billing records which reveal the reason for seeking legal advice, litigation strategy or the specific nature of services provided are protected from disclosure.

Financial Records and Delinquency Reports

Separately, in the May 2015 “unreported” case of Brown v. Commission on Common Ownership Communities,  the Maryland Court of Special Appeals upheld the decision of the Montgomery County Commission on Common Ownership Communities (CCOC) that a condominium had complied with the books and records provisions of the Condominium Act by providing financial records as kept in the ordinary course of business and it did not have to create new documents which re-format its existing financial records.  (An “unreported” appellate decision may not be relied on as precedent in other similar cases).

The CCOC decision upheld by the appeals court also ruled that the books and records provision of the Condo Act requires that, on request,  condominium unit owners must be provided with assessment delinquency reports without redaction of the names of delinquent owners.  That portion of the CCOC decision was not contested in the court appeal.

Confidentiality Agreements

Completing the trilogy of  recent rulings regarding access to books and records, the Court of Special Appeals ruled in August 2015 that a person entitled to inspect and copy corporate records may be required to sign a confidentiality agreement which prohibits disclosing the information to third parties.

Referring to a Maryland court case from 1898 regarding stockholder rights to inspect the books of a business corporation, the court interpreted the statutory right of inspection to allow use of a confidentiality agreement to protect against disclosure and misuse of confidential documents and information.  Although the financial records in Hogans v. Hogans Agency, Inc. involved a business corporation, the ruling is also instructive with regard to providing access to the books and records of condominium and homeowner associations.

Based on this new judicial guidance regarding access to books and records, association boards and managers may be able to avoid inspection disputes by adopting, or amending, a written policy for owner inspection and copying of association records.

POSTED BY: Thomas Schild Law Group, LLC

More on Pit Bulls—Maryland Appeals Court Affirms Strict Liability

by Tom Schild

The Maryland Court of Appeals on August 21 affirmed its April 26 ruling that owners of pit bulls and property owners who have the right to control the presence of pit bulls are strictly liable for injuries caused by such dogs,  However, the court did modify its earlier decision so it does not apply to mixed breed pit bulls.

In its April 26 decision in Tracey v. Solesky, the court ruled that property owners who know, or have reason to know, of the presence of a pit bull on their property are liable for injuries caused by such dogs, whether or not they know a particular dog has a history of vicious propensities.  The court concluded that pit bulls are inherently dangerous animals.

According to the appeals court August 21 decision, the strict liability standard for injuries caused by pit bulls “simply requires that those who possess them or permit them on their property take reasonable steps to assure that they do not run loose or otherwise are in a position to injure people”.

The appeals court decision has been widely criticized for its conclusion that pit bulls are inherently dangerous, for applying a different standard of liability to one  breed of dog, and for making landlords and others with the right to control the presence of pit bulls on their property strictly liable for injuries caused by such dogs.

In response to the appeals court decision, the Maryland General Assembly considered several bills regarding liability for injuries caused by dogs during its recent Special Session.  Although the House and Senate passed similar versions of legislation, the differences in the two versions were not resolved before the General Assembly adjourned until January 2013 without enacting any dog bite legislation.

With the appeals court standing by its April 26 ruling to impose strict liability on pit bull owners and property owners, legislation regarding dog bite liability is expected to be considered again during the regular 2013 legislative session.

Faced with greater potential liability for pit bull bites, some landlords reportedly are terminating leases of tenants who have pit bulls and some dog owners are surrendering their pit bulls to animal shelters.  And, some condominium, homeowner association and coop boards are considering a ban on pit bulls.

Pit Bull Legislation Stalls

by Tom Schild

After considering several bills regarding liability for injuries caused by dogs, the Maryland General Assembly has adjourned until January 2012 without enacting any dog bite legislation.

During the recent Special Session, the Senate and House passed different versions of legislation which would impose dog bite liability on landlords and others who have the right to control the presence of dogs on their property only where there is knowledge of a particular dog’s presence and vicious propensity.  This would have restored the negligence standard of liability modified by a recent appeals cout decision with respect to injuries caused by pit bulls and mixed breed pit bulls.

For dog owners, the proposed dog bite legislation would have extended the strict liability standard to injuries caused by all breeds of dogs, with a few exceptions for specific circumstances.

After passing casino legislation, the General Assembly adjourned on August 15 without taking final action on the dog bite bills.

Appeals Court Ruling–Strict Liability for Pit Bulls

The proposed dog bite legislation was in response to the April 26 ruling of the Maryland Court of Appeals–the highest state appellate court–that both the owner of a pit bull dog (or pit bull mixed breed) and a landlord or other person with the right to control the presence of such dogs would be strictly liable for all injuries caused by such dogs whether or not there was any knowledge that a particular dog had a history of being vicious. Concluding that pit bulls are inherently dangerous animals, the court decision in Tracey v. Solesky changed the long-established common law (i.e. court-made law) liability standard for pit bull owners and property owners.

The  appeals court stated that the new strict liability standard applies to any new claims arising after the date of its decision.  Faced with greater potential liability for pit bull bites, some landlords reportedly began terminating leases of tenants who had pit bulls and some pit bull owners surrendered their dogs to animal shelters.  Condominium, homeowner association and coop boards began consideration of a ban on pit bulls and pit bull mixed breeds.

On May 25, the Court of Appeals was asked to reconsider its decision.  This created  uncertainty whether the ruling would remain effective as of April 26 if it was not modified on reconsideration.  In response to a legislator’s inquiry as to the status of the court ruling, a Maryland Assistant Attorney General issued an opinion letter on July 10 advising that, in her opinion, the new liability standard announced by the Court of Appeals was not yet in effect because the court ruling was not a final decision, so long as the request for reconsideration was pending.  But, that letter also indicated it was uncertain if the court would agree with her opinion and urged private parties to consult their own legal counsel for advice.

The court decision has been widely criticized for its conclusion that pit bulls are inherently dangerous, for applying a different standard of liability to one breed of dog, and for making landlords and others with the right to control the presence of pit bulls on their property strictly liable for injuries caused by such dogs.

Legislation Proposed to Overturn Court Ruling

In response to criticism of the appeals court ruling by animal rights advocates, landlords, the Community Associations Institute, and insurance companies, the Maryland General Assembly acted quickly during its August special session to consider legislation to overturn the court ruling while the request for court reconsideration was still pending.

On behalf of the Community Associations Institute, I attended the House Judiciary Committee hearing to explain the special problems of condos, HOAs and coops in banning, identifying and removing pit bulls and mixed pit bull breeds.  Unlike landlords which can readily ban pit bulls and evict tenants who violate pet restrictions, it is far more difficult, time-consuming and costly for a community association to ban certain breeds of dogs and have prohibited dogs removed from the community.  The final House version of the legislation included an amendment to make clear that condominiums, homeowner associations, and housing cooperatives are not subject to the strict liability standard.

With the support of animal rights groups, the Senate and House passed bills to generally extend the strict liability standard to owners and keepers of all dogs, with a few exceptions for veterinarians, police and military personnel, and other specified circumstances.

With the support of organizations representing landlords, community associations, insurance companies and animal rights advocates, both the Senate and House-passed versions overturn the strict liability standard for property owners and restores the common law liability standard for property owners which was in effect prior to the court ruling in Tracey v. Solesky Under the negligence standard, a landlord, condominium, homeowners association, housing cooperative or other person with control over the presence of a dog can still be liable for injuries caused by a dog where there is knowledge of the dog on the property and knowledge of its vicious propensities.

No Dog Bite Legislation Enacted

Although similar (but different) versions of dog bite legislation was introduced, considered,  and passed by the Maryland Senate and House in less than a week during the special legislative session, the differences were not resolved and no new law was approved by the General Assembly.  The entire topic of dog bite liability is expected to be revisited again during the regular January 2013 legislative session….when the legislative dogfight will continue.

 

Pit Bull Liability…Revisited

by Tom Schild

The Maryland Court of Appeals has been asked to reconsider its April ruling that owners of pit bulls and landlords are strictly liable for injuries caused by this breed of dog.  As a result, there is uncertainty whether the Court’s decision is final and binding. 

In response to the court ruling, a joint House-Senate legislative task force was appointed to develop possible Maryland legislation to address issues raised by the court opinion.  Some have proposed extending the strict liability standard to all breeds of dogs to address uncertainty whether a particular dog is a pit bull or mixed breed pit bull.  Others have suggested eliminating the strict liability standard for landlords and community associations. 

Because the Court of Appeals could revise its decision, no legislative action is expected until the court ruling  becomes final.

Condo Resale Disclosures May Violate Maryland Consumer Protection Act

by Tom Schild

It has been a rough month for Maryland condos.  First, the Maryland Court of Appeals expanded the potential liability for the presence of pit bulls on condo common areas (See May 11 blog post–Beware of Pit Bull).    A few days later, the same court ruled that condos and their management companies may violate the Maryland Consumer Protection Act by issuing a “misleading” resale document in connection with the sale of a condo unit.

The Maryland Court of Appeals–the highest state appellate court–issued its initial opinion in MRA Property Management, Inc. v. Armstrong in October 2011 but withdrew that ruling in December 2011 in response to objections by the unit owners, condominium and management company who were the parties to the litigaiton.  The court issued its new and revised ruling on April 30, 2012.

Unit owners who received the condominium operating budget as part of the resale disclosure package claimed the approved budget was misleading because there was no indication that additional repairs would be required and a special assessment to fund the repairs would be imposed on unit owners  The condominium and management company contended that they had complied with the resale disclosure requirements of the Maryland Condominium Act by providing the operating budget and that the Maryland Consumer Protection Act does not apply to the issuance of condo resale disclosure information.

The appeals court concluded that the Consumer Protection Act does apply to the issuance of resale disclosure certificates and other information even though neither the condominium nor management company is the seller of the condo unit.  The court reasoned that the statutory duty under the Condo Act to provide materials  to prospective buyers injects the condominium and management company into the sales transaction as “central participants” because the sales contract would be unenforceable if they failed to provide the resale disclosure information.  According to the court, the required disclosures “may have been integral to the transactions”.

Therefore, the Consumer Protection Act establishes an independent basis of potential liability by the condo and its manager if the disclosures are “misleading or had the capacity, tendency, or effect of misleading or deceiving”.  The Maryland Condominium Act requires disclosures, while the Consumer Protection Act  mandates that those disclosures not be deceptive.

The appeals court did not rule on whether the operating budgets provided by the condominium and its management company were deceptive in violation of the Consumer Protection Act.  Instead, the court found that they were not necessarily deceptive and sent the matter back to the trial court to determine if they were deceptive or not.  The Court of Appeals left open the possibility that the mere disclosure of the operating budget might be deceptive if additional known information was not also disclosed to prevent the budgets from being misleading.

Additionally, the appellate court did not address whether the condominium has an obligation under the Condominium Act to disclose building conditions that may have been code violations but were never charged as such by a  government agency.  Although the court had addressed that issue in its earlier withdrawn decision, the court’s revised decision concluded that issue was not properly before the court.

 

Beware of Pit Bull—Maryland Landlords, Condos and HOAs Face New Liability

by Tom Schild

The Maryland Court of Appeals — the highest state court — has changed the long-standing legal standard for landlord liability to victims of attacks by pit bulls and cross-bred pit bulls which occur on leased property. 

In a landmark ruling in Tracey v. Solesky, the appeals court changed the “common law” of prior court decisions that a landlord is liable for the actions of a pit bull kept by a tenant only if the landlord had knowledge of “past vicious behavior” of that particular dog.

The new legal standard adopted by the 4-3 court decision on April 26 is that the dog owner and others who have “the right to control the pit bull’s presence” and knows, or has reason to know, that the dog is a pit bull or cross-bred pit bull mix will be liable for injuries caused by the dog.

Concluding that pit bulls or cross-bred pit bulls are “inherently dangerous”, the appeals court specifically ruled that the new strict liability standard applied to a “landlord who has the right and/or opportunity to prohibit such dogs on leased premises.”  This could expose landlords and their management companies to liability for attacks by such dogs merely by allowing these breeds to be kept on the leased property.

For other dog breeds, the “common law” is unchanged and it will still be necessary to show knowledge of the prior vicious behavior of a particular dog in order to establish liability for a dog attack.

In a vigorous dissenting opinion, 3 of 7 appeals court judges opposed the new strict liability standard, noting that it applies to any dog “with a trace of pit bull ancestry” without any guidance how that is to be determined.

Although the court ruling involved a rental property, it applies broadly to others who have the “right to control” the presence of pit bulls — which includes condominiums and homeowner associations.  To avoid liability for attacks by pit bulls and pit bull mixed breed dogs, landlords, condos and HOAs now may decide to prohibit such breeds.