Maryland condominium associations may not use condominium amenities to enforce condominium assessment payment
The Maryland Court of Appeals issued a decision on June 23, 2017, discussing the extent to which a condominium association may impose restrictions on a unit owner’s right to access common amenities of the condominium. In Elvation Towne Condominium Regime II, Inc. v. Rose, the court looked at a condominium association with a “suspension-of-privileges” rule, by which the association prohibited unit owners from parking overnight on the property or using the pool during periods when the owner was delinquent in paying condominium fees. The unit owners bringing this case were alleged to be in arrears in making require payments of assessments, so the association not only sued the owners for the amount owed in the District Court of Maryland but also barred them from overnight parking or use of the pool. The owners brought their own suit against the condominium association in Circuit Court, seeking a declaratory judgment striking down the prohibition against the use of common amenities.
The Court of Appeals held that a Maryland condominium association may restrict access to common areas and amenities as a means to enforce payment of condominium fees, but only if this enforcement mechanism is expressly provided for in the condominium’s declaration. This was not the case here, because the action was taken based only on a rule enacted by the condominium’s board. Therefore, the court would not allow this enforcement mechanism against these particular owners.
In making this decision, the court wrestled with whether a “suspension-of-privileges” rule constitutes a taking of property, requiring more than a rule-making under the Maryland Condominium Act. The court held that, when a rule disparately affects a portion of unit owners by revoking a property interest they acquired when they purchased their units, without affecting the rights of other unit owners, there is a taking of property. The court went on to find that restricting a condominium owner’s access to the community-held property is a significant infringement of the owner’s property rights, which may only be authorized by a provision in the condominium’s declaration, and not be a rulemaking.
Maryland employers may need to provide accommodation to employees with disabilities by offering alternative job postings
The Maryland Fair Employment Practices Act (“MFEPA”) makes it unlawful for an employer to refuse to make reasonable accommodation for an employee that has a disability known to the employer. Regulations implementing the Act provide that an employer may not deny an employment opportunity to an employee with a disability, if the basis for the denial is a need to accommodate the individual’s physical or mental limitations, and the accommodation would be reasonable.
Earlier this year, in Townes v. Md. Dept. of Juvenile Services, the U.S. District Court in Maryland had an opportunity to apply this law to a government employee who was diagnosed with bipolar disorder. The employee’s treating psychiatrist recommended that she work from a different office location within the state-wide department, in order to reduce travel. The employee contended that there were open positions within the department that would require her to engage in less travel, but the department declined to consider her for any of those jobs when she returned from disability leave. She further alleged that her employer failed to perform an individual assessment to determine whether she was qualified for another job, beyond her current position. The employer filed a motion for summary judgment, arguing that it was entitled to a favorable judgment as a matter of law on the facts as alleged by the employee, without need to proceed to trial on those facts.
The employee argued that the MFEPA is similar to the Americans with Disabilities Act (“ADA”) in requiring an interactive process by which an employer conducts an individualized assessment for an employee with a disability. She pointed to an earlier decision by the Maryland Court of Appeals, in which that court broadly interpreted the phrase “job in question.” The court also looked to a Maryland state regulation that requires an employer to consider an employee’s request for another job position if she becomes disabled.
The question in the summary judgment motion came down to whether a Maryland employer is required by the MFEPA to assess whether an employee with a disability can perform the essential functions of any job opening within the organization, or only those that are located in the employee’s existing work location. While the employer did not dispute that it was required to perform a review to determine whether a reasonable accommodation was available to allow the disabled employee to perform essential job duties, it questioned whether it had to assess whether the employee can perform job functions at any job posting within a multi-site organization. In ruling on this pre-trial motion, the court found that the MFEPA statute does not preclude a jury from finding that there is such an obligation, and therefore the court allowed the case to proceed toward trial.
This ongoing case suggests that federal courts in Maryland may be inclined to interpret the MFEPA in a similar manner as the Americans With Disabilities Act (“ADA”) and the Rehabilitation Act. If so, then upon learning of an employee’s request for a transfer to another job location due to a claim of disability, an employer should engage in good faith interactions with the employee (and an individualized assessment), and try to find an appropriate job posting for the employee elsewhere within the organization. As noted, this case has not yet reached trial, and the plaintiff still must prove her case to a jury in order to prevail on her theory.
Prevailing parties in Maryland breach of contract lawsuits may be awarded compensation for time spent supporting litigation efforts, if the contract provides for reimbursement of business losses.
As a general rule in American jurisprudence, each party to a lawsuit pays its own attorneys’ fees and costs of litigation, regardless of which party prevails. A well-established exception to this rule provides that parties to a contract may agree that the prevailing party in any lawsuit arising out of the contract is to be awarded its attorneys’ fees and court costs as part of the judgment, to the extent the court finds such fees and costs to have been reasonable. In the recent case of Under Armour, Inc. v. Ziger/Snead, LLP, however, Maryland’s intermediate appellate court interpreted a contract between two parties to also permit reimbursement of business costs incurred due to litigation, beyond attorneys’ fees and typical court costs. This potentially expands the exposure of losing parties to paying substantial additional amounts to prevailing parties.
The contract, in this case, was between a property owner and an architecture firm. The contract provided that, if the architecture firm employed attorneys to gain enforcement of the agreement, the property owner would have to reimburse the architecture firm for its attorneys’ fees, costs, and expenses arising in litigation. That portion of the contract was typical of a fee-shifting provision, but the contract went on to also provide for reimbursement of “losses” incurred by the prevailing party.
At trial, the jury awarded $58,940 in compensatory damages to the architecture firm, and after post-trial motions, the court also awarded the architecture firm $182,735 in attorneys’ fees, $155 in court costs, $42,830 in litigation expenses, and another $62,190 to compensate it for business “losses.” These recovered losses were the value of time expended by one of the principals in the architecture firm, and several employees of the firm, on the investigation of the dispute and in performing litigation-related tasks at the request of its attorneys. To prove the amount of its losses, the firm presented evidence of the number of hours spent by its principal and other employees on litigation matters, multiplied by their hourly billing rates typically charged to firm clients – on a theory that the time expended on litigation matters was time they otherwise would have been billing to clients for their usual services. The court decided to compensate the firm for 79 ½ hours of employee time spent evaluating the case and preparing for and attending mediation, 154 ½ hours investigating the facts, dealing with discovery, and preparing for and attending depositions, and 69 ½ hours preparing for and attending the trial.
The award of business losses, in this case, will be a surprise to many attorneys, because there has been a well-established practice of limiting the scope of most fee-shifting contract provisions to reasonable attorneys’ and court costs. Opening the door to compensating a prevailing party for the value of its employees’ time preparing for and participating in litigation will cause careful contract drafters to include “losses” among the items that can be awarded to a prevailing party, should a dispute arise under the contract. The result could be substantially larger awards in contract actions. This outcome probably feels fair to the prevailing party and may be considered outrageous by the losing party, but the practical result will be that contract litigation may now become even more financially risky. In this case, the amount of compensatory damages was $58,940, but additional fees and costs that were awarded totaled about $230,000, of which $62,190 were to compensate for “losses.” Litigating parties will face pressure to negotiate a settlement prior to trial, in light of increased financial exposure in the event of a loss a trial. Placing increased financial pressure on all parties effective benefits the party having greater financial resources, since that party can better withstand a negative result at trial.