This case involved claims brought by two condominium owners (Owners) against their condominium association (Association) for damages from failure to maintain common areas and injunctive relief based on claims that Association: (i) failed to properly maintain the common areas and exteriors of the condominiums for several years; and (ii) consistently violated the governance provisions of the its declaration and bylaws by, among other things, failing to hold meetings and votes on Association affairs, failing to maintain banking and other Association records, and refusing to provide Owners with financial information about the Association.
Owners suit against Association made claims for breach of the governing documents, breach of fiduciary duty, and violations of the Maine Unfair Trade Practices Act (UTPA). In their action, Owners alleged that Associations failure to properly maintain and govern caused their units to lose value, and further deprived Owners of the use and enjoyment of their units. As a result, Owners sought damages for the diminution in value of their units and for their frustration and mental anguish which drove them to the point of wanting to sell their units.
The trial court found that Association breached contracts with Owners (the governing documents), violated its fiduciary duty owed to Owners, and violated the UTPA, and awarded damages of $134,900 to one Owner and $106,801 to the other Owner to compensate them for their meritorious claims. The trial court also granted Owners injunctive relief in the form of specific performance that compelled Association to abide by its contractual and fiduciary duties in the future. The order of specific performance required Association to promptly come into substantial compliance with all of the provisions of the Declaration, Bylaws, and corresponding provisions of the Maine Condominium Act and the Maine Nonprofit Corporation Act. Association appealed the trial courts judgment.
The appellate court ruled that the trial courts judgment in favor of Owners on the UTPA claim was reversible error because the UTPA did not apply and did not provide a remedy for the harms suffered by Owners as a result of Associations actions. The appellate court also ruled that Owners were entitled to compensatory damages for their claims for breach of contract and breach of fiduciary duty for the losses they suffered as a result of Associations breaches.
In evaluating the damages awarded by the trial court, the appellate court found that there was sufficient evidence presented at trial that: (i) Owners units would currently be worth more than what Owners paid for them, but because of Associations breaches of contract and fiduciary duty, they were actually worth substantially less and, as a result, Owners were entitled to damages to compensate them for the diminution in value of their respective units; and (ii) Owners were entitled to damages for loss of enjoyment of their units and mental anguish. Accordingly, the trial courts judgment for the damages that were awarded to Owners was affirmed.
Upon review of the portion of the trial courts judgment that ordered specific performance, the appellate court ruled that the trial courts order would necessitate continuous supervision and judicial review by the court to determine whether Association was adequately maintaining the common areas and the exteriors of the units and whether it was properly governing the Association. Due to these burdens on the court, the appellate court ruled that, under the facts of the case, the trial court abused its discretion by making an order that required the court to oversee Associations performance continuously and in minute detail over an indefinite period. Accordingly, the appellate court reversed the trial courts judgment granting specific performance. In footnoted comments, the appellate court indicated that appointment of a receiver or similar remedy might be appropriate in the future if Association continued to violate its contractual and fiduciary duties.
Maine Supreme Judicial Court decision (April 9, 2020).
See case decision: Brown v Compass Harbor Village Condo Assn