This case involved a dispute between husband and wife homeowners (“Owners”) and their homeowners association (“Association”) over Association’s denial of their request to construct a garage on their property. The proposal by Owners was to construct a three-car garage structure with a storage space above the garage and solar panels on the roof. Association’s governing documents required approval of the proposed garage by Association’s board. In reviewing Owner’s request for approval, Association’s board members expressed concerns about the size of the garage and felt the garage that was proposed by Owners was not in sync with the surrounding properties.
Aside from the need to obtain Association’s approval of the planned garage, applicable local ordinances required Owners to obtain a variance from the City of Baltimore because the garage, as proposed, extended into the minimum side yard setback area. Association opposed Owners’ application for a variance from the City, but the variance was ultimately granted by the Board of Municipal and Zoning Appeals after finding that the variance was appropriate given the property’s unique setting as a corner lot, and that the plans would not be injurious to neighboring property owners.
Notwithstanding the City’s granting of the variance to allow construction of the proposed garage, Association maintained its position that the garage, as proposed, was too large and out of sync with the neighboring properties. Thus, Association’s board continued to refuse to grant an approval of the garage as proposed by Owners. Owners then filed suit against Association seeking a declaratory judgment to the effect that Association improperly denied Owners proposal to construct a garage on their property. In defense of Owners’ claims, Association argued that its decision to deny the garage proposed by Owners was protected from judicial scrutiny by the business judgment rule. The trial court granted judgment in favor of Association and Owners appealed.
On appeal, Owners contended that Association’s reliance on the business judgment rule in this particular case was misplaced because Association’s Architectural Review Board failed to follow legally-mandated procedures relative to the approval process by holding closed meetings and making decisions with Owners being present. The appellate court ruled that the business judgment rule insulated Association’s decision from judicial scrutiny absent a showing of fraud, irregularity, or arbitrary action. In reviewing the facts that were presented to the trial court, the appellate court found that the decision by Association’s board to deny Owner’s request was one “based upon a reason that bears some relation to the other buildings or the general plan of development” and was not “arbitrary, whimsical or captious.” Accordingly, the decision to deny the proposed garage was proper and protected from judicial scrutiny by the business judgment rule.
UNREPORTED Maryland Appellate Court decision (July 10, 2018).
See case decision: Moore_v._Roland_Park_Roads