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Court of Appeals Affirms Judgment Against Condo Owners Who Challenged Creation of Additional Parking Spaces

On July 19, 2012, the District of Columbia Court of Appeals decided Harnett v. Washington Harbour Condominium Unit Owners’ Ass’n, Nos. 08-CV-1193 & 09-CV-599, slip op. (D.C. July 19, 2012) in which it considered claims arising from a decision by a condominium owners’ association (“Owners’ Association”) to re-designate certain common elements of a condominium as parking spaces and to auction those spaces to existing unit owners for the purpose of raising funds to finance building repairs. The claims were brought by two owners (an individual and his company) (together, “appellants”) against, inter alia, the Owners’ Association (“appellee”). The appellants’ alleged, inter alia, that the new parking interfered with the use of existing parking and that the Owners’ Association retaliated against them for challenging the re-designation by delaying building repairs that would benefit their units. The Court upheld the trial court’s judgment rejecting each of the appellants’ five claims as follows:

Count I: Violation of Condominium Act and Condominium Instruments. The Court affirmed the trial court’s Rule 12(b)(6) dismissal of the appellants’ claim alleging that “the Owners’ Association exceeded its authority under the Condominium Act and the Condominium Instruments in creating a Parking Committee and later auctioning off the new parking spaces.” Id. at 9. The Court explained that the Owners’ Association did not exceed its authority because (1) it was authorized pursuant to the Condominium Act to grant a lease or license through or over the common elements and to impose on and receive from individual unit owners any payment for the rental of the common elements, and (2) the condominium’s bylaws did not expressly take away that statutory authority. Id. at 14.

Count II: Violation of Zoning Laws. The Court affirmed the trial court’s Rule 12(b)(6) dismissal of the appellants’ claim alleging, inter alia, that the new parking spaces violated zoning laws, though it did so on grounds not considered by the trial court. The Court explained that, approximately one year after the trial court dismissed this count, one of the appellants initiated a proceeding before the District of Columbia Board of Zoning Adjustments (“BZA”) challenging the Zoning Administrator’s decision to issue a building permit to create the new parking spaces on the grounds that the decision violated zoning laws. The proceeding resulted in the BZA affirming the Zoning Administrator’s decision. The Court ruled that, pursuant to the doctrines of res judicata and collateral estoppel, the BZA’s ruling precluded the appellants’ claim that the new parking spaces violated zoning laws. Id. at 14-17.

Count III: Breach of Fiduciary Duty. The Court affirmed the trial court’s grant of the appellee’s Rule 41(b) motion to dismiss the appellants’ breach of fiduciary duty claim finding nothing clearly erroneous about the trial court’s factual determination that the appellants failed to show that the actions of the Owners’ Association were unreasonable. Id. at 21-24.

Count IV: Intentional Interference with Property Rights. With respect to the appellants’ claim for intentional interference with property rights, the Court assumed without deciding that the District of Columbia recognizes such a tort. It then proceeded to uphold the trial court’s determination that the appellants failed to show a prima facie case for such a tort (assuming one exists) because they did not establish that the actions of the Owners’ Association were unreasonable or that the re-designation of common elements into additional parking substantially interfered with the private use and enjoyment of previously existing parking. Id. at 29-31.

Count V: Failure to Make Repairs. With respect to the appellants’ claim for “failure to make repairs,” the Court stated that the appellants failed to provide “legal authority for the proposition that a claim can be brought against a condominium association for retaliatory failure to make repairs.” Id. at 31. Additionally, it affirmed the trial court’s finding that appellants had failed to prove that the Owners’ Association acted improperly in choosing when to make repairs. Id. at 31-32.

The Court also affirmed several procedural and evidentiary decisions of the trial court. Specifically, it affirmed the trial court’s decision to deny the appellants’ request to file a third amended complaint. The Court explained that the trial court did not abuse its discretion in denying that request because, inter alia, at the time of the request, discovery had closed, the case had been in litigation for over three years, and the appellants had twice previously been granted leave to amend the complaint. Id. at 18-21. The Court also affirmed several rulings of the trial court regarding discovery and the admission into evidence of certain documents. Id. at 25-28.

To view the Court of Appeals’ opinion, click here.