Randall Reiner, et ux. v. Clifford Ehrlich, et al. 2013 Md. App. LEXIS 61
A recently reported decision issued by the Maryland Court of Special Appeals offers some guidance and support for community associations on two issues that are frequently the subject of homeowner disputes. The case of Randall Reiner, et ux. v. Clifford Ehrlich, et al. involved a homeowners association’s denial of a request to install a new roof on a home using materials not authorized by the bylaws of the association. The Plaintiffs in the case filed suit against the homeowners association and sixteen individual community members. After holding a hearing, the underlying circuit court dismissed the complaint as to the individual homeowners, and entered summary judgment in favor of the homeowners association. On appeal, the Court of Special Appeals held that the granting of summary judgment in favor of the Association and the dismissal of the individual homeowners was proper.
In upholding the grant of summary judgment to the Appellees, the Court determined that the business judgment rule applied. As the Court stated, “the general rule under Maryland law is that decisions made by a homeowners association’s board of directors will not be disturbed unless there is a showing of fraud or bad faith.” In this particular case, the Bylaws of the Association made it clear that certain roofing materials were prohibited. Furthermore, the evidence presented indicated that the Board of Directors based its decision on the language of the bylaws and that bad faith and/or fraud was not implicated. This is a helpful ruling for community associations as a whole in Maryland because it reaffirms the notion that Board decisions with respect to architectural applications are enforceable provided that bylaw (or other governing document) authority forms the basis of any decision.
Another issue of note in this case is the dismissal of the matter with respect to the individual defendants. Frequently, community associations encounter lawsuits in which individual board members are named as part of the suit. Under the Maryland Code however, the named homeowners association would be the only proper party. In Reiner, the Court recognized the statutory provisions which immunize board members from actions challenging the acts of a homeowners association.