206 A.3d 307
Me.2019Background
- Fall Line Condominium Association (128 units) has bylaws and a board that promulgated "Rules and Regulations" first in 1985 and amended as recently as 2017.
- Scotts, unit owners, were sued by the Association in small claims; they counterclaimed seeking a declaratory judgment that rules not approved by a majority in interest of unit owners are void.
- The Business and Consumer Docket granted summary judgment for the Scotts, declaring all Association rules void because none had been properly adopted under the bylaws (specifically § 5.17).
- The Association appealed, arguing § 5.17 is ambiguous and that the Board has independent authority under § 2.03(e) to adopt rules without owner approval.
- The Maine Supreme Judicial Court reviewed the bylaws de novo, focusing on construction of § 5.17 ("Rules of Conduct") versus § 2.03(e) (Board powers).
Issues
| Issue | Plaintiff's Argument (Scotts) | Defendant's Argument (Association) | Held |
|---|---|---|---|
| Whether § 5.17 requires owner approval for Board-promulgated rules | "May" modifies the entire phrase; Board can only promulgate/amend rules of conduct with majority-in-interest approval | "May" is permissive; Board has inherent authority under § 2.03(e) to adopt/amend rules without owner approval | § 5.17 unambiguously requires owner approval for rules of conduct concerning use of units, common areas, and facilities |
| Whether § 2.03(e)'s broad grant of powers overrides § 5.17 | § 5.17 limits Board authority despite § 2.03(e) | § 2.03(e) permits the Board to adopt rules covering operation and use without owner approval | § 2.03(e) is subject to its limiting clause; § 5.17 properly constrains the Board only as to rules of conduct (use) |
| Scope of the Business Court's declaratory judgment invalidating all rules | All rules not approved by owners are void | Overbroad; some rules fall under general operation and use, not "rules of conduct" | Judgment was too broad: only rules concerning use of units, common areas, and facilities are void; other rules not invalidated |
| Whether the distinction between types of rules is a question of law or fact | Reading § 5.17 as unambiguous makes the rule question legal | Ambiguity would create factual issues | Interpretation that § 5.17 applies only to rules of conduct is legal; determining which specific rules fit that category may be a question of fact for a factfinder |
Key Cases Cited
- Estate of Frost, 146 A.3d 118 (Me. 2016) (standard for de novo review of contract interpretation in summary judgment)
- Burdzel v. Sobus, 750 A.2d 573 (Me. 2000) (summary judgment appropriate only when no genuine issue of material fact exists)
- Farrington's Owners' Ass'n v. Conway Lake Resorts, Inc., 878 A.2d 504 (Me. 2005) (contract language ambiguous only if reasonably susceptible to different interpretations)
- Am. Prot. Ins. Co. v. Acadia Ins. Co., 814 A.2d 989 (Me. 2003) (contracts construed to give effect to the intention of the parties; all clauses considered together)
- City of Augusta v. Quirion, 436 A.2d 388 (Me. 1981) (plain meaning of words controls contract interpretation)