Trustees of the Cambridge Point Condominium Trust v. Cambridge Point, LLC
478 Mass. 699, 89 N.E.3d 1149 (2018)
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Rule of Law:
A condominium bylaw requiring a supermajority of unit owner consent for the board of trustees to initiate litigation against developers is void if it effectively shields developers from liability for construction defects in common areas, as it contravenes the strong public policy favoring safe and habitable homes and access to legal redress.
Facts:
- In 2007, Cambridge Point, LLC, as the declarant, filed a master deed, a declaration of trust, and the bylaws for a forty-two-unit condominium.
- The condominium bylaws included a provision, Section 1(o), that required the board of trustees to obtain the written consent of at least eighty percent of all unit owners before initiating any litigation concerning common areas and facilities against anyone other than a unit owner.
- The bylaws further stipulated that the proposed complaint and a monetary limit for legal fees/costs had to be delivered to unit owners, and those costs would be assessed as a special assessment upon consent, all within 60 days.
- Beginning in 2012, unit owners experienced pervasive water leaks causing damage and mold infestation in the building envelope and individual units.
- An engineering firm identified numerous design and construction defects with the condominium in 2013, with repair costs estimated to exceed $2 million.
- The developers, Cambridge Point, LLC, and their affiliates, including Giuseppe Fodera, Frank Fodera, and Frank Fodera, Jr., retained an ownership interest in at least 20.36 percent of the condominium units.
- The trustees' demands that the developers repair the defective construction were unsuccessful.
Procedural Posture:
- The Trustees of the Cambridge Point Condominium Trust filed a verified complaint in the Superior Court Department against the developers of the condominium, Cambridge Point, LLC, & others, alleging negligence, breach of implied warranty of habitability, negligent misrepresentation, fraudulent misrepresentation and concealment, and breach of fiduciary duty, and also sought a declaratory judgment that § 1(o) of the bylaws was void.
- The trustees moved for partial summary judgment on their claim seeking a declaration that § 1(o) of the bylaws was void, which the first motion judge denied.
- On reconsideration, the first motion judge determined that § 1(o) required the consent of at least eighty percent of all unit owners, not just disinterested ones.
- The developers subsequently moved to dismiss the complaint on the grounds that the trustees had not obtained the minimum level of consent required under § 1(o).
- The second motion judge allowed the motions to dismiss, concluding the Condominium Act did not prohibit such a bylaw and it did not contravene public policy.
- The trustees appealed the dismissal, and the Supreme Judicial Court granted their application for direct appellate review.
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Issue:
Is a condominium bylaw requiring the consent of at least eighty percent of unit owners for the board of trustees to initiate litigation against developers void because it violates the Condominium Act or contravenes public policy?
Opinions:
Majority - Gants, C.J.
Yes, the bylaw provision is void because it contravenes public policy. The court first found that the Condominium Act does not per se prohibit every bylaw requiring unit owner consent for litigation, recognizing the Act's enabling nature and flexibility for developers and unit owners. However, the court concluded that this specific bylaw provision was void as against public policy due to its practical effect. The bylaw's requirement of 80% unit owner consent, combined with the developers' retention of over 20% ownership interest, effectively made it impossible for the trustees to sue the developers for construction defects. This situation was deemed an 'overreaching' imposition by the developer, especially since the trustees are the exclusive party authorized to bring such claims regarding common areas. The court emphasized Massachusetts' strong public policy favoring the safety and habitability of homes, as reflected in the implied warranty of habitability (Albrecht v. Clifford, Berish v. Bornstein) and building codes, which underpin unwaivable rights. The bylaw, in its practical application, functioned as a sweeping and unfair waiver of liability, lacking the transparency of an explicit waiver, thus undermining these fundamental public policy interests.
Analysis:
This decision significantly strengthens consumer protections for condominium unit owners in Massachusetts. By declaring such an 'overreaching' bylaw void, the court ensures that developers cannot insulate themselves from liability for construction defects by embedding supermajority consent requirements in condominium documents, especially when they retain substantial control over voting interests. The ruling reaffirms the non-waivable nature of the implied warranty of habitability and building code compliance, protecting access to legal redress for condominium trusts regarding common area defects. Future condominium developments and their governing documents will need to be carefully structured to avoid provisions that could be deemed to contravene public policy by impeding legal action for fundamental rights.
