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Trustees of The Cambridge Point Condominium Trust v. Cambridge Point, LLC

Supreme Judicial Court of Massachusetts, Middlesex

January 19, 2018

TRUSTEES OF THE CAMBRIDGE POINT CONDOMINIUM TRUST
v.
CAMBRIDGE POINT, LLC, & others. [1]

          Heard: October 5, 2017.

         Civil action commenced in the Superior Court Department on April 3, 2014. A motion for partial summary judgment was heard by Rosalind H. Miller, J.; a motion for reconsideration was considered by her; and motions to dismiss were heard by Peter B. Krupp, J.

         The Supreme Judicial Court granted an application for direct appellate review.

          Edmund A. Allcock for the plaintiffs.

          John F. Gleavy for CDI Commercial Development, Inc., & another.

          David Aleksic, for Frank Fodera & another, was present but did not argue.

          David T. Keenan, for Anahid Mardiros, was present but did not argue.

          Henry A. Goodman & Ellen A. Shapiro, for Community Associations Institute, amicus curiae, submitted a brief.

          Cailin M. Burke, Julie B. Heinzelman, Diane R. Rubin, Thomas O. Moriarty, & Kimberly A. Bielan, for Real Estate Bar Association for Massachusetts, Inc., & another, amici curiae, submitted a brief.

          Present: Gants, C.J., Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.

          GANTS, C.J.

         In this action, a condominium trust's board of trustees has filed suit against the developers of the condominium for damages arising from various design and construction defects in the condominium's common areas and facilities. The condominium bylaws, however, provide that the trustees cannot bring any litigation involving the common areas and facilities against anyone other than a unit owner unless they first obtain the consent of at least eighty per cent of the unit owners. The issue on appeal is whether this bylaw provision is void, either because it violates the Condominium Act (act), G. L. c. 183A, or because it contravenes public policy. We conclude that it is void because it contravenes public policy. [2]

         Background.

         In 2007, Cambridge Point, LLC, as the declarant of a predominantly residential forty-two-unit condominium in Cambridge, filed in the Middlesex South District registry of deeds a master deed, a declaration of trust, and the bylaws of the Cambridge Point Condominium Trust (trust). The trust's board of trustees (trustees) is responsible for administering the affairs of the trust. Among the powers and duties committed to the trustees is the authority under § 1(o) of the bylaws to "conduct[] litigation as to any course of action involving the common areas and facilities." However, this authority is limited by a condition precedent that requires the trustees, before initiating any litigation against anyone who is not a unit owner, (1) to deliver a copy of the proposed complaint to all unit owners; (2) to specify a monetary limit of the amount to be paid as legal fees and costs in the proposed litigation; (3) to inform all unit owners that, if they consent to the initiation of the litigation, they will forthwith be separately assessed this amount of legal fees and costs as a special assessment; and (4) within sixty days after a copy of the proposed complaint has been delivered to the unit owners, to receive the written consent of not less than eighty per cent[3] of all unit owners to bring the litigation.[4]

         In 2012, the trust began receiving complaints from unit owners about pervasive water leaks, which were infiltrating and damaging the building envelope, eventually causing a mold infestation both on the exterior sheathing of the building envelope and within individual units. An investigation conducted by an engineering firm in 2013 identified myriad design and construction defects with the condominium. When the trust's demands that the developers repair the defective construction proved futile, the trust sought out a contractor to repair the building, who estimated the costs of repair as exceeding $2 million.

         On April 3, 2014, after having delivered to the unit owners the proposed complaint and a statement of the estimated legal fees and costs of the litigation, but without having received the written consent of at least eighty per cent of the unit owners, the trustees filed a verified complaint in the Superior Court against the developers of the condominium[5] alleging negligence, breach of the implied warranty of habitability, negligent misrepresentation, fraudulent misrepresentation and concealment, and breach of fiduciary duty. In their complaint, the trustees also sought a judgment declaring that ยง 1(o) of the bylaws is void. They alleged that, because the developers and their affiliates had "reserved for themselves, and continue to own, enough units ...


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