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Condominium Association Held in Contempt for Willfully Failing to Make Repairs in Violation of Arbitration Award

In 100 Harborview Drive Condominium Council of Unit Owners v. Penthouse 4C, LLC, No. 0901, Sept. Term, 2014 (filed Aug. 20, 2015), the Court of Special Appeals affirmed the ruling of the Circuit Court for Baltimore City that a condominium association, by failing to make repairs to prevent water damage to a tenant’s unit as required by an arbitration award, was in contempt and must pay compensatory damages to the tenant.

Appellee Penthouse 4C, LLC (“PH4C”), a single member limited liability company formed for the purpose of owning unit Penthouse 4C (the “Apartment”) in the 100 Harborview Drive Condominium in Baltimore City, commenced the action on March 9, 2010 by filing a complaint against Appellant 100 Harborview Drive Condominium Council of Unit Owners (“Harborview”). The complaint alleged, among other things, that Harborview failed to maintain the building properly, which led to water leaks and exposure to mold in the Apartment. James W. Ancel, the sole member of PH4C and the primary resident of the Apartment, and his family were unable to live in the Apartment due to the damage.

An arbitration panel awarded PH4C monetary damages in the amount of $1,252,487, as well as specific performance. In particular, the arbitration panel stated that Harborview “must replace the building’s roof system and repair the exterior façade and other matters,” including removing and replacing balcony railings, and that such work must be completed by December 30, 2013.

On March 10, 2014, after the deadline for completion of repairs under the arbitration award had passed, PH4C filed a Petition for Constructive Civil Contempt. PH4C’s petition alleged that Harborview only completed about 25% of the exterior façade repairs by December 30, 2013, and that Harborview “has willfully ignored certain scopes of work required by the [arbitration award], such as the removal and replacement of all balcony railings.” In fact, during the hearing it was revealed that Harborview did not include removal and replacement of the railings in its remedial contracts, and Harborview’s President testified that Harborview is “not replacing any railing unless our engineer tells us we need to replace it. They will make the decision of which railings need to be treated in what manner.” In its defense, Harborview argued that it had no present ability to comply with the order to complete repairs by the December 30, 2013 deadline, so a finding of contempt was precluded by the doctrine of impossibility.

The circuit court ruled that Harborview’s failure to comply with the arbitration award was willful and constituted exceptional circumstances allowing for compensatory damages. The court therefore held Harborview in constructive civil contempt and ordered Harborview to pay PH4C $15,543 per month for 18 months, and $25,000 for each month thereafter, until Harborview purges the contempt by completing the work as directed by the arbitration award.

In an unreported opinion, the Court of Special Appeals agreed that “Harborview’s pattern of delay and persistent attempts to modify or avoid the requirements of the arbitration award amount to a willful failure to comply . . . .” As to Harborview’s impossibility defense, the court wrote: “Certainly, the specific deadline set by the earlier order cannot now be met; however, the purpose of the order was to require the remediation of the condominium building. Thus, there remains a current obligation . . . .” Accordingly, the Court of Special Appeals affirmed the circuit court’s decision holding Harborview in contempt and awarding compensatory damages to PH4C.

For questions, please contact Richard Topaz (410) 576-4004.

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Date

11.04.15

Type

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