Brown v. Compass Harbor Vill. Condo. Ass'n

• Decision Date: 09 April 2020
• Docket Number: Docket: BCD-19-298
• Citation: 229 A.3d 158
• Parties: Kathy S. BROWN et al. v. COMPASS HARBOR VILLAGE CONDOMINIUM ASSOCIATION et al.
• Court: Maine Supreme Court

229 A.3d 158

Kathy S. BROWN et al.

v.COMPASS HARBOR VILLAGE CONDOMINIUM ASSOCIATION et al.

Docket: BCD-19-298

Supreme Judicial Court of Maine.

Argued: March 5, 2020

Decided: April 9, 2020

Jason J. Theobald, Esq. (orally), and Richard P. Olson, Esq., Curtis Thaxter LLC, Portland, for appellants Compass Harbor Village Condominium Association and Compass Harbor Village, LLC

Brendan P. Rielly, Esq. (orally), Jensen Baird Gardner & Henry, Portland, for appellees Kathy S. Brown and Charles R. Maples

Panel: SAUFLEY, C.J., and MEAD, GORMAN, JABAR, HUMPHREY, HORTON, and CONNORS, JJ.

HORTON, J.

[¶1] Compass Harbor Village Condominium Association and Compass Harbor Village, LLC, appeal from a judgment entered in the Business and Consumer Docket (Duddy, J. ) in favor of Kathy S. Brown and Charles R. Maples (collectively, the Owners). The Association and the LLC (collectively, Compass Harbor) argue that the court (1) erred in finding in favor of Brown and Maples on their claim brought pursuant to the Maine Unfair Trade Practices Act (UTPA), 5 M.R.S. §§ 205-A to 214 (2018) ; (2) erred in calculating damages; and (3) abused its discretion in entering an order of specific performance.¹ We vacate the order of specific performance, the judgment in favor of Brown and Maples on the UTPA claim, and the award of attorney fees associated with the UTPA claim. We affirm the judgment in all other respects.

I. BACKGROUND

[¶2] After a jury-waived trial, the court made the following written findings, which are supported by competent record evidence. See Harris v. Woodlands Club , 2012 ME 117, ¶ 2, 55 A.3d 449.

[¶3] The Association is a condominium association in Bar Harbor. The LLC is the declarant of the Association. See 33 M.R.S. § 1601-103(9) (2018). In 2007, Brown purchased a condominium unit at the Association for $133,502, and Maples purchased a unit for $168,250.² The Association's declaration and bylaws are contracts between Compass Harbor and Brown and Maples. The declaration incorporates the provisions of the Maine Condominium Act, 33 M.R.S. §§ 1601-101 to 1604-118 (2018).³ Because the LLC holds more than fifty percent of the votes in the Association, 33 M.R.S. § 1603-103(a) imposes fiduciary obligations on the LLC.

[¶4] For many years, the Association has not properly maintained the common areas and exteriors of the condominium units. This has caused, among other problems, rotting wood on units, unpainted unit exteriors, algae in the pool, exceedingly dirty common areas, nonfunctioning laundry appliances, potholes in the roads, and the accumulation of trash in outdoor common areas. Brown's unit had a hole in the front deck that allowed mice to enter her unit. Although Brown made the Association aware of this problem, the Association did not fix the hole for years. Maples has had a broken kitchen window for over four years that the Association had not repaired by the date of trial.

[¶5] The Association has also consistently violated the governance provisions of the declaration and bylaws by, among other things, failing to hold meetings and votes on Association affairs, failing to maintain banking and other Association records, and refusing to provide the Owners with financial information about the Association. Compass Harbor has continually ignored the Owners' requests for financial records and their complaints about its deficiencies with respect to both governance and maintenance.

[¶6] The LLC has taken the position that its failure to hold formal votes on Association affairs was harmless to the Owners because it holds a majority of the voting power in the Association and therefore any dispute between it and any of the unit owners would ultimately be decided in its favor. The LLC has repeatedly caused the Association to act for the LLC's benefit and to the detriment of the other unit owners without following the procedures laid out in the declaration and bylaws. Additionally, although the LLC owns fifteen of the Association's twenty-four condominium units, the LLC has not consistently paid the Association the required monthly fees for its units.

[¶7] In 2013, the LLC hired, on the Association's behalf, a property manager to maintain the common areas and unit exteriors. The property manager purchased a condominium unit from the LLC, and, as part of this transaction, the LLC agreed to deduct $10,000 from the outstanding balance of the property manager's promissory note for each year that he serves as property manager. The LLC gives itself a $10,000-per-year credit toward the Association fees it owes to compensate itself for "loan forgiveness." The Association did not hold a vote to approve the hiring of the property manager or the LLC's practice of deducting $10,000 per year from its Association fees.

[¶8] Compass Harbor's actions with respect to maintenance and governance of the Association have caused the Owners' units to lose value. Four units at Compass Harbor have sold since 2013 at an average loss of about $53,000.

[¶9] Because the Association does not maintain the common areas, the Owners are unable to use or enjoy them. Compass Harbor's refusal to respond to the Owners' many complaints has caused the Owners to experience such frustration and mental anguish that they both want to sell their units. Maples listed his unit with a real estate broker, but the property had not sold despite having been listed for 297 days prior to trial. Brown would consider selling her unit, but other units at Compass Harbor have recently sold at such great losses that she fears the remaining balance on her mortgage exceeds her unit's market value.

[¶10] Based on these facts, the court found that (1) Compass Harbor breached the contracts between it and the Owners, (2) the LLC violated its fiduciary duties to the Owners, and (3) Compass Harbor violated section 207 of the UTPA. The court awarded $134,900 to Maples and $106,801 to Brown to compensate them for their meritorious claims. These amounts compensated the Owners for "loss of real property rights[,] ... frustration, mental anguish, devaluing of their [condominium] units, and loss of the enjoyment of their [condominium] units."

[¶11] The court also entered an order of specific performance requiring Compass Harbor to abide by its contractual and fiduciary duties in the future. The order of specific performance requires Compass Harbor to "promptly come into substantial compliance with all of the provisions of the Declaration, Bylaws, and corresponding provisions of the Maine Condominium Act and the Maine Nonprofit Corporation Act."

[¶12] Following the entry of a final judgment, Compass Harbor timely appealed. See M.R. App. P. 2B(c).

II. DISCUSSION

A. UTPA

[¶13] Title 5 M.R.S. § 213(1) provides,

Any person who purchases or leases goods, services or property, real or personal, primarily for personal, family or household purposes and thereby suffers any loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by section 207 or by any rule or regulation issued under section 207, subsection 2 may bring an action either in the Superior Court or the District Court for actual damages, restitution and for such other equitable relief, including an injunction, as the court determines to be necessary and proper.

The Attorney General has not promulgated any regulations that are relevant to the Owners' UTPA claim. Thus, the only acts for which there is a remedy pursuant to section 213 are "method[s], act[s] or practice[s] declared unlawful by section 207." 5 M.R.S. § 213(1). Section 207 states that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are declared unlawful." Id. § 207.

[¶14] The court identified two acts by Compass Harbor that violated section 207: first, the LLC's inconsistent payment of Association fees despite its ownership of fifteen of the Association's twenty-four condominium units, and second, the LLC's decision to hire the property manager without formal approval by the Association. Compass Harbor asserts that it was not engaged "in the conduct of any trade or commerce," id. , and therefore, that the court erred by ruling in favor of the Owners on their UTPA claim.

[¶15] As used in the UTPA, the words "trade" and "commerce" "include the advertising, offering for sale, sale or distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity or thing of value wherever situate, and ... include any trade or commerce directly or indirectly affecting the people of this State." Id. § 206(3). A transaction occurs in the conduct of trade or commerce only if it "takes place in a business context, as opposed to one done on a private, nonprofessional basis." Binette v. Dyer Library Ass'n , 688 A.2d 898, 907 (Me. 1996). Whether a transaction occurred in the conduct of trade or commerce is a question of law that we review de novo. See id.

[¶16] In construing the UTPA, we are to be "guided by the interpretations given by the Federal Trade Commission and the Federal Courts to Section 45(a)(1) of the Federal Trade Commission Act ( 15 United States Code 45(a)(1) ), as from time to time amended." 5 M.R.S. § 207(1) ; see State v. Weinschenk , 2005 ME 28, ¶ 15, 868 A.2d 200. Federal courts have long held that the Federal Trade Commission cannot act pursuant to 15 U.S.C.S. § 45(a)(1) (LEXIS through Pub. L. No. 116-128) absent proof that doing so is in "the interest of the public." Fed. Trade Comm'n v. Klesner , 280 U.S. 19, 27, 50 S.Ct. 1, 74 L.Ed. 138 (1929) (quotation marks omitted); see Removatron Int'l Corp. v. Fed. Trade Comm'n , 884 F.2d 1489, 1495 (1st Cir. 1989) ("A proceeding is not in the public interest if it is merely a private controversy."). Our case law interpreting the UTPA has reflected this limitation in suits brought by private individuals. See Binette , 688 A.2d at 907 (explaining that...