Milton Co. v. Council of Unit Owners of Bentley Place Condominium

• Decision Date: 01 September 1996
• Docket Number: No. 1696,1696
• Citation: 708 A.2d 1047,121 Md.App. 100
• Parties: The MILTON COMPANY, et al. v. COUNCIL OF UNIT OWNERS OF BENTLEY PLACE CONDOMINIUM. ,
• Court: Court of Special Appeals of Maryland

Page 100

121 Md.App. 100

708 A.2d 1047

The MILTON COMPANY, et al. v. COUNCIL OF UNIT OWNERS OF BENTLEY PLACE CONDOMINIUM.

No. 1696, Sept. Term, 1996.

Court of Special Appeals of Maryland.

April 29, 1998.

Kevin P. Kennedy, Rockville, and J. Mitchell Kearney (Brown, Diffenderffer, Wagonheim & Kearney, LLP, on the brief), Towson, for Appellants.

Barry L. Steelman (Nicholas D. Cowie, on the brief), Baltimore, for Appellee.

Roger D. Winston and Linowes and Blocher LLP, Suburban Maryland Building Industry Association, Silver Spring, for Amicus Curiae.

Before MURPHY, C.J., and WENNER, J., and JOHN F. KELLY, Sr., Judge (Specially Assigned).

MURPHY, Chief Judge.

In the Circuit Court for Montgomery County, the Council of Unit Owners of Bentley Place Condominium, appellee, filed a complaint against the Milton Company and Tuckerman Lane Development Company, Inc., appellants. Appellee asserted that appellants were responsible for certain defects that existed in the common elements and individual units of the Bentley Place Condominium, and owed damages as a result of their (1) negligence, (2) breach of implied warranty, (3) breach of contract, (4) breach of fiduciary duty, (5) breach of express warranties, (6) negligent misrepresentation, (7) violation of the Maryland Consumer Protection Act, and (8) civil conspiracy.

A jury (the Honorable Michael D. Mason, presiding) returned verdicts in favor of appellee and against both appellants on all but the civil conspiracy and fiduciary duty counts. ¹ The jury resolved the negligent misrepresentation count in favor of appellee and against appellant Milton. This appeal followed in which appellants present the following questions for our review:

I. Did the trial court erroneously instruct the jury that it may award damages for alleged common element defects for breach of implied warranty without a finding that the Council complied with the notice and limitations provisions of Title 11?

II. Did the trial court err in holding that the Council has standing to assert common law causes of action on behalf of two or more unit owners for alleged common element defects?

III. Did the trial court err in holding that individual unit owners have common law causes of action with respect to alleged common element defects?

IV. Is the jury verdict for damages to each and every unit at the Project proper in the absence of evidence supporting each unit owner claim?

V. Were the appellants prejudiced by the trial court's admission into evidence of unit owner surveys containing double and triple hearsay and upon which the Council's primary expert relied in rendering his opinion concerning defects in the Project?

VI. Was the trial court's award of attorneys' fees and litigation expenses supported by the record?

For the reasons that follow, we shall affirm the judgments of the circuit court. ²

FACTUAL BACKGROUND

Appellee is an unincorporated association of 240 families who purchased homes at the Bentley Place Condominium, a residential garden condominium project located in Montgomery County, Maryland. Tuckerman was the "developer" of the condominium and Milton was the general contractor responsible for hiring subcontractors to perform construction work.

Prospective purchasers of the condominiums were provided with a standardized "Sales Agreement" and contract addenda. Paragraph 1 of the Sales Agreement provides that the individual homeowner has contracted to purchase an identified dwelling unit "together with an undivided interest in the common elements." In Paragraph 6 of the Agreement, "[s]eller agrees to erect or construct the Unit ... substantially according to plans and specifications."

In September of 1989, appellee notified appellants that there were numerous defective conditions at the condominium, and requested that appellants make repairs. Thereafter, the parties discussed the resolution of appellee's complaints. These discussions resulted in the execution of a January 23, 1991 Agreement to Extend Statute of Limitations (the "Tolling Agreement") through April 1, 1991. While the parties attempted to negotiate a resolution, this agreement was later extended through October 31, 1991. Having failed to negotiate a satisfactory resolution, appellee filed its complaint on October 30, 1991.

I

Appellants argue that Judge Mason should not have allowed appellee to assert an implied warranty claim for alleged common element defects under Md.Code Ann. (1974, 1996 Repl.Vol.), § 10-203 of the Real Property Article ("RP"). According to appellants, appellee could only assert an implied warranty claim under RP § 11-131(c). If appellants are correct, Judge Mason should not have instructed the jury that it may award breach of implied warranty damages for alleged common element defects without first finding that appellee complied with the notice and limitations provisions of RP § 11-131(d).

Title 11 of the Maryland Real Property Article, known as the Maryland Condominium Act, applies to all condominiums established in Maryland after July 1, 1982. RP § 11-107(a) provides that each unit owner shall own an undivided fee simple interest in the common elements of the condominium. Recognizing the unique ownership interest created in condominium developments, the General Assembly created an implied warranty with respect to common elements. That warranty specifically includes the protections referenced in § 11-131(c), as well as those set forth in RP § 10-203. The warranty extends for a period of three years from the first transfer of title to a unit owner (or from the time that the unit has been completed). RP § 11-131(c)(3). RP § 11-131(c)(4) requires that notice of a defect be given within the warranty period, and that suit for enforcement of the warranty must be brought within one year of the warranty period. The implied warranty in § 11-131(c) runs from a "developer" (defined in § 11-101(g)), to the council of unit owners. RP § 11-131(c)(4) of the Act provides that

[a] suit for enforcement of the warranty on general common elements shall be brought only by the council of unit owners. A suit for enforcement of the warranty on limited common elements may be brought by the council of unit owners or any unit owner to whose use it is reserved.

Appellants argue that appellee has no viable claim for implied warranties other than that specifically provided for in Title 11 of the Real Property Article. Judge Mason rejected that argument, concluding instead that the implied warranty found in RP § 10-203 also applies to condominium owners. Unlike the implied warranty found in Title 11, this warranty deals with the sale of property in general, runs from a "vendor" to the owner, extends for a period of two years from the date of conveyance, and does not require that notice of defect be given within the warranty period.

Appellants argue that, due to the unique ownership interest in condominium property, Title 11 was not enacted to create additional implied warranties for common elements, but rather to create exclusive warranties for condominiums. According to appellant, because Title 11 reserves such claims exclusively to the council, condominium owners do not have individual implied warranties against "vendors" or anyone else for common element defects.

In Starfish Condominium Ass'n v. Yorkridge Service Corp., 295 Md. 693, 699-701, 458 A.2d 805 (1983), decided before the enactment of Title 11, the Court of Appeals held that Title 10 warranties do apply to newly constructed condominiums. In Antigua Condominium v. Melba Investors, 65 Md.App. 726, 501 A.2d 1359 (1986), rev'd 307 Md. 700, 517 A.2d 75 (1986), decided after the enactment of Title 11, this Court held that condominium warranties were governed by the shorter one year limitation period of RP § 11-131(d), and not the two year limitations prescribed in RP § 10-204(d). We reasoned as follows:

When § 11-131(a) made the express and implied warranties of §§ 10-202 and 10-203 applicable to condominium sales, it specifically provided a one year period of limitations for them in § 11-131(d). The provisions of § 10-204, containing a two year limitation period, were not made applicable to condominiums by § 11-131.

Id. at 745, 501 A.2d 1359. The Court of Appeals, however, concluded that our reasoning was based on a "premise [that] was faulty", namely: "that Title 10 warranties had not applied to condominiums [prior to the effective date of § 11-131] and that the enactment of RP § 11-131(a) first made § 10-202 and § 10-203 applicable to condominium developers." Antigua Condominium, 307 Md. at 725, 517 A.2d 75. Judge Mason came to the following conclusions regarding the interplay between Title 10 and Title 11:

Really what Title 11 sought to do was to make sure--in some of the cited cases, it looked to me like occasionally there were persons who sort of got out on the issue of liabilities because they really weren't vendors and so Title 11 really sought to hold those kinds of persons, the developers, and say you can't avoid liability by not falling within the definition of a vendor, we are going to make you liable as a matter of law so you vendors will henceforth also be liable, but vendors were and still are liable.

Judge Mason therefore allowed the jury to deliberate on two different standards for statutory implied warranties; one under Title 10, which does not require proof of notice of defects, and one under Title 11, which does require proof of notice of defects. He delivered the following instructions:

Now, before describing for you the implied warranties which are imposed by statute let me define two terms for you because different persons and specifically vendors and developers who are considered persons within the law by law give different implied warranties.

So let me first define those two terms for you, vendor and developer. A vendor means any person engaged in the business of erecting or otherwise creating an improvement on realty.

A...