MOHAMAD FAHD v. EILEEN J. GLASS, GORDON PETERS, IRENE B. GARROW, RAYMOND TROP, BARBARA L. WINSLOW and RENATE MARKGRAF as purported trustees of the OAK HILL CONDOMINIUM TRUST, and FIRST PROPERTY MANAGEMENT CO.

Introduction

This case involves the Oak Hollow Condominium in Mashpee. It is in this court because the condominium is on registered land and the issues presented concerned the validity of certain instruments subsequently registered on the certificate of title’s memorandum of encumbrances. See G.L. c. 185, §§60, 114 & 115. These instruments are competing lists of condominium trustees, and the controversy was over which was the correct one. Simply put, the question was this: who, in fact, were the condominium’s trustees at certain critical times? The question was not academic. The plaintiff, Mohamed Fahd, along with his wife Mary Waygan, is a unit owner. He and many others were unhappy with the defendants’ choice of property manager, their alleged lack of attention to necessary condominium repairs and, most of all, to the size of their proposed increase in condominium fees.

Mr. Fahd pressed those arguments at a December 4, 2004 Special Meeting of the condominium association, which defendants had called to vote on the increased fees. Mr. Fahd had researched the defendants’ status as trustees, and asserted at that meeting that many were not, in fact, trustees. Words became heated and the defendants abruptly left the room, declaring the meeting over. Mr. Fahd then used the opportunity to nominate a new set of trustees, which the meeting voted to accept. He filed the list of these “new” trustees at the Barnstable Registry on December 13, 2004, [Note 1] and the defendants filed their list of trustees at the Registry on December 14. [Note 2] This action followed.

The claims regarding the status of the various purported trustees were resolved on summary judgment. [Note 3] As set forth in the summary judgment decision and discussed more fully below, both Mr. Fahd’s list and the defendants’ list were incorrect and will be stricken from the certificate’s memorandum of encumbrances, with the court’s findings substituted. But the case did not end there. While the summary judgment motion was pending, the defendants assessed and liened plaintiff’s unit for the entire amount of their legal fees incurred to that date in connection with the lawsuit, reserving their right to assess all future such fees, alleging that Mr. Fahd’s protests, his actions in connection with those protests, and his bringing of the lawsuit constituted “misconduct” within the meaning of G.L. c. 183A, § 6(a)(ii).

Mr. Fahd refused to pay the assessment and the defendants brought suit against him and his wife in Falmouth District Court by the condominium board on behalf of the condominium association. [Note 4] Mr. Fahd sought to contest the validity of the assessment in that proceeding but, based on the board’s representation that “a unit owner may not challenge the legality of a common expense assessment by refusing to pay it but rather must pay and seek reimbursement in a separate action,” [Note 5] the District Court dismissed his counterclaims and entered judgment against him. [Note 6] Mr. Fahd paid that judgment in full, and now seeks reimbursement of the “misconduct” portion in this action. [Note 7] Construing his motion for reimbursement as one to amend his complaint, I allowed the amendment and denied defendants’ initial motion to have the reimbursement claim dismissed. [Note 8] The reimbursement claim was then tried before me, jury-waived.

Based on the evidence admitted in these proceedings, my assessment of the weight, credibility and reliability of that evidence, and the reasonable inferences I draw therefrom, I find and rule that Mr. Fahd’s actions were not “misconduct” within the scope and meaning of G.L. c. 183A, §6(a)(ii) and thus the assessment and lien against his unit based on those actions was invalid.

First, the “misconduct” did not result in the type of expense to the trustees cognizable under G.L. c. 183A, §6(a)(ii). As the Appeals Court has held, a G.L. c. 183A, §6(a)(ii) “misconduct” assessment may only be made to recover the expense of “maintaining, repairing or replacing a limited common area and facility.” Trustees of the Clarendon/Warren Condominium v. Cotto, 82 Mass. App. Ct. 1107 , 2012 WL 2912814 at *3 (Mass. App. Ct., Mem. & Order Pursuant to Rule 1:28). These were legal fees.

Second, Mr. Fahd’s actions simply weren’t “misconduct” under any reasonable meaning of that term and, in large measure, were protected speech. See Bd. of Managers of Old Colony Village Condominium v. Preu, 80 Mass. App. Ct. 728 (2011). While Mr. Fahd could have acted more gracefully, and the involvement of a lawyer would have avoided many of his procedural mistakes, his arguments were in important respects correct. Two purported trustees were not, in fact, trustees at the time they called the December 4, 2004 meeting, making any action at that meeting invalid. See Mem. & Order on Summary Judgment at 7. Mr. Fahd’s protests at that meeting thus prevented what would have been an illegal increase in condominium fees. His issues with the condominium property manager had merit as well. The trustees themselves later fired that manager due to his apparent substance problem and “not showing up when he said he would be,” making him “not reliable.” [Note 9] Moreover, the “misconduct” assessment and lien against Mr. Fahd had suspect origins. It was made because the property manager challenged by Mr. Fahd (the same one later fired by the trustees) recommended it, [Note 10] and was taken against Mr. Fahd alone, even though other unit owners had joined in his protests. [Note 11] The alleged “confusion” regarding condominium governance, blamed on Mr. Fahd and cited by the trustees to support their assessment and lien, was in part caused by the trustees’ and manager’s own actions, and did not result in any proven adverse consequences. Mr. Fahd is thus entitled to reimbursement of the “misconduct” assessment and lien in full, plus interest at the statutory rate from and after the time of his payment.

Facts and Analysis

I begin by addressing the defendants’ contention that this court lacks jurisdiction to decide the reimbursement claim and that it could only have been addressed in the context of the District Court case and is thus res judicata. I previously rejected those arguments (Mem. & Order on Summary Judgment at 11-13; Mem. & Order on Defendants’ Motion to Dismiss Plaintiff’s Claim for Reparations at 2-3) (May 12, 2011)), and do so again.

Mr. Fahd sought to contest the validity of the assessment in the District Court proceeding but, based on the board’s representation that “a unit owner may not challenge the legality of a common expense assessment by refusing to pay it but rather must pay and seek reimbursement in a separate action,” [Note 12] judgment was entered against him. [Note 13] It is thus disingenuous for the defendants to now argue res judicata, when they specifically represented to the District Court that Mr. Fahd could bring a separate action to challenge the validity of the assessment. Such a representation precludes them from raising res judicata in this proceeding under familiar principles of judicial estoppel. Otis v. Arbella Mut. Ins. Co., 443 Mass. 634 , 639-40 (2005). [Note 14]

Moreover, in the context of the matter at issue — whether or not Mr. Fahd committed “misconduct” within the meaning of G.L. c. 183A, § 6(a)(ii) when he brought and pursued this action — this is the best, and perhaps the unique, forum in which to bring that “separate action.” This, after all, is the court in which those claims are being litigated and their ultimate merits determined. Given the prior pendency of this action, the District Court could not have heard the merits of the “misconduct” claim even if it wanted to. Mass. R. Civ. P. 12(b)(9). See also Trustees of Hunters Village Condominium Trust v. Gerke, 2007 Mass. App. Div. 23 , 2007 WL 959539 at *3-*4 (Mass.App.Div.) (Blood v. Edgar’s Inc., 36 Mass. App. Ct. 402 (1994) does not bar challenge in separate case to illegal “misconduct” assessment when there is no direct relationship between the conduct assessed and unit ownership and no valid basis for trustees’ belief that the assessed expense was proper).

The defendants also argue that this court lacks subject matter jurisdiction to hear Mr. Fahd’s reimbursement claim. But that is not so. This is a registered land condominium, and questions regarding the validity of condominium assessments (which are enforceable liens against title) directly involve “right, title or interest” in that registered land. G.L. c. 185, § 1(a ½). More fundamentally, the central question presented by the “misconduct” assessment — the merit or lack of merit of Mr. Fahd’s “governance” claims — is the central question before this court, bringing the “misconduct” charge (and the consequences of that charge — a lien against Mr. Fahd’s title) directly within this court’s ancillary jurisdiction. See Essex Co. v. Goldman, 357 Mass. 427 , 434 (1970); Ritter v. Bergmann, 72 Mass. App. Ct. 296 , 299-303 (2008).

I turn now to the merits of the “misconduct” assessment itself. As noted above, it consisted of the legal fees incurred by the trustees in connection with their defense of Mr. Fahd’s claims in this lawsuit and, for that reason alone, was invalid. See Trustees of the Clarendon/Warren Condominium v. Cotto, 82 Mass. App. Ct. 1107 , 2012 WL 2912814 at *3 (Mass. App. Ct., Mem. & Order Pursuant to Rule 1:28) (misconduct assessment may only be made to recover the expense of “maintaining, repairing or replacing a limited common area and facility”); Bd. of Managers of Old Colony Village Condominium v. Preu, 80 Mass. App. Ct. 728 (2011) (protected speech may not be assessed as “misconduct”). Moreover, by any reasonable definition, Mr. Fahd’s actions were not “misconduct.” To show that, I begin by repeating the facts and analysis from the summary judgment decision that are relevant to the G.L. c. 183A, §6(a)(ii) question, supplemented by facts as found at trial. As they demonstrate, far from being frivolous or unfounded, Mr. Fahd’s claims were in substantial part correct and his protests prevented what would have been an illegal special assessment.

The Oak Hollow Condominium was created by Master Deed dated June 26, 1984. [Note 15] In accordance with that Deed and G.L. c. 183A, the condominium is “managed and regulated” by the Oak Hill Condominium Trust. G.L. 183A, §§ 8(i), 10(b); Master Deed, ¶ 13. The trust is governed by the Declaration dated June 26, 1984 (“Declaration”), as amended on May 13, 2003 (“Amended Declaration”).

Under the authority granted by those documents and G.L. c. 183A, the trustees, who can act (and can only act) by majority vote, [Note 16] have broad powers and wide discretion to manage the condominium, choose a management company, and set and enforce assessments. G.L. c. 183A, §§ 5, 10; Declaration, Article II, § 1; Declaration, Article III, § 2; Declaration, Article V, §§ 1-4. Who is selected to be a trustee is thus of vital importance to the condominium unit owners.

As provided in the Amended Declaration, the board of trustees consists of five natural persons, each of whom must be a unit owner. [Note 17] Amended Declaration, Article III, § 1. Trustees are elected at the association’s annual meeting for three year terms on a staggered basis so that in each year one or two trustees’ terms will expire. Id. A quorum to elect trustees is “those in attendance or by proxy,” and the candidates who receive the most votes are elected. [Note 18] Id. Trustees whose terms have expired continue in office until successors are elected or appointed. Id. If a vacancy occurs due to death, disability or resignation prior to the expiration of the trustee’s term, the vacancy is filled for the balance of the term by appointment by the remaining trustees. Id. If the remaining trustees fail to make that appointment within thirty days after the vacancy occurs, any unit owner (with notice to all other unit owners), may petition a court of competent jurisdiction to make the appointment. Id. The election or appointment of a trustee is effective at the time of election or appointment, and an instrument certifying that election or appointment is required to be filed at the Registry thereafter. Id. In contrast, trustee resignations do not take effect unless and until an “instrument in writing, signed and acknowledged in the manner required in Massachusetts for the acknowledgement of deeds,” is filed at the Registry. [Note 19] Declaration, Article III, § 3.

Gordon Peters, Renate Markgraf, Eileen Glass, James Perry and Barbara Winslow received the most votes at the trustee election at the April 2004 annual meeting and, on May 4, 2004, a certificate was filed at the Registry naming them as the association’s trustees. Mr. Peters, however, was not a unit owner at the time and was thus ineligible to serve. [Note 20] Amended Declaration, Article III, § 1. Mr. Perry submitted a letter of resignation on July 27, 2004, but it was not filed at the Registry until December 13, 2004. Ms. Markgraf submitted a letter of resignation on August 1st, but hers was never filed. So far as the record shows, neither Mr. Perry nor Ms. Markgraf attended any trustee meetings after they submitted their resignation letters. It is also not clear that they received proper and timely advance notice of trustee meetings — a prerequisite to the ability of the trustees to take actions at those meetings. Declaration, Article V, § 6.A.

Based on their erroneous belief that Mr. Peters was a duly elected trustee and that Mr. Perry’s and Ms. Markgraf’s resignations were effective, Mr. Peters, Ms. Glass and Ms. Winslow met on October 1, 2004 and voted to appoint Ms. Irene Garrow and Mr. Raymond Trop as Mr. Perry and Ms. Markgraf’s successors. That vote was ineffective to appoint either Ms. Garrow or Mr. Trop because Mr. Perry’s and Ms. Markgraf’s seats were not “vacant.” Amended Declaration, Article III, § 1 (requiring a vacancy before a seat can be filled). Neither Mr. Perry’s nor Ms. Markgraf’s resignations had yet been filed at the Registry, so both continued to serve as trustees. Declaration, Article III, § 3. The vote also was ineffective for another reason. The board had four members at the time (Ms. Glass, Ms. Winslow, Mr. Perry and Ms. Markgraf), and the two that attended the October 1st meeting did not constitute a “quorum” (i.e., a majority of the four trustees) capable of taking action. Declaration, Article V, § 6. The document filed at the Registry on December 14, 2004 listing Mr. Peters, Ms. Glass, Ms. Winslow, Ms. Garrow and Mr. Trop as the condominium’s trustees [Note 21] was thus erroneous and invalid.

All of this had particular importance in November 2004 when a letter was sent to the unit owners, purportedly on behalf of the “Oak Hollow Condominium Association Board of Trustees,” [Note 22] calling a Special Meeting of the association for December 4, 2004. The purpose of the meeting was “to discuss the financial matters at hand” (identified as roof, deck and septic system replacements and/or updates) and an increase in the monthly assessment. Mr. Fahd reviewed the letter and its attached budget — particularly the assessment on the unit he occupied with his wife, Mary Waygan — and found it “a shocker.” Letter from Mohamad Fahd to so-called “absentee” unit owners (Nov. 23, 2004). He prepared and sent his own letter to the twenty-four or so absentee owners of condominium units — those who either rented their units or resided there only seasonally — soliciting their support and proxy to “‘get rid’ of the current board members and [their] chosen management company.” Id. The Special Meeting took place on December 4th, discussion became heated, and the moderator declared the meeting “adjourned” before any action was taken. On the advice of the property manager, the “trustees” then left the room as a group and did not return. [Note 23]

Mr. Fahd and his allies, however, remained in the room and purported to elect a new slate of trustees. Such an “election” was invalid for three reasons: (1) the meeting was a Special Meeting, and Special Meetings may only consider the topics set forth in the notice that scheduled them, Declaration, Article V, §6.B, [Note 24] (2) the possible recall of trustees, and the election of their successors, was not identified in the notice as a matter to be considered at the meeting, [Note 25] and (3) as previously noted, [Note 26] the meeting had not validly been called in the first place. The document later filed at the Registry by Mr. Fahd purporting to reflect the election of these “new” trustees [Note 27] was thus erroneous and invalid.

Mr. Perry’s resignation was filed at the Registry on December 13, 2004. After that filing, the board thus consisted of Ms. Markgraf, Ms. Glass, and Ms. Winslow. So far as the record shows, that membership remained until the next annual meeting. [Note 28]

That annual meeting took place on April 23, 2005 and, as provided in the Amended Declaration, Article III, § 1, trustee elections took place. Gregory Smith and Raymond Trop were elected, joining Ms. Glass and Ms. Winslow. Ms. Markgraf’s term expired, leaving her seat vacant. Mr. Trop resigned immediately after the meeting, and the remaining trustees appointed Mr. Peters (the candidate who received the second highest number of votes at the meeting) to take Mr. Trop’s place. [Note 29] Amended Declaration, Article III, § 1 (power of existing trustees to appoint new trustees to fill unexpired terms). A Certificate of Appointment and Acceptance of Trustees dated April 27, 2005 was filed at the Barnstable Land Court Registry on May 10, 2005 (Document 1,001,238) naming Ms. Glass, Ms. Winslow, Mr. Peters, Mr. Smith and Ms. Garrow as trustees. The Certificate was signed by each of them on April 27th, and those signatures were each notarized. That was a sufficient action to appoint Ms. Garrow to the fifth seat, since the four validly elected/appointed trustees (Ms. Glass, Ms. Winslow, Mr. Peters and Mr. Smith) had the power to do so. Amended Declaration, Article III, § 1. Thus, as of April 27, 2005, the trustees consisted of Ms. Glass, Mr. Winslow, Mr. Peters, Mr. Smith and Ms. Garrow. Id. (election or appointment of trustees to a vacant seat becomes effective immediately upon such election or appointment). [Note 30] With these declarations, made by the court on summary judgment, [Note 31] the trustee issues raised by Mr. Fahd were now resolved and the condominium could go forward without ambiguity.

At some point in 2005 or 2006 (the record is not clear on exactly when), the condominium board imposed a G.L. c. 183A, §6(a)(ii) “misconduct” assessment on the unit owned by Mr. Fahd and his wife Mary Waygan. As revealed at trial, the assessment was made because the property manager challenged by Mr. Fahd recommended it. [Note 32] The assessment was for the entire amount of the attorney’s fees and expenses incurred by the defendants from May 2005 through February 2006 in connection with this action, with the trustees reserving their right to assess “all future legal charges incurred by them in connection with the S-Petition and the related litigation in the Land Court.” [Note 33] Despite the fact that others had joined in the challenge to the make-up of the board, no one else was assessed. [Note 34] This assessment was made before any ruling by this court on the merits of Mr. Fahd’s claims and, as detailed above, Mr. Fahd was correct in many of his allegations. He may never have been a trustee as he claims, but, for the bulk of the time in question, neither were many of the defendants. His protests at the December 4, 2004 Special Meeting prevented an invalid fee increase from being imposed. [Note 35] Moreover, it is not clear under the condominium documents that the association had the power to pay the legal bills for those defendants who were not, in fact, trustees, see Declaration, Article III, § 8, and it is thus not clear that the bills for their defense could validly be included in an assessment.

When Mr. Fahd refused to pay the “misconduct” assessment, the board brought suit against him and his wife in the Falmouth District Court. Mr. Fahd sought to contest the validity of the assessment in that proceeding but, based on the board’s representation that “a unit owner may not challenge the legality of a common expense assessment by refusing to pay it but rather must pay and seek reimbursement in a separate action,” [Note 36] judgment was entered against him. [Note 37] Mr. Fahd paid that judgment in full, and sought reimbursement of its “misconduct” portion by motion in this action. The amount at issue is $8,791.55, paid in full by May 16, 2006, plus interest. [Note 38] Construing his motion in accordance with the Civil Rules’ command “to do substantial justice,” Mass. R. Civ. P. 8(f), I deemed his motion as one to amend his complaint (Mass. R. Civ. P. 15) and allowed the amendment.

The defendants contend that, despite the merits of Mr. Fahd’s arguments, they were justified in making a “misconduct” assessment against him because he created “confusion” regarding condominium governance. But no such confusion was proved at trial, nor damage caused by it. The defendants claim that monthly condominium fees were erroneously sent to Mr. Fahd rather than the property manager, but could not show a single instance where that happened or that any such fees were lost. They claim that snow-plowing was delayed due to “confusion.” But there was only one instance of delay, the delay was one day, and there was no testimony from the plow company that the delay was caused by any instruction from Mr. Fahd or “confusion” he created. No other problems attributed to Mr. Fahd were identified [Note 39] and, given the admitted unreliability of the then-property manager which later led to his firing, it would be difficult to give such attribution credibility. There was no proof that any vendor or condominium transaction was adversely affected by the filing of Mr. Fahd’s list of trustees at the Registry. The defendants’ list was filed the very next day and, as detailed above, both were erroneous. To his credit, Mr. Fahd promptly filed this action to resolve the controversy, and it has done so.

Conclusion

For the foregoing reasons, the reasons set forth in the court’s Memorandum and Order Granting Summary Judgment on the Parties’ Cross-Requests for Declaratory Judgment and Denying Defendants’ Motion to Dismiss Plaintiff’s Motion for Reparations (Dec. 28, 2007), and the court’s Memorandum and Order on Defendants’ Motion to Dismiss Plaintiff’s Claim for Reparations (May 12, 2011), it is ORDERED, ADJUDGED and DECREED:

1. Document 988,373, filed at the Barnstable Land Court Registry on December 13, 2004, and all references to that Document, are hereby STRICKEN from the memorandum of encumbrances to the Oak Hollow Condominium’s Certificate of Title.

2. Document 988,511, filed at the Barnstable Land Court Registry on December 13, 2004, and all references to that Document, are hereby STRICKEN from the memorandum of encumbrances to the Oak Hollow Condominium’s Certificate of Title.

3. Renate Markgraf, Eileen Glass, James Perry and Barbara Winslow were the trustees from April 2004 through December 13, 2004.

4. Renate Markgraf, Eileen Glass and Barbara Winslow were the trustees from December 13, 2004 through April 23, 2005.

5. Eileen Glass, Gordon Peters, Gregory Smith and Barbara Winslow were the trustees from April 23, 2005 to April 27, 2005.

6. Assuming that Raymond Trop’s resignation was submitted in writing and duly filed at the Registry, Eileen Glass, Gordon Peters, Gregory Smith, Barbara Winslow and Irene Garrow were the trustees thereafter (as indicated in Document 1,001,238 at the Barnstable Land Court Registry).

7. The trustees of the Oak Hollow Condominium shall reimburse plaintiff Mohamed Fahd the sum of $8,791.55, plus interest at the statutory rate from and after May 16, 2006.

Judgment shall enter accordingly.