Title: Ridgely v. Smyrnioudis

State: maryland

Issuer: Maryland Supreme Court

Document:

IN THE COURT OF APPEALS OF MARYLAND
No. 120
September Term, 1995
_____________________________________
THE RIDGELY CONDOMINIUM      
 
    ASSOCIATION, INC.
   
v.
NICHOLAS SMYRNIOUDIS, JR. et al.
____________________________________
Murphy, C.J.
Eldridge
Rodowsky
Chasanow
Karwacki
Bell
Raker,
JJ.
____________________________________
OPINION BY MURPHY, C.J.
____________________________________
       Filed:  August 27, 1996
      The Maryland Condominium Act defines "common elements" as
1
all of the condominium except for the units.  "Limited common
elements" are those which are "reserved for the exclusive use of
one or more but less than all of the unit owners."  "General common
elements" are those which are not limited.  Maryland Code (1996
Repl. Vol.) § 11-101 of the Real Property Article.
This case involves a judgment enjoining the Ridgely
Condominium Association, Inc. (Association) from enforcing a bylaw
amendment which prohibited clients of the condominium's seven
first-floor commercial unit owners from entering and leaving the
commercial units via the condominium lobby.
I
A condominium is a "communal form of estate in property
consisting of individually owned units which are supported by
collectively held facilities and areas."  Andrews v. City of
Greenbelt, 293 Md. 69, 71, 441 A.2d 1064 (1982).  
The term condominium may be defined generally as a system
for providing separate ownership of individual units in
multiple-unit developments.  In addition to the interest
acquired in a particular apartment, each unit owner also
is a tenant in common in the underlying fee and in the
spaces and building parts used in common by all the unit
owners.
4B Richard R. Powell, Powell on Real Property ¶ 632.1[4] (1996).
A condominium owner, therefore, holds a hybrid property interest
consisting of an exclusive ownership of a particular unit or
apartment and a tenancy in common with the other co-owners in the
common elements.   Andrews, supra, 293 Md. at 73-74; see also
1
Starfish Condo. v. Yorkridge Serv., 295 Md. 693, 703, 458 A.2d 805
(1983); Black's Law Dictionary 295 (6th ed. 1990).
      The term "rule" is used in this opinion in its generic sense
2
to encompass any regulation in any form enacted by a condominium
board of directors or council of unit owners, or contained in the
condominium's original documents.
-2-
In exchange for the benefits of owning property in common,
condominium owners agree to be bound by rules  governing the
2
administration, maintenance, and use of the property.  Andrews,
supra, 293 Md. at 73.  Upholding a rule prohibiting the consumption
of alcohol in a condominium's clubhouse, a Florida court observed:
It appears to us that inherent in the condominium concept
is the principle that to promote the health, happiness,
and peace of mind of the majority of the unit owners
since they are living in such close proximity and using
facilities in common, each unit owner must give up a
certain degree of freedom of choice which he might
otherwise enjoy in separate, privately owned property.
Condominium unit owners comprise a little democratic sub
society of necessity more restrictive as it pertains to
use of condominium property than may be existent outside
the condominium organization.
Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180, 181-82
(Fla.Dist.Ct.App. 1975); see also Nahrstedt v. Lakeside Village
Condo., 8 Cal.4th 361, 33 Cal.Rptr.2d 63, 878 P.2d 1275, 1281
(1994) ("Use restrictions are an inherent part of any common
interest development and are crucial to the stable, planned
environment of any shared ownership arrangement."); Dulaney Towers
v. O'Brey, 46 Md.App. 464, 466, 418 A.2d 1233 (1980) ("The courts
stress that communal living requires that fair consideration must
be given to the rights and privileges of all owners and occupants
of the condominium so as to provide a harmonious residential
atmosphere.").
      "The concept of 'horizontal property' or 'strata' ownership
3
simply means that the area above land can be divided into a series
of strata or planes capable of severed ownership, making the
ownership of things affixed to land separable from the ownership of
the land itself."  Nahrstedt, supra, 878 P.2d at 1280.
      The Condominium Revision Committee of the Real Property,
4
Planning and Zoning Section of the Maryland State Bar Association
proposed the revisions to the General Assembly in a report which is
reprinted in the editor's note before Title 11 of the 1978
Cumulative Supplement to the Real Property Article.  See Rockville
Grosvenor, Inc. v. Mont. Co., 289 Md. 74, 85-86, 422 A.2d 353
(1980).
-3-
The Maryland Condominium Act (the Act), Maryland Code (1996
Repl. Vol.) §§ 11-101 et seq. of the Real Property Article,
regulates 
the 
formation, 
management, 
and 
termination 
of
condominiums in Maryland.  The Act was originally enacted by Ch.
387 of the Acts of 1963, as the Horizontal Property Act  in
3
response to § 104 of the federal Housing Act of 1961, Pub. L. No.
87-70, 75 Stat. 149, which made federal mortgage insurance
available to condominiums in states where title and ownership were
established for such units.  The Act was based on the Federal
Housing Administration's Model Horizontal Property Act of 1961.  66
Op.Atty.Gen. 50, 52 (1981).  The legislature amended and recodified
the Act by Ch. 641 of the Acts of 1974.4
Under the Act, property becomes a condominium upon the
recording of a declaration, bylaws, and a condominium plat.  § 11-
102.  The declaration must include the name of the condominium; a
description of the entire project, the units, and the common
elements; and the percentage interests in the common elements and
      Maryland Code (1974) § 11-111(f) of the Real Property
5
Article provided: "The bylaws must necessarily provide for at least
the following: ... (f) Such restrictions on or requirements
respecting the use and maintenance of the units and the use of the
common 
elements 
as 
are 
designed 
to 
prevent 
unreasonable
interference with the use of the respective units and of the common
elements by the several unit owners."
-4-
votes appurtenant to each unit.  § 11-103(a).  The declaration may
be amended with the written consent of at least 80% of the unit
owners, except that unanimous consent of the owners is required for
some amendments, such as altering percentage interests in common
elements, changing the use of units from residential to
nonresidential and vice versa, and redesignating general common
elements as limited common elements. §§ 11-103(b); 11-107(c).  
The bylaws govern the administration of the condominium and
must include the form of the condominium administration and its
powers, meeting procedures, and fee collection procedures.  § 11-
104(a), (b).  The former § 11-111(f) also required the bylaws to
include restrictions on the use of units and common elements.   The
5
1974 amendments made inclusion of such use restrictions in the
bylaws optional.  Section 11-104(c) now provides: "The bylaws may
also contain any other provision regarding the management and
operation of the condominium including any restriction on or
requirement respecting the use and maintenance of the units and the
common elements."  The bylaws may be amended by at least a 2/3 vote
of the unit owners.  § 11-104(e)(2).
-5-
The Council of Unit Owners, which may delegate its powers to
a Board of Directors, governs the affairs of the condominium and
may adopt rules for the condominium.  §§ 11-109(a),(b), 111(a).  If
there is any conflict between the provisions of the various
documents governing the condominium, the statute controls, then the
declaration, plat, bylaws, and rules in that order.  § 11-124(e).
II
The Ridgely, located at 205 East Joppa Road in Towson,
Maryland, was established in June, 1975.  According to Article XV,
§ 1 of the Association's bylaws, all of the 239 units in the
building are residential, except for the seven units on the first
floor which "may be used as professional offices."  Each of the
seven commercial units is accessible both through the lobby and
directly through a door located outside of the building.  There are
no porches or canopies protecting the exterior entrances to the
commercial units.
The accounting firm of Smyrnioudis & Wilhelm occupies unit
102.  Nicholas Smyrnioudis, Jr. and his father, Nicholas
Smyrnioudis, Sr., have owned the unit since 1977.  Clients entered
the office through both the lobby and outside exterior doors until
the office was remodeled in 1987 at a cost of approximately
$40,000.  The exterior door now opens into a conference room.
Nicholas Smyrnioudis, Jr. testified that switching the reception
area and conference room would involve removing an eleven foot
reception counter, non-bearing walls, and carpeting.
-6-
Mary Granger operated a mail list brokerage and management
company in unit 104, which she purchased in 1985.  The three or
four clients who visited each month used both the lobby and
exterior doors.  During the pendency of this litigation, Granger
sold her unit to Philip R. Grillo, who also operates a business in
the unit.  Visitors to all of the other commercial units use the
exterior doors exclusively.
In 1990, the Association remodeled the lobby of the Ridgely at
a cost of approximately $125,000.  The lobby, which is among the
condominium's common elements, is elaborately decorated with marble
floors, dark wood-paneled walls and decorative furniture.  The cost
of the remodeling was paid out of condominium fees to which both
the commercial and residential tenants contribute.  Nicholas
Smyrnioudis, Jr. testified that use of the lobby is important for
his business because of its appearance and because it allows
clients to avoid wet grass, ice, rain, and snow.  Mary Granger also
testified that the lobby "lends to our credibility as a
professional business" and "makes a nice impression."  In addition,
she testified that using the exterior door in the winter makes it
difficult to keep the office warm.
The president of the Association, Calvin Coblentz, testified
that members of the Association had become concerned about security
around the time the lobby was renovated.  A card system was
installed for the garage doors and elevators in the garage, fire
      Officer John S. Reginaldi, Crime Prevention Coordinator for
6
the Towson precinct of the Baltimore County Police Department
testified at the trial that the Ridgely "is relatively safe other
than the fact of the commercial businesses using the main
entrances."  To improve security, he recommended that the
commercial units use the exterior entrances.
      Appellees' counsel has stricken his appearance for Berman
7
and Francus since they sold their unit after the trial.  Granger
sold her unit, after the Court of Special Appeals issued its
opinion, to Philip A. Grillo who requested that he be substituted
as a party in this appeal.
-7-
exits were made inaccessible from outside the building, and
lighting was added in the parking areas.6
In May of 1990, the Board of Directors, in response to
members' security concerns, sought to have the commercial unit
owners voluntarily agree to have visitors use the exterior
entrances to their units exclusively.  When this effort failed to
achieve full compliance, the Board of Directors, in the spring of
1991, adopted a resolution which provided that: "Effective
September 1, 1991, clients of commercial units owners and tenants
shall not utilize the Condominium's lobbies."
On August 27, 1991, (1) Nicholas Smyrnioudis, Jr., Sr. and
George Wilhelm; (2) Merrill I. Berman and Joseph B. Francus; and
(3) Mary E. Granger (appellees) filed suit in the Circuit Court for
Baltimore County against the Association seeking to enjoin the
enactment or enforcement of rules restricting the use of the lobby
by the appellees' clients.7
On or about October 1, 1991, the members of the Association
voted to amend the bylaws.  Originally, Article XV, § 1 of the
-8-
bylaws provided: "All units shall be used as a single family
residence, except that up to a maximum of seven (7) units on the
first floor may be used as professional offices."  The amendment
added: 
provided however, that all clients of, or visitors to,
professional office owners or their tenants shall be
required to use the exterior entrances of each such
professional office for ingress and egress.
No visitor or clients of any owner of a professional
office or tenant thereof, shall be permitted in any other
area of the building, unless accompanied by the owner of
the office unit or the tenant of such office unit.  For
the purpose of this section, the terms "clients" or
"visitor" of professional office owner or tenant, shall
include the clients or visitor and all person(s) who may
accompany such client or visitor to such professional
office.
The appellees do not challenge the procedures used to adopt the
resolution or amend the bylaws.
The appellees filed an amended complaint on September 27,
1991.  Pending trial, the parties reached an agreement which
allowed commercial visitors to use the lobby, but required them to
sign in and wait at the front desk for an escort.  
After a trial, Judge John F. Fader, II, on April 18, 1994,
enjoined the Association from enforcing the bylaw.  In his opinion,
Judge Fader determined that "the proper standard of review is
whether the Condominium's rule is reasonable."  The restriction, he
said, "is unenforceable for failure to reasonably relate to the
health, happiness and enjoyment of unit owners."  Safety concerns,
he noted, had prompted the adoption of the restriction, but there
-9-
was no evidence that any commercial visitors had threatened the
building's security.  Judge Fader added:
There was no indication that the prohibition of all
access by commercial tenants and their clients/patients
was the only method, the least intrusive method, or the
best means available to lessen the possibility of
unauthorized persons entering the building, or of
authorized individuals causing trouble.  In prohibiting
commercial access via the main lobby, the Board reacted
to a situation, which objectively was not dire, and which
did not require the stringent regulation initiated by the
Board.
Judge 
Fader 
also 
held 
that 
the 
restriction 
"fails 
the
reasonableness test since it has a discriminatory impact on
commercial unit owners."  
On appeal, the Court of Special Appeals affirmed.  Ridgely
Condo. v. Smyrnioudis, 105 Md. App. 404, 660 A.2d 942 (1995).  At
the outset, it said that "our review of the record convinces us
that this case actually concerns an access restriction that has
diluted 
appellees' 
respective 
percentage 
interests 
in 
the
Condominium lobby."  Id. at 409.  In a footnote, the court said
that, "To deny the use of the lobby to clients of the commercial
unit owners constitutes an ultra vires taking of a portion of their
percentage interest in the common areas in derogation of the
Ridgely Condominium declaration as well as certain provisions of
the Maryland Condominium Act."  Id. at 409 n.2.  Nonetheless, the
court declined to base its decision on that issue since it was not
argued by the parties in the circuit court.  Id. at 410.
-10-
The court held that the reasonableness test is the proper
standard of review for evaluating restrictions contained in a bylaw
amendment.  Id. at 422.  Courts apply a more deferential standard
of review to recorded use restrictions, the court said, because
unit owners have notice of the restrictions when they purchase
their units.  Id. at 417.  In contrast, the court concluded that
the more restrictive reasonableness standard is appropriate in this
case, because owners did not have notice of the restriction when
they purchased their units.  Id. at 418.  
The court emphasized the disparate impact of the restriction
on the commercial unit owners, id. at 421, and indicated that § 11-
108 may require any use restriction that does not apply equally to
all unit owners to be stated in the declaration.  Id. at 420.
Thus, the court held that application of a deferential standard of
review is particularly inappropriate where the use restriction has
a discriminatory impact.  Id. at 421, 422.
III
The Association filed a petition for a Writ of Certiorari,
which we granted, and which presented this question: "Did the trial
court and the Court of Special Appeals apply the appropriate
standard of review for evaluating the propriety of a condominium
by-law amendment?"  In their brief and before the lower courts, the
appellees argued that courts should apply a reasonableness test in
reviewing the validity of condominium bylaw amendments.  At oral
argument before us, however, they argued in addition that the bylaw
-11-
amendment at issue violated both the declaration and the Act by
"taking" a property right.  Such changes in property interests,
they maintained, may only be accomplished by amending the
declaration with the unanimous consent of the unit owners.
Although this point was not briefed by the parties and was only
briefly alluded to in the opinion of the Court of Special Appeals,
the appellees urge this Court to reach the issue.
Under Rule 8-131(b), we "ordinarily will consider only an
issue that has been raised in the petition for certiorari or any
cross-petition and that has been preserved for review by the Court
of Appeals."  AppelleesU argument is directly responsive to the
question in the petition for certiorari. They assert that the test
for evaluating the propriety of the by-law amendment is whether it
deprives a unit owner of a property right.  Consequently, in our
view, the argument is encompassed within the question presented in
the certiorari petition.
IV
In reviewing the validity of a rule, a court must determine
whether the Board of Directors or Council of Unit Owners had the
authority to promulgate the rule at issue under the Act,
declaration, and bylaws.  Dulaney Towers, supra, 46 Md.App. at 466;
Johnson v. Hobson, 505 A.2d 1313, 1317 (D.C.App. 1986); Juno by the
Sea 
North 
Condominium 
v. 
Manfredonia, 
397 
So.2d 
297
(Fla.Dist.Ct.App. 1981); 68 Op.Atty.Gen. 112, 119 (1983).  Since we
find that the Association did not have the authority to enact the
      The Ridgely bylaws, Article XXI, § 1, require a vote of 75%
8
of the unit owners to amend the bylaws.
-12-
rule at issue here by amending the bylaws, we do not reach the
question briefed by the parties.
 The Association contends that the rule is merely a use
restriction which the Council of Unit Owners may enact by amending
the bylaws with a 2/3 vote of the unit owners.   Cases addressing
8
the propriety of use restrictions fall generally into two
categories.  In the first class of cases, which we will refer to as
"exclusive use" cases, some courts rule that granting exclusive use
of common elements to one or few unit owners changes the percentage
interest of the excluded unit owners in the common elements.  E.g.,
Kaplan v. Boudreaux, 410 Mass. 435, 573 N.E.2d  495 (1991).  In the
second class of cases, which we will refer to as "equality" cases,
some courts rule that if a restriction applies equally to all the
unit owners, it does not change their respective percentage
interests in the common elements.  E.g., Jarvis v. Stage Neck
Owners Ass'n, 464 A.2d 952 (Me. 1983).
The Supreme Judicial Court of Massachusetts, in Kaplan, supra,
573 N.E.2d at 497, reviewed a bylaw amendment granting exclusive
use of a path, which was part of the condominium's common elements,
to one unit.  The statute required consent of all the unit owners
to alter the percentage interests in the common elements.  Id.  The
court found that it was not necessary to "transfer ... the sum
total of a unit owner's interests in a portion of the common area"
-13-
in order to "affect [the] percentage interest in the common area."
Rather, "[t]ransfer of an interest that is smaller than an
'ownership' interest would suffice to alter the percentage interest
held by each [owner]."  Id. at 498-99.  The court held that the
amendment affected an interest in land because it resembled an
easement and concluded that the amendment changed the relative
percentage interests of the unit owners in the common elements.
Therefore, consent of all the unit owners was required to enact the
amendment.  Id. at 500; see also Makeever v. Lyle, 125 Ariz. 384,
609 P.2d 1084, 1089 (Ariz.Ct.App. 1980) (converting general common
elements to exclusive use of one owner constitutes taking of other
owners' property without authority); Preston v. Bass, 13 Ark.App.
94, 680 S.W.2d 115, 116 (1984) (Board approval of carport in common
area created limited common element requiring 100% vote of unit
owners); Penney v. Association of Apt. Owners, 70 Haw. 469, 776
P.2d 393, 395 (1989) (change from general to limited common element
altered unit owners' percentage interests); Carney v. Donley, 261
Ill.App.3d 1002, 633 N.E.2d 1015, 1020 (1994) (board did not have
authority to approve balcony extensions into common area); Sawko v.
Dominion Plaza One Condo. Ass'n, 218 Ill.App.3d 521, 578 N.E.2d
621, 627 (Ill.App.Ct. 1991) (assigning parking spaces to some units
diminished other owners' interests in common elements); Stuewe v.
Lauletta, 93 Ill.App.3d 1029, 418 N.E.2d 138, 140 (Ill.App.Ct.
1981) (developer's grant of parking space to one unit gave
exclusive easement and diminished other owners' interests in common
-14-
elements); Strauss v. Oyster River Condominium Trust, 417 Mass.
442, 631 N.E.2d 979, 981 (1994) (additions built in common area
changed percentage interests of unit owners); Grimes v. Moreland,
41 Ohio Misc. 69, 322 N.E.2d 699, 712 (1974) ("placing fences and
[air conditioner] 
compressors 
on 
condominium 
common 
areas
constitutes a taking of property and an ouster of co-tenants from
common areas"); cf. Alpert v. Le'Lisa Condominium, 107 Md.App. 239,
247, 667 A.2d 947 (1995) (parking spaces assigned to 20 of 32 unit
owners did not become limited common elements because they would
not be conveyed with the unit); Juno by the Sea, supra, 397 So.2d
297, 303 (assigning parking spaces to 50 of 70 unit owners did not
convert general into limited common elements because spaces would
not be conveyed with the unit).  Compare Parillo v. 1300 Lake Shore
Drive Condo., 103 Ill.App.3d 810, 431 N.E.2d 1221, 1223 (1981)
(enclosing limited common element would not change unit owners'
percentage interests in common elements because use was already
exclusive) with Gaffny v. Reid, 628 A.2d 155, 157 (Me. 1993)
(cottage encroaching on limited common area violated other owners'
property rights despite prior exclusivity of use).  
In contrast, the Supreme Judicial Court of Maine, in Jarvis,
supra, 464 A.2d at 954, reviewed an agreement approved by 80% of
the unit owners which granted an adjacent resort hotel use of the
condominium's pool, tennis courts, and parking area.  The court
discussed Stuewe, supra, 418 N.E.2d 138, and Makeever, supra, 609
P.2d 1084, and said:
-15-
There is a distinct difference between these cases, in
which exclusive use, control and/or ownership of the
common areas is taken from some or all of the unit owners
and cases in which some reasonable restrictions or
regulation of the common areas is imposed on all owners.
In the first instance, each owner's percentage interest
in the common area is altered.  In the second instance,
the percentage ownership interest is unaffected.
Jarvis, supra, 464 A.2d at 956.  Since the agreement did not
increase or decrease the common elements and did not grant any
owner exclusive use, it did not alter the percentage interests of
the unit owners.  Id. at 957; see also Schaumburg State Bank v.
Bank of Wheaton, 197 Ill.App.3d 713, 555 N.E.2d 48, 52-53, cert.
denied, 561 N.E.2d 707 (1990) (declaration amendment granting
nonexclusive easement over driveway to neighbor did not change unit
owners' percentage interests in common element); Bd. of Dir. of By
the Sea Council v. Sondock, 644 S.W.2d 774, 781 (Tx.App. 1982)
(declaration amendment allowing removal of carports did not change
unit owners' percentage interests in common element because applied
equally to all unit owners); cf. Coventry Square Condominium Ass'n
v. Halpern, 181 N.J.Super 93, 436 A.2d 580, 582 (1981) (bylaw
amendment requiring security deposit from rented units only created
"a special class of owners" and was unreasonable, arbitrary, and
unnecessary).
 Here, the rule at issue affected an "interest" in property.
The bylaw amendment revoked the commercial unit owners' right to
have their clients use the lobby.  That right resembles an
easement, which is an interest in property.  In Condry v. Laurie,
-16-
184 Md. 317, 320, 41 A.2d 66 (1945), we discussed the difference
between a license and an easement:
While an easement implies an interest in land, a license
is merely a personal privilege to do some particular act
or series of acts on land without possessing any estate
or interest therein.  In De Haro v. United States, 5
Wall. 599, 627, 18 L.Ed. 681, 688, Justice Davis spoke of
the incidents of a license as follows: "It is an
authority to do a lawful act, which, without it, would be
unlawful, 
and 
while 
it 
remains 
unrevoked 
is 
a
justification for the acts which it authorizes to be
done.  It ceases with the death of either party, and
cannot be transferred or alienated by the licensee,
because it is a personal matter, and is limited to the
original parties to it."
The right which the bylaw amendment revoked was not "a mere
personal privilege," Griffith v. Montgomery County, 57 Md.App. 472,
485, 470 A.2d 840 (1984), cert. denied, 469 U.S. 1191 (1985), but
was appurtenant to the condominium unit and would be conveyed with
the unit.  Since the right resembles an easement, we hold that the
bylaw amendment affected an interest in the appellees' property.
See Kaplan, supra, 573 N.E.2d at 500.
Here, however, and unlike the exclusive use cases, such as
Kaplan, supra, 573 N.E.2d 495, the bylaw amendment in this case did
not grant one or few unit owners exclusive use of a common area.
Nonetheless, unlike the equality cases, such as Jarvis, supra, 464
A.2d 952, the bylaw amendment disparately affected a portion of the
unit owners by revoking a property interest they acquired when they
purchased their units, without affecting the rights of the other
unit owners.  
-17-
In terms of the Maryland Condominium Act the lobby was a
general common element, the use of which all of the tenants enjoyed
equally.  This was consistent with § 11-108(a) requiring that,
"except as provided in the declaration, the common elements shall
be subject to mutual rights of ... access, use, and enjoyment by
all unit owners."  By by-law amendment, the Association has
attempted to deny that mutuality of use of a general common
element.  Further, under § 11-106(a), "[e]ach unit in a condominium
has all of the incidents of real property."  By by-law amendment,
the Association has attempted to reduce the "easement" that the
professional office units enjoyed in the lobby, and that "easement"
is one of the incidents of the ownership of a professional office
unit.
For these reasons, we hold that it was beyond the power of the
Association by by-law amendment to purport to deprive the owners of
the professional office units of their rights under the declaration
and under the Maryland Condominium Act to the enjoyment of the
lobby for the ingress and egress of their business invitees.
JUDGMENT 
AFFIRMED 
WITH
COSTS.