Opinion ID: 2680038
Heading Depth: 2
Heading Rank: 3

Heading: America’s Individual Smoking-Ban Claims

Text: [¶13] Because the smoking-ban claims in America’s amended complaint were dismissed pursuant to M.R. Civ. P. 12(b)(6), we review their sufficiency de novo “in the light most favorable to [America] to determine whether [they] set[] forth elements of a cause of action or allege[] facts that would entitle [America] to relief pursuant to some legal theory.” Ramsey, 2012 ME 113, ¶ 6, 54 A.3d 710 (quotation marks omitted). The complaint must allege facts with sufficient particularity so that, if true, they give rise to a cause of action; merely reciting the elements of a claim is not enough. See id. ¶¶ 6-7. Before turning to an examination of the five smoking-ban-related counts in America’s amended complaint, we first discuss two bases relied upon by the trial court in dismissing them. 9
[¶14] In all of the smoking-ban claims except the count alleging negligence the court identified the business judgment rule as a basis for dismissal. “The business judgment rule provides that business decisions made by the directors of a corporation are not subject to judicial review unless they are the result of fraud or bad faith.” Shostak v. Shostak, 2004 ME 75, ¶ 22, 851 A.2d 515 (citing Rosenthal v. Rosenthal, 543 A.2d 348, 353 (Me. 1988)).4 The rationale for the rule is that “it falls outside the proper judicial domain to inquire into and second-guess the prudence of particular business decisions honestly reached by those entrusted with the authority to determine what course of action best advances the well-being of the enterprise.” Rosenthal, 543 A.2d at 353. [¶15] Although three of the smoking-ban counts in America’s amended complaint allege that the defendants acted in bad faith, which would ordinarily make the business judgment rule inapplicable, the facts he recites establish that the defendants have not flatly refused to enforce the ban, but rather have enforced it in a way that he believes to be insufficient. For example, the complaint asserts: “In the vast majority of instances of reported violations . . . the Board . . . has failed to investigate or otherwise take effective action. . . . In the few instances where steps 4 Although in Shostak v. Shostak we referred to corporate directors when discussing the applicability of the business judgment rule, 2004 ME 75, ¶ 22, 851 A.2d 515, pursuant to the MCA “[t]he principles of law and equity, including the law of corporations . . . supplement the provisions of this Act, except to the extent inconsistent with this Act,” 33 M.R.S. § 1601-108 (2012). 10 have been taken to enforce the Smoking Ban, they have been taken in a dilatory and ineffectual fashion.” Absent the conclusory recitation of the phrase “bad faith,” the facts alleged in the complaint thus portray a disagreement between America and the Board members over how to enforce the ban, not whether to enforce it. Disagreement is not bad faith—we have said that “[b]ad faith imports a dishonest purpose and implies wrongdoing or some motive of self-interest.” Seacoast Hangar Condo. II Ass’n v. Martel, 2001 ME 112, ¶ 21, 775 A.2d 1166 (quotation marks omitted); see Ramsey, 2012 ME 113, ¶ 7, 54 A.3d 710 (concluding that a complaint was insufficient when it “merely recit[ed] in conclusory fashion” necessary elements of a claim). [¶16] An absolute refusal to enforce a condominium rule might be actionable as a decision made in bad faith unprotected by the business judgment rule. However, accepting as true the allegations made in the amended complaint that the Board has not reacted to smoking-ban complaints with sufficient speed or vigor, the business judgment rule’s protections are not lost simply because America alleges that an inadequate response, as opposed to no response, equates to bad faith.
[¶17] Each smoking-ban-related count of the amended complaint recites that America “sustained harm.” In dismissing the smoking-ban counts, the court 11 found that “[a] crucial aspect of the Amended Complaint is that it does not allege that the asserted failure to enforce the smoking ban has caused harm—at least legally cognizable injury—to [America] individually.” [¶18] The specific factual assertion of harm made in the amended complaint is that “America cannot enter or leave his unit without passing the exhaust of a unit in which tobacco is being smoked in violation of the Smoking Ban.” America argues that “[c]igarette smoke is universally understood to be a toxic and carcinogenic substance,” and therefore his “allegations that he has been exposed to secondhand smoke . . . describe a legally cognizable injury sufficient to withstand a motion to dismiss.” The court found America’s allegation that he “sustained harm” as a result of walking past another unit’s exhaust to be insufficient absent some particularized physical injury or illness. [¶19] The MCA provides: “If . . . any . . . person subject to this Act fails to comply with . . . any provision of the declaration or bylaws, any person or class of persons adversely affected by that failure has a claim for appropriate relief.” 33 M.R.S. § 1604-116 (emphasis added). The Sunspray Declaration provides: “An aggrieved unit owner shall have a right of action against the Association for failure to comply with or to enforce . . . any rules and regulations duly adopted . . . .” (Emphasis added). In reaching its conclusion that the amended complaint was insufficient to withstand a motion to dismiss, the trial court found that 12 the reference to “aggrieved unit owner,” like the reference to “persons adversely affected” in the MCA, has to be construed to require particularized injury, meaning that the aggrieved owner must allege and if necessary, establish, that he or she has suffered particularized injury as a result of the acts or omissions at issue. [¶20] We agree with the Superior Court. A complaint “must . . . allege facts sufficient to demonstrate that the complaining party has been injured in a way that entitles him or her to relief.” Burns v. Architectural Doors & Windows, 2011 ME 61, ¶ 17, 19 A.3d 823. In a different context, we said that “[a] person is aggrieved . . . if that person has suffered particularized injury—that is, if . . . [an] action operated prejudicially and directly upon the party’s property, pecuniary or personal rights.” Nelson v. Bayroot, LLC, 2008 ME 91, ¶ 10, 953 A.2d 378. [¶21] Here, accepting the factual allegation in the complaint as true, America was exposed to secondhand smoke when outside his unit. The complaint does not allege how much, how often, or to what effect. Simply stating in his brief that the harm to him is “universally understood” under those vague circumstances is not sufficient to establish an actionable injury. Without any specifics concerning his exposure and the results of that exposure, the court could not find that America “allege[d] facts sufficient to demonstrate that [he] has been injured in a way that entitles him . . . to relief.” Burns, 2011 ME 61, ¶ 17, 19 A.3d 823. 13 3. The Sufficiency of the Complaint’s Smoking-Ban Counts [¶22] We now examine the legal sufficiency of the five smoking-ban-related counts in America’s amended complaint. In Counts I (breach of fiduciary duty), III (violation of the MCA), and V (violation of the MNCA), America alleged that the defendants acted in bad faith. As discussed above, the complaint’s factual assertions do not make out a claim of bad faith due to a flat refusal to enforce the smoking ban, but rather demonstrate a disagreement over how to enforce it. In that circumstance, the defendants’ discretionary decisions are protected by the business judgment rule. [¶23] Count VII alleges breach of contract based on the defendants’ failure to enforce a Sunspray rule, namely the smoking ban. An element of that claim is that America show “actual injury or damage.” In re Hannaford Bros., Co. Customer Data Sec. Breach Litig., 2010 ME 93, ¶ 8, 4 A.3d 492. As discussed above, the facts alleged in the complaint do not make out a cognizable injury to America. [¶24] Finally, Count X alleges negligence in that “[d]efendants breached their duty to exercise reasonable care in enforcing the Smoking Ban.” “A claim of negligence requires proof of a duty owed, breach of that duty, and an injury proximately caused by the breach.” Gray v. TD Bank, N.A., 2012 ME 83, ¶ 16, 45 A.3d 735; see In re Hannaford Bros., Co., 2010 ME 93, ¶¶ 8-9, 4 A.3d 492 14 (stating that “actual injury” is an element of a negligence claim, and that because “[t]he tort of negligence does not compensate individuals for the typical annoyances or inconveniences that are a part of everyday life. . . . [l]iability . . . ordinarily requires proof of personal injury or property damage.” (citation omitted)). Because the complaint did not allege a cognizable injury, this count was properly dismissed. The entry is: Judgment affirmed. On the briefs: Neal F. Pratt, Esq., and Jonathan G. Mermin, Esq., Preti Flaherty, LLP, Portland, for appellant Vitorino America Catherine R. Connors, Esq., Geraldine G. Sanchez, Esq., Nolan L. Reichl, Esq., and Joshua D. Dunlap, Esq., Pierce Atwood LLP, Portland, for appellees Sunspray Condominium Association et al. At oral argument: Neal F. Pratt, Esq., for appellant Vitorino America Catherine R. Connors, Esq., for appellees Sunspray Condominium Association et al. Business and Consumer Docket docket number CV-2011-41 FOR CLERK REFERENCE ONLY