I am frequently asked to discuss my representation of the owner of a multi-million dollar penthouse condominium unit on the top floor of a residential high-rise building on Baltimore’s Inner Harbor known as Harborview Condominium. The claim concerned the failure of the Condominium’s Council of Unit Owners to correct defects in the common elements of the roof, exterior façade and HVAC system. These defects were alleged to have permitted water intrusion through the exterior envelope and into the Plaintiff’s unit, resulting in damage to building components, interior finishes and furnishings and other personal property, along with microbial contamination, which rendered the unit uninhabitable.
The case was tried over five days before a three-judge arbitration panel in September 2011. In November 2011, the arbitration panel awarded the Plaintiff cash damages in the amount of $1,252,487, representing the cost to repair damage to the unit and to remediate the environmental contamination, along with alternative living expenses and other related costs. The panel also issued a specific performance award directing the Condominium to undertake an identified scope of work to repair to the roof, exterior façade and HVAC system. The value of the repair is approximately $5,000.000. The panel ordered that the HVAC repairs be completed within 60 days, and that the remaining building repairs be completed by December 2013.
On June 5, 2012, the Circuit Court for Baltimore City confirmed the arbitration award in its entirety, and a judgment was entered. Those of you who are interested are welcome to click the “Read More” tab to review the case details that follow:
Penthouse 4C, LLC (“PH4C”) is a limited liability company organized under the laws of Maryland, and the owner of the penthouse condominium unit at Harborview. James W. Ancel, Sr. purchased 100% of the membership interest in the PH4C in April of 2007. At that time, Mr. Ancel became the sole member of PH4C and the primary resident of the Unit. On March 9, 2010, PH4C filed a Complaint for Specific Performance and Damages in the Circuit Court for Baltimore City relating to Condominium’s failure to perform duties required by the By-Laws of 100 Harborview Drive Condominium and Maryland law, including the failure to repair and maintain the common elements of the Condominium. The claim concerned water intrusion and other damages to the Unit arising from defects in common element components, including the roof, exterior façade and HVAC system. It was alleged that, as a result of transition studies and other information, the Condominium had long been aware of building deficiencies, but had not acted properly in responding to these issues.
On June 18, 2010, the Court ordered that the “case BE and the same IS HEREBY stayed as to all Defendants for arbitration pursuant to the parties’ arbitration agreement under the By-Laws of 100 Harborview Condominium.”
The arbitration agreement referenced by the Court in its June 4, 2010 Order is found in Article XV, Section 2 of the By-Laws: “If there be any dispute, concerning rules and regulations or any other matter related to the condominium, between the Council … and any unit owner … the same shall be submitted to arbitration in accordance with Section 3 of this Article XV.” Article XV, Section 3(a) prescribes the procedure for selecting an arbitration panel: “Each of the two parties to the dispute or disagreement shall appoint one (1) arbitrator, the two arbitrators thus appointed shall, within fifteen (15) days after the second of them is appointed, jointly appoint a disinterested, mature and competent person as the third impartial arbitrator ….”
Following the Court’s June 4, 2010 Order, and pursuant to the arbitration agreement in the By-Laws, the parties conducted a private arbitration before an arbitration panel consisting of retired Maryland jurists, the Honorable Dana M. Levitz, the Honorable Paul E. Alpert, and the Honorable Dale R. Cathell. Before the trial, PH4C filed a First Amended Complaint for Specific Performance and Damages, which included the allegation that Mr. Ancel had been forced to vacate the unit as a result of the water damage and environmental contamination. The Amended Complaint requested that Defendant be specifically ordered to correct the maintenance failures in a workmanlike manner, using appropriate means and methods. The Amended Complaint also alleged that the Condominium’s breach of contract and negligence have caused PH4C to suffer “direct and consequential” damages, including but not limited to “loss of value of Unit, payment for the installation and monthly service fees of a security system, exposure to uninhabitable and dangerous living conditions, including exposure to mold spores, removal and correction of mold issues arising, and payment of Council fees that have not been used for its intended purpose.”
The case was heard by the arbitration panel during five days in September 2011. Numerous experts were called by both sides, including structural and environmental engineers. Following the trial, the parties were required to submit Proposed Findings of Fact and Conclusions of Law, after which the arbitration panel heard closing arguments from counsel in October 2011. On November 24, 2011, the majority of the arbitration panel issued its award. It then found that “[b]ecause of the conditions on PH 4C – water damage, mold growth, and mold deposition, the unit cannot be said to be safe for normal occupancy and a remediation protocol must be followed to correct the problems.” As a result, the panel awarded PH4C “the sum of $1,252,487.00 as compensatory damages suffered as a result of the Condominium’s negligence and breach of their contractual obligations.” The panel also ordered and awarded relief to PH4C on its claim for specific performance, as follows.
“The Council must clean the rooftop HVAC unit and the ductwork from those units, through the elevator lobbies on each floor of the building in accordance with the National Air Duct Cleaners Association (NADCA) standards. The rooftop [exterior ductwork] must be fully insulated. The work must be completed within 60 days.
The Council must replace the building’s roof system and repair the exterior facade and other matters in accordance with page 18 of the CSG’s report of August 18, 2009. The work must be completed within 2 years.”
PH4C sought to have the arbitration award confirmed by the Circuit Court for Baltimore City, and the Condominium moved to have the award vacated in part and/or modified in part. The Circuit Court heard oral argument in March 2012, and, on June 5, 2012, issued a Memorandum Opinion in which it denied the Condominium’s request to vacate or modify the arbitration award, and confirmed the award in its entirety. Pursuant to the Court’s confirming the award, judgment was entered embodying the terms of the arbitration award, giving the arbitration ruling the effect of a court ordered judgment.