Trustees of the Cambridge Point Condominium Trust v. Cambridge Point, LLC ( 2018 )

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SJC-12327
TRUSTEES OF THE CAMBRIDGE POINT CONDOMINIUM TRUST vs.
CAMBRIDGE POINT, LLC, & others. 1
Middlesex. October 5, 2017. - January 19, 2018.
Present: Gants, C.J., Gaziano, Lowy, Budd, Cypher, &
Kafker, JJ.
Condominiums, By-laws, Management, Common area. Real Property,
Condominium. Public Policy.
Civil action commenced in the Superior Court Department on
April 3, 2014.
A motion for partial summary judgment was heard by Rosalind
H. Miller, J.; a motion for reconsideration was considered by
her; and motions to dismiss were heard by Peter B. Krupp, J.
The Supreme Judicial Court granted an application for
direct appellate review.
Edmund A. Allcock for the plaintiffs.
John F. Gleavy for CDI Commercial Development, Inc., &
another.
David Aleksic, for Frank Fodera & another, was present but
did not argue.
1
Northern Development, LLC; CDI Commercial Development,
Inc.; Giuseppe Fodera; Frank Fodera; Frank Fodera, Jr.; and
Anahid Mardiros.
2
David T. Keenan, for Anahid Mardiros, was present but did
not argue.
Henry A. Goodman & Ellen A. Shapiro, for Community
Associations Institute, amicus curiae, submitted a brief.
Cailin M. Burke, Julie B. Heinzelman, Diane R. Rubin,
Thomas O. Moriarty, & Kimberly A. Bielan, for Real Estate Bar
Association for Massachusetts, Inc., & another, amici curiae,
submitted a brief.
GANTS, C.J. In this action, a condominium trust's board of
trustees has filed suit against the developers of the
condominium for damages arising from various design and
construction defects in the condominium's common areas and
facilities. The condominium bylaws, however, provide that the
trustees cannot bring any litigation involving the common areas
and facilities against anyone other than a unit owner unless
they first obtain the consent of at least eighty per cent of the
unit owners. The issue on appeal is whether this bylaw
provision is void, either because it violates the Condominium
Act (act), G. L. c. 183A, or because it contravenes public
policy. We conclude that it is void because it contravenes
public policy. 2
Background. In 2007, Cambridge Point, LLC, as the
declarant of a predominantly residential forty-two-unit
condominium in Cambridge, filed in the Middlesex South District
registry of deeds a master deed, a declaration of trust, and the
2
We acknowledge the amicus briefs submitted by the
Community Associations Institute and by the Real Estate Bar
Association for Massachusetts, Inc., and the Abstract Club.
3
bylaws of the Cambridge Point Condominium Trust (trust). The
trust's board of trustees (trustees) is responsible for
administering the affairs of the trust. Among the powers and
duties committed to the trustees is the authority under § 1(o)
of the bylaws to "conduct[] litigation as to any course of
action involving the common areas and facilities." However,
this authority is limited by a condition precedent that requires
the trustees, before initiating any litigation against anyone
who is not a unit owner, (1) to deliver a copy of the proposed
complaint to all unit owners; (2) to specify a monetary limit of
the amount to be paid as legal fees and costs in the proposed
litigation; (3) to inform all unit owners that, if they consent
to the initiation of the litigation, they will forthwith be
separately assessed this amount of legal fees and costs as a
special assessment; and (4) within sixty days after a copy of
the proposed complaint has been delivered to the unit owners, to
receive the written consent of not less than eighty per cent 3 of
all unit owners to bring the litigation. 4
3
Section 32 of the condominium's bylaws defines
"[p]ercentage of [u]nit [o]wners" as "the owners of the
specified percentage in the aggregate in interest of the
undivided ownership in the common areas and facilities of the
[c]ondominium."
4
Section 1(o) of the condominium's bylaws provides in
relevant part:
"The [b]oard of [t]rustees shall have all powers necessary
4
In 2012, the trust began receiving complaints from unit
owners about pervasive water leaks, which were infiltrating and
damaging the building envelope, eventually causing a mold
for administering the affairs of the [c]ondominium as set
forth in [G. L. c. 183A] . . . . Such powers and duties of
the [t]rustees shall include, but shall not be limited to,
. . .
(o) conducting litigation as to any course of action
involving the common areas and facilities . . . .
"Notwithstanding any provision of the [m]aster [d]eed, or
the [d]eclaration of [t]rust of the [c]ondominium [t]rust,
or of these [b]ylaws or the [r]ules and [r]egulations to
the contrary, neither the [t]rustees acting in their
capacity as such [t]rustees or acting as representatives of
the [u]nit [o]wners, nor any class of the [u]nit [o]wners
shall bring any litigation whatsoever unless a copy of the
proposed complaint in such litigation has been delivered to
all of the [u]nit [o]wners, and not less than eighty [per
cent] (80%) of all [u]nit [o]wners consent in writing to
the bringing of such litigation within sixty (60) days
after a copy of such complaint had been delivered to the
[u]nit [o]wners and specifying as part of the written
consent a specific monetary limitation to be paid as legal
fees and costs and expenses to be incurred in connection
therewith, which amount shall be separately assessed as a
special assessment effective forthwith at the time of said
affirmative consent. Notwithstanding any provisions of the
[m]aster [d]eed, or of the [d]eclaration of [t]rust of the
[c]ondominium [t]rust . . . or these [b]ylaws or the
[r]ules and [r]egulations, the provisions of this
[p]aragraph . . . shall not be amended except by vote of at
least eighty [per cent] (80%) of [u]nit [o]wners. The
provisions of this [p]aragraph (o) shall not apply to
litigation by the [c]ondominium [t]rust against [u]nit
[o]wners with respect to the recovery of overdue [c]ommon
[e]xpenses or [s]pecial [a]ssessments or to foreclose the
lien provided by [G. L. c. 183A, § 6], and [G. L.
c. 254, §§ 5 and 5A], . . . or to enforce any of the
provisions of the [m]aster [d]eed, or the [d]eclaration of
[t]rust of the [c]ondominium [t]rust, or these [b]ylaws
. . . , or the unit deed, against [u]nit [o]wners . . . ."
5
infestation both on the exterior sheathing of the building
envelope and within individual units. An investigation
conducted by an engineering firm in 2013 identified myriad
design and construction defects with the condominium. When the
trust's demands that the developers repair the defective
construction proved futile, the trust sought out a contractor to
repair the building, who estimated the costs of repair as
exceeding $2 million.
On April 3, 2014, after having delivered to the unit owners
the proposed complaint and a statement of the estimated legal
fees and costs of the litigation, but without having received
the written consent of at least eighty per cent of the unit
owners, the trustees filed a verified complaint in the Superior
Court against the developers of the condominium 5 alleging
negligence, breach of the implied warranty of habitability,
negligent misrepresentation, fraudulent misrepresentation and
concealment, and breach of fiduciary duty. In their complaint,
5
We refer to all of the defendants as "developers of the
condominium" but recognize that the defendant Anahid Mardiros
does not appear to have participated in the drafting of the
condominium documents or the development and maintenance of the
condominium. She has filed a separate brief, claiming that her
only affiliation with the other defendants is as a trustee of
the Cambridge Point Nominee Trust, which is not a defendant
here. To resolve this appeal, we need not (and do not) address
whether Mardiros is properly a defendant in this action. We
also note that, pursuant to a stipulation by the parties, the
claims against the defendant Frank Fodera, Jr., were dismissed
prior to the judgment of dismissal at issue in this appeal.
6
the trustees also sought a judgment declaring that § 1(o) of the
bylaws is void. They alleged that, because the developers and
their affiliates had "reserved for themselves, and continue to
own, enough units to prevent an [eighty per cent] supermajority
of [u]nit [o]wners to authorize the [t]rust to institute a
lawsuit," § 1(o) effectively prevented them from obtaining legal
redress. 6
The trustees moved for partial summary judgment on their
claim seeking a judgment declaring that § 1(o) of the bylaws is
void. The first motion judge denied the motion. 7 The developers
then moved to dismiss the complaint on the grounds that the
trustees had not obtained the minimum level of consent required
under § 1(o). The second motion judge allowed the motions to
dismiss, concluding that the act "does not prohibit adoption of
a bylaw that requires a percentage of unit owners to consent to
litigation before litigation is filed by the trustees of a
condominium," and that the requirements of § 1(o) did not
6
The trustees also sought a judgment declaring that
§ III(i) of the declaration of trust, which provides for the
indemnification of the trustees "against any liability incurred
by them," is void, but neither motion judge addressed this claim
and it is not before us on appeal.
7
The first motion judge initially ruled that the trustees
could proceed with the litigation if they obtained the consent
of eighty per cent of the "disinterested unit owners," defined
as those who had neither business, financial, nor familial ties
to the developers, but, on reconsideration, she determined that
under § 1(o), the litigation required the consent of at least
eighty per cent of all unit owners.
7
constitute "overreaching" in contravention of public policy
where the unit owners knew or should have known of these
requirements prior to purchasing a unit. The trustees appealed,
and we granted their application for direct appellate review.
Discussion. The trustees argue that the provisions in
§ 1(o) of the bylaws requiring them to obtain the consent of at
least eighty per cent of the unit owners before initiating
litigation against the developers are void for two reasons: (1)
they circumscribe the power of the trustees to conduct
litigation, in violation of the act; and (2) they effectively
shield the developers from any litigation brought on behalf of
the unit owners for defects in the construction and design of
the condominium, in contravention of public policy. We address
each argument in turn.
1. Does the act prohibit any requirement of unit owner
consent before the trustees may initiate litigation? Under
§ 10 (b) (4) of the act, a condominium trust, as the entity
granted the authority to manage the common areas and facilities
of the condominium, "shall have, among its other powers, the
. . . rights and powers . . . [t]o conduct litigation . . . as
to any course of action involving the common areas and
facilities." We have recognized that, where there are defects
or other problems in the common areas and facilities, the
authority of a condominium trust to seek a remedy through
8
litigation is "exclusive." Berish v. Bornstein, 437 Mass. 252,
265 (2002). "[C]ondominium unit owners cede the management and
control of the common areas to the organization of unit owners,
which is the only party that may bring litigation relating to
the common areas of the condominium development on their
behalf." Id. at 263. See Strauss v. Oyster River Condominium
Trust, 417 Mass. 442, 445 (1994) ("Only the trustees have the
right to conduct litigation concerning 'common areas and
facilities'" [citation omitted]). The trustees contend, in
essence, that, because the act provides that they are the only
party that may commence litigation to obtain compensation for
damages arising from construction and design defects in the
common areas, the act implicitly prohibits any bylaw provision
that requires the trustees to obtain the consent of the unit
owners before filing suit.
We are not persuaded that every bylaw that requires unit
owner consent before the trustees may initiate litigation is in
violation of the act. The act is "essentially an enabling
statute, setting out a framework for the development of
condominiums in the Commonwealth, while providing developers and
unit owners with planning flexibility." Scully v. Tillery, 456
Mass. 758, 769 (2010), quoting Queler v. Skowron, 438 Mass. 304,
312 (2002). It "sets forth certain minimum requirements for the
establishment of condominiums, but 'those matters that are not
9
specifically addressed in the statute are to be worked out by
the involved parties.'" Scully, supra, quoting Queler, supra at
312-313. Matters not specifically addressed by the act may be
undertaken through the condominium bylaws, provided they are not
"inconsistent" with the act or the master deed. See G. L.
c. 183A, § 12 (d) ("The [bylaws] may also provide . . . [s]uch
other provisions as may be deemed necessary for the management
and regulation of the organization of unit owners or the
condominium not inconsistent with [G. L. c. 183A] and the master
deed").
The act declares that the "organization of unit owners," as
defined in G. L. c. 183A, § 1 -- here, the trust -- has the
power to "manage, and otherwise deal with" common areas and
facilities of the condominium. G. L. c. 183A, § 10 (b) (1).
However, the act does not grant unbridled authority to the trust
with respect to every management decision that affects common
areas and facilities. For example, it requires the agreement of
at least seventy-five per cent of the unit owners to repair or
restore a condominium in the event it suffers a casualty loss
that exceeds ten per cent of the value of the condominium.
G. L. c. 183A, § 17 (b) (1). It also provides that improvements
to the common areas and facilities may not be treated as a
"common expense" borne collectively by the unit owners unless at
least seventy-five per cent of the unit owners agree to make the
10
improvements. G. L. c. 183A, § 18 (b). The existence of these
provisions in the act suggests that the Legislature did not
believe that a condominium trust's power to manage the common
areas and facilities is necessarily inconsistent with a
requirement of unit owner consent for certain management
decisions.
The trustees contend that, because the Legislature included
provisions in the act requiring unit owner consent under some
circumstances, but failed to include any comparable provision
governing the initiation of litigation, we can therefore infer
that the Legislature intended to prohibit any bylaw requiring
unit owner consent for litigation. "However, the maxim of
negative implication -- that the express inclusion of one thing
implies the exclusion of another -- 'requires great caution in
its application.'" Halebian v. Berv, 457 Mass. 620, 628 (2010),
quoting 2A N.J. Singer & J.D. Shambie Singer, Sutherland
Statutory Construction § 47.25, at 429 (7th ed. 2007). Such
caution is especially appropriate here, given the enabling
nature of the act and the wide latitude and flexibility it
provides developers and unit owners to craft arrangements not
specifically addressed by the act. See Scully, 456 Mass. at
769. We cannot reasonably infer that, because the act requires
unit owner consent for some management decisions, the
Legislature intended to prohibit any bylaw requiring unit owner
11
consent for other management decisions, including the decision
to commence litigation concerning common areas or facilities.
See Halebian, supra, quoting 2A N.J. Singer & J.D. Shambie
Singer, Sutherland Statutory Construction, supra at § 47.25, at
433-435 (maxim of negative implication "will be disregarded
. . . where its application would thwart the legislative intent
made apparent by the entire act"). See also Bank of Am., N.A.
v. Rosa, 466 Mass. 613, 619-620 (2013). Such an inference would
require a clearer indication of legislative intent than mere
negative implication. See generally Globe Newspaper Co.,
petitioner, 461 Mass. 113, 119 (2011) (applying maxim of
negative implication would yield result not intended by
Legislature). Therefore, we conclude that a bylaw provision
requiring unit owner consent to initiate litigation is not per
se void because it is "inconsistent" with the act under
§ 12 (d).
2. Is this particular bylaw void because it contravenes
public policy? Having determined that the act does not
bar every bylaw provision requiring unit owner consent prior to
litigation, we now consider whether this bylaw provision is void
because it contravenes public policy. We begin by recognizing
that the bylaw provision's requirement of the consent of at
least eighty per cent of all unit owners makes it effectively
impossible for the trustees to sue the developers of a
12
condominium for damages arising from the defective construction
and design of common areas or facilities where, as here, the
developers or their affiliates retain an ownership interest in
at least twenty per cent of the units. 8 The developers are not
likely to agree to sue themselves. And if the trustees cannot
file suit against the developers, no one can, because their
authority to bring such a suit is "exclusive" as to the common
areas and facilities of the condominium. See Berish, 437 Mass.
at 265. Moreover, if the developers or their affiliates were to
retain at least a twenty per cent ownership interest in the
units for more than six years, they could effectively prevent
any suit from being brought against them for design or
construction defects in the common areas or facilities because
the statute of repose would bar any subsequent suit. See G. L.
8
Giuseppe Fodera, Frank Fodera, and Frank Fodera, Jr.,
formed, and currently manage, the defendant Cambridge Point,
LLC. These three individuals contemporaneously formed, and
currently manage, defendant Northern Development, LLC, the
general contractor of the condominium. These three individuals
and their affiliates owned at least 20.36 per cent of the
beneficial interest in the condominium units: Giuseppe owned a
5.58 per cent beneficial interest; Ciross, LLC, owned by
Giuseppe's wife, owned a 6.54 per cent beneficial interest; a
limited liability corporation owned by Giuseppe's relative owned
a 3.49 per cent beneficial interest; and a trust formed by Frank
Fodera, who appointed his lawyer as the trustee, owned a 4.75
per cent beneficial interest. Consequently, even without
considering Mardiros's 14.87 per cent beneficial interest, see
note 5, supra, the developers and their affiliates alone could
have thwarted any attempt by the trustees to initiate litigation
against the developers for defects in construction in the common
areas and facilities.
13
c. 260, § 2B (six-year statute of repose for tort actions for
damages arising out of deficiency or neglect in design,
planning, construction, or general administration of improvement
to real property). 9
Even if the developers or their affiliates did not retain a
twenty per cent ownership interest, the provisions of § 1(o), in
their entirety, make it extraordinarily difficult for the
trustees to sue the developer for defective construction and
design of common areas or facilities. First, the bylaw
provisions require the consent of at least eighty per cent
of all unit owners, so if the developers retain any ownership
interest in the units, the trustees would need to obtain the
consent of more than eighty per cent of the unit owners who are
not affiliated with the developers -- and perhaps all of them,
if the developers have retained nearly twenty per cent of the
units. Second, because the trustees must obtain the affirmative
consent of at least eighty per cent of all unit owners, any unit
owner who fails to respond to the request for written consent is
treated as if he or she refused such consent, regardless of
whether the unit owner is ill, has rented out the unit and is
9
Even if the developers or their affiliates were to retain
at least a twenty per cent ownership interest in the units for
just three years, any such suit might also be barred by the
statute of limitations, depending upon the date the cause of
action accrued. See G. L. c. 260, § 2B (actions in tort for
negligent design or construction "shall be commenced only within
three years after the cause of action accrues").
14
presently unavailable, or is simply unwilling to make a
decision. Contrast Fla. Stat. § 720.303(1) (homeowners
association required to "obtain the affirmative approval of a
majority of the voting interests [present] at a meeting of the
membership at which a quorum has been attained" prior to
litigating any matter in which amount in controversy exceeds
$100,000). Third, the bylaw provides that the entirety of the
legal fees and costs to be incurred from litigation must be
"separately assessed as a special assessment effective
forthwith" upon consent, even though the legal fees and costs
would be incurred and billed during the life of the litigation.
See Mass. R. Prof. C. 1.15 (b) (3), as appearing in 471 Mass.
1380 (2015) (even where retainer paid in advance, lawyer may not
withdraw funds until fees earned or expenses incurred). Fourth,
the trustees have only a brief time frame of sixty days to
obtain the required written consent from the unit owners.
Cumulatively, these requirements function as a formidable hurdle
that the trustees are required to surmount before commencing
litigation against the developers.
We have long recognized that "the public interest in
freedom of contract is sometimes outweighed by public policy,
and in such cases [a] contract will not be enforced." Beacon
Hill Civic Ass'n v. Ristorante Toscano, Inc., 422 Mass. 318, 321
(1996). "The grounds for a public policy exception must be
15
clear in the acts of the Legislature or the decisions of this
court." Miller v. Cotter, 448 Mass. 671, 683 (2007).
See Beacon Hill Civic Ass'n, supra at 321 ("'Public policy' in
this context refers to a court's conviction, grounded in
legislation and precedent, that denying enforcement of a
contractual term is necessary to protect some aspect of the
public welfare"). Consequently, we must consider whether a
bylaw that makes it extraordinarily difficult -- and in this
case, effectively impossible -- to obtain redress for a
developer's defective construction and design of common areas
and facilities is void because it is contrary to public policy.
Massachusetts has a well-established public policy in favor
of the safety and habitability of homes, as reflected in our
implied warranty of habitability under common law and in the
legislative enactment of building codes. In Albrecht
v. Clifford, 436 Mass. 706, 710-711 (2002), we expanded our
implied warranty of habitability under common law, holding that
it attaches not only to residential leases but also to "the sale
of new homes by builder-vendors in the Commonwealth." The
purpose of this implied warranty is "to protect a purchaser of a
new home from latent defects that create substantial questions
of safety and habitability." Id. at 711. Cf. Boston Hous.
Auth. v. Hemingway, 363 Mass. 184, 199 (1973) ("[I]n a rental of
any premises for dwelling purposes, under a written or oral
16
lease, for a specified time or at will, there is an implied
warranty that the premises are fit for human occupation").
Although the precise scope of the warranty depends on the
circumstances of the case, "a home that is unsafe because it
deviates from fundamental aspects of the applicable building
codes, or is structurally unsound, or fails to keep out the
elements because of defects of construction, would breach the
implied warranty." Albrecht, supra. We have emphasized that
"[the implied warranty] cannot be waived or disclaimed, because
to permit the disclaimer of a warranty protecting a purchaser
from the consequences of latent defects would defeat the very
purpose of the warranty." Id. Cf. Boston Hous. Auth., supra
("This warranty [insofar as it is based on the State [s]anitary
[c]ode and local health regulations] cannot be waived by any
provision in the lease or rental agreement").
"The policy reasons that led us to adopt an implied
warranty of habitability in the purchase of a new home apply
equally to the purchase of a new condominium unit." Berish, 437
Mass. at 263. In Berish, supra, we therefore held that an
implied warranty of habitability attaches to the sale of new
residential condominium units by builder-vendors. 10 At the same
10
"A claim for breach of this implied warranty may be
brought by an individual unit owner who can establish that (1)
he purchased a new residential condominium unit from the
builder-vendor; (2) the condominium unit contained a latent
17
time, we recognized that "the protections afforded [to]
purchasers of newly constructed condominium units by this
implied warranty against latent defects in their own units may
not be adequate to ensure the habitability of those units"
because improper design, material, or workmanship that causes a
defect in a common area might cause units to be uninhabitable or
unsafe. Id. at 264-265. "To ensure that there is a complete
remedy for a breach of habitability in the sale of condominium
units, we conclude[d] that an organization of unit owners" --
such as a condominium trust -- "may bring a claim for breach of
the implied warranty of habitability when there are latent
defects in the common areas that implicate the habitability of
individual units." Id. at 265. 11
A developer of a condominium not only is subject to the
defect; (3) the defect manifested itself to the purchaser only
after its purchase; (4) the defect was caused by the builder's
improper design, material, or workmanship; and (5) the defect
created a substantial question of safety or made the condominium
unit unfit for human habitation." Berish v. Bornstein, 437
Mass. 252, 264 (2002).
11
To establish a claim for the breach of the implied
warranty of habitability, the condominium trust must demonstrate
that: "(1) it is an organization of unit owners as defined by
G. L. c. 183A, § 1; (2) the common area of the condominium
development contains a latent defect; (3) the latent defect
manifested itself after construction of the common areas was
substantially completed; (4) the defect was caused by the
builder's improper design, material, or workmanship; and (5) the
defect created a substantial question of safety as to one or
more individual units, or made such units unfit for human
habitation." Berish, 437 Mass. at 265-266.
18
implied warranty of habitability but also must comply with the
minimum standards prescribed by the building code. See 780 Code
Mass. Regs. § 114.1 (2017) ("It shall be unlawful for any
person, firm[,] or corporation to erect [or] construct . . . any
building, structure[,] or equipment regulated by [the building
code] . . . in violation of any of [its] provisions . . .").
The purpose of the building code "is to establish the minimum
requirements to safeguard the public health, safety[,] and
general welfare . . . ." 780 Code Mass. Regs. § 101.3 (2017).
The importance of adherence to the building code is evident from
the fact that, in certain circumstances, a building code
violation may also result in liability under G. L. c. 93A,
pursuant to the Attorney General's regulation, 940 Code Mass.
Regs. § 3.16(3) (1993), which provides, among other things, that
an act or practice may constitute unfair or deceptive conduct
within the scope of G. L. c. 93A if it "fails to comply with
existing statutes, rules, regulations[,] or laws, meant for the
protection of the public's health, safety, or welfare."
See Klairmont v. Gainsboro Rest., Inc., 465 Mass. 165, 170
(2013) (building code violation may constitute violation of
G. L. c. 93A, § 2 [a], if underlying conduct is unfair or
deceptive, and occurs in trade or commerce). Importantly, where
a claim under G. L. c. 93A, § 2 (a), arises from a building code
violation, that claim cannot be waived because such a waiver
19
could "do violence to the public policy underlying the
legislative enactment." Canal Elec. Co. v. Westinghouse Elec.
Corp., 406 Mass. 369, 378 (1990), quoting Spence v. Reeder, 382
Mass. 398, 413 (1981). See Downey v. Chutehall Constr. Co., 88
Mass. App. Ct. 795, 800-801 (2016) (waiver of building code
requirements by homeowner does not preclude contractor's
liability for G. L. c. 93A violation arising from building code
violation "where there are possible consequences for the safety
of the homeowner and others").
In sum, it is "clear [from] the acts of the Legislature
[and] the decisions of this court," Miller, 448 Mass. at 683,
that the public policy of Massachusetts strongly favors the
safety and habitability of homes. In order to effectuate this
public policy, we have consistently recognized the rights of
individuals to obtain legal redress when their homes fail to
meet minimum standards. These rights -- whether grounded in the
implied warranty of habitability or in the building code as
enforced through G. L. c. 93A -- are so vital that we have
consistently held that they cannot be waived.
This clear expression of public policy leads us to conclude
that a condominium bylaw provision that effectively limits the
ability of unit owners to obtain legal redress for violations of
these rights must be carefully scrutinized to determine whether
it contravenes that public policy. For example, if a bylaw were
20
to provide that the unit owners waive all claims against the
developers for any defects in construction, we would surely
declare such a bylaw void as contravening public policy to the
extent that it sought to waive the unwaivable claims based on
the implied warranty of habitability and G. L. c. 93A, § 2 (a).
And we surely would not enforce such a sweeping waiver to the
extent that it would shield the developers from claims of gross
negligence. See Maryland Cas. Co. v. NSTAR Elec. Co., 471 Mass.
416, 422 (2015), quoting Zavras v. Capeway Rovers Motorcycle
Club, Inc., 44 Mass. App. Ct. 17, 19 (1997) ("[It is a] well-
established principle of contract law . . . that, 'while a party
may contract against liability for harm caused by its
negligence, it may not do so with respect to its gross
negligence'"). See also CSX Transp., Inc. v. Massachusetts Bay
Transp. Auth., 697 F. Supp. 2d 213, 226 (D. Mass. 2010) ("[T]he
[Supreme Judicial Court] would not enforce agreements purporting
to require indemnification against gross negligence").
But the bylaw provision here, in practical effect, is even
more sweeping and more unfair than this hypothetical bylaw
provision. It is more sweeping because, as here, where the
developers and their affiliates control more than twenty per
cent of the units, this provision effectively prevents the
trustees from bringing any claim in litigation against the
developers for defects in construction or design, regardless of
21
whether the claim is for a breach of the implied warranty of
habitability, a violation of G. L. c. 93A, or any other claim
(including gross negligence, fraud, or intentional misconduct).
And it is more unfair than the hypothetical bylaw provision
because its practical effect would likely not be immediately
apparent to a reasonable prospective purchaser. If, under our
hypothetical bylaw provision, unit owners were required to waive
all claims against the developers for defects in construction or
design, a prospective purchaser -- if he or she had reviewed the
bylaws in the registry of deeds -- would know that he or she
would have no legal recourse against the developers for any
defects in construction or design of the common areas and
facilities of the condominium. A reasonable prospective
purchaser, however, would not necessarily understand from the
terms of § 1(o) the absence of legal recourse (or the severity
of the impediments to legal recourse), because the prospective
purchaser would not know how many condominium units the
developers intended to retain, and for how long. Without this
information, a prospective purchaser could not know whether
§ 1(o) is simply a provision that requires consent from eighty
per cent of the unit owners before initiating litigation, or a
provision that, in effect, will shield the developers from any
and all legal claims by the trustees.
In Barclay v. DeVeau, 384 Mass. 676, 682 (1981), we
22
declared that "[a]bsent overreaching or fraud by a developer, we
find no strong public policy against interpreting c. 183A,
§ 10 (a), to permit the developer and unit owners to agree on
the details of administration and management of the condominium
unit" (footnote omitted). We conclude that it is overreaching
for a developer to impose a condition precedent that, for all
practical purposes, makes it extraordinarily difficult or even
impossible for the trustees to initiate any litigation against
the developers regarding the common areas and facilities of a
condominium. Such a provision has all the same flaws as a
waiver of liability provision -- which we would find void as
contravening public policy -- but without the transparency of
such a provision. We therefore conclude that § 1(o) of the
bylaws, viewed in light of the totality of the circumstances, is
void because it contravenes public policy. 12
Conclusion. We vacate the judgment of dismissal of the
verified complaint, order the grant of partial summary judgment
on so much of the trustees' declaratory judgment claim as seeks
a declaration that § 1(o) of the bylaws is void as contravening
12
Because we reach this conclusion, we need not (and do
not) address the trustees' other arguments that § 1(o) of the
bylaws denies access to the courts in violation of art. 11 of
the Massachusetts Declaration of Rights, or that the provision
invades the attorney-client relationship and privilege by
requiring the trustees to provide unit owners with a draft of
the complaint and an estimate of the legal fees and costs to be
incurred in the proposed litigation.
23
public policy, and remand the matter to the Superior Court for
further proceedings consistent with this opinion.
So ordered.