CONSTRUCTION DEFECT ATTORNEY FEES: condominium entitled to attorney fees in addition to construction defect damages.

 

Maryland Construction Defect Attorneys 

 Maryland condo association awarded $500,000.00 for attorney fees in addition to $6.6 million damages for cost of repairing construction defects.

A condominium association may have the legal right to recover attorney’s fees in a construction defect case.  For example, in a construction defect case where I served as an attorney for the condominium (discussed below), the Circuit Court for Montgomery County, Maryland  awarded a condominium association $500,000.00 in attorney’s fees in addition to a $6.6 million jury verdict in favor of the condominium association and against a developer  for the cost of repairing a defectively constructed Rockville condominium, that included structural failures, bursting sprinkler pipes, defective HVAC systems  and extensive water leaks through the exterior walls and roofs.

Below are some excerpts from an article I wrote discussing circumstances under which a condominium association has a right to recover attorney’s fees and how to utilize that right when negotiating the settlement of a construction defect dispute. A condominium association’s potential recovery of attorney’s fees at trial may provide the necessary leverage to obtain additional repairs, monetary compensation and/or other concessions as part of a negotiated construction defect settlement.

Legal Basis for Attorney Fee Recovery in a Construction Defect Case

Generally, attorney’s fees are not recoverable in a lawsuit unless specifically authorized by statute or contract.  Maryland has such a statute known as the “Maryland Consumer Protection Act” (“MCPA”).  The MCPA was originally enacted in 1973 to ease the burden facing consumers seeking legal redress from sellers who mislead them in transactions involving “consumer goods and services”.  The MCPA was amended in 1976 to include “consumer realty” thereby expanding its application to developer sales of residential condominiums.

The MCPA prohibits a seller of consumer realty, such as a developer of residential condominiums, from misleading purchasers regarding the quality, characteristics or standards of construction.  Under the MCPA, a unit owner or a condominium association on behalf of its unit owner members, can bring a law suit to recover the cost of repairing defects resulting from a violation of the MCPA by a builder or a developer.  For example, if a developer promises prospective unit owner purchasers that a condominium is or will be constructed in accordance with the building code, it is a violation of the MCPA if the construction is defective  because it does not comply with the building code.  In such a case, a claim can be made under the MCPA for the cost of repairing the non-code compliant construction.  In addition, the MCPA allows the Court to award “reasonable attorney’s fees” if the unit owners (or the association on their behalf) prevail at trial on the underlying construction defect claim.Under the MCPA it is not necessary to prove that a seller actually intended to mislead a prospective purchaser who relies to their detriment on a on a developer’s material representation about the condominium was not true.

The MCPA is intended to encourage Courts to award reasonable attorney’s fees regardless of the amount of the underlying damage claim so that “the Courthouse will remain open to consumers who might not otherwise be able to afford representation.”  By allowing consumers to recover their reasonable attorney’s fees, the MCPA encourages private attorney’s to accept ordinary consumer complaint cases, even though the potential attorney’s fees could be disproportionate to the amount of damages sought.

Utilizing the Right to Recover Attorney’s Fees in Developer Negotiations 

            Negotiating a construction defect dispute, without resorting to litigation, requires compromise from all parties concerned, tempered, in part, by the strength of their respective bargaining positions.  In practice, developers are loath to consider compensating an association for attorney’s fees incurred in negotiations.  They realize that proving a construction defect claim at trial can be an expensive, time consuming proposition for an association.  However, by demonstrating to the developer a specific legal basis upon which attorney’s fees could be recovered at trial, combined with a resolve to pursue litigation if necessary, an association can strengthen its bargaining position at the negotiating table.

Nicholas D. Cowie, Esq., of the law firm Cowie & Mott, is one of the attorneys who represented the condominium association in Milton Company v. Council of Unit Owners of Bentley Place Condominium, 121 Md. App. 100 (1998), aff’d, 354 MD 264 (1999). In that case, a condominium association obtained a verdict of $ 6.6 million plus $500,000 in attorneys fees.  For additional Articles discussing the case see the flowing links:

Council’s Authority To Sue in Construction Defect Cases,” by Nicholas D. Cowie

“Maryland’s Highest Court Reaffirms Council’s Broad Power in Construction Defect Cases,” by Nicholas D. Cowie

Maryland Construction Defect Lawyers