U.S. District Court Allows Association’s Claims To Proceed For Actions During Period of Developer Control

The United States District Court for the District of Maryland has denied a motion to dismiss filed on behalf of a developer, and allowed claims of a property owner’s association to proceed that concern actions taken while the board was under the control of the developer’s agents.  In Greenspring Quarry Association, Inc. v. Beazer Homes Corp., Civil No. JKB-17-646, the association’s suit relates to charges for common area maintenance costs.  The assoication alleged that the developer was to be responsible for such charges until title transferred to the association, and claimed that, during the period that the developer controlled the board, the management company had been instructed to bill the association for common area maintenance for several years before title was transferred.  The court denied the developer’s motion to dismiss all claims, finding that there were sufficient allegations of an independent duty of care and reasonable reliance on the representations made, and that the claims were stated with sufficient particularity.  Notably, the court found that the developer’s agents on the board assumed fiduciary duties to the association when they occupied the board seats.