ACM News

Case Law Update: Violations, Fines and Open Meetings

Posted on January 30, 2017

By: Keough & Moody, P.C.

Effective on January 1, 2017 amendments to both the Illinois Condominium Property Act (“Act”), as well as the Common Interest Community Association Act (“CICAA”) went into effect which allow Boards to discuss a number of topics outside of open meetings. These amendments to the Act and CICAA expanded the topics allowed to be discussed in a closed session of a noticed board meeting, or in a separate board meeting, even if it is separate from a noticed meeting. However, these amendments make clear that any action or vote based on discussions in a closed session or separate board meeting must still be approved by at least a majority of the Board in open session of a properly called meeting, where a quorum exists.

A clear reminder of this necessity and requirement, that the board decision or action discussed in a closed session must still be voted upon in an open meeting, was recently brought to the forefront on December 30, 2016 in an unpublished decision of the First Appellate Court in Jayne v. Courtyard of Hardwood Heights Condominium Ass’n, 2016 IL APP (1st) 141004-U (1st Dist. Dec. 30, 2016). In Jayne, an Association held a unit owner in violation of the Association’s parking rules and regulations. As such, the Association provided the unit owner a hearing date in order to contest the violation. This hearing was conducted in a closed session and it was determined, by the Board, that the owner was in violation and that fines would be assessed to her account. However, the decision and vote by the Board to uphold the violation and impose a fine was not decided in open meeting of the Board.

After the owner failed to pay the fines assessed, the Association filed a lien against her property. In response, the owner brought a lawsuit alleging, in the end, slander of title. In response, the Association filed a counter-claim seeking to foreclose on its lien. After extensive motion practice, the Association was granted summary judgment in its favor on its foreclosure of lien. The unit owner appealed the ruling. In sum, the unit owner claimed that the Association was not entitled to foreclose the lien because the Association breached its fiduciary duty by failing to comply with the Act’s requirements under section 18(a)(9).

On appeal, the First District Court ruled in favor of the unit owner, holding that while the Board could discuss the owner’s violations and fines in closed session, any vote on the fines, pursuant to section 18(a)(9) of the Act, must be done in an open meeting of the owners. Relying upon its ruling in Alliance Property Management, Ltd. v. Forest Villa of Countryside Condominium Ass’n, 2015 IL App (1st) 150169 (1st Dist. Dec. 24, 2015), a case which our office successfully defended on behalf of the Association, the Appellate Court thereby ruled that the imposition of fines was void. As a result, the owner was entitled to summary judgment on the Association’s lien claim, and the Association was no longer the prevailing party and, thus, it was not entitled to its attorneys fees in the foreclosure of its lien.

While this case is not a published opinion, the court’s reasoning is reasonable and, therefore, it is likely other judges would accept a similar argument by an Owner. The decision is timely with the recent changes to the Act and CICAA and is a reminder to all to ensure that all such decisions are made an in an open Board meeting.

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