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Condominium Law FLASHPOINTS May 2021

Kenneth Michaels, Jr., Bauch & Michaels, LLC, Chicago
312-588-5000 | E-Mail Kenneth Michaels, Jr.

Association Directors Deprived Unit Owner of Opportunity To Be Heard, Failed To Serve Proper Notice of Rules Violation Hearing

The Illinois appellate court has rendered another decision adverse to the process used by a condominium association in imposing fines against a unit owner. Board of Directors of Winnitt Park Condominium Ass’n v. Bourdage, 2021 IL App (1st) 192536. This decision focused on the association’s notices for hearings on rules violations.

The condominium association filed a two-count eviction action against a unit owner who was accused on multiple occasions of harassing, defaming, and using profanity and confrontational words against certain unit owners and service professionals and of threatening violence. 2021 IL App (1st) 192536 at ¶¶9, 18. She was also accused of sending e-mails with false statements. The appellate court affirmed the trial court’s several findings against the notices and processes used by the condominium association.

Forced Involuntary Sale Relief Was Not Allowed

The second count of the association’s eviction complaint sought an involuntary judicial sale of the defendant’s unit pursuant to the condominium declaration. The trial court dismissed this second count without prejudice because such equitable relief is not available in Cook County eviction courts, which are courts of limited jurisdiction. 2021 IL App (1st) 192536 at ¶6. This dismissal was not appealed.

The Eviction Claims Were Related to Two Separate Hearings on Different Violations

The first count of the complaint alleged that the defendant unit owner owed over $10,000 in unpaid assessments from July 2017 through June 2018. 2021 IL App (1st) 192536 at ¶3. In fact, the amounts claimed were not for unpaid assessments but were all related to two unpaid fines and related attorneys’ fees. There was a $50 fine from a hearing on August 24, 2017, and a $700 fine from a hearing on January 31, 2018. The association’s exhibits at trial showed that the unit owner had in fact paid her assessments and late fees. 2021 IL App (1st) 192536 at ¶4.

The Eviction Claim Based on the Second Hearing Required a Separate 30-Day Demand

Jumping ahead to address the second hearing first, the eviction claim for an unpaid fine and attorneys’ fees premised on the January 31 hearing was denied by the trial court because the association failed to satisfy the condition precedent to an association’s eviction claim under §9-104.1(a) of the Illinois eviction statute, 735 ILCS 5/9-101, et seq., namely to serve the unit owner with at a 30-day demand for possession. 2021 IL App (1st) 192536 at ¶25. The appellate court affirmed this conclusion. On appeal, the association argued that its 30-day demand for possession dated October 27, 2017 — that is, after the August 2017 hearing but before the January 2018 hearing — was sufficient to satisfy the amounts owed pursuant to both hearings. The association argued that nothing in either the eviction statute or the Condominium Property Act requires “a new demand must be sent to maintain an eviction cause of action each time new assessments become due during the pendency of the action.” 2021 IL App (1st) 192536 at ¶48. The appellate court rejected this argument because the instant case did not involve unpaid assessments but rather nonpayment of a fine. The violations that formed the basis of the August 2017 hearing were separate from the violations forming the basis of the January 2018 hearing. Id. The demand letter served on the defendant clearly was linked to the August 2017 fines, and the omission of the January 2018 fines was not a simple error because the hearing had not even taken place. 2021 IL App (1st) 192536 at ¶¶49 – 51. A second demand letter needed to be sent relating to the January 2018 fines.

The Eviction Claim on First Hearing Was Denied Because of Insufficient Notice and an Opportunity To Be Heard

The unit owner’s defense was that “she had not been provided the opportunity to appear before the board to defend herself because she was unavailable to attend the scheduled hearing on the violations.” 2021 IL App (1st) 192536 at ¶7. She had notified the board that she was unavailable for the hearing at the times proposed because of her business hours and that she was on vacation on the date ultimately set for the first hearing. The facts in the opinion relating to communications among the parties and their attorneys fill a couple pages of the opinion. 2021 IL App (1st) 192536 at ¶¶9 – 23.

For our purposes, we will hit the highlights on these communications. Most communications among the parties were by e-mail. As the question is not presented, it can be assumed that the unit owners throughout the association had consented to notice by e-mail. In early August 2017, the association sent notice offering the defendant two possible dates later in the month for a hearing at 6:30 p.m. on a complaint alleging violations. Supposedly, there were three attachments to the e-mail, but it appeared from the evidence at trial that only one attachment was sent, namely a statement of hearing procedures. No complaint or witness statements or evidence was sent to the defendant. The defendant promptly responded to the notice, objecting that her business did not close until 7:00 p.m. She apparently also informed the board that she was on vacation on the latter offered date. At trial, evidence from the defendant’s son established that she was in fact on vacation at this time traveling to visit colleges. On August 22, the association sent a 48-hour notice of a board meeting for the evening of August 24, stating that the board would immediately go into closed session to conduct a hearing. No information was provided about the hearing nor did it state that the hearing was about the defendant, although the defendant did not dispute at trial that she understood the hearing was about her.

On the evening of August 24, 2017, the board conducted its closed hearing and made a finding while in closed session (in violation of both the Condominium Property Act and its own procedures) to adopt written narratives of four witnesses (three of these narratives having been written by the two directors with whom the defendant was apparently engaged in conflicts). The board found that the defendant violated the declaration and bylaws and imposed a $50 fine along with all attorneys’ fees related to the matter through the time when the matter would be finally resolved. By October, this fine was over $5,000. The appellate court noted that the narratives adopted at both hearings were filled with hearsay, many statements from unknown declarants, and allegations of occurrences made without any personal knowledge. 2021 IL App (1st) 192536 at ¶29.

In a letter from November 20, the association’s attorney offered, in response to the defendant’s prior objection that the board knew she would not be available at that time or on the date of the meeting because of a trip that had been planned for months, to entertain a motion to strike the August 24 findings, in exchange for offering three new dates when hearings would be held on both the old complaint and a new one that had been received but never sent to the defendant. Nothing was resolved from further communications back and forth, and the defendant hired an attorney.

On January 29, 2018, the association repeated its prior conduct, sending notice to all unit owners of a January 31 meeting with a closed session to consider a complaint against an unidentified unit owner. The defendant did not attend this hearing. This notice was apparently not sent to the defendant’s attorney. In any event, this January 31 finding of the board was denied as a basis for eviction, as discussed above, because no 30-day demand was sent in connection with the fine.

The trial court “found that the primary issue was whether the August 22 notice of the August 24 violation hearing was legally sufficient to provide [the defendant] with proper notice and an opportunity to be heard on the alleged violations against her.” 2021 IL App (1st) 192536 at ¶26. After a bench trial, the court made the following findings: (1) notice of the meeting (hearing) was not directed to defendant, but to all unit owners; (2) notice did not invite defendant to present her case; (3) notice was for a general board meeting, not a violation hearing; (4) the e-mail failed to provide details as to what violations were alleged and who was alleged to have committed the violations; (5) there were no attachments to the e-mailed notice (no agenda, no notice of violation, and no supporting documents); (6) the defendant was deprived of an opportunity to be heard as she presented uncontroverted evidence that she was out of town and had advised the board in advance that she would be out of town; (7) the board failed to follow its own policy that extensions would not be unreasonably denied; (8) the defendant was provided with a mere 48 hours in advance on a date that the board knew she would not be available; (9) subsequently providing an opportunity to appeal the findings against her did not cure the deficiencies of notice and deprivation of an opportunity to be heard; (10) even if notice had been proper, the association’s procedures required witnesses and testimony but instead written statements were adopted; (11) the association’s procedures required a two-step process of conducting the hearing and then the board separately considering the evidence and any fine; and (12) the entire process was conducted in a closed meeting in violation of Illinois law (because a board’s vote must be in an open meeting). 2021 IL App (1st) 192536 at ¶¶27 – 29.

Appellate Court Affirmed Trial Court

The defendant unit owner did not file a brief or participate in the appeal. As its standard of review, when there was a bench trial the appellate court will defer to the findings of the trial court unless they are against the manifest weight of evidence. “A decision is against the manifest weight of the evidence only when an opposite conclusion is apparent or when the findings appear to be unreasonable, arbitrary, or not based on the evidence.” 2021 IL App (1st) 192536 at ¶33, quoting Eychaner v. Gross, 202 Ill.2d 228, 779 N.E.2d 1115, 1130, 269 Ill.Dec. 80 (2002). The appellate court must not substitute its judgment for that of the trial court that had the opportunity to weigh the evidence and make findings of fact.

“The plaintiff in an eviction action bears the burden of proof in establishing its right to possession and must prove its allegations by a preponderance of the evidence.” 2021 IL App (1st) 192536 at ¶33, citing Circle Management, LLC v. Olivier, 378 Ill.App.3d 601, 882 N.E.2d 129, 136 – 137, 317 Ill.Dec. 555 (1st Dist. 2007). “However, the defendant in an eviction action has a right to assert any germane defenses in response to the plaintiff’s claim of possession.” 2021 IL App (1st) 192536 at ¶37, citing Circle Management, supra, 882 N.E.2d at 137. The court looked to §9-111(a) of the Illinois eviction statute, a lengthy section specifically dealing with condominium property. Section 9-111(a) provides that when the property is subject to the Condominium Property Act and the action is based on the failure of the unit owner to pay his or her proportionate share of common expenses, lawfully agreed on expenses, or fines, “and if the court finds that the expenses or fines are due to the plaintiff, the plaintiff shall be entitled to the possession of the whole of the premises claimed.” [Emphasis added.] 735 ILCS 5/9-111(a). The appellate court noted that the language referring to finding that the expenses or fines are due to the plaintiff raises the question “whether the fines assessed against [the defendant] were properly imposed” as a proper defense to an eviction action. 2021 IL App (1st) 192536 at ¶37.

In reviewing the communications among the parties, the appellate court affirmed the findings of the trial court regarding notice and an opportunity to be heard. While there were no attachments to the e-mails, the defendant did not argue that she was unaware of the nature of the complaints against her. However, there was no question that she had requested a hearing on the complaints. The defendant was not refusing a hearing altogether, only asserting that she worked until 7:00 p.m. The board offered two dates and then sent all the unit owners a notice of a board meeting for a different date without informing the defendant that the third date was her hearing date. The court characterized the association’s arguments that the defendant had failed to avail herself of an opportunity offered to her as “disingenuous.” 2021 IL App (1st) 192536 at ¶43.

The scheduling of the hearing should not have been a take-it-or-leave-it proposition, especially where the notice provided to [the defendant] as to scheduling expressly provided that reasonable accommodations would be made if requested in a timely manner. . . . We agree with the trial court that the board’s actions here in no way provided [the defendant] with “notice and an opportunity to be heard” as required by the Condominium Property Act. 2021 IL App (1st) 192536 at ¶44.

Regarding the association’s offer to vacate its findings if a new joint hearing date was agreed on, the appellate court relied upon the U.S. Supreme Court’s holding in a due-process case that “having a hearing on a motion to vacate does not cure the error of failing to give a party proper notice because the petitioner was required to first face the task of overcoming an adverse judgment against him, a burden that he would not have faced if he had received proper notice and appeared in the original proceeding.” 2021 IL App (1st) 192536 at ¶45, citing Armstrong v. Manzo, 380 U.S. 545, 14 L.Ed.2d 62, 85 S.Ct. 1187, 1191 (1965). The only way to wipe the slate clean is to set aside the judgment and consider the case anew. Id.

Because the appellate court had decided that notice was improper, it declined to address the trial court’s findings on the hearing procedures. However, the appellate court also declined the association’s request to strike the trial court’s findings as to the hearing procedures. 2021 IL App (1st) 192536 at ¶46. An interesting footnote appears at the end of the opinion, which provides direction that a defendant unit owner needs to act in good faith and cannot simply deny his or her availability.

We further observe that [the defendant] is under the impression that she has a right to keep her business open until 7 p.m. and that the board must schedule a hearing during the hours of the day or night to accommodate her. The board should work with [the defendant] to formulate a reasonable time for hearing, and if [the defendant] must close her business a few hours early to appear at a hearing, she should be required to do so. 2021 IL App (1st) 192536 at ¶53 n.7.

Takeaway

First, this is yet another opinion rejecting how some associations are conducting their rule violations hearings. As the author’s sales and secured transactions Professor Ann Lousin often reminded, two sparrows do not make a spring. But there have now been a couple of recent Illinois opinions essentially applying due-process principles and cases to associations in reviewing how they conduct rules violations. Associations need to proceed cautiously in this regard.

Second, it should be noted that the trial judge in this case was no stranger to condominium law and practices. He is the Honorable Joel Chupack, who, before he donned a robe, was a highly regarded and loved member of the Chicago community of condominium practitioners. Judge Chupack recently has been transferred to the Mortgage Foreclosure/Mechanics Lien Section of the Chancery Division of the Circuit Court of Cook County, where his skills will surely enhance the quality of our judiciary.

For more information about condominium law, see CONDOMINIUM LAW: GOVERNANCE, AUTHORITY, AND CONTROLLING DOCUMENTS (IICLE®, 2021). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

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