By Deborah Goonan, Independent American Communities

A recent Cook County Appellate Court ruling reaffirms the First Amendment rights of condo owners in Illinois.

On March 29th, in Brian Connolly v.  Anthony Milazzo, Mike Fish, Serap Brush, 
and Glenn Greene, Justice Cunningham reversed the trial court’s dismissal of one of the Plaintiff’s primary claims.

In his lawsuit, Connolly claimed his condo association board members imposed unjustified sanctions and fines against him, in retaliation, after he criticized the board’s “self dealing” behavior.

History of dispute at 111 East Chestnut

According to court records, in October 2013, the named board members accused Connolly of four incidents of “obnoxious and offensive behavior” directed at other condo owners. As is standard practice in condo HOAs across the U.S., an owner accused of violating the Association’s rules is generally presumed guilty, unless and until he can prove his innocence.

The board held a hearing, but did not permit Connolly to provide evidence in his defense. The board then agreed to impose a $250 fine for each alleged incident, for a total of $1,000.

The lawsuit

Connolly first filed his lawsuit against his condo board, without representation by an attorney (pro se) in October 2013. The court dismissed his first and second complaints, but ultimately accepted his Third Amended Complaint, filed in August of 2014.

In Count 1 of that complaint, “Violation of Plaintiff’s Statutory and Constitutional Rights,” Connolly cited, among other things, the board’s violations of Illinois Condominium Statute 765, ILSC 605/1 section 18.4 h, which reads as follows:

Illinois 765 ILCS 605/1 18.4 h
Excerpt:

…no rule or regulation may impair any rights guaranteed by the First Amendment to the Constitution of the United States or Section 4 of Article I of the Illinois Constitution including, but not limited to, the free exercise of religion, nor may any rules or regulations conflict with the provisions of this Act or the condominium instruments. No rule or regulation shall prohibit any reasonable accommodation for religious practices, including the attachment of religiously mandated objects to the front-door area of a condominium unit.

 

The Defendants soon filed motions to dismiss all four of Connolly’s claims. During the next two years, motions were denied or delayed. The parties attempted mediation to resolve their issues in May 2015, but that attempt was unsuccessful.

In early 2016, Connolly hired Attorney Norman Lerum to respond to dismissal motions by the Defendants. But by July 2016, the trial court dismissed Connolly’s complaints on all counts.

Among other things, the trial court stated that First Amendment rights are not guaranteed by condominium associations, because board members are not “state actors.” Or, to put it in simpler terms, the judge agreed with the condo association’s position that, because HOAs are private organizations, and not government, the Bill of Rights Need Not Apply.

 

Sanctions for alleged “frivolous” claims

Emboldened by the trial court’s dismissal, in August of 2016, Defendants moved to enforce Rule 137, claiming both Connolly and Lerum engaged in frivolous or retaliatory litigation.

The Rule 137 motion asserted that none of plaintiff’s pleadings or motions had been “well-grounded in fact or law.” The motion additionally argued that plaintiff’s pleadings had an improper purpose, claiming plaintiff had engaged in a “campaign of retaliation” and “relentless harassment.” The Rule 137 motion suggested that plaintiff’s motivation could be inferred from the fact that he had filed separate lawsuits against the association and Milazzo, and by the fact that plaintiff “maintained a website devoted to demeaning Association management.”5 The Rule 137 motion also claimed that plaintiff had requested mediation when he had “no good-faith intention of negotiating.” The Rule 137 motion recognized that Lerum did not appear on plaintiff’s behalf until January 2016, but sought sanctions against him because he “proceeded with this litigation and the frivolous arguments contained therein without any regard for the law.” (Source: BRIAN CONNOLLY v.  ANTHONY MILAZZO, MIKE FISH, SERAP BRUSH, and GLENN GREENE (Appeal from the Circuit Court of Cook County.)

The court affirmed sanctions in January 2017, and awarded the defendants $111,941 in attorney’s fees and costs in July 2017. Plaintiffs promptly filed an appeal.

Reversals on appeal

Highlighting relevant sections of the 29-page opinion, the Appellate court sees the Connolly case as essentially similar to Boucher.

In light of our reasoning in Boucher, we conclude that Count I of the third amended complaint in the case before us, stated a claim for violation of section 18.4(h). We recognize that the pleading was not particularly artful, which was not surprising given plaintiff’s pro se status. Nevertheless, keeping in mind that we examine the allegations in the light most favorable to the plaintiff, we conclude that count I set forth the gist of a colorable claim that the violations notice and fine were imposed in retaliation for plaintiff’s exercise of free speech. Under the portion of the complaint entitled “Facts Common to all Counts,” plaintiff alleged that he “expressed criticism of the governing practices of the Board and management” including “investigation into, and public discussion of, incidents of Board-member self dealing” and that “[s]aid public discussion has included petitions for relief with *** various government agencies.” Count I pleaded that the issuance of the violations notice was an “intentional misapplication of *** the Association’s Declaration, in violation of the Plaintiff’s First Amendment Rights” and “was in retaliation to Plaintiff having reported the Board President’s non-compliance with Building Permits for his unit *** to government authorities.” Thus, the nature of plaintiff’s claim is essentially identical to that alleged in Boucher, namely, that the “association penalized him for expressing opinions” critical of defendants’ conduct. Id. ¶ 21. The gist of plaintiff’s claim (as in Boucher) was that the notice of purported violations of the association’s rule against “obnoxious activity,” was, in fact, retaliation for exercise of his First Amendment right to express criticism. As in Boucher, we conclude that plaintiff sufficiently stated a potentially viable cause of action for violation of section 18.4(h) of the Act. (Source: BRIAN CONNOLLY v.  ANTHONY MILAZZO, MIKE FISH, SERAP BRUSH, and GLENN GREENE (Appeal from the Circuit Court of Cook County.)

The Appellate Court then reversed Rule 137 sanctions against Connolly and Lerum, light of the court’s reversal on the merits of Count I (First Amendment Rights), as well as the court’s failure to allow an evidentiary hearing prior to imposing those sanctions.

…the court did not merely find that plaintiff’s claims were objectively frivolous; the court also subjectively found that plaintiff had an improper “harassing” purpose. Yet, when it initially decided the Rule 137 motion, the court had specifically declined to make any such findings of plaintiff’s intent. Clearly, it was inconsistent to first state that Rule 137 sanctions were warranted solely under an objective view of the pleadings, but then to justify the extent of the award, in part, on findings of plaintiff’s bad faith and intent to harass. Moreover, it was improper for the court to deny plaintiff an evidentiary hearing before making these findings. (Source: BRIAN CONNOLLY v.  ANTHONY MILAZZO, MIKE FISH, SERAP BRUSH, and GLENN GREENE (Appeal from the Circuit Court of Cook County.)

 

Implications for condominium owners

 

Boucher sets legal precedent

Attorney Norm Lerum, who represented Brain Connolly in Cook County Appellate Court, says that the June 2018 Appellate court ruling in Boucher v. 111 E. Chestnut, set legal precedent that was instrumental in last month’s Connolly ruling.

The ruling is an important step toward protecting Illinois condominium owners from abuse of power by association board members.

Unlevel playing field

However, Lerum also notes that, when it comes to condominium disputes, unit owners and their condo association board members don’t have a level playing field.

There is only one way to enforce condominium laws in Illinois — by filing a lawsuit in civil court. But, as illustrated by both the Boucher and Connolly cases, suing one’s condo association or its board members requires significant personal sacrifice. The legal process can take years, and, in the process, the costs add up.

It’s not uncommon for both parties to rack up tens or hundreds of thousands of dollars in attorney fees and court costs, combined.

“As owner, you can sue, but on your nickel,” according to Lerum. “Most people cannot afford to sue their condo association.”

And, speaking of attorney fees, Illinois is one of a few states that does not allow the prevailing condo owner to recover legal fees in a civil case involving a condominium association. To make matters worse, when the condo association prevails in a legal dispute, it can obtain a court order to recover its attorney fees from the unit owner.

As recently as 2018, Lerum worked with the Illinois state Legislature to correct this imbalance. In that year, two bills were introduced — HB 5744 and SB 2556. The latter bill passed in the Senate 31-17, but stalled in the House Rules Committee.

The Illinois State Chapter or Community Associations Institute (IL-CAI), an industry trade group, opposed the bill, lobbying Legislators to block efforts to give condo owners a fair chance at protect their rights, and holding their associations and board members accountable.

 

Condo owners have no leverage to enforce the governing documents

Lerum explains that, although the trade group purports that a condo association’s governing documents create a contractual relationship, housing consumers do not have a legal right to withhold payment of their condo fees and assessments, regardless of the circumstances.

“Illinois is the only state in the nation that allows a condominium association to used forcible detainer (eviction) against a unit owner for non payment of fines, assessments, late fees, and interest,” says Lerum.

In Spanish Court Two Condominium Association v. Carlson, 2014, the Illinois Supreme Court ruled 4-3, that the Association’s failure to maintain and repair the common elements did not justify Carlson’s decision to withhold payments to the Association.

In that decision, Justice Theis wrote:

Section 9 of the Condominium Act, which establishes a unit owner’s duty to pay assessments, does not provide, expressly or impliedly, that such duty is contingent upon the repair and maintenance of the common elements. Section 9 does state, however, that “[i]f any unit owner shall fail or refuse to make any payment of the common expenses *** when due[ ] the amount thereof *** shall constitute a lien on the interest of the unit owner in the property” which may be recorded and foreclosed by the board of managers. 765 ILCS 605/9(g)(1), (h) (West 2008).

The Spanish Court ruling underscores the fact that, when a condo association fails to fulfill its duties, a condo unit owner’s sole recourse is to file a lawsuit, subject to the state’s unbalanced Condominium Act.

Condominium associations are “creatures of statute”

Lerum points out that condo board actions are both granted and limited by the Condominium Act.

“In Illinois, a Condominium Declaration cannot be inconsistent with statute,” says Lerum. Therefore, a condo associations are governed by a “mix of statutory and contract law.”

In Lerum’s view, since condominium associations are “creatures of statute,” and not private Country Clubs, a condo board is a state actor, and should be held to a higher standard of accountability.

Lerum compares a voluntary membership private club to a condo association. “Because the relationship is purely contractual, a Country Club can enact and enforce all sorts of strict membership rules, and enforce rules of conduct. If a Club member says something that offends other members, the Club can terminate a membership. And the former Club members can’t do anything about it.”

“But,” as Lerum explains, “In a condo association, contract law gives way to the Illinois Condominium Statute. The condo document – the contract – is not the final word.” According to statute, condo boards cannot enact and enforce restrictions and rules in the Association that would interfere with First Amendment rights of its members.

 

How to protect First Amendment rights

Homeowner and shareholder members of associations, as well as housing consumer rights advocates, must see to it that industry trade groups do not attempt to undo case law or undermine individual rights.

“CAI would like the statute to apply just to religious rights,” says Norm Lerum, “but legislative intent says ‘First Amendment rights.’”

At the same time, state advocacy groups should consider amending their state’s laws to explicitly state that no private governance entity (association-governed community) can enact or enforce CC&Rs or rules that abridge First Amendment or due process rights of its owners or residents.♦

 

References:

BRIAN CONNOLLY v.  ANTHONY MILAZZO, MIKE FISH, SERAP BRUSH, and GLENN GREENE (Appeal from the Circuit Court of Cook County.)

Boucher v. 111 East Chestnut Condominium Ass’n, 2018 IL App (1st) 162233

Spanish Court Two Condominium Ass’n v. Carlson, 2014 IL 115342

Explanation of Rule 137:

Illinois Supreme Court Rule 137 requires that either a party or a party’s attorney sign every ‘pleading, motion and other paper’ to certify that ‘it is well grounded in fact and is warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.’ Ill. S. Ct. R. 137 (eff. Feb. 1, 1994). The purpose of Rule 137 is to prevent abuse of the judicial process by penalizing claimants who bring vexatious and harassing actions based upon unsupported allegations of fact or law. [Citation.]” Williams Montgomery & John Limited v. Broaddus, 2017 IL App (1st) 161063, ¶ 41.

Appeals panel: Lawsuit vs condo association wasn’t frivolous; plaintiff shouldn’t owe $111K legal fee sanctions Cook County Record, By Scott Holland | Apr 9, 2019

Win for free speech in condo associations as appellate court reverses case dismissal, Loop North News, By Steve Dahlman | Apr 6, 2019

Man fined for ‘obnoxious’ acts can sue condo board, Chicago Daily Law Bulletin, April 10, 2019 (subscription only)

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First Amendment lawsuit timeline

June 14, 2018

Justice P. Scott Neville, Illinois Appellate Court (First District, Second Division) recently overturned a Cook County Circuit Court ruling against a condominium owner, and issued a court Opinion that acknowledges First Amendment rights of residents in condo associations.

The case, Michael Boucher vs. 111 East Chestnut Condominium Association, Inc. and its board of directors, continues a trend toward curbing abuse of power by some boards of association-governed communities.

Boucher had been accused of “rude and obnoxious behavior” against staff members of the  condominium association, and fined $500 following a “kangaroo court” hearing, at which the board provided no evidence of wrongdoing.

Boucher sued the condo association and its board members for enforcing rules that impair First Amendment rights, as well as failure to produce meeting minutes, and breach of fiduciary duties. A Cook County Circuit Court ruled in favor of the condo association, but the Appellate court reversed the ruling in favor of the unit owner.

The most significant portion of the Boucher ruling is the Court’s judgment that condominium associations must follow Illinois statute, which prohibits boards from enacting or enforcing rules, restrictions, or policies that impede First Amendment rights:

We hold that section 18.4(h) “forbids a board from ‘impair[ing] any rights guaranteed by the First Amendment,’ not from violating the Amendment itself.” Goldberg v. 400 East Ohio Condominium Ass’n, 12 F. Supp. 2d 820, 824 (N.D. Ill. 1998) (quoting 765 ILCS 605/18.4(h) (West 1998)). Under section 18.4(h), condominium boards must not adopt or enforce any rules that prohibit the free exercise of religion, abridge the freedom of speech, or abridge the right to peaceably assemble. See U.S. Const., amend. I.

Simply put, in Illinois, First Amendment protections cannot be denied by governing documents of an association-governed community.

In addition, Justice Neville concluded that the board of 111 East Chestnut Condominium violated fiduciary duties by withholding an audiovisual recording of Boucher’s hearing, as well as alleged evidence against him.

Boucher sufficiently alleged a violation of section 18.4(h) of the Act by alleging that the board fined him for expressing his opinions about the management of the condominium. The Act requires the board to maintain minutes recording board actions at every meeting, including closed meetings. Because the board kept no record of the October 4 meeting other than a video and audio recording, the board’s recording constitutes the minutes of the meeting. Boucher presented sufficient evidence to create an issue of fact as to whether the board violated section 19 of the Act by refusing his request for the minutes of the meeting. Boucher presented sufficient evidence to create an issue of fact as to whether the association and the board members violated their fiduciary duties to Boucher when they withheld from him the evidence that provided the basis for their decision to fine him.

 

August 2018

Diane Silverberg, attorney of Kovitz, Shifrin, and Nesbit law, files an appeal to Illinois Supreme Court, on behalf of 111 East Chestnut Condo Association and four board members, asking for a reversal of the Appellate Court Opinion in favor of the Plaintiff.

Silverberg’s plea for Supreme Court reversal regurgitated the same, tired old defenses for board members of association-governed communities: Being a board member is a “thankless job,” the court has no business in making judgment on the nature of internal disputes. The Court’s second guessing association board decisions will make it even more difficult to recruit members willing to serve on their condo (or HOA) board, and allow disobedient owners and residents to behave badly without consequence, even to the point of bullying and harassing their fellow owners, board members, employees and staff.

In response to Silverberg’s appeal, Boucher’s attorney, Norman Lerum, explained that “state action” is not a prerequisite for protection of First Amendment/Free Speech rights in a condo association. This is spelled out in the Illinois Condominium Property Act and supported by ample case law, including Spanish Court II Condominium Association v. Lisa Carlson.  In Illinois, the condominium association is a creature of Statute, not merely a private contractual relationship.

 

September 26, 2018

As expected, Illinois Supreme Court denied the appeal of Boucher v. 111 E. Chestnut

The implications, going forward, are that leaders of homeowners, condominium, and housing cooperative associations must recognize that residents have the right to criticize board members, management agents, and maintenance staff of their communities.

No longer can the association’s subjective rules against “obnoxious” speech or behavior be used to retaliate against the outspoken owner or resident who dares to complain about services (or lack thereof) provided by the HOA.

 

March 29, 2019

Justice Cunningham, on behalf of Cook County Appellate Court, issues a reversal on one count of trial court’s dismissal, in Connolly vs. Milazzo, et. Al. 

Finding, consistent with Boucher v. 111 East Chestnut, that condo owner and Plaintiff, Brian Connolly, presents sufficient evidence for his claim that condo board members impaired his First Amendment rights, thereby violating section 18.4(h) of the IL Condominium Property Act (765 ILCS 605).

The court also reverses the IL Bar Association’s “baseless case” sanctions against Attorney Norman Lerum, and the trial court’s previous award of nearly $112,000 in attorney fees to the Defendants.

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