## Facts

- A homeowners’ association governed a Maryland development under a recorded declaration requiring approval of annual assessment increases by at least two-thirds of member votes cast in person or by proxy.
- The association increased annual assessments in 2007, 2011, and 2014 without obtaining the declaration’s required two-thirds vote.
- The association gave notice of the increases in newsletters available to the homeowner and budgeted and provided services in reliance on the increased assessments and the absence of objections.
- The homeowner paid the increased assessments for years, then in 2016 learned the increases had not been properly approved and stopped paying, claiming an offset for alleged overpayments.
- The association sued to collect unpaid assessments and attorney’s fees; the district court entered judgment for the homeowner for failure of proof, but on de novo appeal the circuit court entered judgment for the association for \$1,257.60 in assessments plus \$4,200 in attorney’s fees.

## Issues

1. Whether the homeowner could defend against collection by asserting prior assessment increases were unauthorized under the declaration, or whether that defense was barred by Maryland’s corporate ultra vires statute and equitable doctrines (including estoppel and delay-based equities).
2. Whether the circuit court abused its discretion by awarding \$4,200 in attorney’s fees where the principal recovery was \$1,257.60 and the homeowner challenged the fee support and reasonableness.

## Decision

- The Court of Appeals of Maryland affirmed the circuit court’s judgment for the association.
- The homeowner’s attempt to invalidate prior assessment increases as a defense to collection was barred by statutory limits on ultra vires challenges and by equitable estoppel based on long-term payment and the association’s reliance.
- The circuit court did not abuse its discretion in awarding \$4,200 in attorney’s fees authorized by the governing documents.

## Legal Principles

- Maryland’s corporate ultra vires statute limits who may challenge corporate acts as beyond corporate power and can preclude a member’s collateral attack on long-past corporate actions as a defense in a later collection suit.
- Equitable estoppel may bar a homeowner from contesting HOA assessments when the homeowner long acquiesced by paying without objection and the association reasonably relied on that conduct in budgeting and providing services.
- When governing documents authorize fee shifting for collection of assessments, an appellate court reviews a trial court’s fee award for abuse of discretion and will uphold a reasonable award even if it exceeds the principal recovery.

## Conclusion

The court held that a homeowner who paid HOA assessments for years could not later refuse payment by retroactively challenging procedurally defective assessment increases, because statutory ultra vires limits and equitable estoppel foreclosed the defense, and it affirmed the trial court’s attorney’s fee award as within its discretion under the governing documents.


Steele v. Diamond Farm Homes Corp., 464 Md. 364, 211 A.3d 411 (Md. 2019)