Maryland Statutes
Subtitle 4 - Immunities and Prohibited Actions -- Businesses, Associations, and Charities
Section 5-406 - Personal Liability -- Agents of Certain Associations or Organizations

(a)    (1)    In this section the following words have the meanings indicated.
        (2)    (i)    “Agent of an association or organization” means a director, officer, trustee, employee, or volunteer of an association or organization who provides services or performs duties on behalf of the association or organization.
            (ii)    “Agent of an association or organization” does not include an independent contractor who provides services or performs duties on behalf of the association or organization on a contractual basis.
        (3)    “Association or organization” means:
            (i)    An athletic club;
            (ii)    A charitable organization;
            (iii)    A civic league or organization;
            (iv)    A community association;
            (v)    A cooperative housing corporation as that term is defined under § 5-6B-01 of the Corporations and Associations Article;
            (vi)    A council of unit owners of a condominium as that term is defined in § 11-101 of the Real Property Article; or
            (vii)    A homeowners’ association.
        (4)    “Athletic club” means a club organized and operated exclusively for recreational purposes that is exempt from taxation under § 501(c)(7) of the Internal Revenue Code.
        (5)    “Charitable organization” means an organization, institution, association, society, or corporation that is exempt from taxation under § 501(c)(3) of the Internal Revenue Code.
        (6)    “Civic league or organization” means an organization, operated exclusively for the promotion of social welfare, that is exempt from taxation under § 501(c)(4) of the Internal Revenue Code.
        (7)    “Community association” means a nonprofit association, corporation, or other organization that registers with the Secretary of State under § 7-108 of the State Government Article and:
            (i)    1.    Is composed of at least 25% of the adult residents of a local community that:
                A.    Consists of at least 40 households; and
                B.    Is defined by specific geographic boundaries in the bylaws or charter of the organization;
                2.    At least annually, requires the payment of dues;
                3.    Promotes social welfare and general civic improvement; and
                4.    In the case of a corporation, is in good standing;
            (ii)    1.    Is composed of at least 100 adult residents, but less than 25% of the adult residents of a local community that:
                A.    Consists of at least 40 households; and
                B.    Is defined by specific geographic boundaries in the bylaws or charter of the organization;
                2.    Was organized on or before January 1, 2000, and has been in continuous operation since that date; and
                3.    Meets the requirements of item (i)2, 3, and 4 of this paragraph; or
            (iii)    1.    Is composed of more than one of the organizations described in item (i) or item (ii) of this paragraph; and
                2.    Each of those organizations meets the requirements of item (i) or item (ii) of this paragraph.
        (8)    “Compensation” does not include actual and necessary expenses that are incurred by a volunteer in connection with the services provided or duties performed by the volunteer on behalf of an association or organization, and that are reimbursed to the volunteer or otherwise paid.
        (9)    “Homeowners’ association” means a nonprofit association, corporation, or other organization comprised of property owners in a subdivision or group of subdivisions whose purpose is to represent the mutual interests of the property owners regarding the construction, protection, and maintenance of the commonly owned or used property and improvements.
        (10)    “Suit” means any civil action, except any health care malpractice action, brought against an agent of an association or organization or against the association or organization by virtue of the agent’s act or omission in providing services or performing duties on behalf of the association or organization.
        (11)    “Volunteer” means an officer, director, trustee, or other person who provides services or performs duties on behalf of an association or organization without receiving compensation.
    (b)    Except as provided in subsection (d) of this section, an agent of an association or organization is not personally liable for damages in any suit if:
        (1)    The association or organization maintains insurance covering liability incurred by the association or organization or its agents, or both, as a result of the acts or omissions of its agents in providing services or performing duties on behalf of the association or organization;
        (2)    The terms of the insurance policy under which the insurance is maintained provide coverage for the act or omission which is the subject matter of the suit and no meritorious basis exists for the denial of the coverage by the insurance carrier; and
        (3)    The insurance has:
            (i)    A limit of coverage of not less than:
                1.    $200,000 per individual claim, and $500,000 per total claims that arise from the same occurrence; or
                2.    $750,000 per policy year, and $500,000 per total claims that arise from the same occurrence; and
            (ii)    1.    If the insurance has a deductible, a deductible amount not greater than $10,000 per occurrence; or
                2.    If there is coinsurance, a rate of coinsurance not greater than 20 percent.
    (c)    In suits to which the provisions of subsection (b) of this section apply, the plaintiff may recover damages from the association or organization only to the extent of the applicable limit of insurance coverage including any amount for which the association or organization is responsible as a result of any deductible or coinsurance provisions of such insurance coverage.
    (d)    An agent of an association or organization shall be liable for damages in any suit in which it is found that the agent acted with malice or gross negligence, to the extent that the judgment for damages exceeds the limits on liability under subsection (c) of this section.
    (e)    The provisions of this section do not apply to suits brought by the Attorney General upon referral by the Secretary of State in which willful violations of Title 6 of the Business Regulation Article are alleged and proven.
    (f)    (1)    This section does not create, and may not be construed as creating, a new cause of action or substantive legal right against an association or organization or an agent of an association or organization.
        (2)    This section does not affect, and may not be construed as affecting, any immunities from civil liability or defenses established by any other provision of the Code or available at common law, to which an association or organization or an agent of an association or organization may be entitled.
    (g)    This section may be cited as the Maryland Associations, Organizations, and Agents Act.

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