BLUE WATER TOWNHOME ASSOCIATION, INC. VS. LORI DIFABIO (L-0120-15, CAPE MAY COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4709-16T4
BLUE WATER TOWNHOME
ASSOCIATION, INC.,
Plaintiff-Respondent,
v.
LORI DIFABIO,
Defendant-Appellant.
___________________________
Argued September 20, 2018 – Decided March 8, 2019
Before Judges Fuentes and Vernoia.
On appeal from Superior Court of New Jersey, Law
Division, Cape May County, Docket No. L-0120-15.
James P. Grimley argued the cause for appellant
(Grimley Law, attorneys; Adrienne Chapman and
Norman W. Briggs, on the briefs).
James F. Crawford and Christian M. Scheuerman
argued the cause for respondent (James F. Crawford
and Marks, O'Neill, O'Brien, Doherty & Kelly, PC,
attorneys; Christian M. Scheuerman, James F.
Crawford, and Sean X. Kelly, on the brief).
PER CURIAM
Defendant Lori DiFabio owns two condominium units in Townhomes at
Blue Water, a Condominium, which is managed and operated by plaintiff Blue
Water Townhome Association, Inc. She appeals from an order granting
summary judgment in plaintiff's favor and awarding $377,815.09 in damages for
past due condominium assessments, monthly fees and other costs and attorney's
fees. Defendant also appeals from the court's order granting summary judgment
dismissing her counterclaim, which challenged the validity of a $60,000 per unit
special assessment that comprised $120,000 of the damages awarded. Based on
our review of the record in light of the applicable law, we affirm the court's
award of $85,949.09 in overdue condominium assessments, monthly dues and
collection costs, reverse the award of $120,000 for the $60,000 per unit
assessment and the dismissal of defendant's counterclaim, vacate the attorney's
fee award and remand for further proceedings.
I.
In our review of the record before the trial court, we view the facts and all
reasonable inferences therefrom in the light most favorable to defendant because
she is the party against whom summary judgment was entered. Brill v. Guardian
A-4709-16T4
2
Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Applying that standard, the
record before the trial court established the following facts.
Defendant owns two condominium units in Townhomes at Blue Water, a
Condominium. Defendant is admittedly delinquent in the payment of fees and
assessments and other costs due to plaintiff. In November 2013, plaintiff
obtained a $38,454.12 default judgment against defendant in a separate
proceeding for delinquent fees and assessments. After defendant failed to
satisfy the judgment, the court in that matter appointed a receiver for one of
defendant's units to oversee the repair and rental of the unit. By July 14, 2014,
defendant owed plaintiff $51,843.41, in overdue fees and assessments. This
amount included the sums due under the November 2013 judgment.
The July 18, 2014 Meeting and Approval of the $60,000 Per Unit Special
Assessment
At a July 18, 2014 meeting, plaintiff's board of trustees voted to authorize
a $60,000 per unit special assessment for siding and deck replacements. The
board adopted a resolution explaining that the unit owners who were eligible to
vote authorized the board "to create an assessment of $60,000 per unit, payable
by [October 20, 2014] . . . to fund the project involving the decking and siding."
A-4709-16T4
3
All of the unit owners, except defendant, subsequently paid the special
assessment.
After obtaining bids from various contractors, in October 2014 plaintiff's
board retained a contractor to complete the decking and siding project. The
retention was not authorized by a vote of the unit owners at a formal board
meeting. The contractor that was retained is owned by the board president, but
he did not participate in the review of the bids received for the project or the
board's decision to retain his firm.
Plaintiff's Complaint and Damages Claims
In March 2015, plaintiff filed a complaint alleging defendant failed to pay
"all regular common maintenance expenses (monthly condo fees)[,] special
assessments and attorney's fees and costs incurred in the collection of any unpaid
monthly condo fees and special assessments." More particularly, in the first
count of the complaint, plaintiff claimed $167,669.63 in damages, which
included $28,287.85 in monthly condominium fees for December 2013 through
March 1, 2015,1 $120,000 for the $60,000 per unit special assessment for the
siding and deck renovations and $19,381.78 in attorney's fees and costs incur red
1
This amount included a $5500 per unit special assessment allegedly due on
January 12, 2014.
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4
through March 5, 2015, for collection of the November 2013 judgment. Plaintiff
also generally alleged it was entitled to any other amounts that became due
during the litigation and additional attorney's fees incurred during its efforts to
collect the sums due.
In the complaint's second count, plaintiff repeated its claim for damages
for the attorney's fees and costs of collection of the sums due under the
November 2013 judgment. Plaintiff subsequently filed an amended complaint,
adding a claim in the second count for costs and fees associated with services
provided by the receiver.
Defendant's Answer and Counterclaim
In response to the amended complaint, defendant filed an answer and
counterclaim in which she sought a declaratory judgment that the special
assessment and retention of the contractor were void because they were not
authorized by plaintiff's board in accordance with the master deed and by-laws.
Defendant also asserted claims for breach of fiduciary duty and a violation of
the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -210,2 and sought specific
performance of plaintiff's alleged obligation to provide plaintiff with records.
2
The parties dismissed defendant's CFA claim by stipulation.
A-4709-16T4
5
Plaintiff's Motions For Summary Judgment
Plaintiff was represented by separate counsel on its claims in the
complaint and in defense of the counterclaim. In January 2017, plaintiff's
counsel on the counterclaim moved for summary judgment for dismissal of the
counterclaim. Plaintiff's counsel on the complaint then "cross-moved" for
summary judgment on plaintiff's affirmative claims. The court considered the
motions at the same time.
In support of its summary judgment motion to dismiss the counterclaim,
plaintiff asserted that the board properly authorized the $60,000 per unit special
assessment at its July 18, 2014 board meeting. Defendant and the other unit
owners were properly notified of the meeting by a written notice that was sent
on June 27, 2014. Any alleged failure to provide defendant with notice was
immaterial because she was ineligible to vote due to her delinquency in the
payment of condominium dues and assessments. According plaintiff, the board
solicited bids for the siding and deck replacement project, selected the board
president's company to perform the work without his participation or
involvement and hired the company in October 2014, to perform the work at a
cost of $60,000 per unit.
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6
Plaintiff's "cross-motion" for summary judgment relied on the facts
asserted in support of its initial motion and sought judgment against defendant
for the sums allegedly due and owing for monthly fees, assessments, other costs
and attorney's fees and costs. Plaintiff sought damages, inclusive of attorney's
fees and costs, totaling $340,313.52. The total consisted of $168,447.52 for
alleged past due monthly fees and assessments, 3 including $120,000 for the
$60,000 per unit assessment for the siding and deck replacements. The
remaining, and larger, amount sought, $171,866, was claimed for attorney's fees
and costs.
While the summary judgment motions were pending, plaintiff's counsel
on the complaint submitted a January 12, 2017 supplemental affidavit updating
plaintiff's itemized statement of damages and claim for attorney's fees that
reflected a revised total of $377,815.09. Plaintiff sought $205,949.09 in
damages for fees, assessments, and costs, including costs related to the recei ver
3
The summary included credits against the sums due based on rents collected
by the receiver.
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7
and repairs made to defendant's units,4 as well as $171,866 for attorney's fees
incurred through December 8, 2016. 5
Defendant's Opposition to the Summary Judgment Motions
Defendant's opposition to plaintiff's summary judgment motions focused
on the imposition of the $60,000 per unit special assessment she alleged in her
counterclaim was not approved in accordance with plaintiff's master deed and
by-laws. She also challenged the reasonableness of plaintiff's attorney's fee
request. She did not otherwise dispute plaintiff's entitlement to the remaining
$85,949.09 for outstanding monthly fees, assessments and costs, including those
associated with the receiver.
Defendant further argued plaintiff failed to formally authorize the October
2014 retention of the contractor to perform the siding and deck replacements,
4
The record does not permit a precise breakdown of the revised and increased
damages claimed in plaintiff's counsel's supplemental affidavit. The affidavit
indicates that a summary of the damages is annexed as Exhibit K, but the exhibit
included in the appendix does not include a breakdown.
5
In a February 8, 2017 letter to the court, plaintiff's counsel further revised the
amount of the requested damages to $389,084.06. Plaintiff claimed damages for
fees, assessments and costs totaling $206,103.47, and its request for attorney's
fees increased to $182,980.59. It is unnecessary to address the merits of the
damages and attorney's fees requested in the letter, which was unsupported by
an affidavit or certification in accordance with Rule 1:6-6, because the court's
summary judgment orders were not based on it.
A-4709-16T4
8
and plaintiff's retention of the contractor was void because the contractor is
owned by plaintiff's board president. In her sur-reply brief submitted in
opposition to plaintiff's summary judgment motions, defendant argued for the
first time that plaintiff lacked the authority to file its complaint because its board
did not authorize the lawsuit at a board meeting.
Plaintiff's Counsel's Letter Submission Concerning Ratification
While the summary judgment motions were pending, plaintiff's counsel
submitted a February 13, 2017 letter to the court, with accompanying
attachments, stating that the association conducted a special meeting on
February 12, 2016, and a "ballot by mail" in accordance with its "[m]aster
[d]eed and [b]y-[l]aws" ratifying the July 18, 2014 vote to approve the $60,000
per unit special assessment and the October 2014 retention of the contractor to
perform the siding and deck replacements. 6 Plaintiff's counsel further stated that
he provided defendant notice of the special meeting and ballot-by-mail by faxing
a notice to her counsel nine days prior to the scheduled meeting date. Plaintiff's
counsel attached documents to his letter including the notice of the meeting, a
6
The letter further advised that the ballot-by-mail ratified an October 25, 2015
approval of an additional $20,000 per unit special assessment. Defendant does
not challenge the board's approval of that assessment.
A-4709-16T4
9
ballot and a resolution memorializing the ratification vote. Although pl aintiff's
counsel's rendition of the facts related to the ratification was unsupported by any
affidavit or certification, see R. 1:6-6, he requested that the court consider the
letter and documents, and asserted that because the $60,000 special assessment
and retention of the contractor were ratified, "there is no reason why [s]ummary
[j]udgment should not be entered in favor of . . . plaintiff and against defendant."
The Trial Court's Decision
After hearing argument on the summary judgment motions, the court
issued a written decision finding defendant was "entitled to notice [of] the July
18, 2014 meeting" pursuant to Section 3.04 of plaintiff's by-laws regardless of
whether she had fees and assessment arrearages at the time. In pertinent part,
Section 3.04 provides that notice of plaintiff's meetings shall be given to unit
owners "not less than ten (10) days nor more than ninety (90) days before the
day on which the meeting is to be held."
The court also determined there was a genuine issue of material fact as to
whether defendant received notice of the July 18, 2014 meeting but that the
dispute over defendant's receipt of the notice was not material. The court
reasoned that defendant was not prejudiced by any alleged failure to provide
notice of the meeting because she was ineligible to vote under plaintiff's by-laws
A-4709-16T4
10
due to her delinquency in the payment of fees and assessments, and she made
no showing that had she been given notice of the meeting, she had the ability to
timely pay the amount due and restore her voting eligibility prior to the meeting. 7
The court also determined that plaintiff's master deed authorized the July
18, 2014 $60,000 per unit special assessment and the subsequent retention of
the contractor to perform the siding and deck replacements.8 The court
concluded that although plaintiff did not approve the retention of the siding and
deck replacement contractor at a formal meeting prior to the contractor's
commencement of the work, the decision to retain the contractor was not ultra
vires because the master deed granted plaintiff "the capacity to award the
construction contract . . . as a special assessment."
The court further determined that any alleged failures to comply with the
master deed and by-laws in plaintiff's adoption of the $60,000 special
7
Section 2.09 of the association's by-laws provides that a unit owner shall be
entitled to vote at the association's meetings "if [s]he has fully paid all
installments due for assessments made or levied against [her] and [her] Unit
. . . together with all interest, costs, attorney's fees penalties and other expenses
. . . at least three (3) days prior to the date fixed for such meeting."
8
The court relied on Section 6.10 of the master deed that in pertinent part
authorizes the association board to levy "a [s]pecial [c]ommon [e]xpense
[a]ssessment" for "the cost of any reconstruction, repair or replacement of an
existing [c]ommon [e]lement not determined . . . to constitute an emergency."
A-4709-16T4
11
assessment and hiring of the contractor were cured during the February 2016
board meeting and ballot-by-mail ratification vote. The court rejected
defendant's contention that the ratification was void because she received notice
of the February 12, 2016 meeting and the ballot-by-mail nine days earlier,
instead of the ten days required under plaintiff's by-laws. The court found the
one-day difference was "de minimis and . . . [did] not materially prejudice
[d]efendant," and the February 12, 2016 ratification vote was "effective for
purposes of [the association's] claims."
The court also rejected defendant's assertion that plaintiff's retention of
the contractor was void because the contractor is owned by plaintiff's board
president. The board president was not involved in the consideration of the bids
for the work or plaintiff's decision to hire his company. The court determined
there was no evidence plaintiff's retention of the company constituted "self -
dealing" or an "unconscionable" violation of its fiduciary duty to defendant and
the decision was protected by the business judgment rule, which protects a
corporation's internal decisions absent a "showing of fraud or lack of good
faith."
The court awarded attorney's fees to plaintiff, finding the master deed
explicitly provides for plaintiff's recovery of attorney's fees incurred to collect
A-4709-16T4
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unpaid assessments, and "[d]efendant may not defeat summary judgment on this
issue by conclusory allegations." The court explained that it reviewed the
invoices supporting plaintiff's fee request and found "that the attorney's fees
[were] reasonable in relation to the time spent and efforts made in pursuing the
claim as well as the other cited fees, including receivership fees." The court
observed that defendant failed to "set forth any facts that would put into question
the reasonableness of the attorney's fees sought by" plaintiff.
The court entered an order granting plaintiff's motions for summary
judgment, dismissing the counterclaim and entering judgment in the amount of
$377,815.09 plus costs in plaintiff's favor. 9 This appeal followed.
II.
We apply the same standard as the trial court in our review of appeals
from summary judgment determinations. Lee v. Brown, 232 N.J. 114, 126
(2018). "Summary judgment is appropriate 'when no genuine issue of material
fact is at issue and the moving party is entitled to a judgment as a matter of law.'"
Ibid. (quoting Steinberg v. Sahara Sam's Oasis, LLC, 226 N.J. 344, 366 (2016)).
9
Annexed to the court's written opinion is a May 25, 2017 order. The court
issued a revised order on June 6, 2017. The record does not reflect the reason
for entry of the revised order. In any event, the revised order does not include
any substantive changes to the initial order.
A-4709-16T4
13
We conduct a de novo review of the court's determination of legal issues, Ross
v. Lowitz, 222 N.J. 494, 504 (2015), and its application of the law to the
undisputed facts, Lee, 232 N.J. at 127.
Under Rule 4:46-2(c), summary judgment is granted "if the pleadings,
depositions, answers to interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
challenged and that the moving party is entitled to a judgment or order as a
matter of law." See also Burnett v. Gloucester Cty. Bd. of Chosen Freeholders,
409 N.J. Super. 219, 228 (App. Div. 2009). In applying the standard to our
review of a summary judgment determination, we "must view the facts in the
light most favorable to the non-moving party." Bauer v. Nesbitt, 198 N.J. 601,
604-05 n.1 (2009); see also R. 4:46-2(c); Brill, 142 N.J. at 540. Moreover, "[a]n
issue of fact is genuine only if, considering the burden of persuasion at trial, the
evidence submitted by the parties on the motion, together with all legitimate
inferences therefrom favoring the non-moving party, would require submission
of the issue to the trier of fact." R. 4:46-2(c); Bhagat v. Bhagat, 217 N.J. 22, 38
(2014) (quoting R. 4:46-2(c)).
We begin our analysis by observing that defendant's arguments are
limited. Defendant first contends the court erred by finding plaintiff properly
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approved the $60,000 per unit special assessment and the hiring of the
contractor, and in its determination of the attorney's fees due to plaintiff. She
does not contest the court's determination that plaintiff is otherwise entitled to
summary judgment on its claims for other outstanding amounts due for unpaid
dues, fees and assessments. That amount totals $85,949.09. 10 We limit our
discussion to the issues raised directly in defendant's brief. An issue not briefed
on appeal is deemed waived. Jefferson Loan Co. v. Session, 397 N.J. Super.
520, 525 n.4 (App. Div. 2008); Zavodnick v. Leven, 340 N.J. Super. 94, 103
(App. Div. 2001).
A condominium association's "operations are governed not only by the
Condominium Act, but also through the contents of the master deed and the
condominium by-laws." Jennings v. Borough of Highlands, 418 N.J. Super. 405,
420 (App. Div. 2011). Plaintiff exercises its authority "[s]ubject to the
provisions of the master deed, the by[-]laws, rules and regulations and the
10
As noted, in support of its motion for summary judgment, plaintiff claimed
$205,949.09 in damages for fees, assessments and costs, excluding attorney's
fees. On appeal, defendant challenges only the court's determination plaintiff is
entitled to $120,000 in damages based on the $60,000 per unit special
assessment. Thus, defendant does not challenge the court's award of $85,949.09
to plaintiff.
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15
provisions of [the Condominium Act, N.J.S.A. 46:8B-1 to -38] or other
applicable law," N.J.S.A. 46:8B-15, and defendant does not dispute that the
$60,000 per unit assessment constituted a special assessment 11 which required
approval at a meeting of plaintiff's board held in accordance with the master
deed and by-laws. We therefore first address the requirements of the master
deed and by-laws for approval of special assessments.
Section 6.10 of the master deed imposes specific and express requirements
for board approval of special assessments. It provides that approval of special
assessments must "receive the assent of two-thirds (2/3) in interest of the
affected [m]embers in [g]ood [s]tanding." In addition, the vote on a special
assessment "shall be taken at a meeting duly called for [that] purpose." It also
provides that notice of the meeting "shall be sent to all [u]nit [o]wners no less
than thirty (30) days in advance."
The requirements of Section 6.10 of the master deed, at least as it concerns
the requirements for board approval of the $60,000 per unit special assessment,
were ignored by the motion court. Instead, the motion court relied on Section
11
The July 18, 2014 resolution described the $60,000 per unit assessment as a
"special assessment" and the motion court determined the board was authorized
to impose the assessment under Section 6.10 of the by-laws, which applies only
to special assessments.
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3.04 of the by-laws to define the requirements for the board's putative approval
of the special assessment. In pertinent part, Section 3.04 of the by-laws provides
that "[e]xcept as otherwise provided by law . . . notice of each meeting of the
[u]nit [o]wners [12] . . . shall be given not less than ten (10) days nor more than
ninety (90) days before the day on which the meeting is to be held."
Here, Section 6.10 of the master deed sets the benchmark against which
the board's attempts to approve the $60,000 per unit special assessment must be
measured. Plaintiff must act in accordance with its master deed and by-laws,
N.J.S.A. 46:8B-15, and Section 6.10 expressly defines the requirements for
plaintiff's adoption of a special assessment. Moreover, Section 6.10 is wholly
consistent with Section 3.04 of the by-laws because Section 3.04 provides that
notice of a meeting must be given on not less than ten days' nor more than ninety
days' written notice, and thus makes provision for the thirty days' notice
mandated by Section 6.10 for the approval of special assessments. In addition,
even if there was a conflict between Section 3.04 of the by-laws and Section
12
N.J.S.A. 46:8B-3(q) defines "unit owner" as "the person or persons owning a
unit in fee simple." The statutory definition is incorporated by reference in
Section 1.02 of plaintiff's by-laws. Defendant is a unit owner of two units in
Townhomes at Blue Water, a Condominium.
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6.10 of the master deed, Section 13.01 of the by-laws provides that "the
requirements of [the] [m]aster [d]eed . . . shall be deemed controlling."
We agree with the motion court that the evidence presented by the parties
revealed a fact issue as to whether plaintiff sent defendant notice of the July 18,
2014 meeting. We are not, however, persuaded by plaintiff's contention, and
the court's finding, that a failure to provide defendant with notice of the July
2014 meeting is immaterial because defendant made no showing she had the
ability to pay the amounts due prior to the meeting and thereby obtain
reinstatement of her voting privileges.
As defendant correctly argued before the motion court, plaintiff did not
present evidence showing it complied with the requirements of Section 6.10 of
the master deed because, even accepting its assertions as true, notice was sent
to the unit owners on June 27, 2014, less than the required thirty days prior to
the July 18, 2014 meeting. In addition, although Section 2.09 of the by-laws
provides that only unit owners who are current in their payment of all
assessments, interest, costs and attorney's fees may participate in board votes,
Section 6.10 of the master deed requires that notice of a meeting at which a
special assessment may be approved shall be given to all "unit owners"
regardless of whether they are current in their obligations to plaintiff or not. See
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N.J.S.A. 45:22A-46(a) (2016) 13 (requiring "adequate notice" be sent to "all unit
owners" of condominium association meetings at which binding votes will be
taken and that "all unit owners" be permitted to attend such meetings); N.J.S.A.
46:8B-13(a) (providing, with certain specified exceptions, that condominium
association board meetings "shall be open to attendance by all unit owners").
Defendant's status as an ineligible voter did not excuse plaintiff's failure
to provide defendant with the required notice of the July 2014 meeting. Under
plaintiff's master deed and by-laws, defendant was entitled to attend the meeting
whether she was eligible to vote or not. Because the record is devoid of any
evidence plaintiff provided timely notice under Section 6.10 of the master deed,
and there is otherwise a genuine issue of fact as to whether late notice under
Section 6.10 was sent at all, plaintiff was not entitled to summary judgment
finding plaintiff properly approved the $60,000 per unit assessment at the July
2014 meeting.
In an effort to salvage its failure to comply with the requirements of its
master deed and by-laws, plaintiff argues it ratified the July 2014 approval of
the special assessment at a February 2016 meeting and ballot-by-mail vote. The
13
An amendment to N.J.S.A. 45:22A-46(a) replaced the reference to "unit
owners" with "association members, and voting-eligible tenants where
applicable." L. 2017, c. 106, § 7.
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argument, however, is supported only by plaintiff's counsel's February 13, 2017
letter to the court and the documents related to the ratification that were attached.
Although we do not question the veracity of counsel's letter, it is inadequate to
support a conclusion the special assessment was ratified. Conclusory assertions
without support in an affidavit or certification based upon the personal
knowledge of the affiant cannot support or defeat a motion for summary
judgment. Ridge at Back Brook, LLC, v. Klenert, 437 N.J. Super. 90, 97-98
(App. Div. 2014); Brae Asset Fund, LP v. Newman, 327 N.J. Super. 129, 134
(App. Div. 1999); see also Celino v. Gen. Accident Ins., 211 N.J. Super. 538,
544 (App. Div. 1986) (explaining that facts relied on to support a summary
judgment motion must "be submitted to the court by way of affidavit or
testimony" and not by presentation of argument in a brief).
In any event, even if the facts concerning the ratification were properly
supported by an affidavit, certification or other competent evidence, plaintiff is
not entitled to judgment on its claim for the $60,000 per unit special assessment.
To be sure, plaintiff is entitled to ratify the assessment because it had the legal
authority to impose the assessment in the first instance. See Port Liberte II
Condominium Ass'n v. New Liberty Residential Urban Renewal Co., 435 N.J.
Super. 51, 65 (App. Div. 2014) (finding condominium association may ratify an
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20
action it has the legal authority to perform). However, a ratification is valid
only if it is "accomplished 'with the same formalities required for the original
exercise of power.'" Id. at 66 (quoting Grimes v. City of East Orange, 288 N.J.
Super. 275, 280 (App. Div. 1996)).
Based on the information contained in plaintiff's counsel's February 13,
2017 letter, plaintiff did not ratify the assessment in accordance with formalities
required under Section 6.10 of the master deed. Notice of the meeting was sent
only nine days prior to its scheduled date, and not the thirty days required under
Section 6.10. In addition, Section 6.10 mandates that approvals of special
assessments must take place at a board meeting, and plaintiff opted for a ballot -
by-mail vote.14 Thus, plaintiff failed to present evidence it complied with the
requirements of Section 6.10 in obtaining its board's putative ratification of the
invalid July 2014 approval of the $60,000 per unit special assessment. Lacking
14
We reject the notion that Section 3.09 of the by-laws, which allows a ballot-
by-mail "in lieu of calling a membership meeting," authorized the ballot-by-mail
procedure used here. As noted, plaintiff was required to ratify the special
assessment in accordance with the formalities required under Section 6.10 of the
master deed. Again, Section 6.10 mandates that votes on special assessments
shall take place at a duly noticed meeting, and the by-laws provide that if there
is a conflict between the by-laws and the master deed, the master deed controls.
As such, plaintiff cannot properly conduct a ballot-by-mail for approval of a
special assessment under Section 6.10 of the master deed.
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21
any evidence that plaintiff's attempted ratification complied with the dictates of
the master deed for approval of a special assessment, we are constrained to
conclude the ratification is null and void and does not revive the otherwise
invalid July 2014 approval of the special assessment. See ibid. We therefore
reverse the court's summary judgment order dismissing defendant's
counterclaim challenging the $60,000 per unit special assessment and granting
summary judgment, awarding plaintiff $120,000 in damages based on
defendant's alleged failure to pay the assessment, and remand for further
proceedings on those claims.
Defendant also argues the court erred by finding plaintiff properly ratified
the October 1, 2014 retention of the contractor to perform the siding and deck
replacements. The retention of a contractor, as opposed to the approval of the
special assessment of the project, is not governed by Section 6.10 of the master
deed, but it is subject to the requirements of the by-laws. We again note that the
record presented does not allow a determination of the issue because the facts
supporting the alleged ratification are not supported by competent evidence. We
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22
therefore reverse the court's order dismissing defendant's counterclaim
challenging plaintiff's retention of the contractor on that basis alone. 15
We find no error in the court's determination, for which there was an
adequate record based on competent evidence, that proper ratification of the
retention of the contractor would be protected under the business judgment rule.
Under the business judgment rule:
when business judgments are made in good faith based
on reasonable business knowledge, the decision makers
are immune from liability from actions brought by
others who have an interest in the business entity. The
business judgment rule generally asks (1) whether the
actions were authorized by statute or by charter, and if
so, (2) whether the action is fraudulent, self-dealing or
unconscionable.
[Seidman v. Clifton Sav. Bank, 205 N.J. 150, 175
(2011) (quoting Green Party v. Hartz Mountain Indus.,
164 N.J. 127, 147-48 (2000))].
15
We observe, however, Section 3.09 of the by-laws generally allows for ballot-
by-mail approval of questions by plaintiff's board and, unlike approvals for
special assessments, there is nothing in the master deed or by-laws that prohibits
its application to the unit members' approvals of the retention of contractors.
We do not decide what impact plaintiff's failure to authorize and ratify the July
2014 approval for the siding and deck replacement project has on the validity of
any ratification of its retention of the contractor to perform the work. The issue
is not directly addressed by the parties and may be considered as necessary and
appropriate by the remand court.
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"[D]ecisions made by a condominium association board should be reviewed by
a court using the . . . business judgment rule." Alloco v. Ocean Beach & Bay
Club, 456 N.J. Super. 124, 134 (App. Div. 2018) (quoting Walker v. Briarwood
Condo Ass'n, 274 N.J. Super. 422, 426 (App. Div. 1994)).
Here, the record is bereft of any evidence showing on basis to conclude
that retention of the contractor in October 2014 was founded on fraud or self-
dealing or is otherwise unconscionable. If on remand competent evidence shows
the ratification of the retention of the contractor occurred in accordance with the
requirements of Section 3.09 of the by-laws, the February 2016 approval of the
retention of the contractor is protected under the business judgment rule. See
e.g., id. at 136 (finding plaintiff did not overcome the "rebuttable presumption"
that the actions of a homeowner's association were valid under the business
judgment rule where plaintiff did not carry the burden of showing the actions
were "fraudulent, self-dealing, or unconscionable").
We next consider defendant's contention the court erred by granting
plaintiff's request for $171,866 in attorney's fees. She does not dispute that the
by-laws authorize plaintiff's recovery of attorney's fees for the costs of
collecting overdue fees and assessments but argues, as she did before the motion
court, that the fees claimed are unreasonable.
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The reasonableness of a counsel fee application is governed by Rule of
Professional Conduct 1:5(a) and Rule 4:42-9(b). City of Englewood v. Exxon
Mobile Corp., 406 N.J. Super. 110, 124-25 (App. Div. 2009). R.P.C. 1:5(a)(1)
to (7) identify seven factors a court is required to consider in assessing the
reasonableness of attorney's fees. Id. at 125. Further, in its consideration of an
award of fees, a "court must analyze [the seven] factors . . . and then must state
its reasons on the record for awarding a particular fee." Ibid. (quoting Furst v.
Einstein Moomjy, 182 N.J. 1, 22 (2004)). A court's statement of its reasons
addressing each factor "is fundamental to the fairness of the proceedings and
serves as a necessary predicate to meaningful review." Ibid. (quoting R.M. v.
Supreme Court of N.J., 190 N.J. 1, 12 (2007)).
Here, the court generally found the claimed fees were reasonable but
neither addressed each of the R.P.C. 1:5(a) factors nor made the requisite
findings as to each supporting plaintiff's substantial fee award. For that reason
alone, we vacate the attorney's fees award and remand for the court to consider
and make detailed findings concerning the substantial fees claimed by plaintiff's
counsel.
We note for example that the court did not consider the "amount involved"
and recovered for plaintiff's damages as required that under R.P.C. 1:5(a)(4),
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and did not assess the reasonableness of $171,866 in attorney's fees to collect
$205,949.09 in purported damages. And now, when the invalid $120,000
invalid special assessment on defendant's two units is stripped from the court's
damage award, the court must consider the reasonableness of $171,866 in
attorney's fees where the "amount involved" is $85,949.09 in damages.
Moreover, in its determination of the reasonableness of the fees and the
results obtained, the court shall also consider that despite the substantial
attorney's fees charged for services related to the July 2014 meeting and
subsequent February 2016 putative ratification, those attempts at approving the
$60,000 special assessment are invalid. Thus, the ensuing collection efforts and
litigation related to those meetings, putative approvals and the assessment itself
are the result of plaintiff's ineptitude for which defendant is not obligated to pay
plaintiff's attorney's fees. Of course, the court should consider any other facts
and circumstances relevant to a determination of the reasonableness of the fees
on remand.
Last, we do not address defendant's claim that plaintiff lacked authority to
prosecute this matter because it was not authorized to do so by the board. The
issue was first raised before the motion court in defendant's sur-reply brief in
connection with plaintiff's summary judgment motions. We offer no opinion on
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the issue because the record is bereft of competent evidence permitting a
resolution of the claim, which was not asserted in defendant's counterclaim.
Defendant may make the argument before the motion court on remand.
Any arguments raised by defendant that we have not expressly addressed
are without sufficient merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
Affirmed as to the court's award of summary judgment on plaintiff's claim
for $85,949.09 for overdue fees, assessments and costs. Reversed as to the
court's award of summary judgment to plaintiff for $120,000 for the $60,000 per
unit special assessment and dismissing defendant's counterclaim challenging the
$60,000 per unit special assessment and the board's retention of the contractor.
We vacate the award of $171,866 in attorney's fees to plaintiff. The matter is
remanded for further proceedings. We do not retain jurisdiction.
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