FLEMINGTON FIELDS CONDOMINIUM ASSOCIATION, INC. VS. FLEMINGTON FIELDS HOMEOWNERS ASSOCIATION, INC. (L-0163-15, HUNTERDON COUNTY AND STATEWIDE) (CONSOLIDATED)

NOT FOR PUBLICATION WITHOUT THE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 NOS. A-3873-16T3
A-3919-16T3
FLEMINGTON FIELDS
CONDOMINIUM ASSOCIATION,
INC.,
Plaintiff-Appellant,
v.
FLEMINGTON FIELDS
HOMEOWNERS ASSOCIATION,
INC.,
Defendant-Respondent.
FLEMINGTON FIELDS
CONDOMINIUM ASSOCIATION,
INC.,
Plaintiff-Respondent,
v.
FLEMINGTON FIELDS
HOMEOWNERS ASSOCIATION,
INC.,
Defendant-Appellant.
Argued October 15, 2018 – Decided November 30, 2018
Before Judges Fasciale and Rose.
On appeal from Superior Court of New Jersey, Law
Division, Hunterdon County, Docket No. L-0163-15.
Donald F. Scholl, Jr., argued the cause for appellant in
A-3873-16 and respondent in A-3919-16 (Scholl,
Whittlesey & Gruenberg, LLC, attorneys; Donald F.
Scholl, Jr., on the briefs).
Timothy P. Burns argued the cause for appellant in A-
3919-16 and respondent in A-3873-16 (Robinson
Burns, LLC, attorneys; Timothy P. Burns, of counsel
and on the briefs; Colin R. Gibson, on the briefs).
PER CURIAM
These two appeals, calendared back-to-back and consolidated for
purposes of this opinion, arise out of a complaint filed by plaintiff Flemington
Fields Condominium Association (COA) against defendant Flemington Fields
Homeowners Association (HOA), seeking past and prospective payments from
the HOA for certain amenities shared by both associations in their common
development, and counsel fees and costs. The HOA appeals from a summary
judgment order obligating it to contribute financially to the storm water
management basin (basin or pond), and a post-trial judgment establishing the
percentage of HOA's contribution, while COA appeals from an order denying
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its application for fees and costs. For the reasons that follow, we affirm the Law
Division orders.
I.
We derive the factual background and procedural history from the record
on appeal. Located in Raritan Township, Flemington Fields is an age-restricted
residential development, which is divided into 142 condominium units and 86
single-family homes. The COA governs the condominium units; the HOA
governs the single-family homes.
The crux of this appeal implicates the common elements located in an area
of the development containing the condominium units. Those elements were
constructed by Raritan Valley Developers, Inc. During the timeframe in which
the developer held a majority presence on the boards of each association, both
entities contributed to the operation and maintenance of the pond and other
elements. Pursuant to the Public Offering Statement (POS), drafted by the
developer, the HOA's contribution toward the pond was allocated at thirty-eight
percent, based on the ratio of the number of HOA units to the total combined
units within the development. In 2014, when the developer transitioned control
to each association, the HOA ceased making payments. However, HOA owners
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continued to use the clubhouse until the COA barred them from doing so in
2016.
In the interim, the COA filed its complaint. Following a period of
discovery, the COA moved for partial summary judgment as to liability and
damages, and the HOA cross-moved for summary judgment to dismiss count
four of the COA's complaint, which sought counsel fees and costs.
On September 1, 2016, the trial judge granted the COA's motion in part,
limited to the COA's obligation to contribute to the operating and maintenance
expenses of the pond. In rendering his decision, the trial judge observed the
pond "was constructed as part of the initial planning and design of this combined
community[.]" The judge elaborated:
[I]t [i]s undeniable that the [HOA] and [its]
individual members, the individual property owners are
beneficiaries of the storm water management system.
Their storm water undisputably, a large percentage of
it, runs off through piping and drainage designs . . . into
the pond apparently that [is] located on the [COA]'s
property.
So, there is no way to undo it. There is no way
to deny that the [HOA] homeowners enjoy the benefits
of the storm water management system[.]
To support his decision, the judge cited the Declaration, which "the
[HOA] acknowledge[d] is a document that [it is] bound by." Pursuant to the
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terms of the Declaration, "common property" includes "any easement or other
right which may now or hereafter be granted for the benefit of the Owners for
access to or use of property (or for any other purpose) not included within the
Development[.]"
However, the judge denied COA's motion pertaining to the HOA's
obligation to contribute toward other shared amenities, including the gazebo,
clubhouse, lawn maintenance and snow removal; and the HOA's percentage of
allocation for future fees. The judge also denied, without prejudice, the HOA's
cross-motion pertaining to fees and costs.
On February 16, 2017, the trial judge denied, with prejudice, the COA's
motion for counsel fees and professional fees. 1 The judge observed that,
generally, a prevailing litigant is not entitled to counsel fees except where fee
shifting is authorized by contract or statute. The judge then rejected the COA's
argument that the underlying intent of the governing documents and the
Condominium Act, N.J.S.A. 46:8B-1 to -38 (Act), supported the fee award
sought by the COA in this litigation.
1
During oral argument before us, the COA conceded there exists no legal
support for the COA's claimed professional fees, i.e., costs associated with
hiring the accountant and engineer who testified on behalf of the COA at trial.
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A non-jury trial was held on two consecutive days in March 2017. The
COA presented testimony of three witnesses, including its engineering expert,
Thomas R. Decker, P.E., while no witnesses testified on behalf of the HOA. On
April 7, 2017, the judge awarded the COA damages in the amount of $29,580.15
"for arrears for certain amenities that . . . [d]efendant has received the beneficial
use of, up and through the trial date of March 8, 2017." The judge further
ordered the HOA to pay forty-one percent "of all the [future] expenses, including
in particular, operating expenses, deferred maintenance and capital reserve costs
for the [pond][.]" These appeals followed.
Initially, the HOA appeals, in part, from the September 1, 2016 order
granting partial summary judgment to the COA. The HOA primarily contends
its governing documents are silent as to the basin and do not obligate the HOA
to contribute financially to the basin's maintenance and repair. As such, the
HOA maintains the judge erred in determining the HOA benefitted from an
implied easement for the pond, and other amenities, including the gazebo,
clubhouse and parking area. 2
2
Because the trial judge did not grant summary judgment with respect to
contribution toward those other amenities, we decline to consider that aspect of
HOA's argument in our opinion.
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Secondly, the HOA also appeals from that portion of the April 7, 2017
judgment fixing its percentage contribution for prospective payments at forty -
one percent. The HOA argues the judge improperly permitted evidence from
Decker regarding his formula for contribution, which differed from the thirty -
eight percent figure that was utilized before the respective boards assumed
control of the development.
In its appeal, the COA contends the trial judge erred in denying its
application for counsel fees and professional fees because the Act and the
relevant governing documents authorize recovery of fees in an enforcement
action for unpaid assessments. The COA also argues it is a third-party
beneficiary of the governing documents that authorize the recovery of counsel
fees.
II.
A.
We first consider the HOA's argument that the judge erred in granting
partial summary judgment. "[W]e review the trial court's grant of summary
judgment de novo under the same standard as the trial court." Templo Fuente
De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199
(2016). Thus, we consider "whether the competent evidential materials
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presented, when viewed in the light most favorable to the non-moving party, are
sufficient to permit a rational factfinder to resolve the alleged disputed issue in
favor of the non-moving party." Davis v. Brickman Landscaping, Ltd., 219 N.J.
395, 406 (2014) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520,
540 (1995)).
"If there is no genuine issue of material fact, we must then decide whether
the trial court correctly interpreted the law." DepoLink Court Reporting & Litig.
Support Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div. 2013) (internal
quotation marks and citation omitted). We accord no deference to the trial
judge's conclusions on issues of law. Nicholas v. Mynster, 213 N.J. 463, 478
(2013). Guided by these principles, we conclude that summary judgment was
properly granted.
Specifically, New Jersey adheres to the general rule that "[t]he beneficiary
of an easement . . . has a duty to the holder of the servient estate to repair and
maintain the portions of the servient estate and the improvements used in the
enjoyment of the servitude[.]" Lake Lookover Prop. Owner's Ass'n v. Olsen,
348 N.J. Super. 53, 67 (App. Div. 2002) (quoting Restatement (Third) of Prop.:
Servitudes § 4.13 (Am. Law Inst. 2000)). In that case, the owners of property
surrounding an artificially constructed lake appealed from an order requiring
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similarly situated property owners to contribute to the cost of repairing and
reconstructing a dam on the lake. Id. at 54. The defendants' lakeside lots were
created when the developers constructed the dam in question, which in turn,
created the lake. Id. at 54-55. The court held "the several property owners hold
'separate easements' in the same servient estate (Lake Lookover) and thus have
a duty to each other to contribute to the cost of repairs and maintenance that are
required to preserve that lake." Id. at 67.
Further, it is well-settled that a "quasi-easement" may be created by
implication. Leach v. Anderl, 218 N.J. Super. 18, 24-25 (App. Div. 1987). A
quasi-easement is established by "the apparent use of the quasi-servient portion
of the estate for the quasi-dominant portion, the continuous nature of the use,
the permanent character of the quasi-easement, and its reasonable necessity to
the beneficial enjoyment of the dominant portion." Id. at 26 (citation omitted).
The continuous and permanent nature of an implied easement refers to both "the
continuity of enjoyment . . . as well [as] the permanence of the quasi-easement
in its impliedly intended adaptation to the dominant and servient tenements."
A.J. & J.O. Pilar, Inc. v. Lister Corp., 38 N.J. Super. 488, 498 (App. Div. 1956),
aff'd, 22 N.J. 75 (1956) (noting that a "hidden pipe or drain may . . . be deemed
an apparent [use]"). Additionally, the easement need only be "reasonably
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necessary to the proper enjoyment of the dominant tenement . . . not absolutely
necessary." Ibid.Having considered the HOA's arguments in light of the record and
controlling legal principles, we affirm, substantially for the reasons expressed
in the judge's cogent oral opinion. The HOA's arguments are without sufficient
merit to warrant discussion in our opinion. R. 2:11-3(e)(1)(E). We add only the
following brief comments.
In addition to the definition of "common property," the Declaration also
provides: "Regardless of whether title to the Common Property . . . is held by
. . . the [HOA], the [HOA] shall, at all times, have the duty, responsibility and
obligation to undertake any and all efforts necessary to administer, operate,
maintain, repair and replace the Common Property . . . ." Thus, read as a whole,
the governing documents support the trial judge's determination that an implied
easement was created from the benefits derived by the HOA members whose
storm water "runs off through piping and drainage designs . . . into the pond"
situated on the COA's property.
In sum, the judge aptly recognized the creation of an implied easement "at
a minimum" is "a simple matter of common sense and logic." His decision is
fully supported by the case law. In particular, the HOA benefitted from an
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implied easement, the use of which was continuous, permanent, and reasonably
necessary to the HOA's use of its property. Leach, 218 N.J. Super. at 26.
Because the HOA derived a benefit from the storm water management system,
it is obligated to contribute toward the pond's maintenance and related expenses.
B.
We next address the HOA's argument that the trial judge erred in
permitting the COA to present evidence reallocating the HOA's percentage. The
HOA contends the COA was judicially estopped from presenting evidence at
trial that the percentage of prospective assessments should be calculated at a
forty-one percent contribution, as determined by Decker. Instead, the HOA
claims the COA is bound by the thirty-eight percent formula, set forth in the
POS. The HOA's argument is unavailing.
We have recognized that in order to protect the integrity of the court
system, "[w]hen a party successfully asserts a position in a prior legal
proceeding, that party cannot assert a contrary position in subsequent litigation
arising out of the same events." Kress v. LaVilla, 335 N.J. Super. 400, 412
(App. Div. 2000). The doctrine of judicial estoppel may bar a claim if: (1) a
party currently advocates a position contrary to a position it previously
advocated; (2) the party successfully convinced the court to accept its pr ior
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position; and (3) the party's inconsistent behavior will result in a miscarriage of
justice. Kimball Int'l, Inc. v. Northfield Metal Prods., 334 N.J. Super. 596, 606-
08 (App. Div. 2000).
Here, the trial judge accepted the COA's position regarding the thirty-
eight percent formula for the HOA's arrears because "both boards essentially
agreed with . . . the formula that the developer had initially proposed."
Accordingly, the judge determined the parties were bound by the thirty-eight
percent formula "[until] the respective boards took over control of the
development." Thereafter, however, the parties "were entitled to disagree [about
the percentage formula] once they had control."
In reaching his decision, the trial judge cited a provision of the Act and
case law that prohibits developers from entering into long-term management
contracts. See N.J.S.A. 46:8B-12.2 (providing that certain management
contracts shall not exceed two years in duration); Brandon Farms Prop. Owners
Ass'n v. Brandon Farms Condo. Ass'n, 180 N.J 361, 373 (2004) (holding that a
condominium association properly refused to enforce a management agreement
created by the developer before the association came into existence).
Accordingly, the judge determined, "The POS is an expired document that is not
binding on the HOA . . . forever." Thus, the judge found the COA was within
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its rights to "seek a judicial declaration in the absence of an agreement between
the two boards for a determination of the [HOA]'s [prospective] percentage
responsibility for storm water management costs."
Moreover, the record fully supports the judge's findings. In arriving at the
forty-one percent allocation, the judge determined, "Decker's formula is a more
reasonable, more accurate basis for allocating the storm water management
expenses." In doing so, the judge found Decker credible observing, "His opinion
was based on sound engineering and mathematical principles." Notably, the
HOA's expert, who did not testify, did not disagree with Decker's methodology.
For the foregoing reasons, we decline to apply the doctrine of judicial
estoppel here, where the "prior position" was not exclusively that of the COA,
but rather the prior percentage formula was contained in the POS, which applied
to both boards. See Kimball Int'l, Inc., 334 N.J. Super. at 606-08. Because the
judge's determination regarding the HOA's percentage share of prospective
contribution is supported by substantial, credible evidence in the record, we
decline to disturb it. See Rova Farms Resort, Inc. v. Inv'rs Ins. Co. of Am., 65
N.J. 474, 484 (1974) (according deference to the trial judge's findings, as long
as they are supported by substantial credible evidence).
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III.
Lastly, we turn to the COA's appeal from the order denying its request for
counsel fees. The COA maintains a fee award is warranted by court rule, the
Act and its governing documents. We disagree.
It is well-settled that "New Jersey disfavors the shifting of attorneys' fees."
Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 385 (2009) (citing N.
Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 569 (1999)). For
this reason, New Jersey has long-adhered to the American Rule, "which provides
that litigants must bear the cost of their own attorneys' fees." Innes v. Marzano-
Lesnevich, 224 N.J. 584, 592 (2016). Our Supreme Court has recognized "[t]he
purposes behind the American Rule are threefold: (1) unrestricted access to the
courts for all persons; (2) ensuring equity by not penalizing persons for
exercising their right to litigate a dispute, even if they should lose; and (3)
administrative convenience." Ibid. (alteration in original) (quoting In re Niles,
176 N.J. 282, 294 (2003)). Reflecting this state's strong public policy against
shifting of counsel fees, Rule 4:42-9 creates the presumption that "[n]o fee for
legal services shall be allowed[,]" except in certain enumerated circumstances,
such as by statute or court rule. Id. at 592-93 (first alteration in original).
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Initially, we note the Act provides for fee-shifting under certain
circumstances:
a. The association shall have a lien on each unit for any
unpaid assessment duly made by the association for a
share of common expenses or otherwise, including any
other moneys duly owed the association, upon proper
notice to the appropriate unit owner, together with
interest thereon and, if authorized by the master deed or
bylaws, late fees, fines and reasonable attorney's fees[.]
[N.J.S.A. 46:8B-21.]
The COA acknowledges that its action does not pertain to the filing of a
lien, nor an individual unit owner within the association, but nevertheless
contends that the statute, when read as a whole, encompasses a homeowners'
association within its definition of "unit owner." Because an association is both
a "person" and a "representative body of its unit owners," the COA argues it is
entitled to counsel fees incurred to recover the unpaid assessments from the
HOA. Further, the COA contends that had it sued to recover such expenses in
an enforcement action against one of its unit owners, it would have been able to
recover counsel fees. Accordingly, the COA argues it should be permitted to
recover in an enforcement proceeding against its sister association.
The COA's argument is misplaced. As the trial judge correctly found,
"[t]he statute does [not] clearly apply to this particular circumstance." The
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COA's overly expansive interpretation runs contrary to the underlying intent of
the statute because the COA is not a "unit owner," which is defined as "the
person or persons owning a unit in fee simple." N.J.S.A. 46:8B-3(q). The
statute also defines "association" as "the entity responsible for the
administration of a condominium, which entity may be incorporated or
unincorporated." N.J.S.A. 46:8B-3(b). Further, the statute defines "unit" as "a
part of the condominium property designed or intended for any type of
independent use[.]" N.J.S.A. 46:8B-3(o). Clearly, in defining each term, the
legislature intended to distinguish an association from its unit owners.
Moreover, when interpreting statutes, courts must follow well-established
rules of construction. "The goal of all statutory interpretation 'is to give effect
to the intent of the Legislature.'" Maeker v. Ross, 219 N.J. 565, 575 (2014)
(quoting Aronberg v. Tolbert, 207 N.J. 587, 597 (2011)). A court "first look[s]
to the statutory language, which generally is the 'best indicator' of the
Legislature's intent." Ibid. (quoting DiProspero v. Penn, 183 N.J. 477, 492
(2005)). Extrinsic sources, such as legislative history are considered "[o]nly if
the language of the statute is shrouded in ambiguity or silence, and yields more
than one plausible interpretation . . . ." Ibid. Further, when interpreting a statute
where "the Legislature has clearly defined a term, the courts are bound by that
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definition." Febbi v. Bd. of Review, Div. of Emp't Sec., Dep't of Labor & Indus.,
35 N.J. 601, 606 (1961). Finally, a court considers "not only the particular
statute in question, but . . . the entire legislative scheme of which it is a part."
Kimmelman v. Henkels & McCoy, Inc., 108 N.J. 123, 129 (1987).
Here, prior to adopting N.J.S.A. 46:8B-21, the Senate reasoned:
This bill would provide statutory authority for
provisions found in condominium association master
deeds and by-laws that allow for the imposition of
reasonable fines on unit owners who fail to comply with
the master deed, by-laws, or rules and regulations of the
condominium. The bill also specifically indicates that
condominium associations may include provisions in
their master deeds or by-laws for the imposition of late
fees upon unit owners who fail to pay monies duly owed
the association after proper notice.
[S. Comm. Statement to A.B. 465 (May 2, 1996)
(emphasis added).]
Although we do not find the statute ambiguous, the legislative history
underscores the statutory intent to afford a condominium association a
mechanism to enforce its rules and regulations against non-compliant unit
owners. To the extent the association incurs counsel fees in connection with
such enforcement measures, counsel fees may be assessed against offending unit
owners. There is no indication, however, that the legislature intended to extend
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this enforcement mechanism to an action brought by one association against
another.
We therefore agree with the trial judge and decline to "extend the intent
of the condominium statute" to the COA's claim for fees against the HOA. See
State v. Perry, 439 N.J. Super. 514, 523 (App. Div. 2015) (recognizing a court
should interpret a statute according to "its ordinary meaning and construe it in a
common-sense manner").
Secondly, although Rule 4:42-9 does not include contracts within its eight
exceptions under which attorneys' fees may be awarded, the rule does not
preclude parties from agreeing to fee-shifting provisions, and a party may be
contractually obligated to pay counsel fees. Satellite Gateway Commc'ns, Inc.
v. Musi Dining Car Co., 110 N.J. 280, 285-86 (1988). When fee-shifting is
prescribed by contract, "the [relevant] provision should be strictly construed in
light of [the] general policy disfavoring the award of attorneys' fees." Litton,
200 N.J. at 385 (citing N. Bergen, 158 N.J. at 570).
Relevant here, Article VI of the Declaration provides, in pertinent part:
Each assessment and all fines and other charges
assessed against a Lot or its Owner shall be deemed a
continuing lien upon the Lot against which they were
assessed or the Lot owned by the Owner against whom
they were assessed and shall also be the joint and
several personal obligation of the Owner(s) of such Lot
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at the time when the assessment, fine or other charge
fell due and of each subsequent record Owner of such
Lot, together with such interest thereon and the cost of
collection thereof (including reasonable attorney[s']
fees). Liens for unpaid assessments, fines or other
charges may be foreclosed by suit brought in the name
of the [HOA] in the same manner as a foreclosure of a
mortgage on real property.
[(Emphasis added).]
In considering the application of those governing documents, the trial
judge aptly recognized that they "do [not] really control this type of a situation."
The judge reasoned, "There was nothing that put the [HOA] on notice that [it
was] going to be responsible for counsel fees if [it] failed to prevail in this
litigation." (Emphasis added). Although the HOA unit owners were on notice
that attorneys' fees could be imposed in a legal action to recover delinquencies
on assessments, that provision did not provide notice that the individual owner
could be liable for counsel fees in the present case.
Having reviewed the arguments raised by the COA in light of the record
on appeal and applicable law, we conclude that the judge did not abuse his
discretion in denying the COA's application for counsel fees and costs. See
Brunt v. Bd. of Trs., Police & Firemen's Ret. Sys., Div. of Pensions & Benefits,
455 N.J. Super. 357, 362 (App. Div. 2018). We therefore find no basis to disturb
the judge's findings.
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To the extent not addressed, the COA's remaining points lack sufficient
merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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