NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-3434-99T1
SOCIETY HILL CONDOMINIUM
ASSOCIATION, INC.,
Plaintiff-Appellant/
Cross-Respondent,
v.
SOCIETY HILL ASSOCIATES, A New
Jersey Limited Partnership,
AMS ASSOCIATES, INC., General
Partner of Society Hill Associates,
STEIN BUILT HOMES, INC., A New
Jersey Corporation, ARTHUR M. STEIN,
and ALBERT L. STEIN,
Defendants-Respondents/
Cross-Appellants,
and
TRIAD ASSOCIATES, INC., MARK F.
TACONITA, DAVID M. STEIN, JOSEPH
ALBERT and JUNE BALDWIN,
Defendants.
Submitted January 7, 2002 - Decided January 30, 2002
Before Judges Havey, Braithwaite and Coburn.
On appeal from Superior Court of New Jersey,
Law Division, Camden County, L-9369-89.
Owens & Wolf, attorneys for appellant/cross-
respondent (Matthew S. Wolf, of counsel and on
the brief).
White & Williams, attorneys for
respondents/cross-appellants Society Hill
Associates, AMS Associates, Inc., Stein Built
Homes, Arthur M. Stein and Albert L. Stein
(Peter T. Parashes and William J. Schmidt, of
counsel and on the brief).
The opinion of the court was delivered by
COBURN, J.A.D.
Plaintiff, a condominium association, sued the developer and
related individuals and entities pursuant to the Condominium Act,
N.J.S.A. 46:8B-1 to -38 (the "Act"). The suit was for damages to
common elements resulting from various construction defects.
The condominium project was built in five phases and
ultimately consisted of 375 residential units in forty-three
buildings in Cherry Hill.
During a bench trial on liability, the trial court ruled
against plaintiff on the ground of lack of standing with respect to
damages that it determined were to individual units rather than to
the common elements. It also ruled against plaintiff with respect
to the first two phases on the basis of a release plaintiff gave to
the developer long before this suit was filed and further ruled
that the evidence of construction defects regarding those phases
was inadmissible. In addition, the trial court ruled that the
developer was not liable for certain site conditions and dismissed
plaintiff's consumer fraud claim. Ultimately, the court found
defendants liable for a number of construction defects that need
not be detailed since they are not contested. A liability judgment
was entered on June 22, 1998. Thereafter, a jury determined that
the common-element construction defects had caused plaintiff
damages amounting to $600,000. Interest was allowed and on
February 9, 2000, final judgment was entered in favor of plaintiff
and against the developer, "defendants Society Hill Associates,
Ltd., AMS Associates, Inc., and Stein Built Homes, Inc., jointly,
severally, and in the alternative, in the amount of" $935,776.
Plaintiff's appeal focuses on the liability judgment of June
22, 1998, taking issue with each of the trial court's adverse
rulings noted above. Defendants filed a cross-appeal raising three
points, none bearing directly on the jury's determination of
damages. They contend that the trial court erred (1) in failing to
give defendants credit against the award for insurance proceeds
received by plaintiff for the same claims; and (2) in granting
plaintiff interest on the jury award. They also appeal from an
earlier ruling by another judge denying their motion for summary
judgment on the basis of the entire controversy doctrine.
Because of the nature of the points raised, we will describe
the relevant facts bearing on each point as we reach it, rather
than following the usual course of setting forth all the facts now.
I - Plaintiff's Lack of Standing
At the beginning of the trial, defendants filed a motion
in
limine to bar plaintiff from pursuing certain specific
construction-damage claims. Defendants argued that plaintiff
lacked standing as to those claims because they involved damage to
individual units rather than to common elements. Plaintiff
conceded that the damages related to individual units but claimed
that in each case either the nature of the damage or its specific
location made it a common element damage under the Act and the
master deed. The parties and the trial court treated the matter as
if defendants had filed a motion for summary judgment, and the
trial court ruled for defendants.
For purposes of the motion, the trial court accepted
plaintiff's description of the damages in question as follows:
unit doors and window frames were out of square and binding;
interior unit drywall ceilings and walls were damaged by water
infiltration and had cracks; interior unit floors had "settled,"
and stairs were "unlevel," "bouncy" and "creaky"; unit "garage man
doors" (referring to the door leading from a unit to its garage)
had defective door frames; and interior unit walls had "nail pops"
and were loose and bulged.
Under the Act, a condominium association may sue the developer
for construction defects related to the common elements,
Siller v.
Hartz Mountain Assoc.,
93 N.J. 370, 377,
cert. denied,
464 U.S. 961,
104 S. Ct. 395,
78 L. Ed.2d 337 (1983), and a unit owner may
sue the developer "to safeguard his interests in the unit he owns."
Id. at 382. While there are occasions when a unit owner may sue
the developer with respect to common elements,
id. at 381-82, the
association may not sue the developer for damages to a unit.
N.J.S.A. 46:8B-12 and -14. There is no dispute with respect to
those fundamental propositions. Rather, the question is whether
the identified damages excluded by the trial court were damages to
common elements or damages to a unit. In other words, the question
becomes what is the physical extent of a unit.
"The physical extent of [a unit] depends on what has been
included in the common elements."
Siller,
supra, 93
N.J. at 382.
Whether an item is a common element "may be ascertained by
examination of the statutory definition and the master deed."
Ibid. The
Siller Court also recognized that
defective conditions in the common elements
may also result in injury to the unit owner
and damages to his personal property and the
unit. . . . The unit owner's right to maintain
an action for compensation for that loss
against the wrongdoer is not extinguished or
abridged by the association's exclusive right
to seek compensation for damage to the common
element[s].
[Ibid.]
The Act defines common elements as follows:
(i) the land described in the master
deed;
(ii) as to any improvement, the
foundations, structural and bearing parts,
supports,
main walls,
roofs, basements, halls,
corridors, lobbies, stairways, elevators,
entrances, exits and other means of access,
excluding any specifically reserved or limited
to a particular unit or group of units;
(iii) yards, gardens, walkways, parking
areas and driveways, excluding any
specifically reserved or limited to a
particular unit or group of units;
(iv) portions of the land or any
improvement or appurtenance reserved
exclusively for the management, operation or
maintenance of the common elements or of the
condominium property;
(v) installations of all central services
and utilities;
(vi) all apparatus and installations
existing or intended for common use;
(vii)
all other elements of any
improvement necessary or convenient to the
existence, management, operation, maintenance
and safety of the condominium property or
normally in common use; and
(viii) such other elements and facilities
as are designated in the master deed as common
elements.
[N.J.S.A. 46:8B-3(d) (emphasis added).]
The inclusion within common elements in subparagraph "(ii)" of
the "main walls" and "roofs" implies that material further to the
interior of a unit would be part of the unit. That subparagraph's
exclusion from common elements of "entrances, exits and other means
of access . . . specifically reserved or limited to a particular
unit" casts substantial doubt on plaintiff's claim of standing to
pursue the defects to the unit doors. Finally, as a general matter
the thrust of this section of the Act is to define common elements
in general as those elements existing or intended for common use.
An understanding of the distinction between common and unit
elements under the Act is enhanced by consideration of the
respective authority it gives for maintenance and repairs as
between the association and the unit owner. The association has
the duty of maintaining and repairing the common elements,
N.J.S.A.
46:8B-14(a), and assessing the unit members for the cost thereof as
"common expenses."
N.J.S.A. 46:8B-14(b). On the other hand, a
unit owner is prohibited from repairing or altering common
elements.
N.J.S.A. 46:8B-18. If we accepted plaintiff's position
in this case, no unit owner would be able to correct the defects in
question or sue the developer for damages because of them. Given
the nature of the defects, all essentially to the interior of the
units, that would be an absurd result.
Plaintiff's reliance on the master deed is misplaced. In
particular, its claim of standing is based on section 6 of the
master deed, which describes a unit as follows:
Each Unit consists of:
(i) the volumes or cubicles of space
enclosed by and measured horizontally and
vertically
from the unfinished inner surfaces
of the perimeter interior walls, ceilings, and
floors of that Unit, including doors, windows
and vents;
(ii) all interior dividing walls and
partitions located within the Unit (including
the space occupied by such walls or
partitions) excepting those interior walls and
partitions located within the Unit which
divide one Unit from another, or are denoted
on exhibit "B" as load bearing; and
(iii)
the decorated inner surfaces of
said perimeter walls including the decorated
inner surfaces of any load bearing interior
walls located within the Unit, floors and
ceilings consisting of paint and/or wallpaper,
paneling, floor tiles and other floor
coverings, and all other finishing materials
affixed or installed as a part of the physical
structure of the Unit and all immediately
visible fixtures, appliances, mechanical
systems, air conditioner compressor, and
equipment installed and for the sole and
exclusive use of the Unit, commencing at the
point of disconnection from the structural
body of the Building and from utility lines,
pipes or systems serving the Unit. . . . A
garage shall be considered part of the Unit.
[Emphasis added.]
Plaintiff concedes that exterior doors, "garage man doors,"
and windows are part of the unit under section 6 but contends that
the frames for those items are not. That degree of literalism is
contrary to the thrust of the master deed and entirely inconsistent
with the respective rights of the association and the unit owner
under the Act. Although doors and windows may be purchased
separately from their frames, it is common knowledge that they are
often purchased as a unit. Surely if a unit owner can repair or
replace a window or a door, which cannot be done by the association
since those items are part of the unit, the related frames come, as
well, within the province of the owner.
Another literalism is plaintiff's attempt to distinguish
between paint or wallpaper placed on the drywall walls and ceilings
and the drywall itself. Apart from the lack of commonsense (a
ruling in favor of the association would deprive a unit owner of
the ability to repair the drywall in his unit while repainting or
repapering), we are satisfied that the reference in subsection
"(iii)" to "all other finishing materials affixed or installed as
part of the physical structure of the Unit" includes the drywall.
Thus, all of the claims respecting the drywall _ the "nail pops,"
water damage, cracks, looseness and bulging _ are not maintainable
by the association. We are satisfied, as well, that the defects
affecting the stairs and floors also relate to "finishing
materials" and are thus part of the units. Even if they are not
finishing materials, they still are so much a portion of the
interior of the unit that it would make no sense to find that they
were common elements that could not be repaired by a unit owner.
The distinction between a unit and the common elements has
been helpfully summarized in the following manner:
One easy way to visualize a condominium unit
is as a cube of air, the tangible boundaries
of which are usually the finished side of the
interior sheetrock, ceilings and floors.
While many condominiums vary this definition
slightly (driven, in part, by allocating
maintenance responsibilities), the condominium
unit is generally seen by owners as the
"inside" of their structure while the shell
and "outside" of the building is a common
element.
[Powell on Real Property § 54A.01[2] 11-13 (2001).]
That description accords with the Act and with the thrust of
the master deed and clearly supports our view that all of the
claims at issue are of a type that only individual unit owners may
pursue against a developer.See footnote 11 In other words, these are not matters
of "common interest"; rather, they are in the nature of "individual
grievances" necessarily left to litigation brought by individual
unit owners.
See Stiller,
supra, 93
N.J. at 378 (quoting
Crescent
Pk. Tenants Assoc. v. Realty Eq. Corp of N.Y.,
58 N.J. 98, 109
(1971)).
II - The Release as to Phases I and II
Defendant Society Hill Associates, Ltd. ("SHA"), a limited
partnership, purchased the subject property in 1978 in Cherry Hill.
Defendant AMS Associates, Inc. ("AMS"), the sole general partner in
SHA, and at the time a wholly-owned subsidiary of defendant Stein
Built Homes, Inc. ("SBH"), began construction of the five-phase
condominium complex. After the completion of Phases I and II,
plaintiff asked for the performance of additional work on those
phases. In consideration of the completion of that work, plaintiff
provided SHA with a release signed May 19, 1993, which read, in
pertinent part, as follows:
I [the Association] release and give up
any and all claims and rights which I may have
against you [Society Hill Associates]. This
releases all claims, including those of which
I am not aware and those not mentioned in this
Release. This Release applies to claims
resulting from anything which has happened up
to now. I specifically release the following
claims:
[A]ny and all claims arising from your
development, construction, improvement, repair
or replacement of the Common Elements of
Sections I and II of Society Hill Condominium,
as those Common Elements are defined in the
Master Deed.
. . . .
3.
Who is Bound. I am bound by this
Release. . . . This Release is made for your
[Society Hill Associates] benefit and all who
succeed to your rights and responsibilities,
such as your heirs or the executor of your
estate.
In 1984, AMS merged into defendant SBH, which completed
construction of the remaining phases. In the Plan of Merger, the
entities agreed that SBH would receive all of the liabilities and
assets of AMS. Defendants Albert L. and Arthur Stein were officers
of AMS or SBH. Since plaintiff has not offered any argument
regarding their personal liability, we assume that its claim has
been abandoned as to them.
Matter of Bloomingdale Conval. Ctr.,
233 N.J. Super. 46, 48 n.1 (App. Div. 1989) (an issue not briefed
is deemed waived). In any case, it has no merit.
See Mcbride v.
Minstar, Inc.,
283 N.J. Super. 471, 497-98 (Law Div. 1994),
aff'd
o.b. sub nom. Mcbride v. Raichle Molitor, USA,
283 N.J. Super. 422,
424 (App. Div.),
certif. denied,
143 N.J. 319 (1995).
Relying on
Breen v. Peck,
28 N.J. 351 (1958), plaintiff, while
admitting that the release protects SHA, contends that neither AMS
nor SBH are within its reach. But that case involved independent
tortfeasors and is inapposite. AMS and SBH were not sued as
independent tortfeasors. Rather, their liability was purely
derivative based on their legal relationship as general partner to
SHA, a limited partnership. The release was given to SHA and
extends by its own terms to "all who succeed to your rights and
responsibilities." Under
Mcbride,
supra, the release of an agent
releases the principal. 283
N.J. Super. at 497-98. Therefore, at
the time the release was given it protected AMS as the general
partner of SHA and SBH as the owner of AMS. Moreover, SBH, as a
successor in interest, "'retain[ed] the same rights as the original
[general partner], with no change in substance.'"
Domanske v.
Rapid-American Corp.,
330 N.J. Super. 241, 248 (App. Div. 2000)
(citation omitted). Therefore, we affirm that portion of the order
of June 22, 1998, dismissing all of plaintiff's claims relating to
Phases I and II. We note in passing that plaintiff's argument that
the evidence bearing on Phase I and Phase II defects should have
been admitted in this trial is without sufficient merit to warrant
discussion in a written opinion.
R. 2:11-3(e)(1)(E).
III - The Site Conditions
Plaintiff's civil engineering expert testified that certain
aspects of the systems controlling water runoff had been
negligently designed by the architect, identified by the parties as
defendant Mark F. Taconita, who was employed by defendant Triad
Associates, Inc. ("Triad"). Before trial, plaintiff entered into
a settlement with Taconita and Triad for an undisclosed sum.
Nonetheless, plaintiff pursued the claim against the remaining
defendants on the theory of breach of warranty. At the end of
plaintiff's case, the trial court dismissed the breach of warranty
claim as untimely, a ruling with which the plaintiff does not take
issue. However, plaintiff thereafter argued that it was entitled
to pursue the negligent design claim against the remaining
defendants on the theory of
respondeat superior.
In its brief, plaintiff states without citation to the record
that it "offered deposition transcript testimony of one of the
parties to show that the architect who designed the condominium was
an employee of the developer." What its counsel actually said was:
"Judge, it's in the transcripts of the depositions . . . That
Taconita was an employee up to [I] believe, 1980. That's in
evidence. It was in evidence before the motions were made." There
was no offer of such deposition testimony during the trial and none
has been provided to us. Thus, there was no evidence that
Taconita, or for that matter, Triad, were employees or agents of
any of the defendants. Consequently, the doctrine of
respondeat
superior cannot be employed as a basis for defendants' vicarious
liability. Nor, for that matter, is there any indication that the
settlement did not provide plaintiff with a full recovery on this
aspect of the case. Thus, the trial court was entirely correct in
dismissing this claim.
IV - The Consumer Fraud Act
Without citing any authority, plaintiff devotes two brief
sentences to this claim, merely asserting that it was entitled to
pursue a consumer fraud action pursuant to
N.J.S.A. 56:8-1
et seq.
because "the developer of the project had obtained a release
pertaining [to] the first two phases of the project [which] was
never disclosed to any purchasers who purchased units after 1983."
Since the release was given by plaintiff, we cannot conceive of any
basis on which the plaintiff could maintain this claim. As the
trial court recognized, if those facts give rise to any claim at
all, it would belong to the unit owners to whom the disclosure had
not been made. Moreover, while this issue is mentioned in
plaintiff's brief, it has not been "briefed." Therefore, we deem
it waived.
Matter of Bloomingdale Conval Ctr.,
supra, 233
N.J.
Super. at 48 n.1.
V - Defendant's Entitlement to Credit
The credit sought by defendants relates to a $600,000
settlement between plaintiff and Home Owners Warranty Insurance
Company ("HOWIC") under a policy issued to plaintiff pursuant to
the New Home Warranty and Builders' Registration Act.
N.J.S.A.
46:3B-1 to -20. Plaintiff acknowledges that HOWIC, which
apparently is in receivership, has paid $420,000 towards
satisfaction of that settlement. Defendants assert that
plaintiff's notice of claim against HOWIC shows that it was seeking
recovery against HOWIC for the same defects that were the subject
of the instant lawsuit. Plaintiff responds by asserting that the
claim against HOWIC was for major structural defects, as defined by
the HOWIC policy, and that the claims at issue were for other
defects. In the liability trial, the court was not asked to make
any findings with respect to whether any defect was a major
structural defect under the policy. Nor was that issue submitted
to the jury that determined damages. Although, on the motion for
credit, the trial court agreed with plaintiff, its basis for doing
so is not entirely clear.
Because of various deficiencies in defendants' presentation of
this issue in the trial court and here, we cannot reverse the
denial of the credit.
The first deficiency is that defendants deprived the trial
court of jurisdiction to consider this issue. The pertinent facts
may be summarized briefly. Final judgment was entered in this case
on February 9, 2000. Defendants filed their notice of appeal on
March 3, 2000. Without applying to this court for permission to
proceed in the trial court, defendants apparently filed their
motion for the credit and the matter was argued in the trial court
on March 17, 2000.
From the time "an appeal is taken," apart from certain
exceptions which do not pertain to this case, "the supervision and
control of the proceedings on appeal . . . shall be in the
appellate court."
R. 2:9-1(a). Further applications in the trial
court to modify the judgment may only occur with leave of the
appellate court.
Ibid.;
see also Manalapan Realty, L.P. v.
Township Comm. of Manalapan,
140 N.J. 366, 376 (1995). Since
defendants sought their relief in the trial court without our
direction after filing their appeal, the trial court did not have
jurisdiction on this aspect of the case.
The next deficiency, and one which renders review impossible,
is that defendants have failed to include in their appendix the
notice of motion filed in the trial court and whatever papers were
submitted in support thereof. Thus, for example, we do not have a
copy of the HOWIC insurance policy, the claim form submitted by
plaintiff to HOWIC, which defendants contend demonstrates that this
lawsuit involved the same defects as those submitted to HOWIC, or
any evidential materials relating to the HOWIC settlement or which
might otherwise support defendants' position.
A party on appeal is obliged to provide the court with "such
other parts of the record . . . as are essential to the proper
considerations of the issues."
R. 2:6-1(a)(1)(H);
R. 2:6-3.
Without the necessary documents, we have no basis for
determining that some or all of the defects that were the subject
of this case were also the subject of the HOWIC settlement.
Since defendants sought relief in the trial court after it had
been deprived of jurisdiction by their own action and thereafter
presented the matter to us in a manner which rendered review on the
merits impossible, we have no alternative but to affirm.See footnote 22
VI - Prejudgment Interest
Prejudgment interest may be awarded on contract claims in
accordance with equitable principles.
Bak-A-Lum Corp. of Am. v.
Alcoa Bldg. Prods., Inc.,
69 N.J. 123, 131 (1976). An appellate
court "should not disturb an exercise of discretion involving an
award of prejudgment interest unless it represents a manifest
denial of justice."
Coastal Group v. Dryvit Systems,
274 N.J.
Super. 171, 181-82 (App. Div. 1994)
remanded on other grounds,
147 N.J. 574 (1997) (citing
A.J. Tenwood Assocs. v. Orange Senior
Citizens Housing Co.,
200 N.J. Super. 515, 525 (App. Div.),
certif.
denied,
101 N.J. 325 (1985)).
Defendants do not take issue with the trial court's
calculation of the interest. Rather, they contend that the
equities did not support the award either in whole or in part.
Defendants assert in their appellate brief that this was "a
long and unique litigation that had delays, many of which were not
due to the conduct of the parties in general or [defendants] in
particular." They claim that the proceedings were "stayed for ten
months . . . pending the decisions of the warranty carriers," and
that an intervening appeal filed by plaintiff caused a delay of
some two years. Finally, they assert that the plaintiff's request
for numerous adjournments caused substantial delays in reaching a
final verdict. Plaintiff's brief takes issue, in various ways,
with all of those assertions.
Unfortunately for defendants, on this issue we are again
confronted with an inadequate presentation of the critical facts.
Just as occurred with respect to their credit claim, defendants
have not included in their appendix the notice of motion filed in
the trial court or any supporting certifications that might
demonstrate a factual basis for our interfering with the trial
court's discretion on this issue. Since we do not have all the
facts, we are in no position to weigh the equities in a manner that
would justify interference with the trial court's discretion.
Furthermore, as occurred with the claim for a credit,
discussed in Section V, defendants raised their objection to the
award of interest at a time when the trial court no longer had
jurisdiction.
R. 2:9-1(a).
For all those reasons, we affirm that portion of the judgment
adding pre-judgment interest.
VII - The Entire Controversy Doctrine
The complaint was filed on October 16, 1989. Shortly
thereafter, defendants filed a motion for summary judgment on the
ground that the action was barred by the entire controversy
doctrine. They relied on the following previously filed lawsuits:
(1) A Chancery Division action filed on February 29, 1998, by
plaintiff against defendants demanding the turnover of documents,
including plans and specifications of the condominium complex so
that plaintiff could determine whether it had grounds for an action
in damages against them. Pursuant to
Rule 4:5-1, appended to the
complaint was a certification stating "that future action or
arbitration proceedings may be undertaken but a decision in that
regard must await the receipt of additional information including,
but not limited to, the construction plans and specifications for
the Project." The action was resolved by a judgment entered on the
return day of the order to show cause which directed the turnover.
(2) An action by two unit owners filed on May 13, 1988,
against plaintiff and defendants seeking damages for construction
defects. Plaintiff filed a cross-claim against defendants for
indemnification and contribution. The record does not reveal a
resolution of this case.
(3) An action filed by SBH on June 23, 1988, against plaintiff
and members of its board of trustees seeking damages for libel and
interference with business relationships. The record does not
reveal a resolution of this case.
After carefully considering the record and briefs, we are
satisfied that defendants' entire controversy argument is without
sufficient merit to warrant discussion in a written opinion,
R.
2:11-3(e)(1)(E), and we affirm substantially for the reasons
expressed by the motion judge in his oral opinion of January 19,
1990.
Affirmed.
Footnote: 1 1Perhaps it is worth noting that the Uniform Common Interest
Ownership Act (1994) defines "Unit Boundaries" in part as
follows:
Except as provided by the declaration:
(1) If walls, floors, or ceilings are
designated as boundaries of a unit, all lath,
furring, wallboard, plasterboard, plaster,
paneling, tiles, wallpaper, paint, finished
flooring, and any other materials
constituting any part of the finished
surfaces thereof are a part of the unit, and
all other portions of the walls, floors, or
ceilings are a part of the common elements.
[U.L.A. Common Interest Ownership Act § 2-102 (1994).]
Footnote: 2 2Our conclusion, which was required by the procedural
anomalies, should not be taken as expressing any opinion on the
unbriefed question of defendants' right to seek further relief in
the trial court under Rule 4:50.