[184 NJSuper Page 451] Plaintiffs, owners of five residence units at Harmon Cove I, a condominium development in Secaucus, New Jersey, brought this action seeking a variety of relief against defendants Hartz
Mountain Associates (Hartz Mountain),*fn1 Harmon Cove I Condominium Association, Inc. (Association) and Harmon Cove Recreation Association, Inc. (Recreation Association). By consent of the then parties, Harmon Cove II Condominium Association, Inc. has joined as a plaintiff-intervenor, seeking some of the same relief demanded by plaintiffs as well as other relief. Defendants have moved to dismiss plaintiffs' complaint on grounds that they are without capacity or standing to assert the causes of action set forth in their verified complaint.
The complaint alleges that Hartz Mountain was the planner, developer, builder and seller of both the Harmon Cove I and Harmon Cove II developments; that the Association is a nonprofit corporation which "took over the common elements" in the Harmon Cove I development pursuant to the master deed and bylaws of the Association, and that the Recreation Association is a nonprofit corporation "to which has been transferred and conveyed control of the recreational facilities at said Harmon Cove development. . . ." Plaintiffs further allege that Hartz Mountain built the premises and the common elements in a defective and improper manner and in breach of express and implied warranties, specifying a variety of asserted construction defects both in the residential buildings and in the outlying structures and areas, including recreational areas. Based on those allegations, plaintiffs seek "specific performance to compel Hartz Mountain to specifically perform its undertakings" (first count) as well as for damages (second count). Plaintiffs further seek certification of their action as a class action (third count).
The critical issues on the present application are focused by the fourth count, in which plaintiffs allege that the Association and the Recreational Association undertook to assert and to negotiate and were purporting to settle the claims of all unit owners against Hartz Mountain; that the plaintiffs and other
unit owners have not been adequately informed or consulted with respect to any such negotiations or settlement, and that in any event the causes of action against Hartz Mountain are not within the authority of the Association or the Recreation Association to settle. Accordingly, plaintiffs seek declaratory judgment that "such settlement is beyond the powers" of the Association and Recreation Association, and they seek an injunction against the settlement without the consent of the unit owners and "a majority of property owners after full disclosure of all facts and reports as to common elements. . . ."
When the complaint was filed plaintiffs' application for temporary restraints against the consummation of the contemplated settlement was denied upon representations by counsel for all defendants that any settlement would "be subject to any and all future rulings of the court upon the issues pleaded in the verified complaint." An order memorializing that understanding was entered November 24, 1980.
No question is raised here as to plaintiffs' rights, as members of the Association and Recreation Association, to seek relief against those entities for any assertedly wrongful actions taken by their managements. See Papalexiou v. Tower West Condominium , 167 N.J. Super. 516 (Ch.Div.1979). Nor does this motion present the question whether individual unit owners can assert claims on behalf of all when their association fails to act. What is at issue, rather, is whether the Association and Recreation Association are without lawful authority to settle, on behalf of all the unit owners, the claims against Hartz Mountain.
The relations and rights of the parties are fixed by the Condominium Act, N.J.S.A. 46:8B-1 et seq. The act defines a "condominium" as
The "unit" owned by the "unit owners" is defined as being "a part of the condominium property designed or intended for any
type of independent use . . ." and includes "the proportionate undivided interest in the common elements. . . ." N.J.S.A. 46:8B-3(o). "Common elements" is defined to include essentially all of the portions of the development which are ...