The plaintiff condominium association (Association or plaintiff) brought this action to foreclose liens for unpaid maintenance fees assessed against seventeen condominium units in a 128 unit complex. The issue presented by defendants' motion is the amount of counsel fees to which the Association is entitled under the law and circumstances of this case. The facts are not in dispute.
First Fidelity Bank granted a construction loan for the condominium project to its developer, Hovbilt, Inc., (Hovbilt or defendant) and took back a mortgage as security for payment of the loan. In the usual fashion as units were built and sold, releases from the mortgage were given in return for stated payments on the debt. There came a time, when, in accordance with the terms of the recorded Master Deed, there was a sufficient number of units sold as to allow their owners to take over the operations of the Association from the builder-developer. The reversal experienced by the economy in late 1980s led to the inability of Hovbilt to sell the last seventeen units. It not only defaulted on its payments under the First Fidelity loan (on this project as well as others), but defaulted in payment of maintenance charges on those seventeen units to the Association. First Fidelity began a foreclosure action on its mortgage; the Association directed its attorney to prepare and record liens against the seventeen units for unpaid charges. When no payment was forthcoming from Hovbilt, the Association further authorized its attorney to proceed with foreclosure of the liens. This action was filed on June 11, 1991, and Notices of Lis Pendens were recorded.
During the pendency of the First Fidelity foreclosure action, it agreed to accept a deed from Hovbilt for the seventeen unites in lieu of foreclosure. The deed at First Fidelity's direction was made to Hovbilt Condos/Fidoreo, Inc., a corporation created and controlled by First Fidelity. That deed was expressly made subject to the recorded liens for unpaid management charges. The Association promptly amended its complaint to join the new entity.
Thereafter, the Association's attorney and the attorneys representing the new owner of the units had many Discussions regarding satisfaction of the outstanding liens. None bore fruit. Hovbilt Condos/Fidoreo then essayed a motion for summary judgment seeking a declaration that under applicable law it had no responsibility to pay the outstanding charges to the association. That motion was denied. No appeal was taken.
Instead, defendant entered into an agreement with the Association whereby the liens with interest and a proportionate share of claimed fees would be paid as each unit was sold. Hovbilt Condos/Fidoreo reserved its right to challenge entitlement to those counsel fees (or some part thereof) at an appropriate time. In that fashion, all 17 units have been sold; all maintenance charges have been paid in full; substantial counsel fees have been paid to the Association.
The only item to be resolved is plaintiff's motion for an allowance of its counsel fees.
The Association's entitlement to such allowance is based on R.4:42-9 which, in pertinent part, provides:
(a) Actions in Which Fee Is Allowable. No fee for legal services shall be allowed in the trial costs or otherwise,*fn1 except
(8) In all cases where counsel fees are permitted by statute.*fn2
Under the terms of the Condominium Act (N.J.S.A. 46:8B-1 to -38), ...