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O'Loughlin v. National Community Bank

March 29, 2001

JOSEPH O'LOUGHLIN, CAROL O'LOUGHLIN, ADA DOROTHY HAYES, M.D., DONALD MCADAMS, PLAINTIFFS-APPELLANTS, AND BOARDWALK ON THE BAY CONDOMINIUM ASSOCIATION, INC. AND THIRTY-O-SEVEN BAYSHORE CONDOMINIUM ASSOCIATION, INC., PLAINTIFFS,
v.
NATIONAL COMMUNITY BANK, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT, AND CHARLES STANFA, ANDREW SIMPSON, GEORGE MAUL, BOARDWALK ON THE BAY ASSOCIATION, INC., A NEW JERSEY CORPORATION, DEFENDANTS, AND ARTHUR PETRELLA, THIRD-PARTY DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, L-1997-99.

Before Judges Baime, Carchman and Lintner.

The opinion of the court was delivered by: Lintner, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 28, 2001

Plaintiffs' complaint, filed on June 7, 1999, was dismissed as barred by the statute of limitations. Plaintiffs' action, which had originally been filed on June 3, 1992, was dismissed without prejudice in accordance with a consent order dated February 16, 1999, by which defendants agreed to waive the statute of limitations, as long as plaintiffs filed a "New Action" within fifteen days of the execution of the consent order. Prior to entering the consent order, partial summary judgment had been granted in favor of defendant National Community Bank (the Bank), by order of November 30, 1998. Plaintiffs' motion for reconsideration was heard and denied on December 18, 1998, and subsequently memorialized in an order dated February 16, 1999. On September 10, 1999, an order was entered dismissing plaintiffs' new action based upon the running of the Statute of limitations. Plaintiffs appeal from the orders entering partial summary judgment, denying reconsideration, and barring their new action based upon the running of the statute of limitations. We affirm.

Because they are entwined, we combine the procedural history and relevant facts. The subject of this appeal involves three condominium units that are part of a twenty-four unit, three- story, residential building in Brigantine, which was formerly known as Bay Condominium and was built and sold to plaintiffs by defendant Boardwalk on the Bay Association, Inc. and its principals, Charles Stanfa, Andrew Simpson, and George Maul (the Developer).*fn1

The construction began on the condominium project in 1988, after the Developer obtained a $3,000,000 loan from the Bank, which was secured by a mortgage on the property. Construction was completed sometime in 1989. Plaintiff Donald McAdams paid $187,000 for unit 24 in September 1989. Unit 8 was purchased by plaintiffs Joseph O'Loughlin and his wife Carol in December 1989, for $160,000. Plaintiff Dr. Ada Dorothy Hayes purchased her unit, number 16, in January 1990, for $175,000. Shortly after the purchases, the plaintiffs began to have problems with water intrusion.

Four additional units were sold to others and one unit was repurchased by the Developer before it defaulted on its loan. On June 5, 1991, the Bank accepted a deed in lieu of foreclosure to the Developer's single unit and the sixteen unsold units, resolving its mortgage default dispute with the Developer. The Bank performed what it considered cosmetic repairs on the remaining units in order to prepare them for sale. On August 25, 1991, the Bank held an auction at which the remaining units were sold for prices ranging from $80,000-$90,000. Prior to the auction, the Bank filed an amendment to the Condominium Public Offering Statement, indicating that it was replacing Boardwalk on the Bay Association as sponsor. The amendment provided in pertinent part:

National Community Bank of New Jersey has become the Sponsor of this condominium project by receiving a deed in lieu of foreclosure for sixteen of the units unsold by the original sponsor, Boardwalk on the Bay Associates, Inc. Eight (8) out of the total of twenty-four (24) units were sold by the original sponsor. The remaining sixteen (16) units (and one of the units sold by the original sponsor and conveyed by the original purchaser to the Bank pursuant to a deed in lieu of foreclosure) will be sold at an auction to be conducted by Traiman Corporation, a real estate auction organization. The terms and conditions of the sale are set forth in an Agreement of Sale, which has been approved by the New Jersey Department of Community Affairs.

On September 12, 1991, plaintiffs, through their former attorney, forwarded to the Bank a report of an inspection performed on their behalf by architect Thomas Sidrane. The report found twenty alleged code violations, enumerated seven additional suspected violations that could not be seen without uncovering the work, thirty-three construction defects, and pointed out three additional defective areas where remedial work was necessary in order to address the problems with water infiltration. He concluded the following:

1. It appears that the builders wanted to erect a building with first cost of materials and labor to be as minimal as possible. There is much [sic] yearly maintenance costs to be borne by the condominium association. These costs must be recognized by all owners.

2. It appears that the builders ignored the building code whenever they felt it was in their best interest. I cannot understand how a certificate of occupancy was issued for any of the units with so many outstanding code violations.

3. The water penetration problems must be addressed immediately so as to halt any possible deterioration of the building components which are covered by other work.

As a result of Sidrane's report, inspections of the building were conducted by the New Jersey Department of Consumer Affairs, the Brigantine Building Inspector, and the Brigantine Bureau of Fire Prevention. The Bank was required to hire a contractor to make substantial repairs in order to remedy the code violations and secure a certificate of occupancy for the 17 units that had been sold at the auction. ...


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