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Poblette v. Towne of Historic Smithville Community Association

November 12, 2002

PETER POBLETTE AND ELIZABETH POBLETTE, HIS WIFE, MICHAEL COOL AND MERRYL COOL, HIS WIFE, RONALD RICCIO AND ANNETTE RICCIO, HIS WIFE, DOMINIC DELLAVENTURA AND EILEEN DELLAVENTURA, HIS WIFE, AND JAMES T. LUTTES, PLAINTIFFS-RESPONDENTS,
v.
TOWNE OF HISTORIC SMITHVILLE COMMUNITY ASSOCIATION, INC., A NEW JERSEY CORPORATION, AND ROSELAND MANAGEMENT CO., INC., DEFENDANTS-APPELLANTS, AND MID-ATLANTIC CORPORATION, A NEW JERSEY CORPORATION, AND STAREBARE ASSOCIATES, L.P., JAMES COX, DOMENICK COLLELA, SANDI GRIMMIE, PHIL KRAUS, ANTHONY COPPOLA, AND BRUCE SCHMILOWITZ, DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Civil Part, Atlantic County, L-2972-98.

Before Judges Kestin, Fall *fn1 and Weissbard.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 2, 2002

Defendants, Towne of Historic Smithville Community Association, Inc. (the Association) and Roseland Management Co., Inc., (Roseland) appeal from a judgment in the amount of $327,000 plus prejudgment interest, in favor of plaintiffs Peter and Elizabeth Poblette, Michael and Merryl Cool, Ronald and Annette Riccio, Dominic and Eileen Dellaventura, and James T. Luttes (collectively plaintiffs). We affirm. In 1981, the Historic Smithville Development Co. (developer), a New Jersey Partnership, filed a Declaration of Covenants, Conditions and Restrictions (Declaration) in anticipation of the construction of a planned unit development (Development) in Atlantic County, New Jersey. The developer created the Association as a nonprofit corporation to manage and maintain the Development in accordance with the provisions of the Declaration. Under the Declaration, each owner of property within the Development became a member of the Association and was subject to the Declaration and bylaws adopted by the Association. The Declaration provided that the members were subject to certain easements held by the Association. For instance, Section 4.01(g) provided that each member's rights of enjoyment in and use of the community facilities of the development is subject to

[a]n easement for the present and future installation and maintenance of electric service, master and/or cable TV service, telephone service, water (storm water and sanitary sewer), gas and drainage facilities and the necessary appurtenances to the same which easement shall run in favor of the [developer], Transferees, Community Association and the entity or entities owning or operating such facilities.

Similarly, Section 7.01(r) provided that in addition to the other covenants contained in the Declaration, "the use of Community Facilities and Limited Community Facilities and each Dwelling Unit, Lot or Parcel of the Town of Historic Smithville is subject to" the same easement set forth in Section 4.01(g), quoted above.

In 1987, the developer filed a public offering statement (POS) "pursuant to the requirements of The Planned Real Estate Development Full Disclosure Act (N.J.S.A. 45:22A-21 et seq.)" giving notice to purchasers of the availability of units in the Development known as "Towne of Historic Smithville." The POS disclosed that

[r]esidential dwelling units in the Development shall be offered under and subject to [the Declaration] which will be recorded against the property within the Development in the Office of the Recorder of Deeds in and for Atlantic County, New Jersey. The Declaration sets forth provisions governing the use, ownership, maintenance and administration of all the property within the Development . . . .

The Declaration further provides that, upon taking title to any dwelling unit or lot within the Development, the legal owner of such dwelling unit or lot shall automatically become a member of the Community Association. The operation of the Community Association will be governed by a set of By-Laws . . . .

The Community Association will have the responsibility for the maintenance, governance and administration of those areas and improvements designated as community facilities (the "Community Facilities") . . . . Such Community Facilities will be owned by the Community Association. In addition, the Community Association will have responsibilities for the maintenance of certain facilities in the Development designated as limited community facilities (the "[Limited] Community Facilities") which shall not be owned by the Community Association. Such Limited Community Facilities include, but are not limited to, various landscaped cul- de-sac islands located throughout the Development. These islands, along with certain streets, will be dedicated by the Developer to Galloway Township but will be maintained by the Community Association.

In August 1997, Atlantic County experienced a storm, described by one of the experts as being "of a magnitude greater than the 100-year storm." During a period shortly following the storm, plaintiffs, who owned homes in the Development, suffered substantial damage to their homes from flooding allegedly caused by the overflow of a detention basin on the Development that was to form part of the storm water drainage system. Significantly, the developer had gone bankrupt well before the flood had occurred.

About a year after the storm, plaintiffs filed a complaint naming as defendants the Association, Roseland and Mid-Atlantic Asset Management Company (Mid-Atlantic), the management companies retained by the Association to assist in maintaining the Development, and six individual members of the Association's Board of Directors. The complaint, which related to the flood damage to plaintiffs' properties, raised claims against the Association and the Management Companies for breach of duty, eviction, trespass, and nuisance. In addition, plaintiffs claimed breach of fiduciary duty on the part of the individually-named members of the Association's Board of Directors. Thereafter, plaintiffs filed an amended complaint naming as an additional defendant Starebare Associates (Starebare), a real estate development investment company that owned the property on which the basin was located as of the time of the flood.

Plaintiffs filed a motion for partial summary judgment, seeking an order "adjudging that the [Association] was under a duty to maintain and repair the detention basin adjoining plaintiffs' properties . . . as the holder of an easement granting exclusive control of said detention basin to [the Association] . . . ...


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