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Cyktor v. Aspen Manor Condominium Association

April 17, 2003

LOUIS CYKTOR, JR., LOUIS CYKTOR III, IRVING SORRENTINI, ROBERT G. PAULUS, WICK BUILDERS, INC., AND CANACO, INC., PETITIONERS-APPELLANTS, AND ANNE CYKTOR, KATHLEEN PAULUS, AND DARYL SORRENTINI, PETITIONERS,
v.
ASPEN MANOR CONDOMINIUM ASSOCIATION AND BUREAU OF REGULATORY AFFAIRS, RESPONDENTS-RESPONDENTS.



On appeal from a Final Administrative Determination of the Department of Community Affairs, CAF-09192-00.

Before Judges Braithwaite, Lintner and Parker.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 17, 2003

The central issue on appeal is whether the ten-year statute of repose, N.J.S.A. 2A:14-1.1, protecting "any person performing or furnishing the design, planning, supervision of construction or construction of [an] improvement to real property," bars respondent Bureau of Regulatory Affairs, Department of Community Affairs ("DCA"), from commencing an enforcement action against appellants who constructed a condominium development more than ten years prior to the DCA action. The acting Commissioner of DCA held that the statute of repose did not bar the enforcement action because the statute applies only to actions to recover damages.

On appeal, petitioners assert that DCA's enforcement action is barred by the statute of repose and that DCA's enforcement action against the individual petitioners named as agents of the condominium association should be dismissed. We agree with petitioners that the DCA action is barred by the statute of repose and now reverse.

I.

The condominium development is known as "Aspen Manor Condominium," located in Woodbridge. Aspen Manor, Inc., a New Jersey Corporation, registered a Public Offering Statement on May 8, 1981. It received its first building permit on November 13, 1980, and was issued permits for its last group of buildings in the complex on July 1, 1983. Certificates of occupancy were issued for the individual units from July 1981 to May 1985. At some point, Aspen Manor, Inc., changed its name to Wick Builders, Inc. ("Wick").

Wick, the developers/sponsors of the condominium complex and the non-sponsor/unit owners negotiated in 1986 for the transfer of control of the Condominium Association (the "Association") from Wick to the unit owners. In December 1986 Wick transferred control of the Association to the unit owners and on December 16, 1986, the Association, controlled by the unit owners, executed a release that relieved Wick and its principals, petitioners Louis Cyktor, Jr., Louis Cyktor, III, Robert G. Paulus, and Irving Sorrentini, of future liability in connection with Aspen Condominium in exchange for a payment of $39,192.

The release relieved Wick of the following:

Any and all claims or rights, relating to or arising out of any liability or any obligation of Wick Builders, Inc. to make working capital contributions or to fund capital reserves or otherwise contribute to operate [sic] deficits of Aspen Manor Condominium Association; and any and all claims which I may have relating to or arising out of the construction, completion and repair of buildings, improvements, common elements and facilities and limited common elements and facilities at the Aspen Manor Condominium.

The Association assumed ownership and control of the "common elements of the project."

The DCA first cited the Association for building code violations in 1988 when it sent notices of violation and orders to terminate to the Association and Wick for a failure to equip the buildings with an appropriate number of independent exits on every floor. The Association and Wick challenged the DCA action before the Office of Administrative Law ("OAL"). Thereafter, on May 1, 1992, the Association commenced an action in the Law Division against Wick and the principals listed above plus Daryl Sorrentini for the costs of repairs of twenty-five buildings in the event that the Association lost in the proceedings brought by the DCA.

Both proceedings were settled. On October 3, 1996, the Administrative Law Judge ("ALJ") approved a consent order that Wick would pay the Association $42,000 in consideration for release from any and all claims concerning the particular violations cited by the DCA in the administrative proceedings. On May 20, 1996, the Association and Wick filed a stipulation of dismissal with prejudice in the Law Division action, stating that "the parties hereby mutually dismiss all claims raised by them against each other in this litigation with prejudice and without costs to any of the parties."

In March of 1997, almost twelve years after the final certificate of occupancy was issued, the DCA commenced this proceeding by sending notices of violation and orders to terminate. This time, however, the DCA asserted that "[t]he exit enclosure walls do not extend to the underside of the roof deck, creating an open attic, which is a violation."

In November 1997, the Association moved to set aside the Law Division settlement with Wick and reopen the dismissed lawsuit and amend the complaint to include the new claim involving the most recent violations cited by the DCA. Wick defended on the grounds that the Association was prohibited by the statute of repose, and that the Association was attempting to circumvent the entire controversy doctrine. On January 9, 1998, the Law Division judge denied the Association's motion. She stated that the Association's claim was not barred by the entire controversy doctrine, but it was barred by the statute of repose. She stated that the statute of repose precluded the Association from any remedy against Wick and that if it were permitted to reopen the old case and append a new claim the statute of repose would be rendered ineffective. The Association filed an appeal, but never pursued it. As such, it was dismissed on November 19, 1998.

The DCA identified Wick as the Association's agent. Then in an amended notice of violation issued on September 19, 1997, the DCA identified Robert Paulus as the Association's agent. On February 11, 1998, the DCA sent another series of amended notices of violation to the Association, this time designating petitioners Kathleen Paulus, Robert Paulus, and Canaco, Inc., c/o Robert Paulus, and Louis Cyktor, III, as agents of the Association. Counsel for Wick promptly sent a letter informing the DCA that Wick had transferred control of the Association to the unit owners in 1986.

The DCA then transferred the matter to the OAL, naming as petitioners, in the contested case, Wick, Aspen Manor, Inc. a/k/a Canaco, Inc., Louis Cyktor, Jr., Robert G. Paulus, Louis Cyktor, III, Irving Sorrentini, Kathleen Paulus, and Anne Cyktor.

On November 10, 1998, Wick moved to dismiss the DCA action on the grounds that the notice of violation was barred by the statute of repose and that the DCA was precluded from pursuing Wick's principals for the violations. The DCA argued that the statute of repose did not preclude a governmental agency from bringing an enforcement action. Following oral argument on December 10, 1998, the ALJ issued an initial decision on April 7, 1999, granting Wick's motion, holding that the statute of repose prohibited the DCA's enforcement action.

In his written decision, the ALJ concluded that the statute of repose applied because Wick "contributed to the design, planning, supervision or construction" of Aspen Manor Condominiums, its substandard construction created a hazardous situation, and more than ten years had passed since the completion of construction. Further, he noted that the DCA is not exempt from the statute because the Legislature intended that the statute "grants immunity against all actions . . . including the . . . enforcement action by the DCA in the present matter." The ALJ did not address whether the DCA was precluded from asserting the action against the individual petitioners and their wives.

On July 9, 1999, the then Commissioner of the DCA issued a final agency determination rejecting the ALJ's recommendation. Specifically, the Commissioner accepted the "Statement of the Case and Procedural History" and the "Analysis and Conclusions of Law," but she rejected the conclusion that the statute of repose barred the DCA's enforcement action because a strict construction of the plain language of N.J.S.A. 2A:14-1.1 only prohibits actions for damages upon the expiration of the ten years.

The Commissioner said in part: "the explicit wording of the statute does not support the ALJ's holding. . . . [It] states that no action 'whether in contract, in tort, or otherwise to recover damages' as no action 'for contribution or indemnity for damages' may be instituted more than ten years" after substantial completion of the real property. She continued, "[h]owever, this action is not an action 'for damages.' Rather, this action is an enforcement action taken under the authority of the [Uniform Construction Code], which has no statute of limitations." She took the position that the statute of repose is clear and unequivocal in limiting its applicability to actions for damages. Although she agreed that the courts have traditionally construed the statute liberally to conform to its purpose of preventing interminable exposure to liability for the players in the construction industry, she adopted a literal reading of the statute that would provide protection only against actions for damages.

Additionally, she justified her position under the authority of N.J.S.A. 52:27D-124, a section of the Uniform Construction Code ...


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