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Surf Cottages Homeowners Association, Inc. v. Janel Associates

July 08, 2003

SURF COTTAGES HOMEOWNERS ASSOCIATION, INC., PLAINTIFF-APPELLANT,
v.
JANEL ASSOCIATES, INC., DEFENDANT-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Ocean County, Docket No. DC-2357-01.

Before Judges Skillman, Lefelt and Winkelstein.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 1, 2003

The issue presented by this appeal is whether the"amount in controversy" that determines the jurisdictional limit of the Special Civil Part under Rule 6:1-2(a)(1) includes counsel fees. We conclude that the"amount in controversy" in a Special Civil Part action excludes counsel fees that are not capable of being calculated when the action is commenced.

Plaintiff is a homeowners association in Ortley Beach that imposes dues, fees and beach assessments upon members to conduct its operations. Defendant owns eight residences that are subject to these assessments. Plaintiff's by-laws provide that a member who fails to pay an assessment is subject to late fees, interest and"reasonable attorneys' fees."

In the spring of 2000, plaintiff imposed an assessment of $1,000 per unit to fund the purchase of a beach area adjoining its members' residences and roads. As the owner of eight units, defendant's total assessment was $8,000. Defendant failed to pay any of the assessment.

Plaintiff brought this action in the Special Civil Part to collect the unpaid $8,000 assessment as well as late fees, interest and attorneys' fees. When the action was brought, the jurisdictional limit of the Special Civil Part was $10,000.*fn1 Defendant failed to answer, and the court entered a default judgment in plaintiff's favor for $8,226.48, which consisted of the $8,000 in unpaid assessments, $2.48 interest and $224 for attorneys' fees and costs. However, defendant successfully moved to vacate the default judgment and filed an answer which included a counterclaim for the $5,000 cost of repairing a curb in front of its property that plaintiff had allegedly damaged and equitable relief involving issuance of beach badges as well as enjoyment of other benefits of association membership. The trial court subsequently granted plaintiff's motion for a summary judgment which dismissed defendant's counterclaim and entered judgment for the unpaid homeowners association assessment.

By the time summary judgment was granted, plaintiff's attorneys' fees exceeded $2,000. After initially entering judgment in the full amount of plaintiff's damages, including all attorneys' fees, the trial court sent a letter questioning whether it had authority to enter judgment for an amount in excess of the $10,000 Special Civil Part jurisdictional limit. Plaintiff's attorney briefed the issue, and the court subsequently issued a letter opinion which concluded that the attorneys' fees plaintiff had incurred in pursuing the action were encompassed by the Special Civil Part's $10,000 jurisdictional limit. Accordingly, the court entered an amended final judgment for $10,000 plus costs.

By enactment of chapter 405 of the Laws of 1983, the Legislature abolished the former County District Court and transferred that court's functions, powers and duties to the Superior Court. L. 1983, c. 405, § 1 and 3 (codified as N.J.S.A. 2A:4-3a and c.) (repealed 1991). Shortly after enactment of this legislation, the Supreme Court established, initially by order and subsequently by rule, the Special Civil Part of the Law Division. See Pressler, supra, comment on R. 6:1. Because the Supreme Court created the Special Civil Part in the exercise of its constitutional authority to allocate jurisdiction among the divisions and parts of the Superior Court, N.J. Const., art VI, § 3, ¶ 3, see O'Neill v. Vreeland, 6 N.J. 158, 164-65 (1951), it is within the Court's exclusive province to determine the Special Civil Part's jurisdictional limit. The Court has exercised this authority by increasing the jurisdictional limit of the Special Civil Part from the previous $5,000 statutory limit of the County District Court, N.J.S.A. 2A:6-34(a) (repealed 1991), first to $7,500 in 1992, then to $10,000 in 1994, and most recently to $15,000 in 2002. Pressler, supra, comment on R. 6:1. It is similarly within the Court's exclusive province to decide how this jurisdictional limit shall be determined.

When this action was commenced, Rule 6:1-2(a)(1) provided that matters cognizable in Special Civil Part include:

Civil actions seeking legal relief when the amount in controversy does not exceed $10,000.

In addition, Rule 6:1-2(c) provides:

Where the amount recoverable on a claim exceeds the monetary limit of the Special Civil Part..., the party asserting the claim may waive the excess over the applicable limit and ...


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