January 24, 2007
PARK HAMILTON CONDOMINIUM ASSOCIATION, INC., PLAINTIFF-APPELLANT,
PARK HAMILTON, L.P., A BUSINESS OR ASSOCIATION OF BUSINESSES OF THE STATE OF NEW JERSEY, DEFENDANT, AND PARK HAMILTON, L.P. NO. 1, A LIMITED PARTNERSHIP OF THE STATE OF NEW JERSEY, PARK HAMILTON, L.P. NO. 3, A LIMITED PARTNERSHIP OF THE STATE OF NEW JERSEY, AND ROBERT LEHRER, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
CRAIG WOHLERS, ROBERT COTNOIR, CELESTE FRASER, BRIAN LEE, MICHAEL SING, NEIL STERNBERG, AND ROWINN, INC., THIRD-PARTY DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-4892-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 13, 2006
Before Judges Lefelt, Parrillo and Sapp-Peterson.
This case involves ownership of an outdoor parking lot (the east lot) consisting of 8,334 square feet containing thirty-seven exterior parking spaces. Plaintiff Park Hamilton Condominium Association (plaintiff or Association) claims the east lot is a common element owned by the Park Hamilton Condominium. Defendant Park Hamilton L.P. No. 3 (defendant), which owns the commercial unit in the complex -- an indoor parking garage -- claims title to the disputed area. The trial court ruled in favor of defendant by order of May 28, 2004, and consequently, on January 21, 2005, entered judgment reforming the master deed to reflect its earlier ruling. Plaintiff appeals, and we affirm.
Some background is in order. Park Hamilton Condominium, located at 205 Tenth Street in Jersey City, consists of ninety-one residential units and one commercial unit, an indoor parking garage containing 74 parking spaces. Its developer was 205 Tenth Street U.R. Associates, L.P. Plaintiff is a condominium association, created pursuant to the New Jersey Condominium Act, N.J.S.A. 46:8B-1 to -38, with by-laws governing its administration. Specifically, plaintiff is a New Jersey nonprofit corporation formed to administer, manage and operate the common affairs of the unit owners of the condominium and to maintain, repair and replace the general and limited common elements of the condominium as provided in the master deed and by-laws.
The developer, who retained ownership of the commercial unit, recorded the master deed of the condominium on December 9, 1988. The master deed does not include the east lot as part of the commercial unit, which is described as follows:
The Commercial Unit shall consist of the areas measured horizontally between the interior or exposed surfaces of masonry walls enclosing the Commercial Unit and the area measured vertically from the top of the concrete floor of the lowermost level of the Commercial Unit to the underside of the concrete ceilings of the uppermost level of the Commercial Unit. However, any Common Elements located within the Commercial Unit shall not be considered a part of the Commercial Unit.
However, the condominium's public offering statement (POS), dated May 4, 1987, does include the exterior parking spaces within the definition of commercial unit. Thus, the POS provides in pertinent part:
The Commercial Unit is being retained by the Sponsor and will consist of portions of the first floor of the building and the parking areas on the property. The Commercial Unit is not being offered for sale pursuant to this Offering Statement. Sponsor's present intention is to convert this space to a 91 unit parking garage and to offer parking garage leases located within the Commercial Unit to Unit Owners . . . . Unit Owners are not guaranteed[,] however, that such parking garage spaces will be available for their use and must enter into a lease with the Commercial Unit Owner to secure a garage space. [(emphasis added).]
The POS later refers to the commercial unit as "comprised of portions of the first floor of the building wherein a parking garage is to be located and the parking areas on the property."
According to Eric Silverman, a partner in the developer, it was the developer's intention to create a ninety-one space parking area using both the interior garage and the east lot. He further suggested that references in the POS to the term "parking garage" were to the area within the building. In any event, Silverman represented that the developer never intended to convey title to the exterior lot to plaintiff, having operated the east lot as its own and having rented parking spaces to unit owners the entire time it owned the commercial unit until it transferred title to Rowinn, Inc. on October 2, 1992. From then until October 14, 1994, Rowinn rented parking spaces to unit owners in both the interior garage and the exterior lot. In 1994, Rowinn sold the commercial unit to defendant and since then, defendant has rented parking spaces on the east lot to unit owners. Throughout this fifteen-year period, the unit owners never tended to the exterior parking lot although it was included in their individual tax assessments.
Despite the tax assessments, neither plaintiff nor any individual unit owner ever challenged defendant's ownership of the east lot until now. In fact, in a November 1, 1996 lawsuit filed by plaintiff against defendant for unpaid maintenance fees owed the Association for seventeen units including the commercial unit, plaintiff secured a final judgment by default in the amount of $43,011.64 and an order requiring satisfaction of judgment by the collection of rents for parking spaces owned by defendant, including those on the east lot.
On September 15, 2003, plaintiff filed a six-count complaint seeking, among other things, a declaration that plaintiff owns the east lot as a common element pursuant to the condominium master deed recorded on December 8, 1988.*fn1 Defendant filed an answer, counterclaim, and third-party complaint. In its answer, defendant asserted eleven separate defenses including estoppel, laches and the entire controversy doctrine. In its counterclaim, defendant sought reformation and correction of the master deed to provide a description of the commercial unit that includes the exterior parking lot.*fn2 Cross-motions for summary judgment were filed and following argument, the judge dismissed plaintiff's complaint with prejudice, finding defendant was the owner of the east lot, and also granted summary judgment on defendant's counterclaim to reform the master deed. The judge reasoned that due to an error in the master deed, the east lot was not listed as part of the commercial unit; however there was clear and convincing evidence that the developer's intent was to retain ownership of the exterior parking spaces and not convey title to plaintiff or the unit owners. Consequently, on January 21, 2005, the court entered an order amending the master deed and setting the boundaries for the east lot and commercial unit in accordance with a survey submitted by defendant and appended to the judgment. On February 25, 2005, defendant recorded the judgment reforming and amending the master deed with the Hudson County Register of Deeds.
On appeal, plaintiff raises the following issues:
I. THE TRIAL COURT ERRED BY USING THE PUBLIC OFFERING STATEMENT ("POS") TO CREATE AN AMBIGUITY IN THE MASTER DEED AND THEN RELYING UPON THE POS TO CONTRADICT THE EXPRESS LANGUAGE OF THE CONDOMINIUM ACT AND THE MASTER DEED.
A. THE EAST LOT IS DEFINED AS A COMMON ELEMENT.
B. THE DESCRIPTION OF THE COMMERCIAL UNIT DOES NOT INCLUDE THE EAST LOT.
C. THE MASTER DEED IS CLEAR AND UNAMBIGUOUS ON ITS FACE REGARDING THE STATUS OF THE EXTERIOR PARKING SPACES, SO REFERENCE TO THE PUBLIC OFFERING STATEMENT TO CREATE AN AMBIGUITY WAS IMPROPER.
II. THE COURT ERRED BY RELYING ON THE DEVELOPER'S ASSERTED INTENTION TO DIVEST THE UNIT OWNERS OF INTERESTS IN THE COMMON ELEMENTS NOTWITHSTANDING THE LANGUAGE OF THE RECORDED MASTER DEED AND BY RULING ON THE ISSUE ON SUMMARY JUDGMENT AND BEFORE DISCOVERY WAS COMPLETE.
III. THE UNIT OWNERS ARE INDISPENSABLE PARTIES IN ANY ACTION SEEKING TO REFORM THE MASTER DEED BECAUSE THEIR RIGHTS IN THE REAL PROPERTY WOULD BE AFFECTED BY REFORMATION, SO THE MASTER DEED SHOULD NOT HAVE BEEN REFORMED WITHOUT THEIR JOINDER IN THE LAWSUIT.
IV. EVEN IF RELIANCE UPON EXTRINSIC EVIDENCE WERE APPROPRIATE, THERE IS NO CLEAR AND CONVINCING EVIDENCE THAT THE DEVELOPER INTENDED THE EAST LOT TO BE PART OF THE COMMERCIAL UNIT.
V. THE COURT ERRED BY ENTERING A FINAL JUDGMENT BASED ON A SURVEY WHICH INCORRECTLY INCLUDED A PORTION OF LOT 32 AND ADJUDICATED THE INTERIOR DIMENSIONS OF THE GARAGE.
Essentially, plaintiff contends it was error for the court to rely on extrinsic evidence to contradict the clear, express and unambiguous language of the master deed and that, in any event, there was no clear and convincing evidence of the developer's intent to include the east lot within the commercial unit. We disagree.
To be sure, the master deed defines "general common elements" in accordance with N.J.S.A. 46:8B-3d to include "parking areas" unless otherwise defined as part of a unit, and further, the master deed does not expressly include the east lot within its description of defendant's commercial unit.
From the absence of any provision in the master deed reserving the east lot for the commercial unit, plaintiff deduces that, unlike the interior parking garage, the exterior parking spaces are part of the condominium's common element belonging to the Association. Although plaintiff correctly interprets the master deed as worded, defendant counters that the document suffers from a drafting mistake, mutual in nature, warranting its reformation. Thus, defendant argues, while the general rule is that extrinsic evidence is not admissible to explain the intent of an instrument that is not ambiguous, or to create an ambiguity in an instrument that is clear on its face, Wellington v. Estate of Wellington, 359 N.J. Super. 484, 494-95 (App. Div.), certif. denied, 177 N.J. 493 (2003), it is admissible to demonstrate mutual mistake, and in this case is of such a nature to meet the "clear and convincing" standard. We agree.
Reformation of an instrument requires clear and convincing proof that the instrument does not accurately reflect the parties' expressed mutual intent. St. Pius X House of Retreats v. Diocese of Camden, 88 N.J. 571, 580 (1982). In evaluating claims of mutual mistake and fraud, a court necessarily must look beyond the four corners of the contract. Conforti v. Guliadis, 128 N.J. 318, 327 (1992). For reformation due to mutual mistake, our courts require that the minds of the parties have met and reached a prior existing agreement which the written document fails to express. St. Pius X House of Retreats v. Diocese of Camden, supra, 88 N.J. at 579. "The doctrine of mutual mistake applies when a 'mistake was mutual in that both parties were laboring under the same misapprehension as to [a] particular, essential fact.'" Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599, 608 (1989) (quoting Beachcomber Coins, Inc. v. Boskett, 166 N.J. Super. 442, 446 (App. Div. 1979)) (emphasis added by Bonnco Court).
Here, in determining whether there was a mistake in drafting the master deed, that is, whether the master deed contained an erroneous omission caused by a scrivener's mistake, it was appropriate for the trial court to consider extrinsic proof in the form of the POS, the developer's testimony, and plaintiff's own admissions in the 1996 litigation -- all of which indisputably establish the developer's intention to retain ownership of the east lot as part of the commercial unit and not to convey title to the association as a common element as well as plaintiff's knowledge of this. In our view, such evidence is compelling and constitutes "clear and convincing" proof of mutual mistake sufficient to support reformation of the master deed to reflect the document's true intent.
Although not expressly decided by the trial court, Isko v. Plan. Bd. of Tp. of Livingston, 51 N.J. 162, 175 (1968), abrogated on other grounds, Commercial Realty & Res. Corp. v. First Atl. Props. Co., 120 N.J. 546 (1991), equitable considerations also support reformation of the deed. On this score, defendant points to a number of equitable doctrines as potential bars to plaintiff's challenge to reformation. We find particular merit to the invocation of equitable and judicial estoppel.
Equitable estoppel is defined as:
The effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might otherwise have existed . . ., as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse. . . . [County of Morris v. Fauver, 153 N.J. 80, 104 (1998) (quoting Carlsen v. Masters, Mates & Pilots Pension Plan Trust, 80 N.J. 334, 339 (1979).]
"[A] party asserting equitable estoppel may rely upon 'conduct, inaction, representation of the actor, misrepresentation, silence or omission.'" Ridge Chevrolet-Oldsmobile, Inc. v. Scarano, 238 N.J. Super. 149, 154 (App. Div. 1990) (quoting Fairken Assocs. v. Hutchin, 223 N.J. Super. 274, 280 (Law Div. 1987)).
Judicial estoppel, on the other hand, "looks to the connection between the litigant and the judicial system" rather than the relationship between the parties. Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 419 (3rd Cir.), cert. denied, 488 U.S. 967, 109 S.Ct. 495, 102 L.Ed. 2d 532 (1988). Judicial estoppel "precludes a party from assuming a position in a legal proceeding totally inconsistent with the one previously asserted in the same or another proceeding." Bahrle v. Exxon Corp., 279 N.J. Super. 5, 22-23 (App. Div. 1995), aff'd, 145 N.J. 144 (1996). Its fundamental premise is to protect the integrity of the judicial system by preventing litigants from "'playing fast and loose'" with the court "to suit the exigencies of self interest." USLIFE Corp. v. U.S. Life Ins. Co., 560 F. Supp. 1302, 1304-05 (N.D. Tex. 1983) (quoting Scarano v. Central R. Co., 203 F.2d 510, 513 (3rd Cir. 1953)).
Here, there was a definite pattern of conduct over the course of more than fifteen years of the commercial unit owner collecting rent for the exterior parking spaces leased to individual unit owners. Indeed, defendant alone has continued to rent space in the east lot for almost ten years, to supplement the available parking in the interior garage in order to accommodate all the unit owners. Throughout this time, unit owners never assumed responsibility for the maintenance or upkeep of this area, leaving the task to defendant who presumably expended monies in this regard. Moreover, the unit owners never before challenged defendant's ownership of the east lot, not even in the 1996 litigation between these same parties when, in its financial interests, plaintiff actually asserted the exact opposite position. Most pointedly, plaintiff settled that litigation by dissolving a receivership that covered, among other properties, the east lot and allowing defendant to resume the operation and management of the exterior lot, which had been interrupted by the receivership. In the process, plaintiff acknowledged that excess rents over and above plaintiff's default judgment amount and derived in part from parking on the east lot belonged to defendant. Simply stated, plaintiff should not now be allowed to assert a position in direct contradiction to that assumed in the 1996 litigation. Thus, aside from clear and convincing proof of mutual mistake and actual intent, the equities of the matter compel the result reached by the court.
Plaintiff also claims that the master deed should not have been reformed without joinder of the unit owners as indispensable parties. We disagree.
We are satisfied that the master deed and the Association's by-laws give plaintiff the right to sue or be sued on behalf of the unit owners. Thus, Article 1 of the by-laws provides they are "intended to govern the administration of [plaintiff] and provide for the management, administration, utilization, and maintenance of the Common Elements described in the Master Deed . . ." Article V of the by-laws, titled "Powers and Duties of the Board of Directors," provides in relevant part:
1. General powers and privileges. The Board shall have those powers, which include but which are not necessarily limited to the following, together with such other powers as may be provided herein or in the Master Deed, or which may be necessarily implied. The Board shall be empowered:
(r) To bring and defend actions by or against more than one Unit Owner which are pertinent to the operation of the Condominium, the health, safety or general welfare of the Unit Owners, or any other legal action to which the Unit Owners may consent in accordance with these By-Laws[.]
Section 13 of the master deed provides that upon acceptance of a deed to a unit, the unit owner is subject to the terms and conditions of the master deed and by-laws and is automatically a member of plaintiff.
As the Court noted in Thanasoulis v. Winston Tower 200 Ass'n, 110 N.J. 650, 656-57 (1988):
[A condominium] association is comprised exclusively of the unit owners who, through their individual deeds, automatically become members. In essence, an association is responsible for the governance of the common areas and facilities used by the owners of the condominium units. It is a representative body that acts on behalf of the unit owners. Its powers derive from its by-laws, the master deed, and applicable statutory provisions. An association may enter into contracts, bring suit and be sued. The most significant responsibility of an association is the management and maintenance of the common areas of the condominium complex.
Accordingly, we conclude that the provisions of the master deed and the association's by-laws allow for plaintiff to pursue the instant matter as representative of the individual unit owners and therefore there was no requirement for defendant to have joined them in its counterclaim for reformation.
Plaintiff takes issue with the court's reliance on defendant's survey because it allegedly wrongly included a portion of another lot (Lot 32) as part of the east lot and set the interior dimensions of the parking garage. This claim is without merit. Defendant prepared and submitted a survey with its proposed form of final judgment because none had been included with the original master deed as required by law. Plaintiff proffered no evidence in opposition to the survey, which encompassed all of the parking areas on the premises, including a small portion of lot 32 as part of the east lot. Plaintiff's failure below to rebut the survey offered by defendant proves fatal to its claim on appeal.
We are further satisfied that all remaining arguments advanced by plaintiff are without merit, not warranting discussion in a written opinion. R. 2:11-3(e)(1)(E).