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Committee for a Better Twin Rivers v. McDonald

July 26, 2007

COMMITTEE FOR A BETTER TWIN RIVERS (CBTR); DIANNE MCCARTHY; HAIM BAR-AKIVA AND BRUCE FRITZGES, PLAINTIFFS-RESPONDENTS, AND EDWARD MCDONALD AND EMILY MCDONALD, PLAINTIFFS,
v.
TWIN RIVERS HOMEOWNERS' ASSOCIATION (TRHA); TWIN RIVERS COMMUNITY TRUST AND SCOTT POHL (TRHA PRESIDENT), DEFENDANTS-APPELLANTS, AND JENNIFER WARD (TRHA ADMINISTRATOR), DEFENDANT.



On appeal from and certification to the Superior Court, Appellate Division, whose opinion is reported at 383 N.J. Super. 22 (2006).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The issue before the Court is whether the rules and regulations enacted by the Twin Rivers Homeowners' Association governing the posting of signs, the use of the community room, and access to its newsletter violated New Jersey's constitutional guarantees of free expression.

Twin Rivers is a planned unit development consisting of privately owned condominium duplexes, townhouses, single-family homes, apartments, and commercial buildings located in East Windsor, New Jersey. The community covers about one square mile and is populated by about 10,000 residents. The Twin Rivers Community Trust (Trust) is a private corporation that owns Twin Rivers' common property and facilities. The Twin Rivers Homeowners' Association (Association) is a private corporation that serves as trustee of the Trust. The Association is authorized by the Trust to make rules and regulations for the conduct of its members while occupying the land owned or controlled by the Trust, to provide services to its members, and to maintain common lands and facilities in Twin Rivers. The Association maintains the Trusts' private residential roads, provides street lighting and snow removal, assigns parking spaces in its parking lots, and collects trash. By acquiring property in Twin Rivers, the property owner automatically becomes a member of the Association and is subject to its Articles of Incorporation (Articles) and Bylaws. The Association is governed by a Board of Directors (Board), whose members are elected by all eligible voting members of the Association. The Board is responsible for making and enforcing the rules, and for providing services to its members that are financed through mandatory assessments levied against residents pursuant to an annual budget adopted by the Board.

Prior to the start of this litigation, several residents of Twin Rivers formed a committee, known as the Committee for a Better Twin Rivers (Committee), in order to change the way in which Twin Rivers was governed. Eventually, the Committee and three individual residents of Twin Rivers (collectively, the Committee) filed a nine-count complaint against the Association and Scott Pohl, the president of the Association, seeking to invalidate various rules and regulations. The Committee later amended its complaint to include the Trust as a defendant. The thrust of the complaint was that the Association had effectively replaced the role of the municipality in the lives of its residents and, therefore, the Association's internal rules and regulations should be subject to the free speech and free association clauses of the State Constitution. Only the first three counts of the complaint are relevant to this appeal.

In count one of the complaint, the Committee sought to invalidate the Association's policy relating to the posting of signs, which effectively limited signs to one per lawn, one per window and forbid the posting of signs on utility poles and natural features within the community. The stated purpose of the rule is to avoid the clutter of signs and to preserve the aesthetic value of the common areas, as well as to allow for lawn maintenance and leaf collection. The Committee sought injunctive relief to permit the posting of political signs on the property of community residents and on common elements under reasonable regulation on the basis that the current policy was unconstitutional.

In count two of the complaint, the Committee addressed the policy regarding the use of the community room. In general, the community room is open to residents of Twin Rivers as well as clubs, organizations, and committees approved by the Trust who want to rent the room for parties and other events. A rental fee was charged and the renter was also required to provide a certificate of insurance naming the Association as the insured. The rental fees were intended to cover the costs associated with the maintenance of the room. The Committee asserted that the community room policy denied them equal protection of the laws and unreasonably and unconstitutionally violated their right to access the community room on a fair and equitable basis. The Committee sought temporary and permanent injunctions to allow them to use the room as other similarly situated entities. They also stated that the rental fees were excessive and were not related to actual rental costs incurred by the Association.

In count three, the Committee alleges they were denied equal access to the Association's monthly newspaper, Twin Rivers Today (Today). The newspaper provides residents with news and information that concerns the community and the editorial committee of Today selects the content of the newspaper. The paper is delivered to all Twin Rivers residents but not to the general public. The Committee sought a declaration that all Twin rivers residents should have equal access to the pages of Today. The Committee also sought a permanent injunction enjoining the president of the Board from using the newspaper "as his own personal political trumpet."

The Association filed a motion for summary judgment and the Committee filed a cross-motion. The material facts were not disputed. The trial court granted the Association's motion for summary judgment on the sign claims in count one and on the newspaper claims in count three. The trial court granted partial relief to the Committee on the community room claims in count two. Central to the trial court's decision was the determination that Twin Rivers was not a quasi-municipality and was therefore not subject to the New Jersey Constitution's free speech and association clauses. The court noted that while the Association asserted considerable influence on the lives of Twin Rivers' residents, that impact was a function of the contractual relationship that residents entered into when they elected to purchase property in the community. The court applied the traditional test for evaluating the reasonableness of restrictive covenants and found that the covenant relating to the posting of signs was reasonable and enforceable. The court found the regulations relating to the use of the community room impermissibly vague and directed the Association to modify the regulations to provide clear standards for the granting or withholding of permission for the room's use. Further, the court concluded that the Committee was not denied access to Today and that it would be improper under constitutional principles of free press for the court to exert control over the newspaper's contents.

The Committee appealed. The Appellate Division reversed, holding that the Association was subject to State constitutional standards in respect of its internal rules and regulations.

The Supreme Court granted the Association's petition for certification on whether the New Jersey Constitution applies to its internal rules and regulations.

HELD: In applying the Schmid/Coalition multifaceted standard, the twin Rivers Homeowners' Association's policies, as set forth in its rules and regulations, do not violate the New Jersey constitutional guarantees of free expression.

1. Under federal law, there must be "state action" to enforce constitutional rights against private entities. New Jersey law has not been so confining. In Schmid, this Court has held that under certain circumstances, rights of free speech and assembly under the State Constitution are secure from interference by the owner of private property. In Schmid, this Court crafted the test to be applied to ascertain the parameters of the rights of speech and assembly on the privately owned property and the extent to which such property reasonably can be restricted to accommodate these rights. Under that test, the courts consider: 1) the nature, purposes, and primary use of such private property, generally, its "normal" use; 2) the extent and nature of the public's invitation to use that property; and 3) the purpose of the expressional activity undertaken on such property in relation to both the private and public use of the property. In assessing the reasonableness of any restrictions, the court shall consider whether there exist convenient and feasible alternative means to individuals to engage in substantially the same expressional activity. The Court expanded the Schmid test in New Jersey Coalition Against War in the Middle East v. J.M.B. Realty Corp., where the Court not only relied on the three-pronged test, but also on the general balancing of expressional rights and private interests in addressing the distribution of leaflets in shopping malls. (Pp. 10-22)

2. The vast majority of other jurisdictions that have interpreted a state constitutional provision with language similar to New Jersey's free speech provision require "state action" as a precondition to imposing constitutional obligations on private property owners. This Court has not followed that approach. In the absence of state action, the Court must determine whether the acts of the Association violated its members' free speech and association rights in the setting of this private community. In addition, this case involves restrictions on conduct both on the private housing association's property and on the homeowners' properties. The three-pronged test in Schmid and the general balancing of expressional rights and private property interests in Coalition are the appropriate standards to decide this matter. (Pp. 22-26)

3. Under the first Schmid factor, the nature, purposes, and primary use of Twin Rivers' property is for private purposes and does not favor a finding that the Association's rules and regulations violates the Committee's constitutional rights. Under the second factor, the limited nature of the public's invitation to use the property does not favor a finding that the Association's rules and regulations violated the Committee's constitutional rights. Under the third Schmid factor, the Court finds that the Committee's expressional activities are not unreasonably restricted. The relationship between the Association and the homeowners is a contractual one, formalized in reasonable covenants that appear in all deeds. The mutual benefit and reciprocal nature of the rules and regulations and their enforcement is essential to the fundamental nature of the communal living arrangement that the residents enjoy. Thus, this factor does not weigh in favor of finding that the Association's rules and regulations violated the Committee's constitutional rights. (Pp. 26-30)

4. Neither singularly nor in combination is the Schmid/Coalition test satisfied in favor of concluding that a constitutional right was infringed in this case. In balancing the Committee's expressional rights against the Association's private property interest, the Association's policies do not violate the free speech and right of assembly clauses of the New Jersey Constitution. (Pp. 31-32)

Judgment of the Appellate Division is REVERSED and the judgment of the trial court is REINSTATED.

CHIEF JUSTICE ZAZZALI and JUSTICES LONG, LaVECCHIA, ALBIN, RIVERA-SOTO and HOENS join in JUSTICE WALLACE'S opinion.

The opinion of the court was delivered by: Justice Wallace, Jr.

Argued January 4, 2007

In this appeal, we determine whether the rules and regulations enacted by a homeowners' association governing the posting of signs, the use of the community room, and access to its newsletter violated our state constitutional guarantees of free expression. The trial court held that the association's rules and regulations were not subject to the right of free speech embodied in our State Constitution. On appeal, the Appellate Division reversed. We granted certification and now reverse the judgment of the Appellate Division.

We start from the proposition that all citizens of this State, including the residents of Twin Rivers, possess the constitutional right to free speech and assembly. We acknowledge, however, that those rights are not absolute, as citizens may waive or otherwise curtail their rights. This case presents us with a hybrid setting to apply the standards set forth in State v. Schmid, 84 N.J. 535 (1980), appeal dismissed sub nom. Princeton University v. Schmid, 455 U.S. 100, 102 S.Ct. 867, 70 L.Ed. 2d 855 (1982) and New Jersey Coalition Against War in the Middle East v. J.M.B. Realty Corp., 138 N.J. 326 (1994), cert. denied, 516 U.S. 812, 116 S.Ct. 62, 133 L.Ed. 2d 25 (1995). In applying the Schmid/Coalition multi-faceted standard, we conclude that the Association's policies, as set forth in its rules and regulations, do not violate our constitution.

I.

The facts are from the record created in the parties' cross-motions for summary judgment. Twin Rivers is a planned unit development consisting of privately owned condominium duplexes, townhouses, single-family homes, apartments, and commercial buildings located in East Windsor, New Jersey. The community covers approximately one square mile and has a population of approximately 10,000 residents. The Twin Rivers Community Trust (Trust) is a private corporation that owns Twin Rivers's common property and facilities. The Trust was created by indenture on November 13, 1969, for the stated purpose of owning, managing, operating, and maintaining the residential common property of Twin Rivers. The administrator of the Trust certified that "Trust-owned property and facilities are for the exclusive use of Twin Rivers residents and their invited guests," and that the "general public is not invited" to use them.

The Twin Rivers Homeowners' Association (Association) is a private corporation that serves as trustee of the Trust. The Trust authorizes the Association to make rules and regulations for the conduct of its members while occupying the land owned or controlled by the Trust, to provide services to its members, and to maintain the common lands and facilities in Twin Rivers. The Association maintains the Trust's private residential roads, provides street lighting and snow removal, assigns parking spaces in its parking lots, and collects rubbish in portions of Twin Rivers. By acquiring property in Twin Rivers, the owner automatically becomes a member of the Association and subject to its Articles of Incorporation (Articles) and Bylaws.

The Articles authorize the Association to exercise all of the powers, rights, and privileges provided to corporations organized under the New Jersey Nonprofit Corporation Act, N.J.S.A. 15A:1-1 to -10. The Bylaws additionally authorize the Association to adopt, publish, and enforce rules governing the use of common areas and facilities. The Bylaws may be amended by a majority of a quorum of members present in person or by proxy at a regular or special meeting of the members.

The Association is governed by a Board of Directors (Board), whose members are elected by all eligible voting members of the Association. The Board is responsible for making and enforcing the rules, and for providing services to its members that are financed through mandatory assessments levied against residents pursuant to an annual budget adopted by the Board.

Prior to the commencement of this litigation, various residents of Twin Rivers formed a committee, known as the Committee for a Better Twin Rivers (Committee), for the purpose of affecting the manner in which Twin Rivers was governed. Eventually, the Committee and three individual residents of Twin Rivers (collectively, plaintiffs) filed a nine-count complaint against the Association and Scott Pohl, the president of the Association, seeking to invalidate various rules and regulations. Plaintiffs subsequently amended their complaint to include the Trust as a defendant. The thrust of the complaint was that the Association had effectively replaced the role of the municipality in the lives of its residents, and therefore, the Association's internal rules and regulations should be subject to the free speech and free association clauses of the New Jersey Constitution. Although plaintiffs' complaint consisted of nine counts, only the first three counts are relevant to this appeal.

In count one of the complaint, plaintiffs sought to invalidate the Association's policy relating to the posting of signs. The Association's sign policy provided that residents may post a sign in any window of their residence and outside in the flower beds so long as the sign was no more than three feet from the residence. In essence, the policy limits signs to one per lawn and one per window. The policy also forbids the posting of signs on utility poles and natural features within the community. The stated purpose for the sign policy is to avoid the clutter of signs and to preserve the aesthetic value of the common areas, as well as to allow for lawn maintenance and leaf collection. Plaintiffs sought injunctive relief to permit the posting of political signs on the property of community residents "and on common elements under reasonable regulation," on the basis that the current policy was unconstitutional.

In count two, plaintiffs complained of the Association's policy in respect of the use of its community room. In general, the community room is available to residents of Twin Rivers, as well as clubs, organizations, and committees approved by the Trust who want to rent the room for parties or other events. When the complaint was filed, the community room policy involved a two-tiered rental charge system that differentiated between the uses of the room. However, during the pendency of this action, the Association amended the community room policy to eliminate the tier system in favor of a uniform rental fee of $165 and a refundable security deposit of $250. Additionally, a certificate of insurance naming the Association as an insured was required. The rental fees were intended to cover the costs associated with the maintenance of the room.

Plaintiffs asserted that the community room policy denied them equal protection of the laws and unreasonably and unconstitutionally violated their right to access the community room on a fair and equitable basis. They sought temporary and permanent injunctions "to allow [p]laintiffs to utilize the community room in the same manner as other similarly situated entities." Plaintiffs also urged that the rental fees were excessive because they were not related to the actual rental costs incurred by the Association.

In count three, plaintiffs alleged they were denied equal access to the Association's monthly newspaper, Twin Rivers Today (Today). The purpose of the newspaper is to provide residents with news and information that concerns the community. The editorial committee of Today selects the content of the newspaper. The paper is delivered to all Twin Rivers residents, but not to the general public. Plaintiffs sought a declaration that all Twin Rivers residents should have "equal access" to the pages of Today. Also, plaintiffs sought a permanent injunction enjoining the president of the Board from using Today "as his own personal political trumpet."

The Association filed a motion for summary judgment, and plaintiffs filed a cross-motion for summary judgment. The material facts were not disputed. The trial court issued a comprehensive opinion, granting defendants' motion for summary judgment on the sign claims in count one and on the newspaper claims in count three. The court, however, ...


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