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Quirk v. Midway Beach Condominium Association

September 4, 2007

JAMES QUIRK AND JEANNE MARIE QUIRK, PLAINTIFFS-APPELLANTS,
v.
MIDWAY BEACH CONDOMINIUM ASSOCIATION; ESTATE OF J. PHILLIP CITTA; AND MR. AND MRS. JAMES D. CALDWELL, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Chancery Division, General Equity, Monmouth County, C-212-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: June 5, 2007

Before Judges Kestin, Weissbard and Lihotz.

Plaintiffs, James Quirk and Jeanne Marie Quirk, appeal from a summary judgment dismissal of their complaint to invalidate certain transactions and decisions by their condominium association that, they allege, would invalidity diminish their ownership rights. We affirm.

Defendant Midway Beach Condominium (Midway) is located in Berkeley Township, Ocean County. It contracted to sell four adjacent donated lots to J. Phillp Citta and Mr. and Mrs. James D. Caldwell, for the construction of two homes, and the unit owners voted to amend the master deed to recognize as condominium units the houses that the purchasers would build. Plaintiffs had purchased their unit after that vote was taken, but before the condominium's master deed or public offering statement could be amended to reflect the actions taken. The addition of the new units increased the total number of units in the condominium from 386 to 390, resulting in a slight reduction in the percentage undivided interest of all unit owners in the common elements from 0.259 to 0.2564.

In seeking to invalidate the sales and the amendment of the master deed, plaintiffs claimed that the governing statutes would have permitted the reduction in their percentage undivided interest only if the condominium association had obtained prior individualized consent from each unit owner. The trial court granted defendants' motion for reasons expressed in Judge Lehrer's oral opinion on June 30, 2006. Judge Lehrer determined that the reduction was borne equally by all the unit-owners, that it was minimal, and that it was not attended by any invalidating acts or interests.

On appeal, plaintiffs argue that the Midway Beach Condominium Association (MCBA or association) violated the Condominium Act (the Act), N.J.S.A. 46:8B-1 to -38, and the master deed "by reducing the unit owners' interest in the common elements without the unit owners' consent." Plaintiffs also argue that the trial court "erred in granting summary judgment" because of the presence of genuine issues of material fact and because the rights of the prevailing movants were not clear as a matter of law; and that the complaint should not have been dismissed "without [a] ruling on the issue of whether the sponsors are entitled to vote on association matters." We have taken these arguments to subsume the following issues: whether the trial court erred by ruling 1) that the condominium association had the authority to create new units, and 2) that the sale of the new lots was within the association's authority to make business decisions; and 3) whether the trial court erred by failing to determine the sponsor's right to elect members of the association's board of directors and to cast votes on behalf of unsold units.

Guided by Judge Lehrer's summary of the background facts, we set out our understanding of them.

Midway was established as a condominium in Berkeley Township, Ocean County, with the recording of its master deed in 1994. It was comprised of 386 units, each an existing single-family detached house. Its public offering statement ("the POS") stated "[t]here is no new construction of any units contemplated."

The master deed provided that the association would manage the common elements, and it specified 0.259 as the percentage of undivided interest in the common elements that would be associated with each unit. The master deed did not address the possibility of adding units to Midway. The association's bylaws authorized a broad range of activity by MBCA's board of directors on behalf of all unit owners, including the acquisition and sale of units and other property.

Amendments to the master deed required votes representing sixty percent of the units. The sponsor could vote on behalf of unsold units, but it could not, and did not, vote on resolutions to amend the master deed "for the purpose of changing the permitted use of a Unit or interest, or for the purpose of reducing the Common Elements or facilities."

Joseph A. Citta, a principal in both of Midway's cosponsors, owned four vacant ocean-front lots adjacent to Midway's property. At some point, he donated them to MBCA so that it could bolster its finances by selling them to purchasers, who would construct houses that would be designated as new units in Midway.

At Midway's September 1998 annual meeting, the unit-owners authorized MBCA to pursue sales of those new lots. MBCA obtained municipal approval to amend ...


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