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Mara Court Association v. Giannini


January 2, 2008


On appeal from the Superior Court of New Jersey, Law Division-Special Civil Part, Camden County, Docket No. DC-3889-06.

Per curiam.


Argued: December 5, 2007

Before Judges Cuff and Simonelli.

Defendant Phyllis Giannini, a resident and former president of plaintiff Mara Court Association (the Association), appeals from a $10,250 judgment entered against her following a bench trial. We affirm the judgment as modified in this opinion.

Mara Court is a fourteen house townhouse community in Cherry Hill formed in 1982. The current president of the community, Donna Davis, testified that Mara Court is governed by a set of by-laws (the By-laws) and declaration of covenants (the Declaration) recorded with the Camden County Clerk on September 21, 1982. The Declaration provides that Mara Court is "subject to the covenants, restrictions, easements, charges and liens (sometimes referred to as 'covenants and restrictions')" contained within the Declaration. Pursuant to the Declaration, every owner is a member of the Association and the common areas are to be "maintained in good repair and condition and shall be operated in accordance with high standards."

Article VIII, Section 1 of the Declaration provides that each owner shall pay annual and special assessments. The Association is responsible for using the assessments for the maintenance of the landscaping, paved areas, lighting, water service for fire hydrants, and trash removal in the common area. The Association fixes the actual assessment for each budget year, and the assessment may be increased or decreased upon the assent of sixty percent of the votes of the Class A Members and Class B Members. These assessments, as well as interest and the cost of collection, are a personal obligation of the homeowner. The Association may take legal action to enforce this obligation. Prior to December 31, 2030, the Declaration may be amended by an instrument signed by owners holding not less than ninety percent of the votes of the membership and the amendment must be properly recorded to be effective.

The By-laws of the Association provide that the Association is to be administered and managed by a Board of Trustees (the Board) which "shall have and exercise all lawful powers and duties necessary for the proper conduct and administration of the Common Areas." The officers of the Association shall be president, vice-president, secretary and treasurer, and the president and vice-president are also members of the Board. Article VI, paragraph 7 provides, "The officers of the Association shall serve without compensation, except that they shall be entitled to reimbursement for all expenses reasonably incurred in the discharge of their duties." This By-law has never been amended.

Upon assuming the presidency, Davis testified that she discovered that defendant and Christine Bulger, another former president, had paid themselves compensation during their presidencies. Davis testified that she accepted no compensation for her position; she spent approximately forty hours a month on Association matters. She testified that Board members owed a fiduciary duty to the Association, which Davis believed meant that "you do the work, that you take no compensation for it." She added that such work should be done in a reasonable, businesslike fashion, using good business judgment.

When Davis became president in 2005, the Association's financial situation was strained. There was only $3.14 in the checking account and approximately $1,200 or $1,300 in the capital account, and the Association had several bills outstanding for landscaping and electricity.

Davis conducted an audit and discovered that prior officers of the Association, including defendant, were in arrears for payment of their dues. Davis also discovered that defendant had received cash payments from the Association for services performed during her presidency. The parties stipulated that the arrears in dues and compensation totaled $7,250. Specifically, in 1999, defendant received $500 in compensation and failed to pay $250 in condo fees. During 2000 through 2002, defendant received $1,200 in compensation and failed to pay $600 in monthly condo fees annually. In 2003, defendant received $400 in compensation and failed to pay $200 in condo fees. She also received a $500 stipend in 2003, which was to be paid by the waiver of ten months of Association dues.

Davis found no evidence in the Board minutes that the Board authorized these payments to defendant. Davis further testified that Article VI, paragraph 7 of the Association's By-laws prohibits the payment of compensation to Association officers. Davis sought and received an opinion from an attorney who opined that no officer is allowed to receive compensation, and the Bylaws allow recovery of legal fees attendant to legal action to recover fees due to the Association. The Association commenced suit against every past president who had taken such compensation.

Defendant testified that the custom of providing compensation to the Association's president began in 1992, when the outside management company quit and the president assumed the management duties. Defendant stated that the prior management company was paid approximately $300 a month. Defendant opined that the Association paid the president rather than the management company in order to save money.

Defendant testified that she did not want the position of president. Nevertheless, she was elected and agreed to assume the office on the condition that she receive $150 monthly. The Association agreed. Defendant testified that she spent approximately twenty-five to thirty hours a month working for the Association and she was not reimbursed for her phone, automobile, and gasoline usage. She was reimbursed from petty cash for other documented expenses.

Defendant admitted that she had received a copy of Mara Court's governing documents prior to buying her Mara Court home. She also admitted that she was aware of the provision in the Bylaws that denied compensation to officers and that she was not a professional property manager. In addition, defendant did not dispute that she was signing checks to herself for $100 a month.

Christine Bulger testified that prior to becoming president, she knew that the Association had a reimbursement policy for management services paid to the president. She was informed that as president and property manager she would be compensated $100 a month and she would have her $50 monthly dues waived. Bulger spent approximately twenty to twenty-five hours a month working in her capacity as president and manager, and she testified that she would not have taken the position without the compensation. Bulger further testified that the president's compensation was noted in the budgets, it was mentioned during meetings, and there were never any complaints. Additionally, Bulger stated that the September 21, 2003 minutes of the Board reflect approval of the payments. She admitted, however, that an amendment of the By-laws was never filed with the county clerk.

Janine Mullowney lived in Mara Court from 1987 to 2004. She served as the vice-president for the Association and her husband served as the vice-president from 1992 to 1993. She recalled that a woman served as the outside manager. When she quit due to personal reasons, the Board decided that the president would be paid $100 a month to serve as Mara Court's manager. Mullowney testified that this policy began with Stan Levin and that his compensation was paid to his secretary. She testified that the Association authorized these payments of $150 per month to the president at a meeting. Additionally, the budgets listed the compensation. Mullowney admitted, however, that she had never received a copy of the By-laws and was unaware of the prohibition of payment of compensation to Association officers.

In Judge Laskin's September 15, 2006 decision rendering judgment for plaintiff, he memorialized the facts of the case and reviewed the documentation governing the Association. He found that the deed provided for the maintenance of the common lands and facilities; thus, creating a condominium ownership. The Declaration established membership and voting rights in the Association and it required its members to pay various assessments for the purpose of maintaining the common area. Judge Laskin stated, "[o]bviously, this Declaration established the duties of the Association, the effect of nonpayment of the assessments, the obligations of the owners, liens, remedies, etc." The By-laws were established to manage the operation and administration of the Association. Judge Laskin emphasized that Article VI, Section 7 of the By-laws provides that the officers of the Association are to serve without compensation.

The judge found no dispute that defendant had paid herself a presidential stipend and had not paid her condominium fees. He declared defendant's argument that she was authorized to make these payments unpersuasive because "absolutely no documentation was introduced as evidence, to justify that position." There was no evidence of resolutions, minutes, or votes that allegedly authorized such payments. Judge Laskin stated that the other testimony presented by defendant was unpersuasive, noting that Mullowney was unfamiliar with the By-laws and Bulger admitted that there was never any motion to amend the By-laws to provide for such payment.

Judge Laskin also found several of defendant's legal arguments to be incoherent or inapplicable. He concluded, "It's a very uncomplicated matter. The rules and regulations of the Association prohibit the president from being paid . . . [and] [t]he president paid herself $100.00 a month, and benefited by the fact that she didn't pay the condominium fee of $50.00 a month. She owes the Association, the sum of $7,250.00."

In her post-judgment motion for a new trial, defendant argued that N.J.S.A. 40A:9-22.5h barred Davis from appearing as a witness on behalf of the Association. She also argued that the Association was required to utilize alternative dispute resolution procedures prior to suit, that the findings of fact were contrary to the evidence, and that the matter should have been transferred to another county due to a purported relationship between Davis and another trial judge in the vicinage.

Judge Laskin held that N.J.S.A. 40A:9-22.5h did not apply to Davis, that alternative dispute resolution procedures are inapplicable to the collection of fees, and there was no basis for a transfer of venue. On appeal, defendant argues that the Local Government Ethics Law, N.J.S.A. 40A:9-22.1 to -22.25, barred Davis from testifying on behalf of the Association. She also contends that the payments received by her were not ultra vires because the payments were necessary, were consistent with the business judgment rule, and the Association was unable to prove injury. Defendant also argues that plaintiff's claim is barred by the statute of limitations.

Our scope of review of the findings of fact of a judge sitting without a jury is limited. As long as the facts found by the trial judge are supported by substantial credible evidence in the record, we must accept those findings. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). On the other hand, a trial judge's "'interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Raspa v. Office of Sheriff of Gloucester, 191 N.J. 323, 334-35 (2007) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

Here, we are satisfied that the trial judge's factual findings are well-supported by the trial record. The By-laws of the Association bar payment of compensation to the officers of the governing body. Defendant admits she received $100 monthly in cash and did not pay the $50 monthly assessment. Neither plaintiff nor defendant were able to identify any resolution that authorized the payments. Both parties admitted that the By-laws had never been amended.

Defendant's arguments that the payments were justified are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). So, too, is her contention that the Local Government Ethics Law, specifically, N.J.S.A. 40A:9-22.5h, barred Davis from testifying on behalf of plaintiff. Although Davis was employed by the County of Camden and subject to the statute, her testimony before the Superior Court of New Jersey does not fall within the prohibition of Section 22.5h.

Defendant also contends that this action is barred by the statute of limitations because the practice of paying compensation to the Association president commenced in 1992. Thus, according to defendant, the cause of action accrued in 1992. This contention is utterly without merit.

We agree, however, that this action is subject to the six-year statute of limitations. N.J.S.A. 2A:14-1. Defendant assumed office in August 1999 and commenced receiving compensation for that time beginning in October 1999. She continued to receive payments until she surrendered her position in August 2003. The complaint in the matter was filed on March 10, 2006. The Association's claim for payments on or after March 10, 2000, was timely. The Association's claim to recover unauthorized payments prior to March 10, 2000, is barred by the statute of limitations. By our calculations, plaintiff received $1050 between August 1999 and March 2000; therefore, that sum should be deducted from the judgment.

Due to the retirement of the trial judge, we will exercise our original jurisdiction, Rule 2:10-5, and amend the judgment from $10,250 to $9200.

Affirmed as modified.


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