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Dep't of Community Affairs v. Fox Development Corporation

June 19, 2008

DEPARTMENT OF COMMUNITY AFFAIRS, DIVISION OF CODES AND STANDARDS, BUREAU OF HOMEOWNER PROTECTION, PLANNED REAL ESTATE DEVELOPMENT SECTION, PETITIONER-RESPONDENT, AND FOX HILLS AT ROCKAWAY CONDOMINIUM ASSOCIATION, INC., INTERVENOR-APPELLANT,
v.
FOX DEVELOPMENT CORPORATION, INC., RESPONDENT-RESPONDENT.



On appeal from a Final Agency Decision of the Department of Community Affairs, Division of Codes and Standards, Docket No. BHP-559-06-5.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 14, 2008

Before Judges Lintner, Graves and Sabatino.

This matter arises from a dispute between the respondent, a condominium developer, and the present leaders of the condominium's association, relating to the construction of eighty-four additional units in the project. The intervenor, the Fox Hills at Rockaway Condominium Association, Inc. ("the intervenor") appeals a final agency decision of the Department of Community Affairs ("DCA") dated January 26, 2007. The DCA's final decision adopted the recommendations of an administrative law judge ("ALJ"), who presided over six days of hearings.

As a central focus of its appeal, the intervenor challenges the validity of a December 2002 vote by the Association members, approving an amendment to the condominium's Master Deed to allow the proposed construction. The intervenor contends that there were irregularities in the voting process, and that the votes counted in favor of the plan amendment were insufficient. The intervenor also accuses the developer of filing misleading statements with the DCA regarding the amendment after the votes were counted.

We affirm the DCA's final decision, mainly because the challenge to the December 2002 election was not brought until over three years later. Apart from the untimeliness of the challenge, we also join the DCA Commissioner in sustaining the ALJ's finding that there were no irregularities in the voting process. We further sustain the ALJ's separate finding that the developer had not intentionally misrepresented or concealed material facts in its submissions to the DCA. Consequently, we affirm the DCA's discretionary decision to not revoke the developer's registration.

I.

In March 1998, the developer registered with the DCA its plan to construct and sell 600 age-restricted condominium units in Rockaway Township, Morris County. This condominium project became known as Fox Hills at Rockaway ("Fox Hills"). By December 2002, the developer had sold 458 units in the project.

At the times relevant to this appeal, the development company was wholly owned by Carol Salkind. Her husband, Morton Salkind, served as the company's CEO. The Salkinds personally owned a condo unit at Fox Hills during that time frame. Morton Salkind*fn1 served as the first president of the unit owners' Association, which was formed on January 1, 2002.

The original Public Offering Statement ("POS") for Fox Hills, prepared in 1998, included plans to construct an assisted-living facility on the land adjacent to Fox Hills, to be known as Leben Care. That facility was never built, as the developer eventually concluded that such a facility would be unprofitable. The developer sought instead to build eighty-four additional condo units on that adjacent land ("the addition"). The plans for the addition called for two new buildings, each containing forty-two units.

According to the developer, it began discussing its proposal for the addition at several meetings with Fox Hills residents in early 2002. The addition required an amendment to the Master Deed, duly ratified by the Association. The addition also required approval from the Rockaway Township Planning Board. To that latter end, numerous residents of Fox Hills signed a petition in support of the addition. Residents also attended a series of Planning Board and Township Council meetings in September and October 2002 to show their support for the proposal.

The proposal for the addition was also discussed in the August 2002 edition of the Fox Hills monthly newsletter, in which Salkind predicted that the addition would "save all of us almost $300,000 and freeze the maintenance for those additional two years." Subsequent editions of the newsletter also referred to the pending proposal.

The annual regular meeting of the Association for calendar year 2002 took place on December 10, 2002. The primary purpose of that meeting was to the elect members of the Association's Board of Directors. That same night, the proposal to amend the Master Deed to authorize the proposed addition was also scheduled for a vote.

About two months prior to that annual meeting, Salkind, as president of the Association, sent all unit owners a letter on October 28, 2002, explaining in detail the proposed amendment to the Master Deed. The four changes to the Master Deed covered by the proposed amendment were to (1) approve the proposed addition; (2) extend the rights reserved to the developer, as the grantor of the property, from five years to seven years; (3) increase the minimum rental period from 180 days to 365 days; and (4) change the requirements for the resale of condo units.

The election was hotly contested. Three residents ran for two open seats on the Board: J. Richard Grey, Nunzio Di Donna, and James Dunn. Grey and Di Donna were endorsed as an "official slate" by the nominating committee. Dunn was nominated by petition. Dunn had filed an unsuccessful lawsuit in the Superior Court earlier on December 10 to enjoin the vote.*fn2 Grey and Di Donna won the election.

In the administrative hearings before the ALJ, the parties offered two competing narratives of what took place at the December 10 meeting. John Quinn, the community manager at Fox Hills, was the intervenor's principal witness.*fn3 Quinn did not live at Fox Hills and was not an Association member. Quinn served as the election official for the December 2002 vote. He had the responsibility of printing, disseminating, collecting, and counting the ballots, although he did not actually create those ballots.

Quinn recalled that there were several perceived irregularities in the voting and vote counting procedures that night. Specifically, Quinn believed that the ballots that were used to vote for the Board of Directors did not mention anything about the amendment to the Master Deed. He testified that the ballots were six inches by eight inches, and, as he recalled it, contained only the names of the Board candidates.

Quinn claimed that only the proxy ballot sheets, those submitted by unit owners who did not attend the meeting, mentioned the amendment. A sample copy of that proxy ballot is contained in the record. The first sentence on the proxy ballot stated: "I(we) the undersigned do hereby appoint Morton Salkind . . . to cast an affirmative vote for the proposed changes to the Master Deed . . . ."

The proxy ballot did not contain any affirmative method for a condo owner to vote against the proposed amendment, as there were no boxes to check or items to circle. Rather, if a voter took no other action than to sign the proxy ballot, by the language of the proxy, ...


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