On appeal from the Superior Court of New Jersey, Law Division, Morris County, L-1940-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 16, 2008
Before Judges Winkelstein, Fuentes and Chambers.
In 1924, defendant Lake End Corporation of Green Pond purchased approximately 338 acres of property in Rockaway Township, leasing approximately sixty-five separate parcels of land to various individuals, for a period of ninety-nine years each. Lake End later extended the term of the leases to 2078. The leaseholders constitute the Lake End shareholders. The corporation is managed by a board of directors (the Board).
Plaintiffs are the lessees of a parcel of land in Lake End, having acquired their interest in 1989 by lease assignment. In 2004, the Board approved plaintiffs' application to construct additions and alterations to their home, but denied their request to expand their second bedroom, and to construct a porch roof within fifteen feet of the side yard; the Township refused to issue a construction permit without the Board's prior approval. As a result, plaintiffs sued Lake End for failing to approve their plans, and the Township for failing to issue a construction permit.*fn1 The trial court dismissed plaintiffs' claims on summary judgment, and awarded counsel fees to defendants. On appeal, plaintiffs raise the following legal arguments:
I. NO REGULATION, ORDINANCE OR STATUTE ALLOWS THE TOWNSHIP TO DENY PLAINTIFFS' APPLICATION FOR A PERMIT SOLEY BECAUSE THE CORPORATION HAS NOT APPROVED THE CONSTRUCTION.
II. THE BOARD APPROVED THE [PLAINTIFFS'] PRELIMINARY PLANS AND IS ESTOPPED FROM DENYING APPROVAL OF THEIR FORMAL PLANS.
III. THE RESTRICTION REQUIRING A FIFTEEN-FOOT SETBACK WAS INTENDED TO APPLY ONLY TO NEW CONSTRUCTION ON LOTS THAT WERE UNIMPROVED WHEN THE RESTRICTIONS WERE IMPOSED.
IV. THE [PLAINTIFFS'] PROJECT DOES NOT VIOLATE THE 50% RULE.
V. ANY NEIGHBORHOOD SCHEME OF RESTRICTIONS HAS BEEN ABANDONED.
VI. THE CORPORATION'S DENIAL OF PLAINTIFFS' APPLICATION CONSTITUTES A BREACH OF FIDUCIARY DUTY AS ITS DECISION WAS INCONSISTENT WITH ITS GOVERNING DOCUMENT AND THE RULE OF REASONABLENESS.
VII. BECAUSE THE CORPORATION'S CROSS-MOTION WAS NOT GERMANE TO THE [PLAINTIFFS'] MOTION FOR SUMMARY JUDGMENT AND, THUS, WAS NOT ENTITLED TO THE [SAME] RETURN DATE [AS] THE [PLAINTIFFS'] MOTION, THE SANCTIONS IMPOSED AGAINST THE [PLAINTIFFS] ARE UNJUST.
We reject plaintiffs' arguments in points one through six, and affirm the dismissal of their complaint. We agree with plaintiffs' argument in point seven that defendants were not entitled to counsel fees. Consequently, we reverse the court's order granting counsel fees to defendants.
Subject to the terms of their lease, plaintiffs own the structures on their property: a 1,365 square foot, one-story, two-bedroom cottage and a three-car garage. Nevertheless, the leases for each lot in Lake End, including plaintiffs', include the following restrictions:
7. No building, habitation or other structure, when erected, shall be wider than 50% of the width of a single lot, 37 1/2 % of two lots, 30% three lots, 25% four lots, on a line parallel with the shore of the lake.
8. No new building, habitation or other structure shall be erected, constructed or located within fifteen feet of either side line of a lot, except by special permission of the Board of Directors of the LESSOR.
12. No building, vault or other structure of any kind whatsoever shall be located, erected, constructed, added to, moved or altered until the location thereof, and the plans therefor have first been submitted to the LESSOR and approved by a resolution of its Board of Directors.
28. The LESSEE covenants, promises and agrees, to and with the LESSOR that he will in all respects fully and completely perform, fulfill and carry out ...