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LeisureTowne Association, Inc. v. Township of Southampton


January 20, 2010


On appeal from the Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. C-108-07.

Per curiam.


Argued November 2, 2009

Before Judges Rodríguez and Chambers.

On cross-motions for summary judgment, the trial judge granted summary judgment in favor of defendants the Township of Southampton (Township) and Orleans Home Builders (Orleans), denied the cross-motion for summary judgment by plaintiff LeisureTowne Association, Inc. (Association), and dismissed the complaint. In doing so, it determined that the Association could not compel the Township to call in certain performance bonds for the LeisureTowne development or compel the Township to make certain improvements. In addition, the trial court determined that the Association could not prevent Orleans from transferring certain property to the Township. The Association has appealed this decision. We affirm.

The trial court rejected the Township's argument that the complaint should be dismissed under the entire controversy doctrine and the doctrine of collateral estoppel as a result of earlier litigation between plaintiff and the Township. The Township has filed a cross-appeal seeking to overturn that decision. Because we have affirmed the dismissal of the complaint as noted above, these issues are moot, and they will not be addressed in this opinion.


Our review of a trial court's decision on a motion for summary judgment is de novo; we employ the same standard applied by the trial court. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). A movant will be granted summary judgment where there is no material issue of fact and the movant is entitled to prevail as a matter of law. R. 4:46-2(c). In this case, the following relevant facts are not disputed.

The Association is the administrator and owner of common land and facilities for the planned residential age-restricted community known as LeisureTowne located in the Township of Southampton. Orleans is the successor to the original builder for this development.

The Association brought this action against defendants seeking enforcement of performance bonds. In count one, it sought to compel the Township to call in the performance bonds Township is holding for Recreation Area Number 4 within LeisureTowne and to complete the work there. Specifically, the restrooms needed to be made handicap accessible and grading and landscaping by the restrooms needed to be corrected. In count two, the Association sought to compel the Township to call in the performance bonds covering Lake Number 6 and to complete the work necessary there. Lake Number 6 is a man-made lake within LeisureTowne that requires dredging due to the deposit of silt there.

In addition, in count three, the Association sought to require Orleans to convey to it 9.5 acres, identified as Section 1D in the Declaration of Restrictive and Protective Covenants (Declaration) and accompanying deed description. The Declaration with Rider dated March 23, 1994, governing LeisureTowne provided that this land was to be developed into single family residences and that the common areas were to be turned over to the Association within ten years. Orleans did not develop Section 1D as anticipated due to environmental issues that arose. As a result, Orleans proposes to transfer the property for one dollar consideration to the Township. The Township has passed an ordinance authorizing the acceptance of this property and another ordinance providing that the property "shall be designated to remain as open space in its natural state for aesthetic benefit to the community and as an attractive locale for wildlife free of any improvements including trails or other facilities for human activity." The Association contends that this property should be transferred to it, not the Township.

In its answer, the Township contested the merits of the Association's claims and asserted numerous defenses, including collateral estoppel and the entire controversy doctrine. These two defenses were based on previous litigation between the parties. Orleans also filed an answer contesting the Association's claim against it. Defendants filed motions for summary judgment, and plaintiff filed a cross-motion for partial summary judgment.

In its written opinion dated July 28, 2009, the trial court rejected the Township's defenses of the doctrines of collateral estoppel and the entire controversy doctrine. Reaching the merits of the Association's claim regarding the bonds, the trial court found no legal or equitable basis entitling the Association to a court order directing the governing body of the Township to call the performance bonds to which the Association is not a party. It further noted that "[d]efendants, as suggested at oral argument by Township defendant's counsel, have determined that to attempt to call these bonds after all these years would possibly generate significant litigation and consequent unnecessary taxpayer expense, and as a governing body, they have simply chosen to neither accept nor reject the improvements." With respect to count three, the trial court concluded that Orleans was not precluded from transferring Section 1D to the Township, interpreting the governing documents as making the transfer of the common areas contingent upon the tract being developed.


After a careful review of the record, the arguments of counsel, and relevant law, we affirm the dismissal of counts one and two of the complaint that sought to compel the Township to call the bonds substantially for the reasons set forth in the trial judge's written decision.

In count three of the complaint, the Association sought to compel Orleans to transfer Section 1D to it. The Association's claim to this property rests upon two documents, the Declaration and its accompanying Rider governing Sections 1C and 1D. The Declaration and Rider were executed by the original developer Leisure Technology, Inc. (Leisure Tech). Leisure Tech later transferred title of the property and assigned the Declaration and Rider to Orleans. The Declaration provides that its restrictions are binding upon its successors and assigns. Orleans thus took title to the property subject to these restrictive covenants. See Perelman v. Casiello, 392 N.J. Super. 412, 418 (App. Div. 2007) (stating that "[a] grantor may, by covenant in a deed, restrict the use of land conveyed for the benefit of land retained and bind the grantee and his or her successors in the title who take with notice"); Homann v. Torchinsky, 296 N.J. Super. 326, (App. Div. 1997) (enforcing restrictive covenant that was part of the neighborhood scheme in a residential development), certif. denied, 149 N.J. 141 (1997).

Among the many restrictions, the Declaration provided that the property be developed for residential use. Section two of the Rider provided for the conveyance of the common property to the Association as follows:

Developer may retain the legal title to the whole or portions of the Common Property until such time as it has completed initial improvements thereon and until such time as, in the judgment of Developer, the Association is able to maintain same.

Developer, however, notwithstanding any provision to the contrary herein, hereby covenants for itself, its successors and assigns, that it shall convey to the Association all of the Common Property in Section 1C and 1D not later than ten (10) years from the date hereof, and the Association shall be obligated to accept such conveyance(s) and shall properly maintain the Common Property in accordance with the Declaration, this Rider, and the ByLaws.

The Rider defines "common property" as "those portions of the Property other than the residential building lots depicted in Exhibit A, attached hereto and made part hereof." Thus, if everything had gone as planned, Section 1D would have been developed into residential units, and the common property would have been transferred to the Association. The Rider does not identify any circumstances in which all of Section 1D would be conveyed to the Association. As it turned out, Section 1D could not be developed into residential units due to environmental concerns. As a result, Orleans seeks to transfer Section 1D to the Township where it will remain open space.

When construing a restrictive covenant, our goal is to ascertain the intent of the parties. Bubis v. Kassin, 184 N.J. 612, 624 (2005). A restrictive covenant should not be read in a way that would "defeat[] the plain and obvious meaning of the restriction." Ibid. (quoting Lakes at Mercer Island Homeowners Ass'n v. Witrak, 810 P.2d 27, 29 (Wash. Ct. App.), review denied, 816 P.2d 1224 (1991)). Words must be given their "ordinary" meaning. Ibid. When construing a restrictive covenant, the "primary objective 'is to determine the intent of the parties to the agreement.'" Citizens Voices Ass'n v. Collings Lakes Civic Ass'n, 396 N.J. Super. 432, 443 (App. Div. 2007) (quoting Bubis v. Kassin, supra, 184 N.J. at 624). A rule of "strict construction" applies and "[a]bsent explicit indications of a special meaning, words in such covenants are given their ordinary meaning." Ibid.

Applying these rules, under the terms of the Rider, the Association was only entitled to title to the common property. Because the property was never developed, there is no common property to transfer. The Declaration and Rider provide no authority for the transfer of all of Section 1D to the Association; those documents only contemplated the transfer of common property.

As an alternative, the Association argues that if it does not receive title to the whole tract, it should at least receive title to the areas designated as common property in the Declaration while the surrounding property designated for the residential units would remain with the developer. Such a result makes no sense. See Khalil v. Motwani, 376 N.J. Super. 496, 505 (App. Div. 2005) (refusing to interpret language in an easement that would "lead to absurd results"); see also Perelman v. Casiello, supra, 392 N.J. Super. at 419 (providing that a restrictive covenant will not be enforced where changed conditions have frustrated its purpose); Restatement (Third) of Property: Servitudes § 7.10(1) (2000) (stating that a servitude may be modified or terminated when, due to changed conditions, it is "impossible as a practical matter to accomplish the purpose for which the servitude was created").

We further note that Orleans does not violate the restrictive covenants merely by transferring title to another entity. The Declaration and Rider, by providing that its provisions would be binding upon Leisure Tech's successors and assigns, contemplated that Leisure Tech might transfer title to another entity, although the transfer would be subject to the terms and conditions of the Declaration and Rider.

For all of these reasons, the decision of the trial court is affirmed.


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