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Moore v. Radburn Association

March 18, 2010

KATHY MOORE, ZDENA NEMECKOVA, MAUREEN MORIARTY, ROBERT GULACK, MICHAEL RONEY, RITA YELISEYEV, IGOR YELISEYEV, STAN HAYDEN, MAY HAYDEN, SUZANNE DIGERONIMO, LOUIS DIGERONIMO, WOLF TERNER, EUGENE GERLANTS, RACHEL BOYLAN, JANNA GERLANTS, AND JUNE MEYERSON, PLAINTIFFS-APPELLANTS/CROSS-RESPONDENTS,
v.
THE RADBURN ASSOCIATION, INC., DONALD F. MORRIS, IN HIS CAPACITY AS PRESIDENT OF THE RADBURN ASSOCIATION, AND LOUISE ORLANDO, IN HER CAPACITY AS MANAGER AND SECRETARY OF THE RADBURN ASSOCIATION, DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-394-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 17, 2009

Before Judges Carchman, Parrillo and Ashrafi.

This appeal and cross-appeal require us to consider the application of the New Jersey Planned Real Estate Development Full Disclosure Act (PREDFDA), N.J.S.A. 45:22A-1 to -56, and the New Jersey Nonprofit Corporation Act (Title 15A), N.J.S.A. 15A:1-1 to 16-2, as well as the principles ennunciated by the Supreme Court in Comm. for a Better Twin Rivers v. Twin Rivers Homeowners' Assoc., 192 N.J. 344 (2007), to Radburn, a common interest community. The trial judge concluded that (1) all Radburn residents are not entitled to membership in defendant Radburn Association (Association); (2) residents are not statutorily entitled to nominate candidates for the Association's board of trustees (the Board); and (3) the Association's open meetings policy complied with PREDFDA. Defendants Donald F. Morris, Louise Orlando and the Association cross-appeal from the trial court's finding that the 1993 Amendments to PREDFDA are retroactive and apply to Radburn, and from its grant of partial summary judgment to plaintiffs on concluding that the Association is legally required to disclose financial documents to residents in accordance with generally accepted accounting principles (GAAP). We affirm.

I.

These are the relevant facts that emerged on the parties' cross-motions for summary judgment. Radburn, the "Town for the Motor Age," was created in Fair Lawn in 1929 by architects Henry Wright and Clarence Stein in order "to provide more housing and to protect people from the horseless carriage." Radburn utilized the "superblock" in order to "do[] away with the traditional grid-iron street pattern" and maintain the separation of pedestrians and automobiles. Superblocks consist of: large block[s] of land surrounded by main roads. The houses are grouped around small cul-de-sacs, each of which has an access road coming from the main roads. The remaining land inside the superblock is park area, the backbone of the neighborhood. The living and sleeping sections of the houses face toward the garden and park areas, while the service rooms face the access road.

Radburn was developed so that pedestrians could leave their homes and access all necessary services without crossing streets used by automobiles.

Although Radburn was originally intended to house 25,000 residents, during the Great Depression, the original builder, City Housing Corporation (CHC), declared bankruptcy. This limited the community to "its present size of 149 acres which includes 430 single family homes, 90 row houses, 54 semi-attached houses and a 93 [unit] apartment [complex], as well as a shopping center, parks and amenities."

Radburn's historical and social significance is widely acknowledged; it has been called "the first major advance in city planning since Venice." The "Radburn Idea" has been replicated in communities the world over, including England, Sweden, India and Japan. Radburn was designated a National Historic Landmark on April 5, 2005, and it is listed on the National Register of Historic Places as well as the New Jersey Register of Historic Places. See Nat'l Park Serv., http://www.nps.gov/nhl/designations/Lists/NJ01.pdf (last visited Jan. 6, 2010); Nat'l Register of Historic Places, http://www.nationalregisterofhistoricplaces.com/NJ/Bergen/state .html (last visited Jan. 6, 2010); NJ DEP - Historic Preservation Office, New Jersey and Nat'l Registers of Historic Places, http://www.state.nj.us/dep/hpo/1identify/lists/bergen.pdf (last visited Jan. 6, 2010).

The Association "is a non-profit corporation charged with fixing, collecting and disbursing charges; maintaining services, parks and facilities; and interpreting and applying the Declaration of Restrictions, which are restrictive covenants running with the land[,]" governing "[e]ach property within the Association boundaries[.]" In 1929, CHC transferred to the Association the property for which it was responsible, expressing its desire that Radburn property owners and inhabitants be assured "the use and benefit" of the common elements of Radburn and that the Association serve to acquire, improve and maintain those elements.

According to Raburn's website, as cited by plaintiffs, the Association's responsibilities include: manag[ing] a park network of 23 acres, two swimming pools, four tennis courts, four baseball fields, three playground areas, five outdoor basketball courts, an archery plaza, two summer houses, and a community center called the Grange, which includes offices, a library, clubroom kitchen, maintenance shop and garage, a recreation room and a gymnasium equipped with a stage.

On this stage, the Radburn Players, the oldest active amateur theatre group in the state, produce several shows each year. The physical properties allow the Association to provide a comprehensive recreation program for its residents all year long. [Radburn, The Town for the Moter Age, http://www.radburn.org/geninfo/history.html.] Regarding governance of the community, the website states:

The affairs of the Association are handled much like the council-manager form of government. The nine member Board of Trustees sets policies and approves the budget, while the administration lies in the hands of a full time paid manager. Every resident is automatically a member of the Citizen's Association, whose President sits as a full time member of the Board of Trustees during his term of office. This group gives the citizens a forum for voicing opinions and addressing concerns directly to the Board of Trustees through its President. [Ibid.]

In a March 17, 2005 letter to the Radburn community, the Association explained that it is "not a 'homeowners association'. Residential properties are owned in fee simple by individual residents. . . . [A]nd the residential property owners do not have any ownership interest in the common elements, which are owned solely by The Radburn Association."

The Association's bylaws define its members as those persons: (1) specifically named in the Certificate of Incorporation; (2) elected to serve as trustees; or (3) elected to membership by current members. The president of the Radburn Citizens' Association (RCA) is also considered a member but only during the time he or she serves as president. The Association's Board consists of nine individuals, six of whom are elected by all Radburn residents from a list of candidates nominated by the sitting trustees. Those six positions are filled two at a time, for staggered three-year terms. The remaining three trustees are two individuals elected by Association members for one-year terms and the president of the RCA. Only residents are permitted to be trustees, and any resident who is at least twenty-one-years-old may apply to be considered for nomination by the Board.

On July 16, 2006, the Board adopted a resolution permitting resident attendance at Board meetings during which binding votes would be taken. The resolution continued to exclude residents from working sessions of the Board and, at the Board's discretion, from certain confidential discussions that occurred during voting meetings. The policy allowed residents to comment on matters that were open for vote and provided for the posting of meeting minutes at the Grange for resident review.

A sample deed included in defendants' appendix includes one clause relating to Radburn, which states that property ownership is:

Subject to the "Declaration of Restrictions No[.] 1 affecting Radburn Property of City Housing Corporation in the Borough of Fair Lawn, Bergen County, New Jersey, dated March 15, 1929 and recorded April 8, 1929 in the Bergen County Clerk's Office in Book 1643 at pages 177, etc. of DEEDS.", and Amendments thereto.

The stated purpose of the Declaration of Restrictions, an agreement between CHC, the Association and any present or future purchasers of property in the community, was to create a planned community and a related association with the authority to maintain and administer the community amenities, administer and enforce any restrictions and collect and disburse all relevant charges. The Declaration further notes the intention of CHC "that membership in and control of [the] Association shall ultimately be vested in the inhabitants and/or property owners of the community of RADBURN . . ., or in representatives of such inhabitants and/or property owners."

Restrictions in the Declaration include: (1) requirements for design approval for any structures sought to be added to the property, including both common areas of Radburn and individually owned property; (2) the right of the Association to supervise any construction; and (3) the right of the Association to maintain any improved or unimproved property at the owner's expense. The restrictions are intended to maintain the community in harmony with the original design plan and "provid[e] the greatest possible degree of health, safety, architectural beauty and amenity for the property owners and inhabitants thereof[.]" To that end, the Association also created "Guidelines of Architectural Control," which set forth the architectural and landscaping criteria relevant to all property subject to the Declaration.

With respect to assessments, the Declaration provides that each parcel of property, "whether owned by [CHC] or others" through a deed, must pay an annual assessment or charge to the Association. It calls for the Association's Board to fix the amount and provides a method of valuation that allows for property classifications and varying rates. The Declaration establishes that the Association may use the collected funds in such manner and to such extent as the Board . . . may determine to be for the benefit of the residents of The Property and for the promotion of the health, safety and welfare of its residents within The Property and for the enhancement of education, recreation, social life, and community welfare within The Property; but the specific application of such moneys shall remain wholly in the absolute discretion of the said Board[.]

Unlike the Association, the RCA is open for membership to all adult Radburn residents. According to its constitution, its purposes are:

(a) To serve as an open forum to give opportunity for the consideration and discussion of matters of public interest[;] (b) To act as an agency for the presentation to the Radburn Association and to other public or private bodies, of community opinion arrived at through public discussion and other appropriate means[;] (c) To provide a common meeting place for the members[;] (d) To foster the development of community life and a realization of its benefits and responsibilities[; and] (e) To cooperate with other organizations in the furtherance of the above purposes for the welfare of Radburn and the entire community of Fair Lawn.

The RCA's nominating procedure for officers allows any member to nominate a candidate, and all nominees are permitted to stand for election by the membership.

In 2004, the Association decided to sell a remediated 5.7 acre portion of Radburn's parkland, known as Daly Field, for at least $4 million for construction of a condominium complex. The decision was based in part on the increasing property taxes and maintenance burdens for Daly Field, which had fallen into disuse following a period of environmental remediation. The new units would be subject to the Declaration and would pay fees to the Association.

On June 2, 2005, June Meyerson, then-president of the RCA, wrote to Edward Hannaman, an attorney in the Association Regulation Unit of the Department of Community Affairs (DCA), which has jurisdiction over communities like Radburn created prior to the enactment of PREDFDA, and requested that Radburn be brought into compliance with the statute. On November 21, 2005, Robert Matule, then-president of the Association, wrote to Charles Richman, acting commissioner of the DCA, informing him of the Association's opinion that it is not a "homeowners association" because it: is the sole owner of the parklands, pools, tennis courts, playgrounds and Grange Hall.

The residents of Radburn have no ownership interest in the Radburn Association's properties, but own their individual properties in fee simple.

The residential property owners, by acceptance of a deed of conveyance which subjects the property to a covenant which runs with the land, therefore enter into a contract with The Radburn Association.

Matule emphasized that, despite the DCA's position to the contrary, the Association did not believe it was subject to PREDFDA.

On January 10, 2006, following a request for clarification from the Association, Hannaman sent a letter to Matule asserting the DCA's opinion that "Radburn must comply with PREDFDA regarding open meeting requirements, access to financial documents and dispute resolution." Nonetheless, the DCA noted that it did not believe Radburn was in violation of N.J.S.A. 45:22A-47, the provision of PREDFDA dealing with the surrender of control from the developer to owners. Although, in August 2005, the DCA instructed the Association to allow all residents to run for the Board whether or not nominated by the current trustees, in the January letter Hannaman claimed that the DCA was not authorized to determine whether the Association's election procedures were in compliance with PREDFDA. In an April 13, 2006 letter, the DCA again informed the Association that it does not have the authority to intervene in election issues but noted that it was awaiting the enactment of proposed legislation which could alter its position.

On August 5, 2006, a group of residents referring to themselves as the Concerned Citizens Reclaiming Fair Lawn (CCRF) petitioned Fair lawn for a ballot referendum for "Planned Community Democracy." On August 10, the Board responded, urging residents to continue to work with it and the RCA to address any concerns, such as the election process and the Association's financial expenditures, and to vote against a referendum intended to alter Radburn's longstanding form of governance.

Plaintiffs, a group of citizens residing in the Radburn Community, filed a complaint for injunctive and declaratory relief challenging the governance of the Association. Defendants filed an answer and counterclaims, alleging numerous breaches of fiduciary duty and the duty of loyalty as well as asserting a claim of tortious interference by plaintiff Myerson. The parties cross-moved for summary judgment. They stipulated that there were no issues of material fact in dispute and that the issues regarding the Association's methods of governance were to be decided only under PREDFDA and Title 15A.

In a written opinion, Judge Contillo concluded that: (1) the 1993 amendments to PREDFDA, N.J.S.A. 45:22A-43 to -48, are retroactive and apply to Radburn; (2) PREDFDA does not require that all residents of Radburn be members of the Association; (3) PREDFDA does not require a specific nomination procedure, and the Association's procedure is fair and reasonable under Title 15A; (4) the Association's open meetings policy "substantially complies with PREDFDA"; and (5) PREDFDA's general welfare clause requires the Association to disclose financial documents to residents in accordance with the guidelines established in the Condominium Act, N.J.S.A. 46:8B-1 to -38, at N.J.S.A. 46:8B-14(g). The judge also instructed the Association to amend its bylaws to reflect its open meetings policy and his finding with respect to disclosure of financial documents. With respect to defendants' counterclaims, the judge found that the breach of duty claims were unsupported, and the tort claims were barred by the entire controversy doctrine. The judge granted plaintiffs' summary judgment motion as to count IV of their complaint (financial disclosure) and dismissed the balance of the complaint. This appeal and cross-appeal followed.

II.

We first address, as a threshold issue, the application of the 1993 amendments to PREDFDA to Radburn. In this regard, defendants' assert that we erred in Comm. for a Better Twin Rivers v. Twin Rivers Homeowners' Assoc., 383 N.J. Super. 22, 54-55 (App. Div. 2006), rev'd on other grounds, 192 N.J. 344 (2007) in concluding that these amendments were ...


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