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New United Corp. v. County of Essex

April 19, 2010


On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-8794-04.

Per curiam.


Argued February 9, 2010

Before Judges Skillman, Fuentes and Gilroy.

This action concerns disputes between two condominium unit owners, where one owner seeks to require the condominium association to maintain the condominium's common elements, and to assess the second owner for the costs of certain repairs. On leave granted, defendant County of Essex (the County) appeals from the January 13, 2009 order that, among other things, impleaded the condominium association (the Association), the Essex Community Health Services, Inc., as a party to the action, and appointed Edward J. Dauber, Esq., to "represent and administer the affairs of the Condominium Association and act on its behalf consistent with the Master Deed, By-laws and Condominium Act." We affirm in part; reverse in part; and remand for further proceedings consistent with this opinion.*fn1


NUC is a real estate development company. In 1997, NUC purchased a tract of land in Newark known as United Campus upon which the United Hospital and Medical Center had formerly operated. United Campus consisted of five buildings containing approximately 450,000 square feet of office space, and a parking garage. At about the same time, the County was considering whether to refurbish the Essex County Hospital Center in Cedar Grove or to relocate it to a new facility. It decided to relocate the hospital to United Campus.

The County and NUC entered into an agreement to convert United Campus to a three-unit condominium. The County agreed to purchase Unit 1 (the parking garage), and Unit 2 (a significant portion of the North Tower building and the 10th Street building, consisting of approximately 165,000 square feet of office space). NUC retained ownership of Unit 3, the remaining office space within the buildings. The parties conditioned the agreement on the County having majority voting rights of the Association, notwithstanding that its interest in the common elements would be 40.29% and NUC's interest would be 59.71%.

On November 23, 1999, NUC filed the Master Deed converting the property to condominium ownership. On the same day, NUC conveyed Units 1 and 2 to the Essex County Improvement Authority (the Authority); and the Authority leased those two units to the County.*fn2


Subsequent to taking ownership in the condominium, the County decided not to relocate the Essex County Hospital Center to that location. After doing so, the County allegedly not only failed to maintain its two units, but also failed to properly manage the Association.

On October 30, 2004, NUC filed a complaint against the County and the Authority alleging breach of express and implied covenants, tortious interference with NUC's prospective economic advantage, and breach of the condominium by-laws. Specifically, NUC asserted that the County had turned off the heat, water and electricity to its units, allowing storm drain pipes that cross the North Tower building to break and flood parts of the condominium's common areas and NUC's unit.

On July 26, 2005, NUC filed an order to show cause (OTSC) seeking an order directing the County to make repairs to the condominium. On August 19, 2005, the trial court ordered the County to repair the broken storm drain pipes. In September 2005, NUC filed a motion seeking leave to join the Association as a defendant. On October 24, 2005, the court denied the motion. In December 2005, NUC filed an amended complaint alleging that the County had breached its fiduciary duty to NUC by improperly exercising its majority voting control over the Association, thereby preventing the Association from performing its duties. The County filed an answer and counterclaim, asserting that NUC had assumed responsibility to maintain the condominium's common areas.

On December 3, 2007, NUC filed a second OTSC, seeking to compel the County to complete the repairs to the storm drain pipes and to repair the parapet wall on the North Tower eight-story building. The County opposed, contending that an order compelling it to act was not required as it would voluntarily make all necessary repairs to its units and the common elements. On February 22, 2008, the trial court denied the OTSC, finding that a plenary hearing was required to resolve disputed facts.

In June 2008, NUC filed a motion for partial summary judgment on liability, seeking an order holding the County liable for failure to maintain its two units and the common elements, and causing damage not only to the common elements, but also to NUC's unit and business interests. On October 31, 2008, after hearing argument on the motion, the court decided sua sponte to implead the Association as a necessary party, and to appoint a receiver to discharge the Association's responsibilities. After the parties tentatively agreed to the appointment of Eric Max*fn3 as receiver, the court continued the matter without deciding the motion.

Because the parties could not agree on a form of order, the court conducted a conference on January 5, 2009. At the conference, the court advised the parties that Eric Max was not available to serve as receiver, and recommended that the parties consider Dauber instead. On January 12, 2009, the court conducted a second conference to settle the form of order. On the following day, the court entered an order that, among other things, impleaded the Association "as a necessary party to this litigation under [Rule] 4:28-1"; appointed Dauber "to represent and administer the affairs of the [Association] and to act on its behalf consistent with the Master Deed, By-Laws, and the Condominium Act"; prohibited the members of the Association and its Board of Trustees from meeting to conduct any business of the Association; authorized Dauber to retain Helena Ruman, an architect, to inspect the ...

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