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Lake Shawnee Club, Inc. v. Akhtar

July 15, 2010


On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1899-08.*fn1

Per curiam.


Argued January 26, 2010

Before Judges Grall and LeWinn.

Plaintiff Lake Shawnee Club, Inc., (Club) appeals following a bench trial conducted after this court reversed a grant of summary judgment in favor of defendants. Lake Shawnee Club, Inc. v. Akhtar, No. A-4717-06 (App. Div. March 14, 2008). The defendants in these consolidated actions to collect unpaid dues for Club membership - Archibald Clark, Guy Dewey and Salvatore Paschitti - are owners of property located in the Lake Shawnee Reservation (Reservation). None of them opted to belong to the Club during the period for which the dues were assessed.

On a prior appeal, we held that covenants in the deed from the developer to the purchaser of the Reservation, Schneider, and documents referenced in and recorded with the deed required subsequent purchasers of lots to pay a $1.50 monthly maintenance fee and to become members of the Club and pay annual dues. Id. at 4, 13-15. Accordingly, we reversed orders granting defendants summary judgment on the ground that membership was not required. Noting, however, the undisputed evidence of the Club's forty-plus-year practice of treating membership as optional, we remanded for further proceedings to address whether the Club's conduct, changed circumstances or the relevant equities barred enforcement of the restrictive covenants. Id. at 16.

On remand, the judge found that Clark, Dewey and Paschitti relied upon the Club's long-standing and announced policy of optional membership when they purchased property in the Reservation. The judge concluded that because the Club treated membership as optional and defendants relied upon the practice adopted by the Club, the Club was not entitled to collect the dues it billed these defendants. We affirm.

The Reservation is located in Morris County and was established in the 1940s. It is comprised of approximately 550 residential lots owned by individuals and of areas owned by the Club. The Club's property includes the eighty-three acre Lake Shawnee, its dam and three docks, and five additional acres used for three beaches, playing fields and a clubhouse.

Expenses paid from the annual dues and monthly maintenance fee include real estate taxes, insurance, wages for an office manager, a security officer and lifeguards, as well as the costs of maintaining the lake, dam and grounds. The Club's social events are self-funded. There are two flat rates for dues - "Membership Dues" and "Senior Membership Dues," the latter being a discounted rate charged owners over the age of sixty-five.

Club membership is limited to residents of the Reservation. The membership dues permit the owner, persons residing with the owner and their guests to use the Club's facilities. The rate does not vary with the number of persons or the size or location of the owner's property.

For a period of about twenty years after the Schneider deed, membership in the Club was deemed mandatory. Thereafter, membership was treated as optional for a period of more than forty years. During that time, property owners were given the option to pay dues and join the Club on a year-to-year basis. The $1.50 monthly maintenance fee, however, was treated differently; the Club consistently enforced that obligation without regard to Club membership.

Dewey purchased his home in November 1980. He was not specifically looking for a lake property and purchased the home because it was "a good value." He was aware that the deed required membership in the Club, but the seller told him membership was voluntary. The Secretary of the Club confirmed that information and gave Dewey a welcome letter stating that "membership is not mandatory" and encouraging new residents to join. Relying on those representations, Dewey went forward with the purchase, which he would not have done if he had known dues were mandatory.

Clark purchased his home in December 1978 because he could afford it. Prior to closing, he too was advised by the seller that Club membership was not mandatory. He would not have purchased the home if membership was mandatory out of concern that the dues would be an unpredictable expense. Although Clark had no conversations about membership with anyone representing the Club prior to making the purchase, he received solicitations from the Club describing membership as voluntary and encouraging him to join.

Paschitti acquired his Lake Shawnee home in July 1984. He selected it because its location was convenient for commuting to work and the price was "good," not because it was near a lake. He too was told that membership in the Club was voluntary and received information encouraging him to join. He said ...

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