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Mazdabrook Commons Homeowners' Association v. Khan

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


September 1, 2010

MAZDABROOK COMMONS HOMEOWNERS' ASSOCIATION, PLAINTIFF-RESPONDENT/CROSS-APPELLANT,
v.
WASIM KHAN, DEFENDANT-APPELLANT/CROSS-RESPONDENT.

On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Morris County, Docket No. DC-011532-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted June 9, 2010

Before Judges Payne, Miniman and Fasciale.

Defendant, Wasim Khan, a resident of Mazdabrook Commons condominium community, was sued in the Special Civil Part for failure to pay maintenance fees and fines arising from his planting of a rose bush in his front yard. Khan raised the defense of unclean hands and he counterclaimed, alleging breach of contract and violation of his right to free speech as the result of the Association's prohibition of all window signs in condominium units except for one "For Sale" sign. Following a two-day bench trial, the judge found in Mazdabrook's favor, assessing Khan $3,500, consisting of a $1,500 fine for maintaining an over-height rosebush in June and July 2007, and $2,000 for nonpayment of monthly maintenance fees in March 2007 and in the period from July 2007 through October 2008. Mazdabrook had sought a twenty-percent surcharge in lieu of attorney's fees, which the judge cut to ten percent. The judge dismissed Kahn's counterclaim in its entirety. Kahn has appealed, and Mazdabrook has cross-appealed.

I.

Mazdabrook Commons is a condominium development governed by the provisions of the New Jersey Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 to -56, and the regulations promulgated pursuant to the Act. In its Public Offering Statement, Mazdabrook Developers, LLC, provided in section 11 that, prior to the conveyance of the first unit, it would file a Declaration of Covenants and Restrictions, together with the By-Laws of the Association. It stated further:

The Declaration of Covenants and Restrictions sets forth provisions for the use and enjoyment of all Unit Owners with respect to the Common Facilities. All purchasers shall purchase their Units subject to all of the terms and conditions as set forth in the Declaration of Covenants and Restrictions and exhibits attached thereto.

Further, section 12 provided that:

Unit Owners must comply with the restrictions of the Declaration of Covenants and Restrictions and By-Laws as well as any Rules and Regulations adopted by the Association, all of which relate to the use and occupancy of Units, the right of alienation, and the right of alteration of the Units.

A Summary of Restrictions contained within section 12 included the following:

(b) Nothing may be done or kept in any Unit or in the Common Facilities that will increase the rate of hazard insurance of any Unit or Building.....

(k) No signs are permitted on the exterior or interior of any Unit, except for one "For Sale" sign on the interior of a Unit. Further, the Sponsor shall have the right to place "For Sale" or "For Rent" signs on unsold or unoccupied Units.....

(s) No Unit Owner or occupant may build, plant or maintain any matter or thing upon, in, over or under the Common Facilities without the prior written consent of the Association.

The Declaration of Covenants and Restrictions, appended to the offering as Exhibit A, stated in Article VI(a) that:

Every Unit Owner, by acceptance of a deed or other conveyance for a Unit, whether or not it shall be so expressed in any such deed or other conveyance, shall be deemed to covenant and agree to pay to the Association all assessments and all fines and other charges contemplated herein or in the ByLaws.

Another paragraph of that Article provided for the establishment of annual common expense assessments sufficient to maintain the common facilities. What constituted a common facility and a unit was defined in Article II. A unit was defined in terms of an individual's ownership interest in the condominium unit and the land upon which it stood.

In Article X, entitled "Restrictions," paragraph (a)(vii) provided:

No signs (other than those of Sponsor),... shall be erected or installed in or upon any Building, the Common Facilities or any part thereof without the prior written consent of the Board.

Paragraph (a)(xii) stated:

Nothing shall be done or kept in any Unit... which will increase the rates of insurance of any Building or the contents thereof beyond the rates applicable for the Units without the prior written consent of the Board.

Additionally, paragraph (d), entitled "Fines" provided:

The Board shall have the power to make such Rules and Regulations as may be necessary to carry out the intent of these use restrictions, and shall have the right to bring law suits to enforce the Rules and Regulations so promulgated. If permitted by law, the Covenants Committee or the Board (whichever is applicable) shall further have the right to levy fines for violations of these regulations, provided that the fine for a single violation may not, under any circumstances, exceed $25.00. Each day that a violation continues, after receipt of notice by the Unit Owner, may be considered as a separate violation. Any fine so levied shall by considered as a Common Expense to be levied against the particular Unit Owner involved, and collection may be enforced by the Board in the same manner as the Board is entitled to enforce collection of Common Expenses.

Further regulations were contained in the By-laws of the Mazdabrook Commons Homeowner's Association. The By-laws defined an association member in good standing, stating a member would be such "if, and only if (1) he shall have fully paid all installments due for assessments made or levied against him." Further the By-laws provided: "The Membership and voting rights of any Member may be suspended by the Board for any period during which any type of assessment against the Unit to which his Membership is appurtenant remains unpaid." The By-laws also provided: "Only Unit Owners who hold memberships in good standing at least three (3) days prior to any meeting at which an election is to occur shall be entitled to vote in elections of Trustees." Trusteeship was limited to members in good standing. The powers of the Board of Trustees included the administration of the affairs of the Association and the property; the adoption of rules and regulations covering the use of the common facilities; and the collection of common expense payments.

An additional provision stated:

If permitted by law, the Board, at its option, shall have the right, in connection with the collection of any type of assessment or other charge, to impose a late charge of not more than $25.00 for each delinquent payment, if such payment is received after the applicable due date. In the event that the Board shall effectuate collection of said Assessments or charges by resort to counsel and/or filing of a lien, the Board may add to the aforesaid Assessments or charges a sum or sums of twenty (20) percent of the gross amount due as counsel fees, plus the reasonable costs for preparation, filing and discharge of the lien, in addition to such other costs as may be allowable by law.

A later provision, contained in Article XII, Enforcement, stated:

If permitted by law, the Board shall... have the power to levy fines against any Unit Owner(s) for violation(s) of any Rule or Regulation of the Association... except that no fine may be levied for more than $25.00 for any one violation; provided however, that, for each day a violation continues after notice, (for other than failure to pay an assessment or charge), it shall be considered a separate violation.... Despite the foregoing, before any fine is imposed by the Board, the Unit Owner involved shall be given at least ten (10) days prior written notice, and afforded an opportunity to be heard, with or without counsel, with respect to the violation(s) asserted.

Rules and Regulations of the Homeowner's Association provided additional guidance to unit owners. Those Rules and Regulations prohibited the placement of signs in or on windows, except as provided in the Declaration of Covenants and Restrictions, and prohibited planting in common facilities without the prior written consent of the Association. Significantly, however, the document stated in paragraph 19:

The Association grants its approval and consent to all Unit Owners:

(a) To display or install plants either in containers or in the ground adjacent to their Unit, provided

(i) that all in-ground plants are placed within the existing mulched area and also sufficiently removed from the lawn to allow mowing and maintenance of the grass;

(ii) that all plants in containers and/or in the ground planted by Unit Owners are maintained in good condition by the Unit Owner, including removal of weeds, watering, spraying, etc.

Defendant purchased his unit in 2003. Defendant testified that in 2005, he was nominated for a township office. After seeing election signs in the window of the complex's model unit, he placed his own election poster in a window of his house. After it had been in place for two or three days, defendant received a notice that displaying the poster was prohibited, and he was directed to remove it within three days. Although defendant complied, he stated that he was nonetheless fined. Plaintiff's attorney stated that the fine was $75.

At some point after taking up residence at the complex, defendant planted a climbing rose bush in the mulched area between his front and garage doors. Pictures taken on May 16 and 23, 2006 by Board of Trustees' President Jeffrey S. Mandel depict the bush as having grown to a height taller than the garage entrance. Mandel testified at trial that he was notified by the complex's insurer that the bush constituted a fire hazard.

At trial, counsel for plaintiff introduced, through Mandel, four letters, dated, respectively, May 8, May 19, June 5, and June 15, 2006, advising defendant that he had failed to obtain authorization from the Association for the rose bush, and that it must be removed. Fines of $25 per day were imposed commencing on May 11, 2006. Defendant appealed from the imposition of the fines, and the appeal was heard by the Board of Trustees. However, defendant testified that he never was informed of the results of his appeal, and Mandel could not specifically state how the matter had been resolved. Defendant also testified that, in the later part of 2006, he cut the rose bush to two feet.

The rose bush became an issue again in 2007. On May 29, 2007, the Board of Trustees passed a resolution that stated in relevant part:

No Home Owner or Occupant shall build, place or maintain any matter, thing or structure on the general common facilities which include but are not limited to all landscaped areas and planting beds except the following:

1. A Home Owner or Occupant may plant annuals*fn1 within the landscaped areas whose height does not exceed two and one half feet from the average height of the mulch line.

A fine of $25 per day was imposed for a violation of this provision.

The record reflects that defendant was found to be in violation of the height limit on May 30 and 31, 2007, and an invoice requiring payment of $50 in fines was prepared. However, no notice of violation appears in the record. An invoice for $750, constituting the fines for the month of June, and an invoice for $775, constituting the fines for the month of July were also prepared. A fourth invoice disclosed imposition of a fine for twenty-three days in August in the amount of $575. However, the only notice of violation appearing in the record was dated August 20, 2007. That notice apprised defendant of his right of appeal or alternative dispute resolution and advised that if he did not abate the problem or notify the Association within ten days from the date of the letter that he wanted to mediate the dispute, the offer to mediate would be revoked and the Association would assess $25 per day in fines or take whatever other legal action it deemed appropriate.

Evidence introduced at trial disclosed that on May 22, 2008, the property manager drafted another notice of violation with respect to defendant's rose bush, stating that he had previously been notified of height restrictions on bushes, in finding a violation, he relied on provisions prohibiting planting without the prior written consent of the Association. Defendant was notified that a fine of $25 per day would be assessed against him, and he was informed that he had ten days to dispute the assessment of the fine. A further notice, dated June 3, 2008, cited the same provision as the basis for violations involving two rose bushes.*fn2 The notice stated that a fine of $50 per day would be assessed for the period from May 26, 2008 until June 3, 2008 for a total of $450.

On October 17, 2008, before suit was instituted, an invoice to defendant was issued for unpaid maintenance fees of $90 per month for the months of March 2008 through September 2008, plus late fees in the amount of $125. Additionally, the invoice noted a prior balance, as of February 28, 2008, of $4,450.98. An accounting of the charges reflected in that balance was not presented at trial. However, Mandel testified that defendant had failed to pay his maintenance fees for March 2007 and for the period from July 2007 through October 2008. With late fees and what he characterized as "interest" at 20%, the unpaid balance was 2,290.98. Defendant admitted to nonpayment of maintenance fees, testifying that he was concerned that if they were paid, the payments would be credited against fines that defendant was contesting.

Because of defendant's failure to pay fees and fines, in 2006, he was precluded from running for a position on the Board of Trustees, and he has been precluded from voting in Board elections since 2006.

As we have stated, at the conclusion of the trial, the judge awarded plaintiff the sum of $1,500 as a fine for defendant's maintenance of an over-height rose bush in June and July 2007, and $2,000 as the result of defendant's nonpayment of monthly maintenance fees in March 2007 and the period from July 2007 through October 2008. The judge reduced the "interest" due on the maintenance fee from 20% to 10%. The judge denied defendant's free speech claim, relying in making that decision on Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Association, 192 N.J. 344 (2007).

II.

We focus first on the appeal and cross-appeal as they relate to the rose bush. In that regard, defendant contends that much of the documentary evidence utilized by plaintiff to establish his liability was hearsay, and that it was erroneously admitted. Plaintiff, on the other hand, contends that the judge erred in arbitrarily establishing an August 2007 cut off date for the rose bush fines and in failing to find that the violation continued "even as late as May 22, 2008."

Our review of the evidence in light of the By-laws of the Mazdabrook Commons Homeowner's Association satisfies us that the judge was mistaken in finding $1,500 due as fines, and that the judge correctly declined to find the continuing violation that plaintiff claims to have existed. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974).

The evidence disclosed that the Association passed its resolution regarding plant height on May 29, 2007. Defendant was fined the next day and for a period continuing to August 23, 2007. However, Article XII of the By-laws of the Association requires written notice and a ten-day notice period before fines can be levied. The only evidence of proper notice provided to defendant was a document dated August 20, 2007. Thus, any fines levied prior to that date did not conform to the procedures established by the Association.

The invoice for August sought fines for only twenty-three days. We conclude from that fact that the violation was remedied on August 23, 2007. Because ten days did not elapse between issuance of notice on August 20 and defendant's cure, no fines were due. As we previously stated, defendant contends that he cut down his rose bush long before August 2007.

At trial, plaintiff sought to establish a further, or continuing, alleged violation by use of a November 19, 2007, e-mail from "Nicole" at Monticello Management, in which she appears to have pasted an earlier e-mail from Mandel that stated:

I noticed that you indicate that 19 Jillian [defendant's residence] informed you that they removed the offending vine/tree. Seeing that the same vine is still there, please adjust your records accordingly (and assess the proper fines), as the HO did not remove it.

However, no evidence was presented that proper notice was given to defendant or that fines were in fact assessed. Additionally, no date for Mandel's e-mail was offered, and Mandel was unable to authenticate the document in the form that was introduced.

Thereafter, the record contains a notice, dated May 22, 2008, evidencing an intent to impose a fine and a further notice, dated June 3, imposing a fine from May 26, 2008 to June 3, 2008, at a rate of $50 per day. No evidence was presented of a violation in the period from November 19, 2007 to May 26, 2008. Moreover, neither of the 2008 notices provides proper notification of defendant's violation because each cites an inapplicable prohibition as the basis for the violation. As a consequence, we find that proper notice of violation was not provided. We note, additionally, that as the result of the tenday window for cure, even if the June 3 notice had properly informed defendant of the nature of his violation, only one day's penalty could have been imposed. As a final matter, we note that plaintiff presented no evidence that fines were actually levied on defendant for this alleged violation.

We vacate the judge's award of $1,500 in fines and affirm his determination not to find liability after July 2007. As a consequence of this decision, we need not address defendant's evidentiary arguments or the refusal of the judge to recognize defendant's defense of unclean hands.

III.

In its cross-appeal, plaintiff contests the judge's determination to reduce the "interest" charged on the unpaid maintenance fees from 20% to 10%. We agree with plaintiff that the judge was mistaken in having done so. As we have previously noted, the 20% payment was not "interest." It constituted a liquidated damages provision established in the By-laws of the Association in lieu of an assessment of counsel fees in instances in which legal action on the Association's behalf was required.

We have held:

A clause is a liquidated damages provision if the actual damages from a breach are difficult to measure and the stipulated amount of damages is "a reasonable forecast of the provable injury resulting from [the] breach." Wasserman's [Inc. v. Twp. of Middletown], 137 N.J. [238,] 249 [(1994)]. Such clauses are deemed "presumptively reasonable" and therefore enforceable, and "the party challenging [a stipulated damages provision] should bear the burden of proving its unreasonableness." Id. at 252. Because the harm is necessarily incapable of accurate estimate, Westmount Country Club v. Kameny, 82 N.J. Super. 200, 206 (App. Div. 1964), "'reasonableness' emerges as the standard for deciding the validity of stipulated damages clauses." Wasserman's, supra, 137 N.J. at 249. The amount fixed is unreasonable if it serves not as a pre- estimate of probable actual damages, but rather as "punishment," Westmount Country Club, supra, 82 N.J. Super. at 205, grossly disproportionate to the actual harm sustained. [CSFB 2001-CP-4 Princeton Park Corp. Ctr., LLC v. SB Rental I, LLC., 410 N.J. Super. 114, 121 (App. Div. 2009).]

Our review of the trial record in the present matter satisfies us that defendant offered no evidence that would suggest that the liquidated damages contemplated by the By-laws was in any way unreasonable, and that, objectively viewed, an award of such damages was not in fact unreasonable in this case. We are certain that if counsel submitted an accounting of the time required to prepare for and conduct the two-day trial held in this matter, the resultant counsel fees would have been substantially higher. However, as the result of the By-laws, the Association has waived the right to that higher award.

IV.

As a final matter, we address defendant's free speech argument arising from the Association's prohibition of the posting of signs and from the fine imposed upon him for violating that prohibition by displaying a poster relating to his campaign for public office.

As the trial judge recognized, the Supreme Court addressed a similar issue in Twin Rivers. In that case, the plaintiffs, who sought to change the manner in which a planned unit development (PUD) was being governed, challenged as an unconstitutional restriction on the right to free speech, among other things, the PUD Association's policy relating to the posting of signs - a policy that permitted the posting by a resident of a sign in any window of the resident's unit and outside in the flower beds if the sign was within three feet of the residence. The policy prohibited signs on utility poles and on natural features within the community. Twin Rivers, supra, 192 N.J. at 351.

The Court commenced its analysis of this issue by commenting:

This Court has long held that the rights of speech and assembly cannot be curtailed by the government. King v. S. Jersey Nat'l Bank, 66 N.J. 161, 177 (1974). Moreover, under limited circumstances, we have determined that those constitutional rights may be enforced against private entities. [State v.] Schmid, 84 N.J. [535], 559 [(1980)]. In fact, our constitutional guarantee of free expression "is an affirmative right, broader than practically all others in the nation." Green Party v. Hartz Mountain Indus., Inc., 164 N.J. 127, 145 (2000). Here, we must determine whether this case presents one of those limited circumstances where, in the setting of a private community, the Association's rules and regulations are limited by the constitutional rights of plaintiffs.

[Id. at 355-56.*fn3 ]

Ultimately, the Supreme Court rejected plaintiffs' constitutional challenge.*fn4 In doing so, it adopted the analytical framework that it had used in State v. Schmid, 84 N.J. 535 (1980), appeal dismissed sub nom., Princeton University v. Schmid, 455 U.S. 100, 102 S.Ct. 867, 70 L.Ed. 2d 855 (1982), a decision reversing the conviction of a non-student for trespass when he entered the Princeton campus to distribute political materials. Twin Rivers, supra, 192 N.J. at 364. That test requires courts to consider (1) the nature, purposes, and primary use of such private property, generally, its "normal" use, (2) the extent and nature of the public's invitation to use that property, and (3) the purpose of the expressional activity undertaken upon such property in relation to both the private and public use of the property. [Schmid, supra, 84 N.J. at 563.]

In addition, the Twin Rivers Court relied on the Court's decision in New Jersey Coalition Against War in the Middle East v. J.M.B. Realty Corp., 138 N.J. 326 (1994), cert. denied, 516 U.S. 812, 116 S.Ct. 62, 133 L.Ed. 2d 25 (1995), a decision requiring regional private shopping malls to permit leafleting on societal issues. Twin Rivers, supra, 192 N.J. at 364. According to the Twin Rivers Court, in New Jersey Coalition, [t]he Court concluded that "each of the elements of the [Schmid] standard and their ultimate balance support the conclusion that leafleting is constitutionally required to be permitted." Thus, the Court not only relied on the three-pronged test in Schmid, but also on the general balancing of expressional rights and private interests. [Id. at 360 (quoting New Jersey Coalition, supra, 138 N.J. at 356-57).]

Turning to the case before it, the Twin Rivers Court analyzed Schmid's first factor in light of the facts presented, and it found that the development was a "common interest community," distinguishable from other forms of real property ownership because "'"there is a commonality of interest, an interdependence directly tied to the use, enjoyment, and ownership of property."'" Id. at 365 (quoting Fox v. Kings Grant Maint. Ass'n, 167 N.J. 208, 222 (2001) (quoting Wayne S. Hyatt, Condominium and Homeowner Association Practice: Community Association Law § 2.01 at 25 (2d ed. 1988))). Thus, the Court found that the "nature, purposes, and primary use of Twin Rivers's property is for private purposes and does not favor a finding that the Association's rules and regulations violated plaintiffs' constitutional rights." Id. at 366. Likewise, after the Court viewed the extent and nature of the public's invitation to use the property, it concluded "that the limited nature of the public's invitation to use the property does not favor a finding that the Association's rules and regulations violated plaintiffs' constitutional rights." Ibid.

With respect to the third Schmid factor, the Court held:

The third Schmid factor concerns the purpose of the expressional activity in relation to both the private and public use of the property. This part of the test requires that we examine "the compatibility of the free speech sought to be exercised with the uses of the property." Id. at 361. Essentially, we must look to the fairness of the restrictions imposed by the Association in relation to plaintiffs' free speech rights. [Id. at 366-67.]

Viewing this factor in light of the facts, the court found that the plaintiff's expressional activities were not unreasonably restricted by the Association's regulations. Of particular significance to the present case, the Court specifically addressed the issue of the placement of signs on the homeowners' property, stating:

We are mindful that at least in regard to the signs on the property of the homeowners, it is the private homeowner's property and not that of the Association that is impacted. The private property owner not only is "protected under due process standards from untoward interference with or confiscatory restrictions upon its reasonable use," Schmid, supra, 84 N.J. at 561, but also our constitution affirmatively grants the homeowner free speech and assembly rights that may be exercised on that property. Notably, the Association permits expressional activities to take place on plaintiffs' property but with some minor restrictions. Homeowners are permitted to place a single sign in each window and signs may be placed in the flower beds adjacent to the homes. Those limitations are clearly not an "untoward interference with" or a "confiscatory restriction" on the reasonable use by plaintiffs on their property to implicate due process standards. [Id. at 367-68.]

Of further significance to the present matter, while the Court rejected plaintiffs' constitutional challenge, it stated: "Our holding does not suggest, however, that residents of a homeowners' association may never successfully seek constitutional redress against a governing association that unreasonably infringes their free speech rights." Id. at 368-69.

When we apply the principles of Schmid, New Jersey Coalition and Twin Rivers to the present matter, we have no doubt that the first two prongs of the Schmid test should be resolved in plaintiff's favor. Like Twin Rivers, Mazdabrook is a residential, common interest community that is neither impliedly or explicitly held open to the public. Therefore, our focus is on the third element of the Schmid/New Jersey Coalition test and the "fairness of the restrictions imposed by the Association in relation to plaintiff['s] free speech rights." Twin Rivers, supra, 192 N.J. at 366-67. In doing so, we note that in the present case, unlike Twin Rivers, the Association has imposed an almost total ban upon the placement of signs by unit owners inside or on their units, excepting only one "For Sale" sign on the interior of the unit. See Public Offering Statement, Section 12, Summary of Restrictions, paragraph (k).*fn5

The regulation, therefore, although viewpoint neutral, is not content neutral, and it favors commercial speech. State v. DeAngelo, 197 N.J. 478, 487 (2009) (citing Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 513, 101 S.Ct. 2882, 2895, 69 L.Ed. 2d 800, 818 (1981) (invalidating regulations banning noncommercial advertising while permitting significant exceptions for commercial advertising.)). In a municipal context, the constitutionality of a content-based ordinance is subject to the strictest scrutiny. Id. at 486 (quoting Turner Broad. Sys. v. F.C.C., 512 U.S. 622, 642, 114 S.Ct. 2445, 2459, 129 L.Ed. 2d 497, 517 (1994)).

Moreover, as a plurality of the Supreme Court stated in Metromedia: "Insofar as the city tolerates billboards at all, it cannot choose to limit their content to commercial messages; the city may not conclude that the communication of commercial information concerning goods and services connected with a particular site is of greater value than the communication of noncommercial messages." Metromedia, supra, 453 U.S. at 513, 101 S.Ct. at 2895, 69 L.Ed. 2d at 818.

In DeAngelo, supra, the Court invalidated a municipal sign ordinance that prohibited, among other things, "portable signs[,] balloon signs or other inflated signs (excepting grand opening signs)," 197 N.J. at 481, in a case in which the ordinance served as the basis for the prosecution of a union organizer who displayed a large inflatable rat as part of a labor protest. The Court found that the sign ordinance was content-based, did not fairly advance any compelling governmental interests, and was not narrowly tailored to prevent "no more than the exact source of the 'evil' it [sought] to remedy." Id. at 489 (quoting Frisby v. Schultz, 487 U.S. 474, 485, 108 S.Ct. 2495, 2503, 101 L.Ed. 2d 420, 432 (1988)).

The Court also voiced concerns about the ordinance's over breadth. Id. at 489-92. In doing so, it relied heavily on the United States Supreme Court's decision in City of Ladue v. Gilleo, 512 U.S. 43, 114 S.Ct. 2038, 129 L.Ed. 2d 36 (1994), in which the Court struck down an ordinance preventing "homeowners from displaying any signs on their property except 'residence identification' signs, 'for sale' signs, and signs warning of safety hazards" while permitting various signs to be erected at commercial establishments, churches and other nonprofit organizations. Id. at 490 (quoting Ladue, supra, 512 U.S. at 45, 114 S.Ct. at 2040, 129 L.Ed. 2d at 41). According to the DeAngelo Court,

[t]hat ban was invalidated because, Ladue has almost completely foreclosed a venerable means of communication that is both unique and important. It has totally foreclosed that medium to political, religious, or personal messages. Signs that react to a local happening or express a view on a controversial issue both reflect and animate change in the life of a community.... They may not afford the same opportunities for conveying complex ideas as do other media, but residential signs have long been an important and distinct medium of expression. [Id. at 490 (quoting Ladue, supra, 512 U.S. at 54-55, 114 S.Ct. at 2045, 129 L.Ed. 2d at 47).]

Echoing the Court in Ladue's pronouncement that the township "has almost completely foreclosed a venerable means of communication that is both unique and important," the DeAngelo Court held that the elimination of an entire means of expression without a readily available alternative rendered the ordinance overbroad. Id. at 491.

DeAngelo concerned the application of a municipal ordinance to protected speech on public property, whereas our concern here is with the application of Association regulations to speech within private property. Nonetheless, as we analyze the fairness of the restrictions imposed in this case in relation to plaintiff's free speech rights, we find to be significant DeAngelo's discussion of lack of content neutrality and its discussion of overbreadth, particularly insofar as the Court relied on Ladue - a residential case - in reaching its decision.

In the present case, we have a regulation that is not content neutral, and indeed it favors commercial speech. It is broadly drawn so as to foreclose an entire type of communication that has long been recognized as significant. Additionally, it regulates the free speech rights of residents within their condominium units. When we weigh these factors as Twin Rivers dictates, we find that the right to free speech outweighs any concerns that the Association may have regarding the use of condominium property. Accordingly, we find that Mazdabrook's sign restrictions are unconstitutional. Nonetheless, we do not foreclose the adoption of reasonable restrictions as to time, place and manner with respect to signage. We also do not find that defendant has any entitlement to damages as the result of his violation of the sign regulations, determining that those damages were not proven through evidence or testimony given at trial.

We decline to address any remaining arguments of the parties, determining that they lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E).

Reversed in part and remanded for entry of judgment in the amount of $2,290.98 MINIMAN, C.L., J.A.D., concurring in part and dissenting in part.

I concur with the majority's resolution of the issues relating to defendant's rosebush and the award of counsel fees to plaintiff. I further concur that the free-speech issue raised by defendant is governed by Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Association, 192 N.J. 344 (2007); N.J. Coalition Against War in the Middle East v. J.M.B. Realty Corp., 138 N.J. 326 (1994), cert. denied, 516 U.S. 812, 116 S.Ct. 62, 133 L.Ed. 2d 25 (1995); and State v. Schmid, 84 N.J. 535 (1980), appeal dismissed sub nom. Princeton University v. Schmid, 455 U.S. 100, 102 S.Ct. 867, 70 L.Ed. 2d 855 (1982). Finally, I concur with my colleagues' determination that the first two prongs of Schmid must be resolved in favor of plaintiff. However, I respectfully dissent from the majority's determination under the third Schmid prong that defendant's free-speech right "outweighs any concerns that the Association may have regarding the use of condominium property." Ante at ___ (slip op. at 26).

Mazdabrook Commons is a planned unit development consisting exclusively of 194 privately owned townhomes in thirty-six buildings. "The residential Units are of unique architectural design.... Each building [was] intensively landscaped and a lighting plan [was] designed for attractiveness and safety." The development is also a common-interest community "in which the property is burdened by servitudes requiring property owners to contribute to maintenance of commonly held property or to pay dues or assessments to an owners association that provides services or facilities to the community." Restatement (Third) of Property: Servitudes § 6 (2000). Our Supreme Court has recognized that "[a] common-interest community is distinguishable from any other form of real property ownership because 'there is a commonality of interest, an interdependence directly tied to the use, enjoyment, and ownership of property.'" Fox v. Kings Grant Maint. Ass'n, 167 N.J. 208, 222 (2001) (quoting Wayne S. Hyatt, Condominium and Homeowner Association Practice: Community Association Law § 2.01 at 25 (2d ed. 1988)).

Plaintiff is a private, non-profit corporation that owns the common elements and facilities, such as parking areas, driveways, common walls, a pool, tennis courts, and a recreation building.

It is operated by a Board of Trustees elected by the members of the Association. Plaintiff "conduct[s] the maintenance and management of the Common Facilities," which must be "operated and maintained in accordance with the terms of the ByLaws of the Association."

Each unit owner "owns all the space within the area bounded by the Lot's boundary lines, including the lot upon which the townhome is located." The unit owner becomes a member of plaintiff and has the right to use and enjoy the common elements and facilities, "subject to restrictions contained in the Declaration of Covenants and Restrictions, By-Laws and Rules and Regulations of the Association." Furthermore, all unit owners "purchase[d] their Units subject to all of the terms and conditions as set forth in the Declaration of Covenants and Restrictions and exhibits attached thereto," which the owner is required to obey.

The Public Offering Statement provided that each unit owner may decorate the interior of the unit in any way desired, "subject to the By-Laws and Rules and Regulations of the Homeowner's [sic] Association." One such regulation on interior décor requires all unit owners to install and maintain draperies, blinds, curtains or other window coverings on the windows at all times.

Many restrictions apply to the exterior of the townhomes and are undoubtedly intended to preserve the "unique architectural design" of the buildings by maintaining a uniform aesthetic throughout Mazdabrook Commons. The Public Offering Statement contains a summary of the restrictions found in the Declaration of Covenants and Restrictions, including but not limited to the following:

(e) Unit Owners may not cause or permit anything to be hung or displayed or placed on the outside walls or doors of a Building without the consent of the Board of Trustees.

(f) No livestock or poultry of any kind will be raised, bred or kept in any Unit or in the Common Facilities....

(g) No outside dog pens or yards are permitted.....

(k) "No signs are permitted on the exterior or interior of any Unit, except for one "For Sale" sign on the interior of a Unit...."

(l) No trailers, boats, or inoperable or unregistered vehicles may be placed on the Common Facilities by any Unit Owner.

(m) No laundry or other clothes may be hung or displayed outside any Unit.

(n) The sidewalks, entrances, passages and courts must not be obstructed or encumbered or used for any purpose other than ingress and egress to and from the Unit.

(o) No exterior loudspeakers... other than as contained in portable radios or television sets are permitted.

(p) Unshielded floodlights may not be installed in any exterior area of any Unit, nor may any porches be screened.

....

(r) No external or visible radio, television, or any type of communication aerial may be installed or affixed on or about the exterior of any building constructed or erected on the property.

(s) No Unit Owner or occupant may build, plant or maintain any matter or thing upon, in, over or under the Common Facilities without the prior written consent of the Association.

(t) No Unit Owner or occupant may burn, chop or cut anything on, over or above the Common Facilities.

(u) No portion of the Common Facilities or other portion of the property may be used or maintained for the dumping of rubbish or debris....*fn6

The Public Offering Statement notified prospective purchasers that the sponsor would file the Declaration of Covenants and Restrictions together with the By-Laws prior to the conveyance of the first unit and that "all purchasers shall purchase their Units subject to all of the terms and conditions as set forth in the Declaration of Covenants and Restrictions and exhibits attached thereto." Thus, the Declaration of Covenants and Restrictions and the By-Laws run with the land and were accepted by and govern each unit owner. They are not merely rules and regulations enacted by a board of trustees, as in Twin Rivers, supra, 192 N.J. at 349.

The Declaration of Covenants and Restrictions more specifically provides with respect to signs in Article X, ¶ (vii), that "[n]o signs... shall be erected or installed in or upon any Building, the Common Facilities or any part thereof without the prior written consent of the Board." (Emphasis added.) The Rules and Regulations attached to the By-Laws of the Association further provide in ¶ 13 as follows: "No signs of any kind will be placed in or on windows, doors, terraces, facades or other exterior surfaces of the buildings or Common Facilities except as provided in the Declaration of Covenants and Restrictions."

Additional aesthetic concerns are addressed by the Declaration of Covenants and Restrictions, which provide that unit owners are not permitted to "paint or otherwise decorate or change the appearance of any portion of the exterior of the Building or any parking areas without the prior written consent of the Board, [which] shall include, but not be limited to installation of storm doors or storm windows." Additionally, "[n]o clothes poles, lines or clothes trees shall be installed or maintained, nor shall any laundry or other thing be hung out to dry outside of any unit or elsewhere in the Development."

Indeed, "clothes, sheets, blankets, laundry of any kind or other articles [may not] be hung or displayed on the outside of windows or placed on the outside window sills, walls, railings, balconies or decks of any Building, or in any parking areas." Finally, no firewood can be stored in parking spaces and areas, stairways and landings, or in or on any deck appurtenant to a unit.

The aesthetic purpose of these restrictions is reinforced by the By-Laws, Article XI of which permits the Board to establish a Covenants Committee in order to assure that the Development shall always be maintained in a manner:

(a) providing for visual harmony and soundness of repair;

(b) avoiding activities deleterious to the aesthetic or property values of the Development;

(c) furthering the comfort of the Unit Owners, their guests, invitees and lessees; and

(d) promoting the general welfare and safety of the Development. [(Emphasis added.)]

Article XI further specifies, "The Covenants Committee shall regulate the external design, appearance, use and maintenance of the Common Facilities in accordance with the standards and guidelines contained in the Declaration of Covenants and Restrictions or these By-Laws or otherwise adopted by the Board." To achieve that end, the Covenants Committee has the power to issue cease and desist orders and to provide interpretations of the governing documents.

It is clear that these restrictions were intended to directly benefit each individual unit owner by preserving the development's "unique architectural design," because the Declaration of Covenants and Restrictions provides that the failure to comply with the Covenants and Restrictions, By-Laws, and Rules and Regulations "shall be grounds for commencement of an action for the recovery of damages, or for injunctive relief, or both, by... the Association, or any Unit Owner." (Emphasis added.) Thus, each unit owner is the intended beneficiary of all other unit owners' agreement to the various and sundry restrictions placed upon their "conduct both on the private housing association's property and on the homeowners' properties," the same "additional complication" present in Twin Rivers, supra, 192 N.J. at 365. "However, '[i]t is the extent of the restriction, and the circumstances of the restriction that are critical, not the identity of the party restricting free speech.'" Ibid. (quoting Coalition, supra, 138 N.J. at 369).

The Twin Rivers Court examined and applied the three prongs of Schmid and the general balancing of expressional rights and private property interests of Coalition to the covenants and restrictions of the common-interest community before it. Id. at 364-68. As the majority recognizes, the use of the properties in Mazdabrook Commons is purely residential. There are no privately owned businesses within its borders, and unit owners are prohibited from conducting any business in their units that is not permitted by local ordinance. Parsippany provides the schools, police and fire departments, the municipal court, first aid squad, and roadway maintenance within Mazdabrook Commons. Thus, "the nature, purposes, and primary use [of plaintiff's and the unit owners' properties are] for private purposes and do[] not favor a finding [under the first prong of Schmid] that the Association's rules and regulations violated [defendant's] constitutional rights." Id. at 366.

As to the second Schmid prong, plaintiff has not expressly or impliedly invited the public to use the common facilities. Although Mazdabrook Commons is not a gated community and its roads are publicly owned and accessible to the public, the common facilities are for the exclusive use of its residents and their invited guests. "[T]he mere fact that owners may sell or rent property to members of the public who are invited to come into [Mazdabrook Commons] and inspect such property hardly implicates a public invitation." Ibid. Thus, "the limited nature of the public's invitation to use the property does not favor a finding that the Association's rules and regulations violated [defendant's] constitutional rights." Ibid. It is the third Schmid prong that requires more extensive analysis.

As the Court in Twin Rivers explained,

The third Schmid factor concerns the purpose of the expressional activity in relation to both the private and public use of the property. This part of the test requires that we examine "the compatibility of the free speech sought to be exercised with the uses of the property." Essentially, we must look to the fairness of the restrictions imposed by the Association in relation to plaintiffs' free speech rights. [Id. at 366-67 (quoting Coalition, supra, 138 N.J. at 361).]

Unlike Twin Rivers, defendant's expressional activity was not "aimed at affecting the manner in which [the development] is managed," id. at 367, although it was political in nature, because the purpose of defendant's sign was to inform residents of Mazdabrook Commons that he was running for elected office in Parsippany.

The relationship between plaintiff and the other 193 unit owners, on the one hand, and defendant, on the other hand, "is a contractual one, formalized in reasonable covenants that appear in all deeds." Ibid. Mazdabrook Commons "is not a private forum that invites the public on its property to either facilitate academic discourse [as in Schmid] or to encourage public commerce [as in Coalition]." Ibid. Rather, Mazdabrook Commons "is a private, residential community whose residents have contractually agreed to abide by the common rules and regulations of the Association." Ibid. Like Twin Rivers, "[t]he mutual benefit and reciprocal nature of those rules and regulations, and their enforcement, is essential to the fundamental nature of the communal living arrangement that [Mazdabrook Commons] residents enjoy." Ibid. As a result, I would conclude that the third Schmid factor "does not weigh in favor of finding that the Association's rules and regulations violated [defendant's] constitutional rights." Ibid.

I recognize that the prohibition on signs applies to defendant's property as well as that of the Association. Certainly, defendant "not only is 'protected under due process standards from untoward interference with or confiscatory restrictions upon [his property's] reasonable use,' but also our constitution affirmatively grants the homeowner free speech and assembly rights that may be exercised on that property." Ibid. (quoting Schmid, supra, 84 N.J. at 561). I also recognize that, unlike Twin Rivers, here there is a blanket prohibition on all but for-sale signs. I do not consider the sale of one's home to be commercial, although of course a broker's for-sale sign certainly is "commercial speech," as the majority has found, although by the broker rather than the unit owner. However, I am not persuaded that State v. DeAngelo, 197 N.J. 478 (2009) (considering the constitutionality of a content-based ordinance in a municipal context), is particularly helpful in resolving the issue before us.

The sign restriction is a servitude in the form of a burden that runs with the land, Restatement, supra, at § 1.1(1)(c), not a municipal ordinance. The servitude was properly created because "the owner of the property to be burdened... convey[ed] a lot or unit in a general-plan development or common-interest community subject to a recorded declaration of servitudes for the development or community." Id. at § 2.1(1)(b). Such a servitude is valid "unless it is illegal or unconstitutional [in] that [it] unreasonably burdens a fundamental constitutional right." Id. at § 3.1(2). Thus, the issue before us is whether the prohibition on posting all but for-sale signs without the permission of the Board "unreasonably burdens" defendant's freedom of speech. I do not believe that it does.

The Public Offering, Declaration of Covenants and Restrictions, By-Laws, and Rules and Regulations have no other restrictions on free speech, except for the prohibition on loudspeakers. Plaintiff keeps a complete list of all its members and their unit numbers. The list is open to inspection by unit owners during regular business hours upon giving plaintiff forty-eight-hours notice of a requested inspection. Thus, defendant had the means at his disposal to mail information about his candidacy, or any other topic for that matter, directly to unit owners in Mazdabrook Commons. He was also free to stand at the entrance to the development and hand out leaflets. He could go door to door to speak with voters in each unit. He could attend meetings of the Association and advance his candidacy by speaking with other attendees. Finally, and most tellingly, defendant could have sought permission from the Board to place the sign in his window until after the election. Because political speech is so well protected, the Board may well have granted defendant's request. Thus, plaintiff "permits expressional activities to take place on [defendant's] property but with some minor restrictions." Twin Rivers, supra, 192 N.J. at 367. Unlike DeAngelo, supra, 197 N.J. at 491, defendant has "a readily available alternative" form of speech. As a result, I do not consider the limitation on signs "an 'untoward interference with' or a 'confiscatory restriction' on the reasonable use by [defendant] on [his] property to implicate due process standards." Twin Rivers, supra, 192 N.J. at 367-68.

Turning to the balancing of expressional rights and privacy interests under Coalition, I would "not interfere lightly with private property rights." Coalition, supra, 138 N.J. at 371. Here, the prohibition on signs is contained in the recorded Declaration of Covenants and Restrictions, By-Laws, and Rules and Regulations--it was not simply a restriction adopted by the Board of Trustees, as in Twin Rivers, supra, at 350-51. The restriction on signs and the right to sue to enforce it are included in the bundle of rights, restrictions, encumbrances, and easements contained in the deed to defendant's unit.*fn7 Thus, defendant and all other unit owners expressly agreed that they would not violate the prohibition on signs and each owner was empowered to enforce that restriction.

Individuals are permitted to waive their constitutional rights. This frequently occurs in the context of criminal proceedings. See, e.g., State v. Grenci, 197 N.J. 604, 615 (2009) ("right to be present at one's criminal trial, like other constitutional rights, can be waived"); State v. Thomas, 187 N.J. 119, 132-33 (2006) (a defendant can waive his constitutional grand jury protections); State v. Fortin, 178 N.J. 540, 608-12 (2004) (a defendant can waive constitutional protection of Ex Post Facto Clause). But, it also occurs in a civil context. See, e.g., LaManna v. Proformance Ins. Co., 184 N.J. 214, 228 (2005) ("parties to a civil trial may waive their constitutional right to at least a five-sixths verdict and agree to accept a smaller percentage verdict"); Mt. Hope Dev. Assocs. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141, 147 (1998) (parties to civil action may waive constitutional right to appeal); Bocchiero v. Carrino, 108 N.J.L. 176, 183 (E. & A. 1931) (parties may waive constitutional right to jury trial); Van Duren v. Rzasa-Ormes, 394 N.J. Super. 254, 263-64 (App. Div. 2007) (parties invoking arbitration to settle a dispute waive some constitutional rights), aff'd, 195 N.J. 230 (2008); Porter & Ripa Assocs., Inc. v. 200 Madison Ave. Real Estate Group, L.P., 159 N.J. Super. 317, 321 (Ch. Div. 1978) ("constitutional right to due process by way of notice is subject to waiver"), aff'd, 167 N.J. Super. 48 (App. Div. 1979). Indeed, there is a "general rule permitting waiver of constitutional rights." Mt. Hope, supra, 154 N.J. at 147 (citations omitted).

Thus, I would conclude under Coalition that defendant has waived his free-speech right to post signs in his windows and would further conclude that "[t]he outcome of the balancing of the expressional rights and the privacy interests is obvious." Twin Rivers, supra, 192 N.J. at 368. The limitation on signs is no more than a minor restriction on defendant's expressional activities that is not unreasonable or oppressive. Ibid. It preserves the unique architectural design of the development for the benefit of all unit owners--no constitutional right was infringed here. Ibid. I would "conclude that in balancing [defendant's] expressional rights against the Association's [and the other unit owners'] private property interest, the [governing documents and] the Association's policies do not violate the free speech... clause[] of the New Jersey Constitution." Ibid. As in Twin Rivers, defendant has other means of expression. Ibid. Therefore, I would conclude that the sign restriction, which the Board may waive on a case-by-case basis, is reasonable as to time, place, and manner. In any particular case, if the Board does not waive the sign restriction, unit owners may invoke the business judgment rule, id. at 369, and traditional principles of property law, id. at 370, in an action against the Board. As a result, I would affirm the judgment rejecting defendant's free-speech claim.


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