On appeal from Superior Court of New Jersey, Chancery Division, Ocean County, Docket Nos. C-224-08 and C-226-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano and Waugh.
These related appeals concern the Ocean Beach and Yacht Club (Club), which is the homeowners association of a beach community, also known as Ocean Beach Unit II (Ocean Beach), comprising approximately 490 homes in Ocean County.*fn1 Lot sizes range from 1500 to over 5000 square feet. All residents are required to be members of the Club, which has authority to regulate certain aspects of building construction, renovation, and maintenance in the community. The appeals focus on the extent and exercise of that authority.
We discern the following factual and procedural background from the record.
Ocean Beach was created in the late 1940s through the filing of a map and building restrictions by Ocean Beach Company (OBC), the developer. The restrictions allowed OBC and the Club to adopt rules and regulations concerning improvements, and to review and approve proposed improvements consistent with duly established standards. At that time, there was no restriction on the number of stories permitted. Eight two-story houses were subsequently constructed.
In 1964, OBC filed another map with restrictions to create additional sections in Ocean Beach. One of those areas is known as the Melody Lane Extension. In connection with the 1964 filing, the new area was specifically restricted to single-story houses. Eventually, OBC and the Club applied the single-story restriction to the entire community.
The revised rules and regulations allow the owners of existing two-story homes to rebuild or remodel, as long as they do not exceed "the minimum height required by governmental codes or their present height, whichever is greater, when measured from the finished grade level to the top of the structure." Club Rule 9D.
Timothy and Cynthia McKinney (McKinneys)*fn2 own property on Melody Lane, which is located in the Township of Toms River and, as the name suggests, is part of the Melody Lane Extension. They began construction of a house that was not consistent with the applicable restrictions as to setback, height, and number of stories. However, the Club had previously approved their proposed plans in error. The Club then sought to revoke its approval.
The McKinneys and the Club filed lawsuits against each other in January 2008. The McKinneys filed an action in the Law Division, seeking damages for violation of their membership rights. At approximately the same time, the Club filed suit in the Chancery Division, seeking an order compelling the McKinneys to comply with the applicable restrictions. The two actions were consolidated in the Chancery Division.
The consolidated action was settled in June 2008. The terms of the settlement were embodied in a stipulation of settlement. For the purposes of this appeal, the relevant provisions of the stipulation are as follows:
WHEREAS the parties all recognize and accept the validity, applicability and enforceability of the Rules and Regulations of the OBYC as they exist on this date;
WHEREAS, an Agreement has been reached . . .
1) The Plaintiffs will re-record the Deed to their home which Deed shall contain the ...