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Fairview Heights Condominium Association, Inc v. R.L. Investors

May 23, 2011


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-519-08.

Per curiam.


Argued April 12, 2011

Before Judges Payne, Baxter and Hayden.

This appeal concerns a condominium that was completed in 1988, and litigation that was not instituted against the builders, and the builder-owned management company, until twenty years later concerning water seepage in the building.

Plaintiff Fairview Heights Condominium Association, Inc. ("the Association" or "the Board") appeals from orders granting summary judgment to defendant R.L. Investors (RLI), the builders of the condominium, based upon the ten-year statute of repose, N.J.S.A. 2A:14-1.1; and to the builder-owned management company, 440 Associates, and to defendants, Vincent, Russell and Rosario Luppino, based upon lack of duty and lack of proximate cause. Defendants have cross-appealed, arguing that the judge erred by denying their motion for leave to file an amended third-party complaint.

We reverse the dismissal of plaintiff's complaint against RLI, because the judge neglected to address the statute of repose requirement that the alleged construction defect rendered the building "unsafe," and therefore remand for further findings on that issue. If, on remand, the judge determines that the statute of repose is inapplicable, he shall proceed to consider whether RLI is entitled to summary judgment on any other ground.

As to 440 Associates and the Luppino defendants, we affirm the judge's determination that plaintiff failed to raise a genuine issue of material fact on the question of whether any breach of duty by defendants was a proximate cause of plaintiff's damages.

On the cross-appeal, we affirm, finding no abuse of discretion in the judge's refusal to grant such a late amendment to defendant's third-party complaint.


In 1987, RLI broke ground on a twenty-one unit condominium project in Fairview Heights (the building), which was completed a year later. RLI served as the sponsor of the condominium in accordance with the Public Offering Statement, which specified that RLI would retain control over the condominium association until sixty days after seventy-five percent of the units had been sold. At that point, the sponsors' control of the condominium association would terminate. Initially, the condominium Board consisted of the three principals of RLI, defendants Vincent, Russell and Rosario Luppino (the Luppinos).

In 1992, unit owner Susan Miller was elected to the Board, followed in 2001 by Diana Babat. In 2001, after RLI had sold seventy-five percent of the condominium units, Miller became president of the Association and Babat, Vice-President. Defendant Rosario Luppino remained on the Board until 2006. Miller resigned as president of the condominium Board in 2004, at which time Babat replaced her.

440 Associates, which was owned by the three Luppinos, managed the building from 1988 until resigning at the end of 2001. At that time, the Board hired Gelfand, Inc. to manage the building. Gelfand was replaced on August 1, 2002 by H.W. Young Associates. The Association ultimately was dissatisfied with Young, as well, largely for reasons concerning the cleanliness of the building. On August 1, 2004, the Board again contracted with 440 Associates to manage the building, although 440 Associates resigned again in 2006. At the time plaintiff filed the complaint that is the subject of this appeal, the building was self-managed.

At some point, the exact date not being clear from the record, condominium owners began to notice serious water seepage. Defendants claimed they knew nothing of any leaks during 440 Associates' first tenure managing the building from 1988 through 2001. Plaintiff disputes that contention, contending that defendants were made aware of problems with the Exterior Insulation and Finish System (EIFS)*fn1 much earlier, both from a 1989 report prepared by an employee of the EIFS manufacturer, and from a unit owner, who stated that in 1999 she notified defendants of a leak in her unit. According to defendant Rosario Luppino, he did not learn of the leaks in the building until some time between 2001 and 2004, and he noted that the management company, either Gelfand or Young, had hired a contractor to re-caulk the windows, but that leakage around the windows had continued nonetheless.

Miller stated in her deposition that "the only issue[] with the building itself up through 2001" was "nothing [other] than the normal wear and tear," which she described as the building needing painting because it was "dirty." When asked whether she "recall[ed] any issues up to 2001 involving any water intrusion," Miller answered "no." Babat explained that at notime during her rental of a unit between 1994 and 2001 was she aware of any leaks or problems with water, and when she and her husband purchased their unit in 2001, "there were minor things" they wanted repaired, such as new carpeting, but there were no structural problems with the unit. Babat also reported that at the June 2002 Board meeting, although there were some minor cosmetic repairs discussed, there "were no other problems with the building" at that time.

Although one resident, Janice Lohwin, complained to Babat while Babat was a Board member that her unit "had a really bad water intrusion," Lohwin's complaint could not have been made prior to 2001, as Babat did not become a member of the Board until then. The record does not specify what was done to remedy the problem; Lohwin eventually moved out.

As for general repairs, when asked at his deposition whether he had been required to arrange for "repairs to the outside of the building" during 440 Associates's first tenure managing the building, from 1988 to 2001, Rosario Luppino said there was no need to do so "because there was nothing wrong with the building and nothing was done." Nor did it engage anyone to inspect the building at that time because, according to him, there was no cause to do so. It was only between 2001 and 2004, when 440 Associates was not managing the building, that he first became aware of leaks in the building, although the leaks appeared to result from poor caulking around the windows, and not from problems with the EIFS. He noted that in response to the leaks, either Young or Gelfand had hired a company to re-caulk the windows.

In his deposition, Russell Luppino confirmed the statements of his father, Rosario Luppino, that there were no problems with the building until after 2001. Russell stated that RLI never hired anyone to perform repairs on the outside of the building. He also stated that during the period of 1988-2001, 440 Associates was not aware of any leaks in the building, was unaware that EIFS had been installed improperly, had not contacted anyone at a company known as Sto Seal of New Jersey concerning the EIFS, and did not know whether anyone had met with a Sto Seal representative on site.

As some point in 2004, numerous unit owners began to experience leaks. By late 2005, 440 Associates called a meeting of all unit owners after a period of heavy rain revealed "many different leaks throughout the building." After soliciting bids to repair the problem, 440 Associates convened another meeting with unit owners in May 2006 to discuss the repair options, all of which were very expensive. None of the proposals was accepted because the unit owners could not agree that any would be effective. As of ...

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