On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-113-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges A.A. Rodriguez, Grall and LeWinn.
Plaintiff Robert Dublirer is a shareholder of defendant Linwood Avenue Owners, Inc., and a resident of one of the 483 co-op units in a building known as Mediterranean Towers South in Fort Lee (Med South). A shareholder's proprietary lease provides for governance by a board of directors, in conformity with the lease, by-laws and "reasonable" house rules appended to the lease, which may be amended by the board as it deems advisable. The individual defendants have been elected and served as members of the board at various times since 2002, when Dublirer became a shareholder and leased his unit. *fn1
In 2008, Dublirer filed this action seeking declaratory and injunctive relief; declaring invalid and enjoining enforcement of a house rule prohibiting solicitation and dissemination of written information in Med South; and enjoining the board's system for collection of proxy votes by an employee rather than the board's secretary as provided in the by-laws. With their answer, defendants filed a counterclaim seeking counsel fees pursuant to Section 28 of the proprietary lease.
On cross-motions for summary judgment, the judge rejected Dublirer's challenges to the house rule restricting solicitation and dissemination of written material under the Federal and State Constitutions and the business judgment rule; determined that the board's practice for collection of proxy votes was not consistent with the by-laws and directed the board to either amend or conform with the pertinent by-law "or otherwise bring practice and by-law into alignment"; and denied defendant's request for counsel fees on the ground of ambiguity in the lease provision defining the scope of that entitlement.
Dublirer appeals, challenging the judge's determination on both of his claims and the judge's rulings on discovery. Defendants cross-appeal, contending that the judge's denial of its request for fees rests on a misinterpretation of the proprietary lease. We reverse the judgment upholding the house rule; affirm the judgment on proxy votes; and affirm the order denying counsel fees for reasons different than those expressed by the trial judge.*fn2
The facts are drawn from the evidence submitted on the cross-motions for summary judgment. As noted above, Med South has house rules that are referenced in and appended to a proprietary lease. Paragraph thirteen of the lease provides that breach of a house rule "shall be a default under [the] lease." Section 8 of the by-laws authorizes the board to make and amend "reasonable" house rules as it deems advisable.
The rule entitled "Soliciting/Notices" provides:
There shall be no solicitation or distribution of any written materials anywhere upon the premises without authorization of the Board of Directors. Without prior consent of the Board of Directors, no sign or notice shall be placed upon the bulletin board, [in] the mail room, in the halls, lobby, elevators or on the doorways. A bulletin board for residents['] use is provided [near] the rear door.*fn3
The term "solicitation" is not defined, and this rule applies to all solicitation and distribution of written materials throughout the premises. The board has applied it when warning agents of businesses delivering take-out food, who distribute advertisements to residents other than the customer, that they will be barred from the building if they repeat the conduct.
Board members assert that the purposes of this rule are protection of the residents' quiet enjoyment of their apartments and reduction of clutter that papers stuck underneath doors and in hallways would create. Nevertheless, the board has, de facto as far as we can discern from this record, granted itself an exemption. At least once and sometimes as many as three times per year, the board distributes shareholder updates by leaving the literature at or under apartment doors in an effort to avoid payment of postage. Some of those "updates" address topics related to election of board members. For example, one stated: "Can you imagine the disaster that would befall upon Med South and all of us if this group of selfish people ever got control of the Med South Board?" The author of that update described the dissidents as "chronic complainers." Another of the board's advisories warned, "a very small[,] vociferous group of mean[-] spirited residents/shareholders has apparently commenced a campaign of spreading what can only politely be described as misinformation and untruths about our co-op corporation, Board and Management."
The board grants other exceptions to the house rule on distribution of written materials. A Co-op Conversion Committee, which was established by the board to study a proposal to convert the building to a condominium complex, has communicated with the shareholders by leaving information at their doors. In addition, monthly maintenance invoices and notices about ...