On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2469-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 28, 2011 -
Before Judges Grall and Skillman.
Plaintiff Schoolhouse Commons at Union Avenue Condominium Association is the condominium association for a fifteen-unit condominium located in a converted former school building in Pennsauken. Defendant CCTS Tax Liens is the owner of one of the units in the Schoolhouse Commons condominium building. Third-party defendant Mattison Raymond Group contracted with Schoolhouse Commons to manage the common elements of the condominium.
Schoolhouse Commons brought an action against CCTS in the Special Civil Part for the collection of unpaid condominium assessments. CCTS filed a counterclaim against Schoolhouse Commons and a third-party complaint against Mattison Raymond, which alleged that their negligence in the maintenance of a part of the common elements -- specifically, a pipe located above CCTS's unit -- had caused a water leak that damaged the unit, resulting in a loss of income from the unit. Based on this allegation, CCTS sought an order requiring Schoolhouse Commons and Mattison Raymond to repair the leaky pipe and also money damages. The trial court subsequently granted CCTS's motion to transfer the action from the Special Civil Part to the Law Division.
During the pendency of the action, Schoolhouse Commons repaired the leaky pipe and the damage to CCTS's unit caused by the leak.*fn1 As a result, CCTS's claim for an order requiring those repairs to be made was mooted and CCTS's counterclaim and third-party complaint were limited to claims for money damages.
Schoolhouse Commons filed a motion for summary judgment with respect to both its claim for the unpaid assessments upon CCTS and CCTS's counterclaim, which the trial court granted. The court found that the total amount of unpaid assessments owed by CCTS was $3,646.76 and also awarded Schoolhouse Commons $1528 for its attorneys' fees and costs. The court dismissed CCTS's counterclaim on the ground that it was barred by a provision in the condominium association by-laws requiring condominium unit owners to obtain insurance for any damage to their units and precluding any subrogation action for such damage. Although Mattison Raymond had not moved for summary judgment, the court also dismissed the third-party complaint after CCTS acknowledged that the court's rationale for dismissal of its counterclaim would also apply to its claim against Mattison Raymond. CCTS filed a motion for reconsideration of the dismissal of its counterclaim and third-party complaint, which the court denied.
CCTS's appeal is directed solely at the trial court's conclusion that its claims against Schoolhouse Commons and Mattison Raymond for the damage to its unit are barred by the provision of the condominium association by-laws requiring unit owners to obtain property damage insurance and precluding subrogation claims.
The respective rights and responsibilities of unit owners and condominium associations are governed by the Condominium Act, N.J.S.A. 46:8B-1 to -38, the master deed creating the condominium, and the condominium association's by-laws. See Walker v. Briarwood Condo Ass'n, 274 N.J. Super. 422, 426 (App. Div. 1994). The determination whether CCTS may maintain an action against Schoolhouse Commons and Mattison for the damage to its unit caused by their alleged negligent maintenance of the common elements turns on the sections of the Schoolhouse Commons by-laws regarding the parties' obligations to obtain insurance and precluding subrogation actions.
Section 16.01 of the by-laws obligates Schoolhouse Commons to maintain insurance on the "Condominium Property," which includes not only the common elements but also the individual condominium owners' units. This section provides in part:
The Association at all times shall maintain in effect the policies of insurance on the Condominium Property as set forth in this Article. The policies shall be for the benefit and protection of the Association, the Unit Owners, and any mortgagee of a Unit. . . .
This section requires the coverage under the policy to include "water damage" to the unit but not to the unit owner's personal property. Section 16.02(g) of the by-laws provides that the policy obtained by Schoolhouse Commons shall include a waiver of subrogation rights clause:
The [required] policies shall include . . . [a] waiver of the insurer's right of subrogation against the Association, its officers, trustees, and ...