On appeal from the Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. C-0040-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Waugh, and St. John.
Plaintiffs Patricia Hayes, Larry Borowec, and Susan Berntheisel appeal the January 24, 2011 order of the General Equity Part granting summary judgment to defendants Ralph and Donna Leek (the Leeks), as well as defendants Gennaro R. Schiavo, Jr. and Brent Lilliston, as trustees of Sweetwater Haven Association, Inc. and Sweetwater Haven Association, Sweetwater Haven Association, Inc.*fn1 We affirm for reasons other than those relied upon by the trial judge, but remand for revision of the judgment consistent with this opinion.
We discern the following facts and procedural history from the record on appeal.
Each plaintiff resides in the community known as Sweetwater Haven which is located in Mullica Township. Sweetwater Haven consists primarily of thirty-four properties, each of which has access to the Mullica River via the Mullica Canal and waterways located within Sweetwater Haven. There is also a "common element," which includes the waterways, owned by Sweetwater Haven's homeowners association, the identity of which is a key issue in the appeal. Schiavo and Lilliston also reside in Sweetwater Haven. Although the Leeks own property in Sweetwater Haven, they reside on an adjacent property.
Sweetwater Haven had its origins in 1956, when Michael Tomaski purchased the land on which it is now located, as part of a larger parcel of land. He subsequently received approval for a subdivision of his property. In 1963, Tomaski obtained a riparian grant from the predecessor of the New Jersey Department of Environmental Protection (Department). The grant covered the portion of the subdivision in which the Mullica Canal meets the Mullica River. It allowed ingress and egress to what is now Sweetwater Haven's internal waterways, but only with the Department's specific permission.
In December 1963 and January 1964, Tomaski sold portions of the subdivision to John E. Leek, Jr., and Donald J.C. Leek. They formed the Sweetwater Development Corporation (SDC), which subsequently acquired title to the property.
In February 1965, SDC entered into an agreement with Mullica Township, which designated a portion of the property as Sweetwater Haven and provided for its division into lots, canals, and streets. In 1969, the Department granted the SDC the right to use Sweetwater Haven's internal waterways for ingress and egress pursuant to the riparian grant.
In 1979, Sweetwater Haven Association, Inc. (Association
I), was formed pursuant to the New Jersey Business Corporation Act (BCA), N.J.S.A. 14A:1-1 to 7-18. Shortly thereafter, SDC filed protective and restrictive covenants, which bound it, its successors and assigns, including each lot within Sweetwater Haven. The restrictions and covenants were intended to run with the land and "remain in full force and effect forever." In relevant part, the restrictions and covenants prevented construction of bulkheads without the written approval of Association I.
In 1988, Association I and SDC filed a certificate of merger, making Association I the surviving entity. According to the merger, Association I assumed all rights, liabilities, restrictions, and assets of both merged entities. The certification of merger between SDC and Association I speaks in terms of shares of stock, indicating that there were ten outstanding, while Association I's by-laws speaks in terms of members, who are the property owners in Sweetwater Haven. Under the by-laws the members elect the board of trustees and otherwise perform the function of ...