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Whitehall Manor Condominium Association v. Burch

Superior Court of New Jersey, Appellate Division

November 8, 2013

VIVIAN BURCH, Defendant-Respondent, and SYLVESTER C. BURCH, Defendant.


Submitted September 30, 2013

On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Somerset County, Docket No. DC-6066-11.

Daniel T. Kopec, attorney for appellant.

Respondent has not filed a brief.

Before Judges Yannotti and Leone.


Plaintiff Whitehall Manor Condominium Association appeals from an amended final judgment by default entered against defendant Vivian Burch on October 4, 2012.[1] For the reasons that follow, we reverse and remand the matter to the trial court for further proceedings.

Plaintiff is a non-profit condominium association that was established pursuant to the New Jersey Condominium Act, N.J.S.A. 46:8B-1 to -38, and is governed pursuant to its master deed filed with the Somerset County Clerk and its by-laws. Defendant is the owner of a unit in the condominium and, therefore, she is a member of the association.

Plaintiff's by-laws authorize its board of directors to impose annual common expense assessments upon its members, with partial payments due monthly. If a member fails to make any required monthly payment, the board may accelerate the payments due for the remainder of the year. The board is additionally authorized to impose special and emergency assessments upon members, and charge late fees when payments are not made when required. The board is also authorized to recover its attorney's fees and certain costs incurred to recover monies due from members.

On August 22, 2011, plaintiff filed a complaint in the Special Civil Part against defendants. Plaintiff claimed defendants owed it unpaid common expense assessments, along with late fees, attorney's fees and other charges. The complaint was served upon defendant but she did not file an answer. On July 17, 2012, plaintiff filed a motion for a final judgment by default against defendant.[2]

In support of the motion, plaintiff submitted an affidavit from Tracey Starace, plaintiff's accounts receivable manager. According to Starace, defendant owed plaintiff $10, 325 in common expense assessments, $100 in dryer vent fines, $25 for a satellite-dish violation, $11.50 for certified letters for the violations, $868 for emergency cash flow assessments, $227.80 for special snow assessments, and $950 in late fees. Starace said defendant also was obligated to pay plaintiff $6, 336.32 in attorney's fees.

Starace stated that as of June 2008, defendant had paid $1, 943.68, leaving a balance due of $16, 899.94. Starace also noted that a judgment had previously been entered against defendant in the amount of $4, 881.35, and she was entitled to a credit in this amount, resulting in a balance due of $12, 018.59. Starace asked the court to enter a judgment against defendant in that amount.

Attached to Starace's affidavit were copies of the relevant sections of plaintiff's master deed and by-laws, information regarding plaintiff's policies and the specific assessments and charges involved, and copies of plaintiff's records pertaining to the amounts that defendant owed. Plaintiff also provided an affidavit of services by its attorney, Daniel T. Kopec, with copies of his billing records.

On August 21, 2012, the trial court entered a judgment against defendant in the amount of $13, 360. The order stated that this amount consisted of the delinquent assessments totaling $10, 325, plus attorney's fees of $175, with no explanation regarding the balance. The order noted that plaintiff's motion for entry of the judgment had been unopposed.

By letter dated October 1, 2012, Kopec informed the court that it had entered a judgment for $13, 360, but plaintiff had only sought $12, 018.59. Kopec said this amount consisted of unpaid common expense assessments, late fees and other charges totaling $12, 507.30, and counsel fees in the amount of $6, 336.32, less payments made of $1, 943.68 and credit for the prior judgment of $4, 881.35. Kopec asked the court to enter an amended judgment for plaintiff in the amount of $12, 018.59.

The court entered an amended judgment against defendant in the amount of $6, 001.66. According to the order, this amount included $4, 402.12 in unpaid assessments and charges, and $1, 599.54 in attorney's fees and costs. The court did not award plaintiff any late fees. The judgment stated, "The late fee of 14% and 10.3% of the maintenance fee constitutes an unenforceable penalty unenforceable in a court of law and the application for a default judgment may not include the amount of a prior judgment entered between the parties."

Plaintiff appeals and argues that the trial court erred by: (1)reducing the amount of the claimed assessments and charges; (2) refusing to award the late fees sought; (3) reducing its claim for attorney's fees; and (4) concluding that plaintiff failed to give defendant credit for the judgment entered against her in 2009.

Here, the trial court entered a judgment awarding the plaintiff $4, 402.12 for the unpaid assessments and charges. The court did not, however, explain how it arrived at that number. As we noted previously, in its motion, plaintiff sought $10, 325 in common expense assessments, $100 in dryer vent fines, $25 for a satellite dish violation, $11.50 for certified letters, $868 for an emergency cash flow assessment, and $227.80 for a special snow assessment. The total of these assessments and charges is $11, 557.30.

The trial court noted on the order that the amount of the judgment could not include the amount reflected in a prior judgment. However, in its motion, plaintiff gave defendant credit for the prior judgment of $4, 881.35, and deducted that amount from the total amount sought. If the amount of the prior judgment is deducted from the $11, 557.30 sought for the assessments and charges, and if defendant is given credit for payments of $1, 943.68, the result is $4, 732.27, not the $4, 402.12 awarded by the court.

Moreover, as we stated previously, the court refused to award plaintiff any late fees. The Condominium Act provides that a condominium association may impose common expense assessments and other charges upon its members, together with interest and late fees. N.J.S.A. 46:8B-15(e). Plaintiff's by-laws authorize the board to impose late fees of not more than $25 for each delinquent payment. Here, plaintiff charged defendant late fees totaling $950 for delinquent payments, apparently going back several years.

On the amended final judgment, the court wrote that the late fees of 14% and 10.3% of the assessments constituted an unenforceable penalty. The court failed to explain how it arrived at those percentages.[3] The court also did not undertake the appropriate analysis for determining whether the late fees were enforceable.

A stipulated damage clause, such as one that imposes a late fee, will be enforced if determined to be reasonable under the totality of circumstances. Metlife Capital Fin. Corp. v. Wash. Ave. Assocs., L.P., 159 N.J. 484, 495 (1999). In assessing the reasonableness of such a fee, the court should consider "the difficulty in assessing damages, intention of the parties, the actual damages sustained, and the bargaining power of the parties, " among other factors. Ibid. (citing Wasserman's Inc. v. Middletown, 137 N.J. 238, 250-54 (1994)). The court may also consider "what is permitted by statute and what constitutes common practice in a competitive industry." Id. at 497.

Here, the court apparently determined that the late fees were unenforceable because they were too high. However, the court did not consider the totality of the circumstances, including the provision of the Condominium Act, which permits late fees to be assessed by a condominium association for delinquent payments. N.J.S.A. 46:8B-15(e). We note, however, that plaintiff presented no information establishing that the late fees sought were within normal industry standards, or reasonably related to the administrative costs arising from delinquent payments.

Plaintiff additionally argues that the trial court erred by reducing the amount of counsel fees it sought. The Condominium Act permits a condominium association to seek reasonable attorney's fees incurred to collect monies due, if permitted by the association's master deed or by-laws. Ibid. Plaintiff's bylaws provide as follows:

In the event the [b]oard shall effectuate collection of said [a]ssessments or charges by resort to counsel and/or filing of a lien, the Board may add to the aforesaid [a]ssessments or charges a sum or sums of twenty (20) percent of the gross amount due as counsel fees, plus the reasonable costs for preparation, filing and discharge of the lien, in addition to such other costs as may be allowable by law.

Here, plaintiff sought $6, 336.32 in attorney's fees, and the court awarded $1, 599.54. The court did not explain how it arrived at that amount. According to plaintiff's motion, the gross amount claimed to be due, excluding counsel fees, was $5, 682.27. Twenty percent of that amount is $1, 136.45. It is unclear from plaintiff's submission whether it also incurred costs for preparation filing and discharge of a lien or whether it was entitled to other costs "as may be allowable by law"

Finally plaintiff argues that the trial court erred by finding that it sought to include the amount of the judgment entered against defendant in 2009 in the final default judgment As we noted previously plaintiff's motion indicated that defendant was entitled to credit for the amount of that judgment and it reduced that amount from the total claimed

Accordingly we reverse the amended final judgment entered on October 4 2012 and remand the matter to the trial court for reconsideration of plaintiff's motion On remand the court should determine the amount of the delinquent assessments and charges and reduce that amount by the 2009 judgment and the payments defendant has made.

In addition the court should determine whether the late fees imposed here are reasonable and enforceable in light of the totality of circumstances The court should also reconsider the amount of counsel fees to be awarded The court must make appropriate findings of fact and conclusions of law on all of these issues R 1:7-4(a)

Reversed and remanded to the trial court for further proceedings in conformity with this opinion We do not retain jurisdiction.

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