Holiday City Homeowners Corp. v. Kerico
| Decision Date | 07 September 2021 |
| Docket Number | A-5542-18[1],A-0199-19 |
| Parties | HOLIDAY CITY HOMEOWNERS CORPORATION, Plaintiff-Respondent, v. SCOTT KERICO, Defendant-Appellant, and TOWNSHIP OF BERKELEY, Defendant-Respondent. HOLIDAY CITY HOMEOWNERS CORPORATION, Plaintiff-Appellant, v. SCOTT KERICO and TOWNSHIP OF BERKELEY, Defendants-Respondents. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 13, 2020
On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. C-000074-18.
Lauren M. Dooley argued the cause for appellant Scott Kerico in A-5542-18 and respondent Scott Kerico in A-0199-19 (Novins York & Jacobus, PA, attorneys; Lauren M. Dooley, on the briefs).
Paul Leodori argued the cause for respondent Holiday City Homeowners Corporation in A-5542-18 and appellant Holiday City Homeowners Corporation in A-0199-19 (Paul Leodori attorney; Amy Huber, on the briefs).
Michael S. Nagurka argued the cause for respondent Township of Berkeley (Rothstein, Mandell, Strohm, Halm & Cipriani attorneys, join in the briefs of respondent Holiday City Homeowners Corporation in A-5542-18).
Barry S. Goodman argued the cause for amicus curiae New Jersey Realtors in A-5542-18 (Greenbaum, Rowe, Smith & Davis, LLP, attorneys; Barry S. Goodman, of counsel and on the brief; Cameryn J. Hinton, on the brief).
Before Judges Hoffman, Suter, and Smith.
In A-5542-18, defendant Scott Kerico appeals the August 1, 2019 order awarding a judgment against him for unpaid homeowner assessments and unpaid capital contribution maintenance fees following the denial of his motion for summary judgment. At the time, he owned two properties in the Holiday City development in Berkeley Township. In A-0199-19, plaintiff Holiday City Homeowners Corporation (Holiday City) appeals the portion of the August 1, 2019 order that denied its request for attorney's fees and costs.
We affirm the August 1, 2019 order denying Holiday City's request for attorney's fees. We otherwise dismiss these appeals as moot.
We glean the facts from the parties' summary judgment motions. Holiday City is a non-profit age-restricted community organized under N.J.S.A. 15A:1-1(a). Defendant is a real estate broker who was fifty-three years old in November 2017, when he purchased two properties in Holiday City at a sheriff's sale. He purchased the properties to rehabilitate and resell them to persons who are fifty-five or older. Defendant did not intend to reside in either property. At oral argument in these appeals, counsel for Holiday City advised us that both properties have been sold.
Holiday City is governed by a Board of Directors (Board) pursuant to a Declaration of Covenants and Restrictions (Declaration) and other governing documents. Article X of the Declaration provides that "[n]o [owner] as defined in this [Declaration] shall be less than 55 years of age[, ]" although there are exceptions. For married couples, only one owner is required to be fifty-five. If an owner dies and his or her heirs do not meet the age restriction, the heirs can own the property but not occupy it until they reach fifty-five. Section four of the Declaration requires unit owners to advise the Board in advance if the property is to be sold, providing evidence the buyer will meet the age requirements. Property owners are required to pay an annual assessment as fixed by the Board. There are sanctions for non-payment and if a dispute is litigated.
Holiday City advised defendant in December 2017, and again in February 2018, that there were unpaid assessments for the properties.[2] Because defendant was not fifty-five years old and could not own property in Holiday City, it offered him a consent agreement that would allow him to sell the properties within a reasonable time to persons who met the age requirements. This agreement was a "special accommodation" to defendant to permit him to rehabilitate the properties and then sell them. He was required to pay a $5000 security deposit and all unpaid assessments. The parties were not able to reach an agreement on the terms.
On April 6, 2018, Holiday City filed a two-count complaint in the Chancery Division against defendant and the Township of Berkeley (Berkeley). Count One requested a declaratory judgment that defendant violated Holiday City's governing documents because he was the record owner of two properties within the development and was not fifty-five years old. It sought a declaration that various statutes, a local ordinance, and federal laws and regulations were violated. The complaint alleged Holiday City[3] does not allow any person under fifty-five to purchase a home within its community, and that this restriction was approved in 1977 by the Department of Community Affairs and by Berkeley Township. The age restriction was implemented "as a way to demonstrate [the] community's intent to operate as housing for persons fifty-five years of age or older in accordance with 24 C.F.R. §100.306."
Count Two sought specific performance requiring defendant to transfer the properties to persons aged fifty-five or older "as soon as practicable." If not, Holiday City requested its appointment as attorney-in-fact to transfer title. Holiday City requested an award of attorney's fees and costs.
Defendant filed an answer and counterclaim seeking a declaration that his ownership was not in violation of the law, and that plaintiff was not entitled to attorney's fees. Defendant alleged in his counterclaim that he purchased, fully renovated and listed both properties for sale. He claimed he "never intend[ed] on occupying the [p]roperties." Holiday City filed an answer to the counterclaim. Berkeley filed an answer to the complaint.
Holiday City and defendant both filed motions for summary judgment. Following oral argument on March 29, 2019, the trial court granted summary judgment to Holiday City, concluding that "the governing documents require ownership to be over [fifty-five], that there's nothing in the Rules that . requires that the plaintiff open ownership up to those people that are under [fifty-five] . . . ." The order provided defendant did not have standing because he owed maintenance fees and a capital contribution fee. It found defendant's ownership was in violation of the Declaration, the Retirement Community Full Disclosure Act, N.J.S.A. 45:22A-2, the Municipal Land Use Law, N.J.S.A. 40:55D-1 to -163, Berkeley Township Ordinance § 35-101.1, 42 U.S.C. § 3601, and 4 C.F.R. § 100.306 because he purchased the property when he was not yet fifty-five. The order required defendant to transfer title of the property to someone fifty-five or older as soon as practicable. In a separate order on the same date, the trial court denied defendant's motion for summary judgment.
Shortly after, Holiday City filed a motion seeking attorney's fees and costs, and a judgment for unpaid maintenance assessments and capital contribution fees. The motion, which defendant opposed, was supported by a certification from Holiday City's counsel requesting $20, 587.37 in attorney's fees and costs for the litigation.
On August 1, 2019, the trial court entered a judgment against defendant for $700.34 in assessments and $500 in administrative fees relative to the two properties. However, it denied Holiday City's application for more than $20, 000 in attorney's fees, finding Holiday City "never accepted or understood the defendant to be a shareholder." The court found defendant's arguments were not frivolous because certain regulations "created a substantial issue that has been undecided by the courts up until this point." Holiday City also did not serve the notice required by Rule 1:4-8 for frivolous claims.
Defendant appealed the August 1, 2019 order under A-5542-18. Holiday City appealed the portion of the August 1, 2019 order that denied its request for attorney's fees and costs under A-0199-19.
In A-5542-18, defendant raises these issues:
In A-0199-19, Holiday City raises these issues:
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