Onderdonk v. Presbyterian Homes of New Jersey
| Decision Date | 02 February 1981 |
| Citation | 425 A.2d 1057,85 N.J. 171 |
| Parties | Paul T. ONDERDONK, Ralph S. Alexander, Helen S. Crites, Bertha M. Frick, Florence Hay and Marie H. Lund, individually and as representatives and members of the Executive Committee of Meadow Lakes Residents Forum, an unincorporated association, and as members of a class consisting of Meadow Lakes residents, past, present and future; William Lichtenfels, Laura B. Smith, Gertrude P. Young, Mary L. Freeman, J. Arthur Planteroth, Jane Smith, Margaret S. Smith and Frank E. Stevens, individually and as members of Meadow Lakes Residents Forum, an unincorporated association, and as members of a class consisting of Meadow Lakes residents, past, present and future, Plaintiffs-Appellants, v. The PRESBYTERIAN HOMES OF NEW JERSEY, a Corporation of the State of New Jersey, Not for Profit, Ellis G. Willard, George A. Vorsheim, Mrs. Robert T. Mandle, Clarence L. Lecrone, John S. Rogge, L. Rodney Boaz, C. Lincoln McGee, FredApplebohm,Robert C. Thomson, Maurice E. Farr, G. Hale Bucher, Harry T. Tiedack, George A.Slemmer, C. Dickey Dyer, Joseph H. Brady, H. Ross Pinkney, David L. Crawford,John E. Slater, Jr., John A. Vermeulen, Fred Benson, Mrs. John K. Highberger,Mrs. Guy H.Haskins, Mrs. George Herbert, Frank Nolt, Arthur Curtiss, as past or presentmembers of the Board of Trustees of said Corporation, and Edward Hess,Defendants-Respondents. |
| Court | New Jersey Supreme Court |
Garrett M. Heher, Princeton, for defendants-respondents (Smith, Stratton, Wise & Heher, Princeton, attorneys; Garrett M. Heher and Alexander P. Waugh, Jr., Princeton, on the briefs).
Chester Apy, Red Bank, submitted a brief on behalf of amici curiae American Ass'n of Homes for the Aging and the New Jersey Ass'n of Non-Profit Homes for the Aging, Inc. (Abramoff, Apy, Fox & Zaro, Red Bank, attorneys).
The opinion of the Court was delivered by
This suit involves the legal relationship of the parties to what is commonly referred to as a "life-care" contract. Defendant Presbyterian Homes of New Jersey (Homes), a non-profit corporation organized under Title 15 of the New Jersey Statutes,1 operates a retirement community known as Meadow Lakes Village (Meadow Lakes) located in Hightstown, New Jersey. Plaintiffs, fourteen residents of Meadow Lakes, instituted this action individually and as representatives of a class consisting of the inhabitants of the community. The court determined that the class action could be maintained. R. 4:32-2. Of the 376 residents, 121 elected to be excluded.
The primary thrust of the complaint was the demand that Homes submit adequate periodic accountings to the residents. Plaintiffs also alleged that some improper charges had been included in calculating the monthly fee to be paid by the residents. In addition, plaintiff Paul Onderdonk sought to enjoin his eviction from Meadow Lakes and to recover damages under the Landlord Tenant Anti-Reprisal Act, N.J.S.A. 2A:42-10.10 et seq., asserting that Homes attempted to oust him in retaliation for his activities on behalf of a residents' organization. Homes counterclaimed asserting that certain of the plaintiffs had maliciously interfered with its business operations.
The trial court ruled that plaintiffs were not entitled to any accountings or to any relief with respect to misallocation of Plaintiffs appealed and defendant cross-appealed. The Appellate Division reversed the award of $2500 damages to Onderdonk and affirmed the judgment in all other respects. 171 N.J.Super. 529, 401 A.2d 252 (App.Div.1979). We granted plaintiffs' petition for certification. 82 N.J. 303, 412 A.2d 808 (1980). For reasons stated herein the judgment below is affirmed in part and reversed in part.
funds. However, it held that plaintiff Onderdonk came within the umbrella of the Landlord Tenant Anti-Reprisal Act and awarded him $2500 in compensatory damages. It dismissed defendant's counterclaim.
The underlying facts are substantially undisputed. The Presbyterian Synod of New Jersey, a part of the Presbyterian Church, founded Homes in 1915. The power to elect, remove and replace members of the Homes Board of Trustees was vested solely in the Synod. Anticipating dissolution of the Synod in 1974, the trustees amended Homes' certificate of incorporation to provide that the trustees elect their successors. After this amendment, Homes had no further obligation to account to or report to the Presbyterian Church.
Homes constructed and operates a retirement community known as Meadow Lakes which consists of 329 attached one- and two-bedroom apartments, central dining and recreational facilities, and a 90-bed medical infirmary and nursing unit. The cost of construction was financed by a $10 million mortgage loan from Travelers Insurance Company and a.$1.6 million loan from the Homes' Endowment Fund. The first occupants were admitted in 1965.
Homes advertised and distributed brochures to attract possible residents. The literature, besides noting that the minimum age requirement was 60, stressed that Meadow Lakes offered a "distinguished total living retirement community with complete medical/hospital care." It noted that residents would "enjoy the companionship of interested and interesting people"; that Arrangements to live in Meadow Lakes were formalized in a Residence Agreement (the Agreement). The Agreement required payment of a one-time capital fee2 and a monthly rate. The monthly charges could be increased from time to time as "determined to be necessary" by Homes. Homes was obligated under the contract to provide living accommodations, meals and a range of services including utilities, linens, towels, medical, nursing and hospital care, general maintenance and parking. The monthly charge remained the same irrespective of a resident's transfer into the nursing facility or the extent of the medical and nursing care received.
"(a)bove all, the complete medical and hospital care provided at Meadow Lakes itself assures you of security from the threat of prolonged illness"; that medical care including the full cost of surgery and prolonged illness was covered by the monthly maintenance fee so that "you have absolute protection against the often unpredictable expenses of illness and you live here at Meadow Lakes enjoying real peace of mind"; that three meals a day are provided; that each apartment is air conditioned; that all units are joined by air-conditioned and heated enclosed walkways; that wall to wall carpeting and drapes are provided; that common facilities include an auditorium, lounges, library, hobby rooms, a putting green, and a private lake stocked with bass and pickerel. The advertisements reflected the fact that Meadow Lakes was sponsored by the Presbyterian Synod. The literature also stated that the prices of the units ranged from $12,000 to $35,500 plus a monthly service charge of $205 to $245 per person. "The lifetime leasing fee ... assures you of a permanent home."
The Agreement could be terminated, with or without cause, by either the resident or Homes upon 120 days written notice. Termination within 50 months would result in a refund, the All residents were members of Meadow Lakes Forum (Forum), an unincorporated association, which sponsored movies, lectures and other forms of entertainment. The Forum was also interested in any other matters which affected the welfare of the residents. Plaintiff Paul Onderdonk, a retired professional engineer, has been president of the Forum since 1969. He spearheaded the Forum's search for financial information, a search which was substantially motivated by large increases in the monthly rates.
amount of which would be determined by prorating the fee at 2% per month. A minimum of 50% of the capital fee would be refunded if Homes terminated the contract without cause. However, if the resident died, there would be no refund.
From 1965 to 1974, the monthly charges increased more than threefold. When Paul Onderdonk and his wife executed their Agreement on November 29, 1965, their monthly rate was $430. By the time of trial in 1977, the Onderdonks' monthly charge was $1335. When an 18% increase occurred in 1966, the Executive Director of Homes wrote that there would "never be a time when there will be an 18% increase in rates." Yet increases in a 10-month period in 1973 and 1974 exceeded 43%. These increases engendered a sense of insecurity among some residents.
The residents were concerned that part of these monthly rate increases was due to subsidization of activities unrelated to Meadow Lakes. Homes operated a number of residential facilities in addition to Meadow Lakes. When Meadow Lakes was opened in 1965, Homes owned retirement facilities in Belvidere and Haddonfield. Between 1968 and 1974, Homes planned, purchased and developed low-income retirement communities in Asbury Park and Atlantic City, establishing separate nonprofit corporations for each. Homes also purchased, through a separate nonprofit corporation, a 115-acre tract of land in Washington Township.
The separate corporate entities had substantially the same trustees as Homes and the Homes executive offices and staff Plaintiffs also were concerned that they were subsidizing nonresidents who use the Meadow Lakes medical center. Though first call for use of the Meadow Lakes medical center was reserved for the care and treatment of residents, it was also available to and was used by nonresidents. Plaintiffs feared that, from 1971 to 1974, the rate schedule for use of the medical facilities by nonresidents did not accurately reflect their proportionate share of the expenses because it did not include a fair share of the first mortgage debt service due the mortgagee, Travelers Insurance Company. The Travelers Insurance Company mortgage was secured by the entire Meadow Lakes property and buildings, including the...
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