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Cannata v. Marlton Village Homeowners Association

A-3950-08T1 (N.J. Super. App. Div. 2010) (Unpublished)

HOMEOWNERS ASSOCIATIONS; DISCRIMINATION — Where there is no evidence that a discrimination law suit acted as a catalyst prompting a homeowners association to take action to correct an unlawful practice, but rather the ultimate dispute settlement was simply the product of good business judgment, there will no award of attorneys fees under the New Jersey Law Against Discrimination because awards of such fees are discretionary.

A group of property owners sued their association as well as certain board members and management personnel. They alleged violation of the New Jersey Law Against Discrimination (LAD) by way of a resolution adopted by the association banning the use of scooters, skateboards, and skates in their residential community. In response, the association agreed to adopt a superseding resolution modifying these restrictions. Once the resolution was adopted as part of a full settlement between the parties, the homeowners moved for counsel fees. The lower court denied the motion, finding that the LAD was an improper basis for an award for legal costs. The lower court also believed that equity required finding in favor of the association since once the association had settled the dispute, it rescinded the resolution at issue.

On appeal, the Appellate Division affirmed, holding that an award of counsel fees under the LAD is discretionary, and upon this record the lower court did not abuse its discretion in denying such an award. The Court noted that the homeowners’ claim, if tried, would not have necessarily resulted in their favor. The homeowners had argued that the resolution violated the LAD because it discriminated against children, and therefore implicated the LAD’s prohibition against familial status discrimination. According to the Court, however, the resolution did not specifically target children. This negated a claim of intentional discrimination. Though the resolution could have possibly resulted in a disparate impact discrimination against children, the Court agreed with the lower court that the original resolution did not ban the activities in all areas of the community (permitting use in the driveways or within the property lines of the individual residences), and the superseding resolution, resulting from a settlement of the parties, did not remove all area restrictions of the activities (certain common areas remained off-limits). Lastly, the Court found no evidence that the lawsuit filed acted as a catalyst that prompted the association to take action to correct an unlawful practice; rather, it had been argued that settlement was simply the product of good business judgment.

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