Carlyle Towers Condominium Association, Inc. v. Crossland Savings

FSB, 96-6554 (U.S. Dist. Ct. D. N.J. 1997) (Unpublished)
  • Opinion Date: August 21, 1997

CONDOMINIUMS; STANDING—A Condominium association has standing to bring a claim under the N.J. Planned Real Estate Development Full Disclosure Act (PREDFDA) for problems with the common elements. The Consumer Fraud Act is not pre-empted by PREDFDA. Officers and directors of condominium developers may have personal liability under PREDFDA.

The issue was whether a condominium association had standing to bring claims under the Planned Real Estate Development Full Disclosure Act (“PREDFDA”) or the Consumer Fraud Act (“Fraud Act”) for misrepresentation by a condominium developer. While PREDFDA provides remedies for purchasers for injury caused by developers that make untrue statements of material fact in a public offering statement, or omit material information from that statement, condominium associations are not within the defined term “purchaser”, as used in PREDFDA. Since both PREDFDA and the Fraud Act give standing to condominium associations to assert tort claims regarding the common elements as if those claims were being asserted by an individual unit owner, the association in this case argued it had standing to assert claims relating to the common area of the premises. Other issues were whether the officers and directors of a developer can be sued as individuals and whether the Fraud Act was preempted by PREDFDA.

The District Court cited cases that gave associations exclusive standing to assert claims with respect to damage to the common elements and held that both PREDFDA and the New Jersey Condominium Act explicitly give an association exclusive standing to assert any tort claim, including fraud and misrepresentation, with respect to the common elements. Although the officers and directors of the developer claimed they could not be liable in their individual capacities under PREDFDA, the Court disagreed, citing a portion of PREDFDA which imposes joint and several liability on any person who: (1) directly or indirectly controls a developer, or (2) is an officer or director of a developer. Finally, the Court followed an Appellate Division holding that the Fraud Act was not preempted by PREDFDA since both statutes specifically provide for cumulative remedies.