Case Law Summaries

D’Amato v. Ocean Club Condominium

• Opinion Date: June 28, 2000
• Real Property Law
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CONDOMINIUMS; LIABILITY—A clause in a master deed relieving condominium association trustees from personal liability for their association’s failure to repair or maintain common elements was not read to exculpate the association as well.

A broken pipe in a high-rise condominium building caused extensive damage to a unit and its contents. The pipe represented a common element in the building. New Jersey statute and the master deed make it the responsibility of the association to maintain, repair or replace all common elements within the unit. The master deed, however, contained a provision within the section imposing such a duty on the association, reading as follows, “[n]othing in this paragraph 10 contained shall be construed so as to impose a personal liability upon the Association or any of the members of the Board of Trustees, or officers, of the Association for the maintenance, repair or replacement of any Unit or Common Element or give rise to a cause of action against them. The Board of Trustees, as such, shall not be liable for damages of any kind except for willful misconduct or bad faith.” The lower court concluded that the quoted language exonerated the association from liability for the damage caused by the broken pipe. The Appellate Division concluded that the clause in question did not clearly and unambiguously provide such exoneration and that the master deed was, at best, ambiguous. Thus, it held that the association bore responsibility for common elements and that the unit owner’s complaint should not have been dismissed. The critical item, as seen by the Court, was whether the “intentions of the parties [were] expressed in clear and unambiguous language.” Here, the Court focused on the phrase, “personal liability.” It found use of the term “personal” to be “puzzling.” Its view was that the provision might make sense as applied to a claim against individual board members or individual officers, and, as such, would be consistent with the provisions requiring the “association” to repair common elements. Read together, this would mean that the association had maintenance and repair obligations, although a failure to comply with those regulations would not impose “personal liability” on any board member or officer. Particularly where such individuals were serving in a voluntary capacity, “such an exculpatory provision, as to them, would make perfectly good sense and would not be inconsistent” with the association’s repair obligations because the individuals would probably be serving in a voluntary capacity. In addition, the Court found reference to the “Board of Trustees, as such” to be confusing unless it were read to be referring to the members of the Board of Trustees in their individual capacities. A unit owner argued that the exculpatory clause was contrary to New Jersey statute that made the association responsible for the repair of common elements. In support of that contention, reference was made to N.J.S. 46:8B-7, which says that “[a]ny agreement contrary to the provisions of this act shall be void.” The Court stated that this “argument has merit and cannot be dismissed out-of-hand,” but it did not find it necessary to reach such a “drastic” conclusion, given its finding that the clause in this master deed fell short of exonerating the association.

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