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Menin v. Khawam

A-3950-02T1 (N.J. Super. App. Div. 2004) (Unpublished)

CONDOMINIUMS; LIMITED COMMON ELEMENTS—A balcony accessible only though a condominium unit’s ordinary window is not a limited common element for that unit where another unit has access through a door.

Two adjacent units in a high-rise residential condominium building shared a 120 square foot balcony. The owner of the first unit could only access this balcony through her bedroom window. In addition, the balcony was partitioned so that the owners of a unit could not access the portion of the balcony that was only accessible from its neighbor’s unit. Sixty-eight square feet of the balcony was assigned to the first unit; 52 square feet was assigned to the second. The first unit also had a second balcony with normal accessibility. That balcony was 120 square foot in area. According to the master deed, the first unit was provided with 120 square feet of balcony space. Thus, the partitioned balcony outside of the first owner’s bedroom window would have been above and beyond the specified120 square feet of balcony space. The second unit had only one balcony, which was the partitioned balcony.

Problems began when the permanent partition on the joint balcony was removed during a construction project and was not reinstalled. The woman who owned the first unit discovered that the occupants of the adjacent (second) unit were using the entire joint balcony outside her bedroom window. Once notified, the condominium association agreed to reinstall the partition, but refused to amend the master deed to include the 68 square feet of balcony outside of the first owner’s bedroom window as a limited common element. Instead, it designated it as a general common element.

In response, the first unit owner sought to have the master deed reformed as previously requested, and filed a negligence claim against the association for its failure to reinstall the partition. The lower court denied the owner’s motion and held that the portion of the partitioned balcony outside the first unit’s bedroom window was a general common element.

On appeal, the Appellate Division pointed out that the Condominium Act defines a “limited common element” to be a common element set aside for the use of one or more specified units to the exclusion of others. The court held that the 52 square foot joint balcony area was intended for the use of the second unit. Furthermore, it held that the owner of the first unit could not make a similar claim about the remaining 68 square feet, because she, the first unit owner, had failed to establish any entitlement to that part of the balcony outside of her bedroom window. She already had the 120 square feet of balcony to which she was entitled and that space was accessible through a door. There was no language in the statute that would make it reasonable to conceive that the other balcony, whose only access was through a window, was a limited common element.

The lower court also had held that the association was negligent. The association appealed, claiming that the business judgment rule applied to actions of condominium boards. It urged that, pursuant to this doctrine, its delay in reinstalling the partition due to the imminent litigation was justified. The business judgment rule states that to determine whether a condominium association has breached a fiduciary duty, a court must decide whether the association’s conduct was authorized by statute or by its by-laws, and if so, whether the conduct was fraudulent, self-dealing or unconscionable. The rule applies, however, only where an association is authorized to make the decision, not when its decisions exceed the limits of the by-laws.

On appeal, the Court held that the lower court should not have granted the owner’s motion for summary judgment. It held that to determine whether the business judgment rule applied required further findings of fact. If applicable, the rule would have shielded the association from negligence based on decisions made by the trustees, provided that such actions were not precluded by the New Jersey Condominium Act or by the association’s master deed. The lower court made no findings as to the association’s authority to delay reinstalling the partitions. The Court also found that the lower court never ruled on the source of the association’s duty to reinstall the partition, especially where the balcony was only accessible to the complaining owner through a window. Therefore, the Appellate Division reversed the liability judgment against the association for negligence and remanded the matter for further development of the record on that issue as well.

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