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Villas at Poplar Brook Condominium Association, Inc. v. Ustun

A-4204-07T1 (N.J. Super. App. Div. 2009) (Unpublished)

CONDOMINIUMS; ATTORNEY’S FEES — Although a lower court clearly has the authority to require payment of reasonable counsel fees with respect to condominium association collection matters, it does not have to do so if imposing those fees on a unit owner would be inequitable and inappropriate under the circumstances of the case.

A condominium association sued a unit owner when the owner failed to pay the association’s legal fees related to the collection of an assessment charged to the owner. The original assessment was made to recoup the costs the association expended to repair water damage to the owner’s unit. The owner paid the assessment, but disputed the legal fees. As a result, he stopped paying his monthly maintenance fees. After he paid the assessment, he had a positive balance on his account. Prior to that time, the owner had always paid his monthly maintenance fees and other assessments in a timely manner. The association filed a foreclosure complaint.

The lower court dismissed the foreclosure action, finding that the owner had a bill posted on his account in March 2005, and by April 2005 he cleared up that balance. It agreed with the owner that while he should be responsible for late fees as a result of his subsequent non-payment of the maintenance fees (which he paid), he should not be responsible for legal fees. The association appealed.

The Appellate Division affirmed, rejecting the association’s contention that because the legal fees were incurred over a six month period, the association could not have charged the owner for those legal fees earlier because they had not been invoiced by the law firm up to that date. The Court held that it was not so much the time of the presentation of the invoice but, rather, it was the perceived inequity of imposing counsel fees upon a unit owner whose account was not only current, but “in the black” at the time the legal fees were asserted. It also rejected the association’s contention that the lower court erred as a matter of law by not awarding counsel fees to it. The association claimed that the applicable statute authorized it to collect legal fees if the association’s Master Deed or bylaws gave it authority to do so. It noted that the lower court clearly understood that it had authority to require payment of reasonable counsel fees, but that it would be inequitable and inappropriate to require such payment under the circumstances of this case. The Court regarded that determination as an exercise of sound judicial discretion. It also held that the New Jersey Supreme Court has noted that “fee determinations by trial courts will be disturbed only in the rarest of occasions, and then only because of a clear abuse of discretion.” It concluded that: (a) the owner maintained a positive credit balance even after the initial legal fees were deducted; (b) the parties’ reactions to the ensuing dispute over counsel fees spun out of control; and (c) the lower court was correct when it found that it was inappropriate to allow counsel fees for an issue which essentially had been generated by the association.

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