JERRY ALLOCO VS. OCEAN BEACH AND BAY CLUB (C-000015-14, OCEAN COUNTY AND STATEWIDE)

CourtNew Jersey Superior Court Appellate Division
DecidedAugust 22, 2018
DocketA-0922-16T3
StatusPublished

This text of JERRY ALLOCO VS. OCEAN BEACH AND BAY CLUB (C-000015-14, OCEAN COUNTY AND STATEWIDE) (JERRY ALLOCO VS. OCEAN BEACH AND BAY CLUB (C-000015-14, OCEAN COUNTY AND STATEWIDE)) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
JERRY ALLOCO VS. OCEAN BEACH AND BAY CLUB (C-000015-14, OCEAN COUNTY AND STATEWIDE), (N.J. Ct. App. 2018).

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-0922-16T3

JERRY ALLOCO, EDWARD SHALVEY and JOHN O'GRADY,

Plaintiffs-Appellants, APPROVED FOR PUBLICATION v. August 22, 2018 OCEAN BEACH AND BAY CLUB, a New Jersey Corporation, APPELLATE DIVISION

Defendant-Respondent,

and

OCEAN BEACH PEARL, LLC, a New Jersey Limited Liability Company,

Defendant. _____________________________________

Argued January 30, 2018 – Decided August 22, 2018

Before Judges Yannotti, Leone, and Mawla.

On appeal from Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. C-000015-14.

Louis M. Flora argued the cause for appellants (Giblin & Gannaio, attorneys; Louis M. Flora and Brian T. Giblin, on the briefs).

Gregg S. Sodini argued the cause for respondent (Cutolo Barros, LLC, and Law Office of Steven J. Tegrar, attorneys; Gregg S. Sodini and Andrew Stein, of counsel and on the brief; Patricia M. Greeley, on the brief). The opinion of the court was delivered by

LEONE, J.A.D.

Plaintiffs Jerry Alloco, Edward Shalvey, and John O'Grady

challenge the trial court's September 16, 2016 order denying their

motion for summary judgment and granting summary judgment to

defendant Ocean Beach and Bay Club ("Club"). We affirm.

I.

The following facts are undisputed. The Club, a New Jersey

not-for-profit corporation, was established to operate a community

consisting of approximately 986 lots individually owned by

members, with common areas including a clubhouse. The Club leases

a bay beach and an ocean beach from the original developer,

defendant Ocean Beach Pearl, LLC. Plaintiffs own homes in the

Club's community.

The Club was established in the 1950s, with the filing of a

map and deed by the Ocean Beach Corporation. The Club's

certificate of incorporation gave the Club the broad mandate "[t]o

promote and protect the general welfare and property rights of the

property owner members in the use and enjoyment of their property

at" the Club. The deed established a community scheme through

building restrictions which, among other things, provided that

"no[] more than one residence nor more than [a] one-story one-

family dwelling shall be allowed on any lot," and imposed setback

2 A-0922-16T3 requirements. The deed allowed the Club to adopt rules and

regulations concerning the construction and modification of homes

in the community.

The deed and bylaws require every resident to be a member of

the Club. The members elect the Board of Trustees (Board). The

Board manages the Club and is empowered to establish and change

the rules and the regulations as needed.

Superstorm Sandy damaged or destroyed many homes in the Club's

community, including plaintiffs' homes. As a result, in October

2014, March 2015, and November 2015, the Board enacted rule changes

and clarified and expanded building requirements connected with

flood zone compliance. Although these post-Sandy rule changes

allowed members to elevate their homes, Alloco was denied

permission to elevate his home even higher to allow the space

beneath the elevated structure to be used for parking.

In January 2014, plaintiffs filed a complaint in the trial

court. The second amended complaint contains four counts. In

count one, plaintiffs sought a declaratory judgment regarding the

obligation to reconstruct damaged properties. In count two,

plaintiffs sought declaratory and injunctive relief regarding the

enforcement and scope of the Club's restrictions and regulations,

and the approvals of applications for development.

3 A-0922-16T3 Count three alleged that the Board violated the business

judgment rule by adopting and enforcing its rules and regulations.

In particular, plaintiffs alleged the "Club acted incompetently

in devising regulations limiting the height of structures." They

also claimed the Club engaged in self-dealing and breached its

fiduciary duties to the members. Count four alleged the Club

failed to comply with the Club's certificate of incorporation,

violated public policy, and violated the New Jersey Nonprofit

Corporation Act, N.J.S.A. 15A:1-1 to 16-2. Plaintiffs sought

declaratory and injunctive relief, counsel fees, and costs.

The claims in count one and most of the claims in count two

were resolved.1 Plaintiffs filed a motion for summary judgment

with respect to counts three and four of their complaint. The

Club filed a cross-motion for summary judgment.

On September 16, 2016, the trial court, citing the business

judgment rule, denied plaintiffs' motion for summary judgment,

granted the Club's motion for summary judgment, and dismissed the

complaint. Plaintiffs appeal.

1 The parties agreed any unresolved claims in count two could be addressed in consideration of the claims asserted in counts three and four.

4 A-0922-16T3 II.

Summary judgment must be granted if "the pleadings,

depositions, answers to interrogatories and admissions on file,

together with affidavits, if any, show that there is no genuine

issue as to any material fact challenged and that the moving party

is entitled to a judgment or order as a matter of law." R. 4:46-

2(c). The court must "consider whether the competent evidential

materials presented, when viewed in the light most favorable to

the non-moving party, are sufficient to permit a rational

factfinder to resolve the alleged disputed issue in favor of the

non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142

N.J. 520, 540 (1995). "[T]he court must accept as true all the

evidence which supports the position of the party defending against

the motion and must accord [that party] the benefit of all

legitimate inferences which can be deduced therefrom[.]" Id. at

535 (citation omitted).

Appellate courts "review the trial court's grant of summary

judgment de novo under the same standard as the trial court."

Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of

Pittsburgh, 224 N.J. 189, 199 (2016). We must hew to that standard

of review.

5 A-0922-16T3 III.

Plaintiffs argue that the decisions of the Board should not

be protected from judicial scrutiny by the business judgment rule.

We disagree.

The business judgment rule applies to "common interest

communities" such as the Club. Comm. for a Better Twin Rivers v.

Twin Rivers Homeowners' Ass'n, 192 N.J. 344, 369 (2007). Courts

have "uniformly invoked the business judgment rule in cases

involving homeowners' associations," because "a homeowners'

association's governing body has 'a fiduciary relationship to the

unit owners, comparable to the obligation that a board of directors

of a corporation owes to its stockholders.'" Ibid. (quoting Siller

v. Hartz Mountain Assocs., 93 N.J. 370, 382 (1983)). Similarly,

"decisions made by a condominium association board should be

reviewed by a court using the same business judgment rule which

governs the decisions made by other types of corporate directors."

Walker v. Briarwood Condo Ass'n, 274 N.J. Super. 422, 426 (App.

Div. 1994).

As our Supreme Court has reiterated:

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JERRY ALLOCO VS. OCEAN BEACH AND BAY CLUB (C-000015-14, OCEAN COUNTY AND STATEWIDE), Counsel Stack Legal Research, https://law.counselstack.com/opinion/jerry-alloco-vs-ocean-beach-and-bay-club-c-000015-14-ocean-county-and-njsuperctappdiv-2018.