“Housing-Related” Disputes Between Condominium Unit Owners and A Condominium Association Must Go to ADR

Bell Tower Condominium Ass’n v. Haffert, 423 N.J. Super. 507 (App. Div. 2012).  A condominium association imposed a special assessment on each of its five unit owners.  The purpose of the assessment was repairs.  Defendants, who owned the largest unit, were assessed more than the other unit owners.  Defendants refused to pay the assessment, citing both procedural grounds and substantive complaints about how the association Board had managed the condominium.  The association sued to compel payment and succeeded in the Law Division.  On appeal, however, the Appellate Divison, speaking through Judge Baxter, reversed and held that the assessment dispute should have been handled in an alternative dispute resolution forum, not in court.

The basis for that decision was a provision of the Condominium Act, N.J.S.A. 46:8B-14(k), which requires that “[a]n association shall provide a fair and efficient procedure for the resolution of housing-related disputes between individual unit owners and the association, and between unit owners, which shall be readily available as as an alternative to litigation.”  The question then became whether the assessment issue was a “housing-related dispute.”  If it were, the association conceded, the matter belonged in ADR.

Judge Baxter concluded that the dispute was a “housing-related dispute.”  The statute did not define that term, but the panel held that the term was broad, though encompassing “only disputes that arise from the condominium relationship.”  The assessment issue qualified as such a dispute.  “Underlying defendants’ refusal to pay the special assessment is their contention that the Board breached the fiduciary obligations imposed upon it by N.J.S.A. 46:8B-14(j),” which requires boards to act in a manner that furthers the health, safety and general welfare of residents of the condominium community.  Since defendants’ position was premised on a provision of the Condominium Act itself, the dispute was “housing-related.”  

Judge Baxter gave some examples of non-housing related disputes.  These included “an auto accident in the condominium parking lot, a commercial dispute arising from a failed business venture between two unit owners, … or any other dispute that does not arise directly from the parties’ condominium relationship.”  In contrast, “the strong public policy of this State favoring arbitration, the broad and unconditional language chosen by the Legislature when it used the term ‘housing-related disputes,’ and the present dispute’s origins in the disagreement over the special assessment” called for the conclusion that arbitration or some other form of alternative dispute resolution was required. 

The panel did not decide whether a counterclaim that defendants had filed also belonged in arbitration.  Judge Baxter observed, in a footnote, that the pendency of that counterclaim ordinarily would have made the appeal interlocutory, but that under GMAC v. Pittella, 205 N.J. 572 (2011), the appeal was considered final because it involved whether arbitration or other ADR was to occur.