State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: June 11, 2015 519976 

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BLUFF POINT TOWNHOUSE OWNERS

ASSOCIATION, INC.,

Respondent,

v MEMORANDUM AND ORDER

LISA KAPSOKEFALOS et al.,

Appellants.

________________________________

Calendar Date: April 29, 2015

Before: Peters, P.J., Garry, Rose and Devine, JJ.

__________

The Clements Firm, Glens Falls (Thomas G. Clements of

counsel), for appellants.

Niles Piller & Bracy, PLLC, Plattsburgh (John M. Crotty of

counsel), for respondent.

__________

Rose, J.

Appeal from an order of the Supreme Court (Muller, J.),

entered January 7, 2014 in Clinton County, which, among other

things, granted plaintiff's motion for summary judgment.

Plaintiff is a not-for-profit corporation formed in 1988 to

provide services for the benefit of the residents of a townhouse

development on Lake Champlain in the Town of Plattsburgh, Clinton

County. The owners of the townhouses pay membership dues to

plaintiff to cover the cost of these services. Although

defendants have owned one of the townhouses since 1999, they

refused to pay any membership dues after personal disputes arose

between them and their neighbors. Plaintiff obtained an order

requiring defendants to pay the monthly dues and we affirmed,
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concluding that, upon their purchase of the townhouse, defendants

had entered into an implied contract to pay membership dues to

plaintiff as a condition of ownership (see Perkins v

Kapsokefalos, 57 AD3d 1189, 1191-1192 [2008], lv denied 12 NY3d

705 [2009]). Plaintiff thereafter obtained a judgment against

defendants for $7,101 reflecting dues owed and interest from

October 2002 through July 2007. 

Although defendants paid the judgment, they nonetheless

continued to refuse to pay membership dues and, in 2012,

plaintiff commenced this action seeking to recover the

outstanding amounts due since August 2007. In their

counterclaim, defendants alleged, among other things, that

plaintiff had not properly authorized the fees imposed and the

services provided were not reasonable or necessary. Plaintiff

moved for summary judgment granting their claim for payment of

the outstanding dues and dismissing the counterclaims. 

Defendants cross-moved seeking to dismiss the complaint or, in

the alternative, compel discovery. Supreme Court granted

plaintiff's motion and dismissed the cross motion in its

entirety. Defendants appeal. 

The issue of whether defendants are obligated to pay

pursuant to an implied contract was previously litigated in the

prior action and decided in plaintiff's favor (see Perkins v

Kapsokefalos, 57 AD3d at 1192). The doctrine of res judicata

thus precludes defendants from claiming that clear and convincing

proof of an implied contract is again required in order for them

to be obligated to pay plaintiff's monthly dues (see Matter of

Hunter, 4 NY3d 260, 269-270 [2005]; O'Brien v City of Syracuse,

54 NY2d 353, 357 [1981]; Tovar v Tesoros Prop. Mgt., LLC, 119

AD3d 1127, 1128-1129 [2014]). Moreover, to the extent that

defendants challenge the authority of plaintiff to impose those

dues as never having been established, such a claim could have

been raised in the prior action and, therefore, it is likewise

barred by res judicata (see O'Brien v City of Syracuse, 54 NY2d

at 357-358; Tovar v Tesoros Prop. Mgt., LLC, 119 AD3d at 1129;

Matter of Feldman v Planning Bd. of the Town of Rochester, 99

AD3d 1161, 1162-1163 [2012]). 
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Notwithstanding defendants' request that we impose a new

standard for determining whether they should be required to pay

for services that have been undertaken by plaintiff since the

prior judgment and that they do not deem to be reasonably

necessary for their use of their property, the Court of Appeals

has made clear that an implied contract for a community

homeowners' association "includes the obligation to pay a

proportionate share of the full cost of maintaining . . .

facilities and services, not merely the reasonable value of those

actually used by any particular resident" (Seaview Assn. of Fire

Is. v Williams, 69 NY2d 987, 989 [1987]; see Nevel v Shelter Is.

Hgts. Prop. Owners Corp., 204 AD2d 700, 701 [1994]). We review

plaintiff's action in undertaking such expenditures under the

business judgment rule, which, in the absence of "claims of

fraud, self-dealing, unconscionability, or other misconduct," is

limited to an inquiry of "whether the action was authorized and

whether it was taken in good faith and in furtherance of the

legitimate interests of the corporation" (Matter of St. Denis v

Queensbury Baybridge Homeowners Assn., Inc., 100 AD3d 1326, 1327

n 2 [2012] [internal quotation marks and citation omitted]; see

Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530,

533 [1990]). 

Here, we are not persuaded by defendants' contentions that

the actions taken by plaintiff since the prior judgment are

either unauthorized or unnecessary. Plaintiff supported its

motion for summary judgment with an affidavit from its president

and a copy of its bylaws. The president described the services

provided and affirmed that the monthly fees were properly voted

upon and approved, and that plaintiff's business and meetings

were conducted in conformance with its bylaws. Copies of

plaintiff's financial reports were also submitted in support of

the motion. Inasmuch as plaintiff supported its motion for

summary judgment with proof that the fees were "authorized, made

in good faith, and in furtherance of [plaintiff's] legitimate

interests" (Levine v Greene, 57 AD3d 627, 628 [2008]), defendants

were required to come forward with proof in admissible form

"sufficient to require a trial of material questions of fact"

(Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). We

agree with Supreme Court that defendants failed in this regard as

they offered only "mere conclusions, expressions of hope or
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unsubstantiated allegations" (id.; see Forest Hills Gardens Corp.

v Kamparosyan, 63 AD3d 879, 879 [2009]; Forest Hills Garden Corp.

v West Side Tennis Club, 23 AD3d 338, 340 [2005]). Nor have

defendants established that discovery should have been ordered,

as they merely speculated that discovery would yield relevant

evidence (see Jacobs v Mazzei, 112 AD3d 1115, 1118 [2013], lv

dismissed 22 NY3d 1172 [2014]; Saratoga Assoc. Landscape

Architects, Architects, Engrs. & Planners, P.C. v Lauter Dev.

Group, 77 AD3d 1219, 1222 [2010]). 

The parties agree, however, that Supreme Court improperly

calculated the interest owed on the outstanding dues when it

issued the judgment.1 CPLR 5001 (b) provides that, where

"damages were incurred at various times, interest shall be

computed upon each item from the date it was incurred or upon all

of the damages from a single reasonable intermediate date." 

Adopting an intermediate date of October 1, 2010 and applying the

statutory interest rate of 9% results in interest of $531 per

year, or $1.45479 per day. Based on the award of $5,900 and the

1,193 days between October 1, 2010 and January 6, 2014, the date

of the final order, the resulting interest is $1,735.56 and the

judgment should be modified accordingly. Defendants' remaining

contentions have been considered and determined to be without

merit. 

Peters, P.J., Garry and Devine, JJ., concur.

1 Defendants appealed from Supreme Court's final order, but

not the subsequently entered final judgment. Inasmuch as the

final judgment does not materially deviate from the final order,

we deem the appeal as also being taken from the judgment (see

CPLR 5520 [c]; Miller v Moore, 68 AD3d 1325, 1326 n [2009]). 
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ORDERED that the order is affirmed, with costs.

ORDERED that the judgment is modified, on the law, by

computing interest on the damages awarded from October 1, 2010 in

accordance with this Court's decision, and, as so modified,

affirmed.

ENTER:

Robert D. Mayberger

Clerk of the Court