Court Opinion

ID: 4431027
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:51:01.49144+00
Date Added: 2024-06-11T14:51:00.392555
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-3842-16T2

PATHWAY CONDOMINIUM ASSOCIATION,
INC., a New Jersey Nonprofit
Corporation and DARDANELLE
CONDOMINIUM ASSOCIATION, INC., a
New Jersey Nonprofit Corporation,

        Plaintiffs-Appellants,

v.

OCEAN GROVE CAMP MEETING
ASSOCIATION OF THE UNITED
METHODIST CHURCH, a New Jersey
Nonprofit Corporation,

     Defendant-Respondent.
________________________________

              Argued May 24, 2018 – Decided June 28, 2018

              Before Judges Reisner, Gilson, and Mitterhoff.

              On appeal from Superior Court of New Jersey,
              Law Division, Monmouth County, Docket No.
              L-0313-17.

              James T. Hundley argued the cause for
              appellants   (Hundley  and   Bradley,  LLC,
              attorneys; James T. Hundley, of counsel and
              on the brief).

              Edward C.       Eastman argued the cause for
              respondent       (Davidson,   Eastman, Muñoz,
             Lederman & Paone PA, attorneys; Michael J.
             Fasano, on the brief).

PER CURIAM

       Plaintiffs Pathway Condominium Association, Inc. (Pathway)

and    Dardanelle      Condominium    Association,       Inc.   (Dardanelle)

(collectively, plaintiffs) appeal from a March 31, 2017 order

dismissing their complaint with prejudice.              In their complaint,

plaintiffs sought to void two ground leases for the land on which

their condominiums are located and to recover all rents paid under

the leases.      We affirm because plaintiffs' claims are time-barred

by    the   applicable   six-year    statute     of   limitations,   N.J.S.A.

2A:14-1, and their claim that condominiums cannot be held as

leasehold interests lacks merit.

                                      I.

       Ocean Grove is a locality consisting of approximately 260

acres of land in Neptune Township.         The land is owned by the Ocean

Grove Camp Meeting Association of the United Methodist Church (OG

Association).

       Pathway   and   Dardanelle    are   two   condominium    associations

located in Ocean Grove.         Pathway has twenty-two units and is

located on land that is 11,431 square feet.              Dardanelle has six

units and is located on a 0.08 acre parcel of land.

                                      2                               A-3842-16T2
     In 1870, OG Association acquired the approximate 260 acres

that constitute Ocean Grove.        Thereafter, the OG Association

subdivided the land and leased those lots.       The developers of

Pathway and Dardanelle acquired assignments of ground leases to

the land on which they planned to build the condominiums.        The

developer for Pathway was assigned the leases for the land in

2004, and thereafter it consolidated those lots in 2005 and 2006.

The lease for Dardanelle was acquired by assignment in 2006.

     On November 27, 2006, the developer of Dardanelle signed a

lease agreement with OG Association (Dardanelle Lease Agreement).

Under the Dardanelle Lease Agreement, OG Association consented to

the property's conversion to a condominium form of ownership under

the Condominium Act, N.J.S.A. 46:8B-1 to -38.   The Lease Agreement

also required each unit owner, as a sublessee, to pay an annual

land rental fee to OG Association.

     The terms of the Dardanelle Lease Agreement were thereafter

incorporated into the Master Deed for Dardanelle and its by-laws.

In November 2007, the land for Dardanelle was converted into a

condominium form of ownership when the Master Deed, dated December

1, 2006, was recorded.

     On September 1, 2010, the developer of Pathway signed a lease

agreement with OG Association (Pathway Lease Agreement).      Under

that agreement, OG Association consented to the conversion of the

                                3                           A-3842-16T2
Pathway property to a condominium form of ownership under the

Condominium Act.      The Pathway Lease Agreement also required each

unit owner, as a sublessee, to pay an annual land rental fee to

OG Association.

     The terms of the Pathway Lease Agreement were, thereafter,

incorporated into the Master Assignment of Lease for Pathway and

its by-laws.      On September 9, 2010, the land for Pathway was

converted into a condominium form of ownership when the Master

Assignment of Lease was recorded.

     Beginning in 2007, the unit owners of Dardanelle paid the

annual land rent to OG Association.        The unit owners of Pathway

have paid the annual land rent to OG Association since 2010.

     On January 24, 2017, Pathway and Dardanelle filed suit against

OG Association seeking to declare the Pathway Lease Agreement and

the Dardanelle Lease Agreement void.        Plaintiffs contended that

those lease agreements violated the Condominium Act because they

constituted leasehold interests and, under the Act, condominiums

can only be owned in fee simple. Plaintiffs also sought to recover

all rents paid to OG Association under the leases.

     In   response,    OG   Association   filed   a   motion   to   dismiss

plaintiffs' complaint for failure to state a claim under Rule

4:6-2(e).   OG Association also argued that the claims were barred

by the applicable statute of limitations.

                                    4                               A-3842-16T2
     The trial court heard oral arguments on March 31, 2017.           That

same day, the court granted the motion and entered an order

dismissing   plaintiffs'   complaint   with    prejudice.    The     court

identified two grounds for its ruling.        First, the court reasoned

that the Condominium Act allowed condominiums to be held                  as

leasehold interests.   Accordingly, the court ruled that the lease

agreements were valid. Second, the court reasoned that plaintiffs'

claims were barred by the six-year statute of limitations under

N.J.S.A. 2A:14-1.   Pathway and Dardanelle appeal from the March

31, 2017 order.

                                 II.

     On appeal, plaintiffs make two arguments. First, they contend

that the lease agreements with OG Association are contrary to the

Condominium Act and, therefore, are void under the Act.        Second,

they argue that the six-year statute of limitations does not apply

to their claims; rather, their claims are governed by either the

twenty-year statute of limitations under N.J.S.A. 2A:14-7, or the

sixteen-year statute of limitations under N.J.S.A. 2A:14-4.               We

are not persuaded by either of these arguments and, therefore, we

affirm.

     We first will address the applicable statute of limitations

and then analyze plaintiffs' arguments under the Condominium Act.

Initially, we set forth our standard of review.         Both questions

                                  5                                A-3842-16T2
presented on this appeal are questions of law, which we review de

novo.     See, e.g., Smith v. Datla, 451 N.J. Super. 82, 88 (App.

Div. 2017) (stating that "when analyzing pure questions of law

raised in a dismissal motion, such as the application of a statute

of limitations, we undertake a de novo review."); see also Cashin

v. Bello, 223 N.J. 328, 335 (2015) (stating that an appellate

court's review of statutory construction is de novo).

     We also review de novo an order dismissing a complaint for

failure    to    state   a   claim.   State   ex   rel.   Campagna   v.   Post

Integrations, Inc., 451 N.J. Super. 276, 279 (App. Div. 2017).

"When reviewing a motion to dismiss under Rule 4:6-2(e), we assume

that the allegations in the pleadings are true and afford the

pleader all reasonable inferences."           Sparroween, LLC v. Twp. of

W. Caldwell, 452 N.J. Super. 329, 339 (App. Div. 2017) (citation

omitted).       "Where, however, it is clear that the complaint states

no basis for relief and that discovery would not provide one,

dismissal of the complaint is appropriate."           Ibid. (quoting J.D.

ex. rel. Scipio-Derrick v. Davy, 415 N.J. Super. 375, 397 (App.

Div. 2010)).

     A.     The Statute of Limitations

     In counts one and three of their complaint, plaintiffs sought

to void the Pathway Lease Agreement and the Dardanelle Lease

                                      6                              A-3842-16T2
Agreement. In counts two and four of their complaint, plaintiffs

sought to recover the rents paid under the lease agreements.

     The statute of limitations applicable to all of those claims

is set forth in N.J.S.A. 2A:14-1.         That statute provides, in

relevant part, "[e]very action at law . . . for recovery upon a

contractual claim or liability, express or implied, not under

seal, . . . shall be commenced within 6 years next after the cause

of action shall have accrued."        That statute is applicable to

claims for alleged breaches of lease agreements or to void such

agreements.   See Fox v. Millman, 210 N.J. 401, 414-15 (2012)

(explaining the general applicability of the six-year statute of

limitations under N.J.S.A. 2A:14-1); see also In re Estate of

Balk, 445 N.J. Super. 395, 398 (App. Div. 2016) ("New Jersey

applies a six-year statute of limitations to contract claims.").

     Here, plaintiffs seek to void contracts; that is, the lease

agreements.   Thus, their action needed to be brought within six

years of the accrual of that cause of action.         The Dardanelle

Lease Agreement was signed on November 27, 2006, and the Pathway

Lease Agreement was signed on September 1, 2010.     The obligations

to pay a land rental fee to OG Association were established by

those lease agreements.   Consequently, all of plaintiffs' causes

of action accrued by September 2010.         Plaintiffs filed their

complaint on January 21, 2017.       Because the complaint was filed

                                 7                           A-3842-16T2
more than six years after the causes of action accrued, all the

claims were time-barred.

     Plaintiffs argue that the statute of limitations applicable

to their claims to void the lease agreements is the twenty-year

period under N.J.S.A. 2A:14-7.   They also contend that the statute

of limitations applicable to their claim to recover the rent

payments is the sixteen-year period under N.J.S.A. 2A:14-4.            We

disagree.

     N.J.S.A. 2A:14-7 states: "Every action at law for real estate

shall be commenced within 20 years next after the right or title

thereto, or cause of action shall have accrued."         Our Supreme

Court has explained that that statute is applicable to claims for

damages resulting from the adverse possession of real property or

for ejectment.    J&M Land Co. v. First Union Nat'l Bank, 166 N.J.

493, 505, 515, 521 (2001).    Accordingly, N.J.S.A. 2A:14-7 is not

applicable to plaintiffs' claims to void the lease agreements.

     N.J.S.A.    2A:14-4   applies   to   "a   lease   under     seal."

Specifically, that statute provides, in relevant part: "Every

action at law for rent or arrears of rent, founded upon a lease

under seal, . . . shall be commenced within 16 years next after

the cause of any such action shall have accrued."

     The term "seal" has a specific and defined meaning.       N.J.S.A.

1:1-2.1.    Accordingly, that statute explains:

                                 8                              A-3842-16T2
            Every instrument, to which it is required or
            permitted by law that a seal be attached,
            shall be deemed to be sealed when there is
            affixed thereto, or printed, impressed or
            marked thereon a scroll or other device by way
            of a seal, and no such instrument shall be
            impeached or questioned for lack of a wax
            seal.

"Words in the body of the instrument such as 'sealed with our

seals,' which are not accompanied by a scroll or device, are not

sufficient.      A scroll, not accompanied by words indicating the

sealing of the instrument by the maker thereof, is insufficient."

Fid. Union Tr. Co. v. Fitzpatrick, 134 N.J.L. 250, 251-52 (1946).

Accordingly, to create a sealed instrument, there must be both a

statement   of   sealing   and   a   device,   such   as   a   seal,    scroll,

impression, mark, or other device.

      Here, the lease agreements were not sealed.               There was no

seal, scroll, impression, mark, or other device on the Pathway or

Dardanelle Lease Agreements.         Instead, each lease agreement was

signed by a representative of the condominiums' developers and by

the   OG    Association.         Preceding     the    signatures        of     the

representatives,     the    Lease     Agreements      stated     that        those

representatives were setting "their hand and seal."              Those words

alone, however, did not create a sealed lease within the meaning

of N.J.S.A. 1:1-2.1 and N.J.S.A. 2A:14-4.

                                      9                                 A-3842-16T2
       Finally, we reject plaintiffs' argument that even if their

claims are subject to a six-year statute of limitations, the annual

land rental fees created a continuing obligation and, therefore,

they are entitled to recover rental payments for the six years

prior to January 24, 2017. Plaintiffs' argument is that the rental

fees are not allowed because the lease agreements were void under

the Condominium Act.       In other words, if the lease agreements are

lawful, there is no continuing violation from the collection of

annual rents.       Thus, plaintiffs' continuing obligation argument

fails.      Instead, to the extent that the cause of action accrued,

it accrued when the lease agreements were signed in 2006 and 2010.

       B.     The Condominium Act

       Although plaintiffs' claims are barred by the statute of

limitations, we nonetheless address the substance of their claim

that the lease agreements are not allowed under the Condominium

Act.        Plaintiffs   contend   that   the   Condominium   Act   does   not

authorize a condominium to be developed on land that is acquired

as a leasehold interest and in which unit owners are required to

pay an annual land rental fee to the lessor.           We disagree because

the Act expressly allows leasehold condominiums, and the unit

owners were informed of the annual land rent obligation prior to

acquiring their leasehold ownership interests.

                                     10                               A-3842-16T2
    Section 8 of the Condominium Act states:

         A condominium may be created or established
         by recording in the office of the county
         recording officer of the county wherein the
         land is located a master deed executed and
         acknowledged by all owners or the lessees
         setting   forth  the   matters  required   by
         [N.J.S.A. 46:8B-9] and [N.J.S.A. 46:23-9.11].
         The provisions of the "Condominium Act,"
         [N.J.S.A. 46:8B-1 to -38] shall apply solely
         to real property of interests therein which
         have been subjected to the terms of [the
         Condominium Act] as provided in this section.

         [N.J.S.A. 46:8B-8.]

    Section 8.1 of the Condominium Act then clarifies:

         Nothing in the act to which this act is a
         supplement shall be construed to prevent the
         creation and establishment of a condominium
         as defined in this act, upon land held under
         a lease by the lessee or creator of the
         condominium, provided that the master deed
         required under this act shall be signed, not
         only by the lessee, but also by the lessor of
         the land who holds the legal title to the land
         in fee simple.

         [N.J.S.A. 46:8B-8.1.]

    The Act also explains that "[a]ny unit may be held and owned

by one or more persons in any form of ownership, real estate

tenancy or relationship recognized under the laws of this State."

N.J.S.A. 46:8B-5.

    Read in conjunction, those provisions expressly allow the

land to be held under a lease, N.J.S.A. 46:8B-8.1, and the units

to be held as a "real estate tenancy."   N.J.S.A. 46:8B-5.    A real

                               11                            A-3842-16T2
estate tenancy includes a tenancy established by a lease.                     See

Black's Law Dictionary 1477 (7th ed. 1999) (defining "tenancy" as

"[t]he possession or occupancy of land by right or title, esp.

under a lease; a leasehold interest in real estate.").

      Plaintiffs     rely     on   a   separate   statute   and   a    statutory

provisions to contend that ground leases are not permitted under

the Condominium Act.           First, they cite to and make arguments

concerning the Horizontal Property Act, N.J.S.A. 46:8A-1 to -28.

The   short   and    simple    answer     to   that   argument    is   that   the

condominiums here were created expressly under the Condominium Act

and not the Horizontal Property Act.

      Second, plaintiffs cite to N.J.S.A. 46:8B-3(q), which defines

a "[u]nit [o]wner" as "the person or persons owning a unit in fee

simple."      That definition, however, was part of the original

Condominium Act passed in 1969.           In 1973, the Legislature amended

the Condominium Act to add Section 8.1, which expressly authorizes

condominiums on lands held under a lease.                N.J.S.A. 46:8B-8.1.

Accordingly, Section 8.1 expressly controls both by its language

and by the fact that it is a clarifying amendment.                See McGovern

v. Rutgers, 211 N.J. 94, 107-08 (2012) (holding that the court's

role in interpreting a statute "is to determine and effectuate the

Legislature's       intent,"       starting    with   the   statute's      plain

language); see also In re D.C., 146 N.J. 31, 51 (1996) ("The

                                        12                               A-3842-16T2
purpose of a curative amendment is . . . to 'remedy a perceived

imperfection      in    or    misapplication      of    a    statute.'    . . .      The

amendment explains or clarifies existing law and brings it into

'harmony     with      what    the    Legislature       originally       intended.'"

(citations omitted)).

     We also note that plaintiffs' argument is premised on the

concept    that     units     must   be   held   in    fee    simple.     The     lease

agreements here relate to the ground on which the condominiums

were developed.        Even if units were held in fee simple, there is

nothing in the Condominium Act that prevents Pathway's Master

Lease Agreement or Dardanelle's Master Deed from requiring unit

owners to pay an annual rental fee on the ground lease.

     Here,    both      the    Pathway    Master      Lease    Agreement    and      the

Dardanelle Master Deed expressly informed all unit owners that the

ground on which the condominiums were developed are held under

lease agreements.            The Pathway Master Lease Agreement and the

Dardanelle Master Deed also expressly informed the unit owners

that they will have to pay an annual rental fee to OG Association

as the lessor of the land.1

1
   Plaintiffs also made a third argument contending that they did
not waive their claims that the          Lease Agreements were
unconscionable under section 8 of the Act.     N.J.S.A. 46:8B-32.
Plaintiffs did not raise that argument in their merits brief and
defendant accordingly moved to strike the argument when it was

                                          13                                    A-3842-16T2
    In summary, we affirm the dismissal of plaintiffs' complaint,

because the claims are barred by the applicable six-year statute

of limitations and otherwise lack merit.

    Affirmed.

raised in plaintiffs' reply brief. We reserved on that motion.
We note that the trial court did not address this argument in its
March 31, 2017 decision. Further, because we are holding that the
claims are barred by the applicable statute of limitations, we
need not reach the unconscionability argument. Accordingly, the
reserved motion is moot.

                               14                         A-3842-16T2