JAMES PETER ORTIZ v. TERRACE TOWERS, INC.

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4388-07T24388-07T2

JAMES PETER ORTIZ and ROLAND

RATMEYER, Individually and as

Shareholders/Directors of

TERRACE TOWERS, INC.,

a New Jersey Corporation,

Plaintiffs-Appellants,

v.

TERRACE TOWERS, INC., a New Jersey

Corporation, and ALL SHAREHOLDERS

OF TERRACE TOWERS, INC., who are

set forth in the Body of the

Complaint,

Defendants-Respondents.

________________________________________

 

Submitted May 5, 2009 - Decided

Before Judges Fuentes and Chambers.

On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. C-13-07.

C. Robert Sarcone, attorney for appellants.

Respondent has not filed a brief.

PER CURIAM

This case concerns a dispute involving the allocation of parking spaces in the cooperative apartments of defendant Terrace Towers, Inc. (Terrace Towers). Plaintiffs, James Peter Ortiz and Roland Ratmeyer, shareholders and president and vice-president, respectively, of the Board of Directors of Terrace Towers, brought this declaratory judgment action to define the rights of the shareholders to parking spaces at the cooperative apartments. The trial court granted summary judgment for defendants Terrace Towers and its shareholders, finding that the current allocation of parking spaces which has existed for over forty-five years is enforceable. We affirm.

Terrace Towers is a cooperative housing corporation established in 1961, before enactment of The Cooperative Recording Act of New Jersey, N.J.S.A. 46:8D-1 to -18, passed in 1987. Its property consists of thirty residential units and two professional suites. The parking lot, however, has only twenty-two spaces. These spaces have been specifically allocated to twenty-two of the residential units. Plaintiffs contend that this allocation of parking spaces is legally unsupportable based on the underlying governing documents and that it is inherently unfair. Rejecting plaintiffs' arguments, the trial court granted summary judgment to defendant. Plaintiffs appeal, contending that the matter was not ripe for summary judgment and that a plenary hearing should have been held.

In our review, we employ the same standard as the trial court. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Summary judgment is warranted where no genuine issue of material fact is present and the movant is entitled to judgment as a matter of law. R. 4:46-2(c). In this endeavor, we look at the competent evidence "in the light most favorable to the non-moving party" and determine whether that evidence is "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). If it is not, then the motion will be granted. Ibid. We do not defer to the trial court's interpretation of the law, nor its determination of the legal consequences that flow from undisputed facts. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). After a careful review of the record in light of this standard, we concur with the trial judge that the record supports the allocation of the parking spaces to the twenty-two specified units.

In a cooperative housing arrangement, a corporation has legal title to the property, and its individual shareholders have a right to occupy specific units in accordance with their individual proprietary leases. Presten v. Sailer, 225 N.J. Super. 178, 184-85 (App. Div. 1988). The relationship between the corporation and its shareholders is governed by the certificate of incorporation, the by-laws, and the proprietary leases. Sulcov v. 2100 Linwood Owners, Inc., 303 N.J. Super. 13, 30 (App. Div.), certif. granted, 152 N.J. 10 (1997), appeal dismissed, 162 N.J. 194 (1999). The "proprietary lease" may also be called an "occupancy agreement." Herbert Hovenkamp and Sheldon F. Kurtz, The Law of Property 13.2 at 496 (5th ed. 2001). These documents must be read together, Sulcov v. 2100 Linwood Owners, Inc., supra, 303 N.J. Super. at 30, and they constitute the contract between the corporation and its shareholders. Hovenkamp and Kurtz, supra, 13.2 at 496.

The articles of incorporation for Terrace Towers make no specific mention of parking. With respect to the assignment of units, the document merely provides that "tenant-shareholder[s]" may occupy the "dwelling accommodations." The by-laws do not refer to parking or to the units. They do, however, state in Article VI, Section 2, which deals with the transfer of stock, that "[t]ransfer of stock shall be controlled primarily by Occupancy Agreement entered into the 26th day of February, 1962 by the holders of all shares of stock."

The 1962 Occupancy Agreement provides that "the Corporation hereby lets to the Members, and the Members hereby hire and take from the Corporation, dwelling units." Article 19 provides: "The following are the dwelling units let to the Members and parking spaces allocated." Another copy of the occupancy agreement lists each unit and assigns to twenty-two of those units a particular parking space. Subsequent occupancy agreements retain those assignments of parking spaces.

As a result, the contractual arrangement of this cooperative assigns particular parking spaces to particular units. This arrangement appears to have been contemplated from the inception of the cooperative. The sponsoring advertisement for the project listed as a special feature "allocated parking space." A review of one of the initial contracts between the sponsor Gerald Jay Construction Co. and prospective shareholders reveals that the sponsor promised to construct the building and form Terrace Towers as a cooperative housing corporation. In exchange for payment, it promised the prospective shareholders a specified number of shares in the corporation and an occupancy agreement. The contract designated a specific unit for the prospective shareholders and stated "PARKING SPACE TO BE ALLOCATED." At least as early as 1963, the occupancy agreement provided an assigned parking space to units. On July 3, 1963, the Board of Directors of Terrace Towers formally confirmed the allocation of the parking spaces to residents on a permanent basis. There is no record that the vote has ever been undone.

Since then the assigned parking spaces have been transferred with their units. A sampling of contracts to sell units with assigned parking spaces reveals that the parking spaces are specifically included as part of the sale. Helen C. Rowen, who is a former member of the Board of Directors and has been a shareholder since the inception of Terrace Towers, stated in her affidavit to the trial court that since 1962, specific parking spaces have been assigned to specific units as set forth in the occupancy agreements. She states that in interviews with prospective shareholders, parking rights are specifically discussed, and that the matter has been undisputed until raised by plaintiffs. In February 2007, due to the pendency of this litigation, the shareholders by a vote of 25 to 4 at their annual meeting confirmed the allocation of parking spaces to specific units.

Plaintiffs argue that since its inception a parking controversy has plagued the cooperative. They point to Board minutes in 1962 and 1963 in which a Mr. Tepper complained about the parking allocation and Harry Melnick, one of the original sponsors, states that he will allocate the parking. However, plaintiffs present no record of any further parking allocation disputes until the issue was raised in 2006, by plaintiff Ortiz. Rather, the current allocation of parking spaces is in accordance with the governing documents and consistent practices of the cooperative. We find no material issue of fact on that point.

Plaintiffs note the unfairness in requiring shareholders forbidden from using the parking lot to contribute to the cost of the lot, including taxes, insurance, and maintenance expenses. The occupancy agreements in Article Four provide that all shareholders "may enjoy in common with all other members of the Corporation the use of all community property and facilities of the project." Since not all tenants may use the parking lot, it is not being treated as a common area within the meaning of this provision. Rather the parking arrangement here is akin to a "limited common element" under The Cooperative Recording Act of New Jersey, N.J.S.A. 46:8D-3(g). Limited common elements are defined as "those common elements which are for the use of one or more specified units to the exclusion of other units." Ibid.

Article One of the occupancy agreement contemplates that the expenses for the cooperative will be shared by the shareholders on a pro rata basis, stating that "in no event shall the Member be charged with more than his proportionate share" of the monthly carrying charges. However, whether the parking allocation merits an adjustment in the carrying charges is not before this court. Based on this record, we do not know the current allocation method nor whether adjustments are made for the parking situation. The trial court did not address the economic ramifications of the allocation of parking spaces. The complaint and this litigation focused on whether the parking spaces could be allocated to particular units. As a result, our affirmance of the trial court's ruling, should not be construed as a ruling one way or the other on the validity of the current assessment of carrying charges.

Affirmed.

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A-4388-07T2

June 5, 2009