DAWN RICCUITTI and MINDY RUBINSTEIN v. ROBERT MCEWAN

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

DAWN RICCUITTI and MINDY

RUBINSTEIN,

Plaintiffs-Appellants,

v.

ROBERT MCEWAN,

Defendant-Respondent.

_______________________________

February 10, 2016

Argued December 2, 2015 - Decided

Before Judges Fuentes, Koblitz and Gilson.

On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-0093-14.

Gary E. Fox argued the cause for appellants (Fox & Melofchik, L.L.C., attorneys; Mr. Fox, on the brief).

Michael J. Fasano argued the cause for respondent (Davison, Eastman & Munoz, P.A., attorneys; Mr. Fasano, on the brief).

PER CURIAM

This appeal involves a dispute over the use of a portion of the original common area of a condominium. Plaintiffs Dawn Riccuitti and Mindy Rubinstein own one of the units in the condominium and contend that the developer, R.D.R. Properties, Inc. (RDR), told them that a portion of a common area driveway would be made into a garden. Defendant Robert McEwan purchased another unit at the condominium and RDR sold him the right to use the disputed area as parking spaces. Plaintiffs sued defendant, and the Chancery Court dismissed the complaint for failure to state a claim, R. 4:6-2(e), and for failure to join indispensable parties, R. 4:6-2(f). The Chancery Court also denied plaintiffs' motion to amend their complaint to assert claims against RDR, the condominium association, and all other unit owners. We affirm because plaintiffs have no viable claim against defendant, and any claims against RDR, the association, or other unit owners are barred by the applicable statute of limitations, N.J.S.A. 2A:14-1 and N.J.S.A. 45:22A-37(d).

I.

We derive the facts from plaintiffs' complaint and the attached documents. RDR formed 1211 Grand Avenue Condominium, a residential development in Asbury Park consisting of two residential buildings, with eight units, and surrounding lands. In the original master deed, dated May 17, 2006, RDR designated certain areas in and around the buildings as common elements, consisting of "General Common Elements" and "Limited Common Elements." The General Common Elements (GCE) included certain lands, such as sidewalks and landscaped areas, and exterior features, such as the buildings' roofs and foundations. Each unit owner had an undivided percentage interest in and easement to use the GCE. The Limited Common Elements (LCE) were associated with particular units, consisting of things such as porches and decks that could be used exclusively by the related unit owner. When a unit is purchased, the owner becomes a member of the condominium association and the association administers, manages and operates the common affairs of the condominium, including the common elements.

Plaintiffs purchased their unit in July 2006. In March 2007, RDR filed and recorded an amended and restated master deed for the condominium. The amended master deed designated a new LCE, consisting of two parking spaces that were to be sold for the exclusive use of Unit 301. Thereafter, defendant purchased Unit 301 and the exclusive right to use the two parking spaces. The amended master deed did not change the percentage ownership of the GCE for any of the units. Thus, plaintiffs' percentage ownership remained 17.974 and defendant's ownership was 16.684.

On June 2, 2014, plaintiffs filed a complaint against defendant and alleged that when they purchased their unit in July 2006, "Plaintiffs were informed," presumably by RDR, that the driveway area, which at the time was paved, would be made into a garden. Plaintiffs further alleged that in 2007, RDR amended the master deed and designated a portion of the driveway as two parking spaces to be used by the owner of Unit 301, who was defendant. The core of plaintiffs' claim was that "the Amended and Restated Master Deed was improper as it converted the property right of a common element (garden area) to a limited common element, which was subsequently sold to the Defendant as parking spaces." Plaintiffs demanded equitable relief, requesting that the amended master deed be vacated, the disputed area be declared a GCE, and "[r]equiring Defendant to restore the property as a common element rather than a limited common element and to remove the two parking spaces and restore same to the originally planned garden area, a common element."

Defendant filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted and failure to join indispensable parties. Plaintiffs filed a motion to amend the complaint. The proposed complaint sought to add as defendants RDR, the association, and ten individuals who were the other current condominium unit owners.

The Chancery Court dismissed plaintiffs' complaint reasoning that plaintiffs had asserted a breach of contract or misrepresentation claim based on RDR's conduct rather than any wrongdoing by defendant. Thus, the court held that any contract claims or claims pursuant to the Planned Real Estate Development Full Disclosure Act (PREDFDA), N.J.S.A. 45:22A-21 to -56, were barred by the six-year statute of limitations set forth in N.J.S.A. 2A:14-1 and N.J.S.A. 45:22A-37(d). The court further concluded that plaintiffs had not properly pled a claim for quiet title or for ejectment. The court then denied plaintiffs' motion to amend their complaint, applying the same reasoning. Finally, the court reasoned that the association had the exclusive right to bring an action to protect the rights and interests of unit owners in the common elements and that the plaintiffs had not shown that they had the right to bring a derivative action on behalf of the association.

II.

Plaintiffs now appeal the orders dismissing their complaint and denying their motion to amend the complaint. On appeal, plaintiffs argue that the court erred by: (1) dismissing plaintiffs' complaint for failure to state a claim in ejectment; (2) concluding that the statute of limitations barred plaintiffs' proposed amended claims; (3) denying plaintiffs' motion to amend their complaint; (4) dismissing plaintiffs' complaint for failure to join indispensable parties; and (5) concluding that plaintiffs did not have standing to bring this action. We disagree and affirm. We first analyze plaintiffs' claims against defendant, and then their proposed amended claims.

A.

A complaint should be dismissed for failure to state a claim pursuant to Rule 4:6-2(e) only if "the factual allegations are palpably insufficient to support a claim upon which relief can be granted." Borough of Seaside Park v. Comm'r of N.J. Dep't of Educ., 432 N.J. Super. 167, 200 (App. Div.) (quoting Rieder v. State, 221 N.J. Super. 547, 552 (App. Div. 1987)), certif. denied, 216 N.J. 367 (2013). This standard requires that "the pleading be searched in depth and with liberality to determine whether a cause of action can be gleaned even from an obscure statement." Frederick v. Smith, 416 N.J. Super. 594, 597 (App. Div. 2010) (quoting Seidenberg v. Summit Bank, 348 N.J. Super. 243, 250 (App. Div. 2002)), certif. denied, 205 N.J. 317 (2011). "The pleader is entitled to 'the most favorable inferences which may be reasonably drawn from'" the complaint's allegations. Ibid. (quoting Rappaport v. Nichols, 31 N.J. 188, 193 (1959)).

In reviewing the trial court's disposition of a motion made pursuant to Rule 4:6-2(e), this court is bound by the same standard that governed the trial court. Borough of Seaside Park, supra, 432 N.J. Super. at 200. Thus, we review an order dismissing a complaint for failure to state a claim de novo. Flinn v. Amboy Nat'l Bank, 436 N.J. Super. 274, 287 (App. Div. 2014). Although the review is "one that is at once painstaking and undertaken with a generous and hospitable approach," Green v. Morgan Props., 215 N.J. 431, 452 (2013) (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)), dismissal is nonetheless required "where the pleading does not establish a colorable claim and discovery would not develop one," State v. Cherry Hill Mitsubishi, Inc., 439 N.J. Super. 462, 467 (App. Div. 2015).

Read in the light most favorable to plaintiffs, at best their complaint alleged a breach of contract by RDR or a misrepresentation by RDR. Plaintiff's complaint contained no allegations that defendant did anything wrong apart from purchasing Unit 301 and using the related parking spaces. Thus, we affirm the dismissal of the claims against defendant.

B.

Plaintiffs argue that the court erred by denying their motion to amend their complaint to join parties and add additional causes of action. Rule 4:9-1 allows a party to amend a pleading more than ninety days after the original pleading is served "only by written consent of the adverse party or by leave of court which shall be freely given in the interest of justice." Motions for leave to amend should "be granted liberally." Prime Accounting Dep't v. Twp. of Carney's Point, 212 N.J. 493, 511 (2013) (quoting Kernan v. One Wash. Park Urban Renewal Assocs., 154 N.J. 437, 456 (1998)). A ruling on such a motion rests in the court's sound discretion, which requires an analysis of "whether the non-moving party will be prejudiced, and whether granting the amendment would nonetheless be futile." Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006). Consequently, "[c]ourts are free to refuse leave to amend when the newly asserted claim is not sustainable as a matter of law." Prime Accounting, supra, 212 N.J. at 511 (quoting Notte, supra, 185 N.J. at 501).

Plaintiffs submitted a proposed amended complaint that named RDR, the association, and all other unit owners as defendants. That proposed complaint re-alleged the same facts as those in the original complaint and added three additional allegations. First, plaintiffs asserted "an ejectment action pursuant to N.J.S.A. 2A:35-1." Second, plaintiffs sought to bring a derivative action alleging that the association had "failed to act." Third, plaintiffs sought to bring a "quiet title" action pursuant to N.J.S.A. 2A:62-1.

Reading the proposed complaint liberally and providing plaintiffs with all favorable inferences, the proposed complaint does not state a viable claim for a derivative action, which precludes an individual ejectment action and a quiet title action. In the proposed amended complaint, plaintiffs are not claiming the right to solely possess the parking spaces used by defendant. Instead, they are claiming that those parking spaces should be converted into a common element. Plaintiffs, however, do not have the right to bring such a claim.

The Condominium Act, N.J.S.A. 46:8B-1 to -38, states that a condominium association established in a "master deed shall be responsible for the administration and management of the condominium and condominium property, including but not limited to the conduct of all activities of common interest to the unit owners." N.J.S.A. 46:8B-12. Consequently, an "association has the exclusive right to sue a party 'to protect the rights and interests of the unit owners in the common elements.'" Fox v. Kings Grant Maint. Ass'n, 167 N.J. 208, 221 (2001) (quoting Siller v. Hartz Mountain Assocs., 93 N.J. 370, 380, cert. denied, 464 U.S. 961, 104 S. Ct. 395, 78 L. Ed. 2d 337 (1983)). Thus, only the association had the power to file a complaint seeking the ejectment of defendant from the disputed area.

"If an association wrongly fails to act" by filing a claim to protect the unit owner's common interest, "a unit owner may file a derivative suit against the association." Port Liberte II Condo. Ass'n v. New Liberty Residential Urban Renewal Co., 435 N.J. Super. 51, 63 (App. Div. 2014). In such a situation, "[Rule] 4:32-5 would be applicable" and "the association must be named as a party." Ibid. (quoting Siller, supra, 93 N.J. at 381). To bring a derivative action, however, a plaintiff must first demand action from the party having the primary right to bring suit, unless making such a demand "would be futile." In re PSE & G S'holder Litig., 173 N.J. 258, 278-79 (2002) (noting that Rule 4:32-5 requires a plaintiff to describe with particularity the actions taken to comply with the Rule or the reasons for the failure to comply).

Here, plaintiffs' proposed complaint did not include any statement to the effect that they demanded the association bring suit against defendant and were denied, or any reason why they failed to do so. Thus, plaintiffs have no viable claim for a derivative action. As a result, plaintiffs cannot bring individual claims of ejectment and quiet title, regardless of whether those claims were sufficiently pled.1

Finally, the Chancery Court correctly found that any claim plaintiffs may have against RDR with regard to the amendment to the master deed or any misrepresentation would be time-barred. N.J.S.A. 2A:14-1 provides that any claim for recovery on a contract claim must be commenced within six years after the accrual of the cause of action. Similarly, PREDFDA sets forth a six-year statute of limitations to file any claim that a developer has made "untrue statement[s] of material fact" relating to the purchase of certain real estate. N.J.S.A. 45:22A-37(a), (d). Here, plaintiffs purchased their unit in 2006. The amendment to the master deed was recorded in 2007. Any events related to a breach of contract or a misrepresentation occurred more than six years before plaintiffs filed their complaint in June 2014.

In summary, plaintiffs have no viable claim against defendant. Moreover, the claims in their proposed amended complaint either fail to state a cause of action or are time-barred. Thus, it would be futile to allow such an amendment.

Affirmed.

1 Indeed, plaintiffs' quiet title action is not sustainable as a matter of law because defendant occupied the disputed land and used it as parking spaces. To file a quiet title action, plaintiffs must show that they were in "peaceable possession" of the disputed property. N.J.S.A. 2A:62-1. This requirement is jurisdictional. Friedman v. Monaco & Brown Corp., 258 N.J. Super. 539, 542-43 (App. Div. 1992). To establish "peaceable possession," plaintiffs must show that defendant has not "interfered with the complainant's possession of the premises by acts of such a character" that a trespasser rejection action could be brought instead. Barry v. Tunick, 97 N.J. Eq. 281, 282-83 (E. & A. 1925).