Bay Crest Assn., Inc. v DeLisi

[*1] Bay Crest Assn., Inc. v DeLisi 2006 NY Slip Op 50202(U) [11 Misc 3d 1054(A)] Decided on February 2, 2006 Suffolk District Court Hackeling, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through February 24, 2006; it will not be published in the printed Official Reports.

Decided on February 2, 2006
Suffolk District Court

Bay Crest Association, Inc., PLAINTIFF,

against

Suzanne DeLisi, DEFENDANT.



HUCT 238-05



George Carl Pezold, Esq.

Pezold, Smith , Hirschmann & Selvaggio, LLC

120 Main Street

Huntington, New York 11743

Attorneys for Plaintiff

Suzanne DeLisi

Pro Se

C. Stephen Hackeling, J.

The plaintiff, Bay Crest Association, by complaint dated July 28, 2005, seeks the recovery of $1,647.65 representing a common charge (homeowner's assessment) imposed upon the defendant Suzanne DeLisi in June of 2005. Ms. DeLisi has orally interposed several defenses. She asserts: that she is not in privity of contract with Bay Crest Association; that no covenants running with the land obligate her to pay such an assessment; that Bay Crest Association is illegally constituted; that its assessments are erroneous and/or improper as to her; and that the association's corporate by-laws limit its remedy for non payment of assessments to exclusion from the common beach.

Undisputed Facts

The Bay Crest Association has owned and been responsible for the maintenance of streets and beach facilities, and has provided various community services for the benefit of Bay Crest residents since 1905. The board of directors prepares an annual budget which is presented and approved at the annual meeting of the property owners and shareholders. Based on the budget, dues are established by the board of directors. Property owners and shareholders are each assessed a proportionate share of the association's annual operating expenses. The association is incorporated and 43 homeowners and 41 non residents each own equivalent corporate stock interests. Ms. DeLisi is one of the homeowners who objects to the 41 non residents having [*2]

rights to beach cabanas. In 2005, the association assessed Ms. DeLisi $1,647.65 as her proportionate share for maintenance of the common roads and beach facilities. As a result of the defendant's refusal to pay the assessment imposed upon her, the association voted to ban her from utilizing its beach facilities, pursuant to Article V; Section 5 of the By-Laws of the Bay Crest Association.

Issues Presented

1. Is the defendant, who acknowledges the existence of and prior participation in the plaintiff homeowner association, liable for her pro rata share of common expenses under an implied contract (equitable servitude) common law theory?

2. Can the homeowner association's corporate irregularities be asserted as legal justification for the defendant's refusal to pay a common charge

assessment?

3. Can a homeowner who fails to pay her common charges be both barred from

the common property and be required to pay her association assessment?

The Law

Homeowners Association May Impose Implied Contracts

Although this Court maintains personal reservations about the concept of "implied-in fact contracts" (arising out of the law of "equitable servitude"), plaintiff's counsel has thoroughly established that New York's highest Appellate Court recognizes and repeatedly applies the legal doctrine of implied-in-fact contract. In Seaview Association of Fire Island, NY v. Williams, 69 NY2d 987, 989 (1987), the Court of Appeals stated that "where there is knowledge that a private community's homeowners' association provides facilities and services for the benefit of community residents, the purchase of property there may manifest acceptance of conditions of ownership, among them payment for the facilities and services offered. The resulting implied-in- fact contract included an obligation to pay a proportionate share of the full cost of maintaining those facilities and services, not merely the reasonable value of those actually used by any particular resident". In that case, the defendants, nonmembers of plaintiff association were held liable for assessments of the plaintiff association. See also 73 St. Johns Law Review 199 (1999) citing to Douglas Manor Assoc. v. Alimaris, 215 AD2d 522 (NYAD 2nd Dept.,1995); Patchogue Props. v. Saccio, 185 Misc 2d 380 (App. Term, 2nd Dept. 2000).

In addressing the defendant's association corporate irregularity defenses; this Court echoes the comments of the Honorable Ernest L. Signorelli, in Patchogue Properties, Inc. v. [*3]

Cirillo, 54 Misc 2d 863 (NY Dist. Ct., Suffolk, 1967), wherein he opined that the "Defendant may conceivably have remedies available to him in a court of equity in a proceeding to enjoin the plaintiff corporation, which remedies...are not available to the defendant in the District Court, because of jurisdictional limitations" (which limitations are imposed upon this court by statute). See also. Pauling Lake Prop.Owners Assoc. v. McGoorty, 2005 Slip Op. 50365U (App. Term. 2nd Dept. 2005). The defendant's attempt to challenge the corporate conduct of the association's board could properly be addressed by the Supreme Court.

Implied-In-Fact Homeowner Association Charges

Require Availability of Facilities

The Court is sympathetic to the defendant's assertion that the plaintiff can not equitably be permitted to charge her for the common benefit of a beach from which she has been barred. In construing the "equitable servitude/implied contract" doctrine, appellate courts have recognized that dissident members of homeowners associations that "are not entitled to use the facilities...are not responsible for paying a pro rata share of the costs of maintaining them". Shrub Oak Park Community Assoc., Inc. v. Fiducia, 66 AD2d 778 (App. Div.,2nd Dept. 1978) citing Tides Prop. Owners Assn. v. Paolillo, 56 AD2d 888 (NYAD, 2nd Dept. 1977). The plaintiff association is within its rights to create by-laws to bar the defendant's access to the beach facilities, as a result of refusal to pay overdue assessments. However, such a move appears to be an election of remedies which would preclude the invocation of a purely "equitable" remedy which is designed to force those who utilize common facilities to pay for their proportionate share. The judicially created "implied consent" to pay can only be established if the facilities are available for use.

Unfortunately, the record presented does not indicate the date the defendant was barred from the beach or how much of the 2005 assessment represented road maintenance costs (for roads which the defendant utilized) and how much represented beach maintenance (for facilities which the plaintiff was barred from utilizing). The burden of establishing the "barred from using" offset is borne by its proponent, Ms. DeLisi. Absent testimony or the introduction of the annual budget, showing the beach component breakdown, the Court can not award an offset. As this is a small claims proceeding, the defendant is not barred from asserting a future claim for an offset. [UDCA Sec. 1803 (c) and 1808].

Accordingly, the Court awards judgment to the plaintiff, against the defendant for the sum of $1,647.65, together with statutory interest from July 28, 2005.

Dated:_________________ __________________________________

J.D.C.

Decision to be published on line _____yes____no. [*4]