Anne Ward, head of the Condominium/Cooperative Law Department of Ehrlich Petriello Gudin Plaza & Reed (“EPGPR”), has scored a victory on behalf of condominium unit owners. Ms. Ward persuaded the Appellate Division of the State of New Jersey to award $38,703.00 in attorneys’ fees to homeowners. This amount represents sums incurred in litigation against a condominium association.
In a case of first impression, the Appellate Division upheld an Arbitrator’s decision awarding attorney fees and costs under Rule 47 of the American Arbitration Association (“AAA”). The Appellate Division also awarded additional attorneys’ fees to the Plaintiffs to compensate them for the attorneys’ fees and costs incurred at the appellate level. Raymond Zecca, et al. vs. Monterey Condominium Association, Inc., 2020 WL 2177053.
The Initial Lawsuit
The unit owners had originally sued the Association over $400 yearly assessments imposed on them. They received these fees for renting their units on their own initiative, rather than renting through the Association’s rental program.
The Plaintiffs filed suit in the Superior Court, contending that the governing documents permitted the Plaintiffs’ rentals, arguing that the Association had no authority to compel participation in the Defendant’s rental program.
The Plaintiffs alleged the assessments were contrary to law, discriminatory, and ultra vires. In addition, the Plaintiffs argued there was no proper notice to the membership prior to a vote regarding the assessments. Finally, unit owners argued the lack of notice was violative of the governing documents, New Jersey State law, and the New Jersey Administrative Codes.
The matter was referred to arbitration pursuant to a Master Deed provision. However, the Arbitration Clause had omitted reference to the rules governing the arbitration and the choice of arbitrator. The Defendant proposed that the AAA rules applied, and then the Superior Court ordered the AAA rules would govern the arbitration.
The Plaintiffs prevailed on their underlying claims at the arbitration, and the arbitrator decided the lack of notice proved fatal to the assessments. Accordingly, he ordered the assessment monies returned to the Plaintiffs. However, the attorneys’ fees incurred by the Plaintiffs in the litigation were substantial, and they greatly exceeded the amount of the assessments.
Rule 47 of AAA provides that an arbitrator may grant any “remedy or relief” that the arbitrator deems “just and equitable”. Rule 47 also provides that an Arbitrator may enter:
ii. an award of attorneys’ fees if all parties have requested such an award or if it is authorized by law or their arbitration agreement. [Emphasis added].
Gaining Attorney’s Fees
After the victory on the merits, the Plaintiffs filed an application to the Arbitrator for an award of attorney’s fees under Rule 47. They based their request on the fact that both parties had requested attorney’s fees in their respective pleadings.
The Plaintiffs argued that there was a lack of notice, and the Association refused to offer a viable Alternative Dispute Procedure, as required by the New Jersey Condominium Act. Therefore, the matter need never have been litigated. The Plaintiffs argued they were entitled to an award of attorney’s fees because they had been forced to litigate the issues by the Defendant.
The Defendant argued, claiming that the Plaintiffs were required to show they were entitled to an award under the exceptions to the American Rule. The American Rule provides that each party must pay their own legal fees, unless the case falls within a very specific exception.
The Arbitrator decided in the Plaintiffs’ favor. He determined that the highlighted language in Rule 47 authorized him to award attorneys’ fees under the “just and equitable” standard of Rule 47.
Our team is proud to have been a part of this case, helping the plaintiffs receive what they deserved. If you need help with a real estate dispute, we would love to use our skill to be there for you, too. Call our office today at (973) 828-0203, or schedule time with us online.