Bell Tower Condominium Ass’n v. Haffert, A-3218-10T2; Appellate Division; opinion by Baxter, J.A.D.; decided and approved for publication January 12, 2012. Before Judges Carchman, Fisher and Baxter. On appeal from the Law Division, Cape May County, L-493-10. DDS No. 34-2-xxxx [15 pp.]

Defendants Pat Haffert and Terry Downey, husband and wife, own unit 5, the largest of the five units that comprise Bell Tower Condominium. At the May 2010 meeting of the Bell Tower Condominium Association board of trustees, attended by four of the five elected board members (Haffert, the fifth board member, did not attend), the board approved an $80,000 special assessment for repairs. Units 1, 2, 3 and 4 were each assessed $14,400; defendants were assessed $22,400 because their unit is substantially larger.

Defendants notified the board of their intention to withhold payment of the special assessment, due to their disagreement with the manner in which the assessment decision had been made and their concerns about how the money would be allocated. When the association and defendants failed to resolve their dispute, the board filed suit, demanding judgment in the amount of the unpaid special assessment, attorneys’ fees and costs.

Defendants filed a counterclaim asserting that the association had failed to adhere to the requirements of the master deed, bylaws and applicable statutes concerning the governance of the association, particularly with respect to financial management and accountability. They sought, inter alia, an order requiring arbitration or mediation of the dispute concerning the special assessment.

The judge granted summary judgment for the association, specifically rejecting defendants’ assertion that the matter should be sent to arbitration, rather than be resolved by litigation.

On appeal, defendants argue that the Law Division erred by refusing to dismiss this matter in favor of arbitration, as required by the Condominium Act, N.J.S.A. 46:8B-1 to -38, specifically, N.J.S.A. 46:8B-14(k). The association argues that while 46:8B-14(k) requires that all “housing-related disputes” be sent to arbitration, a refusal to pay a special assessment imposed by a condominium board is not a “housing-related dispute” for which arbitration is required.

Held: Because the long-established public policy of this state favors alternative dispute resolution, and because the Legislature chose expansive and unconditional language when it required the arbitration of “housing-related disputes” when requested by a party, the panel construes the term broadly and concludes that it refers to any dispute arising directly from the condominium relationship, and that the dispute between the association and defendants was a housing-related dispute that should have been submitted to arbitration or other form of alternative dispute resolution pursuant to N.J.S.A. 46:8B-14(k).

The panel first notes the strong public policy of New Jersey favoring arbitration as a mechanism for resolving disputes and defendants’ argument that by enacting 46:8B-14(k), the Legislature recognized the policy. It also notes case law holding that because a condominium association is required to provide a procedure for the resolution of “housing-related disputes” as an “alternative to litigation,” qualifying disputes must be sent to arbitration if, after suit is filed, either party chooses to invoke the alternative dispute remedy that must be made available under the act.

Thus, says the panel, resolution of the present appeal turns on whether the dispute between the parties is a “housing-related dispute” under 46:8B-14(k).

The panel notes that although the act contains an extensive definitional section, “housing-related dispute” is not defined.

The panel says the term “housing-related disputes” is a broad one and is not ambiguous. The term signifies that only disputes that arise from the parties’ condominium relationship are subject to the arbitration provisions of 46:8B-14(k). Any other dispute would be resolved either in the Law Division or in the municipal courts. The panel gives a nonexhaustive list of examples of disputes that are not “housing-related disputes” under 46:8B-14(k), including an auto accident in the condominium parking lot or a palimony claim asserted by one unit owner against another.

The panel says that here, defendants’ contention that the board breached the fiduciary obligations imposed on it by 46:8B-14(j) underlies their refusal to pay the special assessment. Thus, the dispute is clearly “housing-related,” as it is premised on one of the sections of the act.

It concludes that the strong public policy favoring arbitration, the broad and unconditional language chosen by the Legislature when it used the term “housing-related disputes,” and the present dispute’s origins in the disagreement over the scope of the special assessment all compel the conclusion that under the statute, arbitration or other form of alternative dispute resolution is required.

— By Judith Nallin

For appellants — Kevin J. Kotch (Obermayer Rebmann Maxwell & Hippel). For respondent — Steven D. Scherzer (Cooper Levenson April Niedelman & Wagenheim).