looking to New York case law on transfer fees imposed by cooperatives
How later courts described this case
- looking to New York case law on transfer fees imposed by cooperatives
- noting the business judgment rule applies to decisions taken by a cooperative's board
- "The proprietary lease grants an interest in real property."
- noting "New York seems to have had more experience with cooperative apartment developments than other states"
Written by the judges who cited it.
The opinion
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0795-23
A-1665-23
MELISSA SCHWARTZ and
STEVEN SCHWARTZ,
Plaintiffs-Appellants,
v.
MICHAEL KOPELMAN, ESQ.,
and CAROL RACHESKY,
a/k/a CAROL REINFELD,
a/k/a CAROL WOLFE,
Defendants,
and
1266 APARTMENT CORP.,
Defendant-Respondent.
___________________________
Argued March 12, 2026 – Decided May 21, 2026
Before Judges Marczyk, Bishop-Thompson and
Puglisi.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-0128-20.
Thomas A. Gentile argued the cause for appellants
(Wilson Elser Moskowitz Edelman & Dicker LLP,
attorneys; Thomas A. Gentile, on the briefs).
Matthew Z. Earle argued the cause for respondent 1266
Apartment Corp. (Kates Nussman Ellis Earle &
Landolfi LLP, attorneys; Cara Landolfi and Matthew Z.
Earle, on the brief).
PER CURIAM
This consolidated appeal involves a dispute between defendant 1266
Apartment Corp. (Corporation) and two shareholders, plaintiffs Melissa and
Steven Schwartz.1 Plaintiffs appeal from the trial court's November 3, 2023
order, which modified previous orders dated August 23, 2023, and September
26, 2023, granting the Corporation summary judgment on its counterclaims
against plaintiffs, terminating their lease, ejecting them from their apartment,
terminating their shares of the unit, and allowing the Corporation to sell their
shares and utilize the sale proceeds. Plaintiffs also challenge the court's award
of attorneys' fees. Following our review of the record and the applicable legal
principles, we affirm.
1
Because plaintiffs share a last name, we will refer to them by their first names
when referencing them individually. We intend no disrespect.
A-0795-23
2
I.
The Corporation is a residential housing cooperative association that owns
and operates six buildings containing 1,266 units. Plaintiffs have resided in
apartment 2908, located in building six, for approximately twenty-three years.
Plaintiffs are shareholders of the Corporation. The Corporation is
governed by its bylaws, and pursuant to those bylaws, the Board of Directors
(Board) manages and controls the Corporation. The bylaws also authorize the
Board to adopt and amend rules for the "health, safety[,] and convenience of the
shareholders and any other occupants" that would be binding upon all the
Corporation's residents.
These rules, known as House Rules and Regulations (House Rules),
include a code of conduct applicable to the residents, providing, in pertinent
part: "[p]ublic halls must not be obstructed or used for any purpose other than
access to apartments"; and "[n]o one shall be permitted to use more than two . . .
washers or two . . . dryers at one time." The House Rules also state:
"[m]anagement, after proper written notice, shall be permitted entry to any
apartment at a reasonable hour to determine whether there has been damage to
or from the resident's apartment." The House Rules further provide the
Corporation was responsible for the maintenance of all common areas and
A-0795-23
3
building exteriors, whereas shareholders were responsible for repairs to their
apartments, including repairs to "[f]loors which . . . are damaged due to . . . leaks
. . . through windows or doors in the apartment[,] . . . from any appliance in the
apartment, or . . . [from] faulty plumbing inside the apartment."
Shareholders of the Corporation were also bound by their respective
proprietary lease. By signing the lease agreement, shareholders acknowledged
their lease was subject to the House Rules, and a breach of the House Rules
constituted a default under the lease. The lease also reaffirmed the respective
repair obligations of the parties as set forth in the House Rules.
Additionally, the lease contained various rights and conditions applicable
to the residents. Paragraph 18(b) of the lease, for example, stated, "[t]he [l]essee
shall not permit or suffer any unreasonable noises or anything which interferes
with the rights of other lessees or unreasonably annoys them or obstructs the
public halls or stairways."
The lease also specified the occurrence of certain events, as stated in
paragraphs 31(a) through (i), authorized the Corporation to terminate a
shareholder's lease, provided the Corporation gave the resident five days' notice.
One of those events, stated in paragraph 31(e), included default under the
lease—other than the failure to pay rent—for thirty days, after written notice
A-0795-23
4
from the Corporation. Paragraph 31(f), which addressed objectionable conduct,
provided:
If at any time the [Corporation] determines, upon the
affirmative vote of two-thirds of its then Board . . . at a
meeting duly called for that purpose, that because of
objectionable conduct on the part of the [l]essee or of a
person dwelling or visiting in the apartment, repeated
after written notice from the [Corporation], the tenancy
of the [l]essee is undesirable (it being understood,
without limiting the generality of the foregoing, that to
repeatedly violate or disregard the House Rules
attached hereto or hereafter in accordance with the
provisions of this lease, or to permit or tolerate a person
of dissolute, loose[,] or immoral character to enter or
remain in the [b]uilding or the apartment, shall be
deemed to be objectionable conduct)[.]
As for the Corporation's rights, such as the right of entry into a resident's
apartment, paragraph 25 explained:
The [Corporation], its agents[,] and authorized
workmen shall be permitted to visit, examine[,] or enter
the apartment and any storage space assigned to [the
l]essee at any reasonable hour of the day upon notice,
or at any time and without notice in case of emergency,
to make or facilitate repairs in any part of the [b]uilding
....
The lease further provided any notices or demands from either party to the
other "shall be in writing and sent by registered mail, return receipt requested,"
and "[n]otices or demands shall be deemed given on the date when mailed."
Paragraph 42 of the lease indicated, in the event of a breach or threatened breach
A-0795-23
5
by a resident of any provision in the lease, the Corporation "shall have the right
of injunction and the right to invoke any remedy at law or in equity."
Finally, paragraph 28 of the lease stated:
If the [l]essee is at any time in default hereunder and
the [Corporation] incurs any expense (whether paid or
not) in performing acts which the [l]essee is required to
perform, or in instituting any action or proceeding
based on such default, or defending or asserting a
counterclaim in any action or proceeding brought by the
[l]essee, the expense thereof to the [Corporation],
including reasonable attorneys' fees and disbursements,
shall be paid by the [l]essee to the [Corporation], on
demand, as additional rent.
Plaintiffs had a history of issues and altercations with the Corporation
staff and its residents, which were documented by the Corporation. Melissa, for
example, was involved in numerous confrontations with other residents and
housekeepers in the laundry room, had incidents with the security staff, and
allegedly misused the storage room. She also had confrontations with the
doormen at the Corporation. Both residents and staff filed police reports in
response to her behavior. The Corporation directed Melissa, on several
A-0795-23
6
occasions, to cease the objectionable conduct, and it also sent her numerous
notices to cure.2
On January 8, 2020, plaintiffs filed a three-count complaint against
Michael Kopelman, the Corporation, and Carol Rachesky. In count one,
plaintiffs asserted claims of negligence, battery, and defamation against
Kopelman, another shareholder of the Corporation, in connection with a
September 4, 2018 incident where plaintiffs alleged Kopelman called Melissa a
"c[**]t" and "violently struck and punched" Steven in the elevator and lobby of
their building. In count two, plaintiffs asserted negligence and breach of
contract by the Corporation, alleging it was "on notice" of Kopelman's
harassment against them, yet it "failed to take any . . . affirmative action" to
protect them. Lastly, in count three, plaintiffs alleged negligence and
defamation against Racheksy, another shareholder of the Corporation, alleging
she harassed, stalked, and defamed plaintiffs for years. 3
2
The record shows the Corporation sent plaintiffs notices to cure on: December
21, 2005; December 21, 2006; January 10, 2007; June 16, 2009; November 24,
2009; October 25, 2012; December 24, 2019; March 12, 2020; January 11, 2021;
March 17, 2021; September 17, 2021; October 31, 2022; and December 15,
2022.
3
It is not clear from the record how plaintiffs' claims against Kopelman and
Rachesky were resolved. These claims are not part of this appeal.
A-0795-23
7
The Corporation answered and counterclaimed. In its counterclaim, it
asserted counts for injunctive relief, abatement of nuisance, breach of contract,
and attorneys' fees. It alleged plaintiffs had "been engaged in an egregious
pattern of aggressive verbal and physical confrontations with multiple different
residents, shareholders, and employees of the Corporation," which violated the
prohibition of engaging in "objectionable conduct" contained in plaintiffs' lease.
The Corporation also sought an injunction prohibiting plaintiffs from engaging
in further objectionable conduct.
On March 12, 2020, two months after this litigation commenced and prior
to answering plaintiffs' complaint, the Corporation's counsel sent a notice to cure
to plaintiffs' attorney via email and regular and certified mail. The notice stated
its purpose was, in part, to place plaintiffs on notice "that they must cease
engaging in . . . objectionable conduct." The letter stated the Corporation was
"advised that [plaintiffs] ha[d] engaged in an egregious pattern of aggressive
verbal and physical confrontations with many different residents of the building
and employees of the Corporation." It noted repeated instances of plaintiffs
calling the police about "incidents that [plaintiffs] appear to have instigated."
The notice to cure cited five specific instances of plaintiffs' conduct:
1. On February 4, 2020[,] at approximately 1:30
[p.m.,] resident Joe Berger was doing laundry in the
A-0795-23
8
building [six] laundry room and using one machine.
When he returned to the laundry room, he found that
[Melissa] had removed his laundry from the washing
machine prior to its completion of the spin cycle. . . .
Berger also noted that [Melissa] was using [five]
washing machines even though the laundry room rules
set a limit of the use of [two] washing machines at one
time by a resident. . . . Berger advised her of same, and
she responded that no one else was there. He pointed
out that she had removed his clothes before the spin
cycle [ended]. At that point, [Melissa] angrily lashed
out at . . . Berger and said that he and his children were
miserable people, and that . . . Berger was "attacking"
her. She then went to get her husband while . . . Berger
folded his clothes.
Video footage from the hallway adjacent to the laundry
room shows that while . . . Berger carried his clothes
out of the laundry room towards the elevator,
[plaintiffs] emerged from the elevator and began
angrily confronting . . . Berger. In particular, [Melissa]
appeared to be screaming at . . . Berger while wildly
gesticulating and pointing at him. While being
subjected to [the] same, . . . Berger attempted to enter
the elevator and leave, but [Melissa] physically blocked
him from doing so. Eventually, [Melissa] moved, and
. . . Berger got on the elevator. While the doors were
closing[, Melissa] appeared to continue to yell at . . .
Berger and angrily point at him. . . . Berger lodged a
complaint with management.
2. On January 25, 2020[,] [s]hareholder Pauline
Zatz came to the laundry room to find that Melissa . . .
had removed . . . Zatz's clothing from the washing
machine that she was using. . . . Zatz told [Melissa] that
she should not be touching other resident[s'] clothes
when they were a few minutes late to remove them from
the machine. [Melissa] became angry and accused . . .
A-0795-23
9
Zatz of "harassing" her. [Melissa] then called the
doorman and demanded that he call the police. The
doorman declined to call the police. . . . Zatz then put
her clothes in a dryer and left. [Melissa] then called the
police. The police visited . . . Zatz but took no action.
. . . Zatz then called security to escort her to the laundry
room to retrieve her clothes.
3. On January 12, 2020[,] resident Phyllis Pfeifer
walked into the lobby of building [six] while Melissa
. . . was sitting in a chair in the lobby. She did not look
at [Melissa,] nor did she speak with her. . . . Pfeifer
spoke with the doorman in the package room. Half an
hour later[,] two people from security came to . . .
Pfeifer's apartment and stated that [Melissa] claimed
that . . . Pfeifer had harassed her. Subsequently, two
police officers came to . . . Pfeifer's apartment after
having received a call from [Melissa]. No police action
was taken. . . . Pfeiffer lodged a complaint with
management.
4. Carol [Rachesky] reported that on November 7,
2019[,] she attempted to enter an elevator in building
[six] to find that [plaintiffs] were already on it.
[Melissa] told her that she could not get on the elevator.
. . . [Rachesky] said that, "I am coming on, if you want
to get off[,] ok." According to . . . [Rachesky,] she
began using her phone while Melissa . . . began
screaming insults at her, calling her a b[****], and
making fun of her appearance. Video evidence from
the elevator camera shows . . . [Rachesky] looking at
her phone while [Melissa] appears to scream and point
at . . . [Rachesky]. At one point, [Melissa] lunged at . .
. [Rachesky] and was restrained by her husband. . . .
[Rachesky] further reported that on November 10,
2019[,] she again attempted to board an elevator but
was blocked by [Melissa]. Fearing another
confrontation, . . . [Rachesky] declined to enter the
A-0795-23
10
elevator. . . . [Rachesky] lodged a complaint with
management.
5. On August 22, 2019[,] resident Gerald N. Daffner
reported that on August 13, 2019[,] he was returning to
his apartment[,] which is adjacent to that of [plaintiffs'].
He had a grocery cart. [Melissa] had left a luggage rack
in the hallway[,] which blocked . . . Daffner from
bringing his grocery cart into his apartment. He moved
[Melissa]'s cart out of the way so that he could enter his
apartment. This enraged [Melissa,] who began yelling
and shoving the grocery cart into his body over and
over, and attempted to tip over . . . Daffner's cart[,] and
caused his mail to spill on the floor. . . . Daffner and his
wife are both [eighty-five] years old. . . . Daffner lodged
a complaint with management.
The notice advised plaintiffs the Board deemed their actions to constitute
objectionable conduct in violation of paragraph 31(f) of the lease, and, if not
cured within thirty days, the Board could vote to terminate their stock and lease.
It further advised plaintiffs could cure their objectionable conduct if they ceased
and desisted from having verbal and physical altercations with residents and
staff members.
On April 29, 2020, plaintiffs' counsel advised the Corporation's counsel
his clients were "working on a detailed factual response to . . . [the] March 12,
2020" notice, but he needed more time to respond. The record does not contain
a further response to the March 12, 2020 notice. However, on April 17, 2020,
plaintiffs' counsel sent a letter to the Corporation's counsel, complaining about
A-0795-23
11
Daffner's conduct towards plaintiffs. In their subsequent opposition to the
Corporation's motion for summary judgment, plaintiffs denied receiving the
March 12, 2020, notice "as it was never sent to them personally or to their unit
as prescribed by the proprietary lease."
On December 22, 2020, plaintiffs reported to their building's security they
sustained a water leak in their dressing room closet. The Corporation staff
reported to the apartment and observed "water had seeped in from underneath
the wall," and the underlying floor tile had "buckled." According to a
certification from Michael Walsh, the Corporation's director of facilities, the
staff cleaned up the water and placed dehumidifiers in the apartment . Walsh
also certified staff investigated plaintiffs' neighbor's apartment and initially
believed the source of the leak was a neighbor's refrigerator. Accordingly, staff
provided plaintiffs with that neighbor's insurance information. On December
28, 2020, Joe Sinisi, another staff member, emailed plaintiffs advising the
Corporation's contractor would contact them that day to address the floor repairs
and noting "[t]he origin of the leak came from a broken refrigerator water line
which occurred in apartment # 2909."
However, according to Walsh, staff later moved the neighbor's refrigerator
and discovered no evidence of water damage, and thus, "it was clear that was
A-0795-23
12
not the source of the leak." Walsh also certified he reviewed the building plans
and noted the neighbor's bathroom was adjacent to the location where plaintiffs'
leak occurred. The Corporation thereafter concluded it needed to conduct a
water test, which involved running water in the neighbor's bathroom at the same
time as another staff member observed plaintiffs' closet to determine whether
any leaks were present, and if so, trace the source of the water infiltration.
On January 6, 2021, plaintiffs' attorney sent the Corporation's counsel a
letter, stating plaintiffs were "suffering through a flood in their apartment" and
demanding the Corporation "immediately determine and certify precisely where
the water [wa]s emanating from."
The following day, the Corporation's counsel emailed plaintiffs' attorney,
stating the Corporation needed to conduct a water test to determine the source
of the leak. The email noted plaintiffs' "cooperation in this assessment will be
required[,] since access to their apartment will be necessary to determine if a
leak is occurring." That same day, plaintiffs' counsel responded via letter stating
plaintiffs were "happy to provide access to their apartment," but given the
COVID-19 pandemic, they needed staff to wear a face mask upon entry to the
unit, confirm the staff member's temperature, and have the Corporation verify
the staff member had a recent negative COVID-19 test.
A-0795-23
13
On January 8, 2021, plaintiffs emailed Walsh asking him to "lay[] out
[the] plan of action to resolve this flood issue" and inquiring about the water
test. That same day, Walsh contacted plaintiffs asking whether they were
available that afternoon to conduct the test. Also on January 8, the Corporation's
counsel sent an email to plaintiff's counsel, stating "[t]he Corporation is unclear
whether your clients are willing to provide access to perform the necessary tests"
and noting plaintiffs had an obligation under the lease to provide access. The
email further stated plaintiffs had "no basis . . . to attach any further terms and
conditions regarding said access." In addition, the email noted plaintiffs had a
telephone conversation with Walsh, which ended with plaintiffs calling him a
"liar[]," and another conversation with Sinisi, in which plaintiffs called him a
"liar[]" and a "piece of s[***]."
On January 11, plaintiffs' counsel responded to the January 8 email,
stating it had been seventeen days since the flood in plaintiffs' apartment , and
the Corporation still had not taken any action. Counsel further stated plaintiffs
were amenable to the water test but only if certain conditions were met: (1) the
names of all individuals who would access the apartment were provided; (2) a
time frame for the duration of the test was provided; (3) a negative COVID-19
test result within the past seventy-two hours for each person going to the
A-0795-23
14
apartment was required; (4) temperature checks were conducted before entry;
and (5) each staff member wore a face mask and gloves. Additionally, plaintiffs'
counsel demanded proof the Corporation had amended its bylaws and rules to
adopt COVID-19 protocols.
The Corporation's counsel responded to plaintiffs' counsel the same day,
reiterating the Corporation needed to conduct the water test to determine the
source of the leak, and plaintiffs were in violation of the lease by refusing to
provide access. Counsel agreed to provide plaintiffs with the names of all
individuals who would enter the apartment, once the parties agreed on a date, as
well as an estimated length of time for the test and agreed all staff would wear
face masks and gloves. However, counsel stated the Corporation "has a legal
duty to keep its employees' medical information confidential," and therefore, it
could not provide plaintiffs with staff members' temperature information or the
results of their COVID-19 tests. Nevertheless, counsel asserted the Corporation
was complying with Executive Order 192 4 and appropriately monitoring
employees for COVID-19 symptoms.
On January 22, 2021, plaintiffs' counsel responded via letter, denying
plaintiffs were refusing access or in violation of the lease, but rather they were
4
See Exec. Order No. 192 (Oct. 28, 2020), 52 N.J.R. 2079(a) (Dec. 7, 2020).
A-0795-23
15
requesting "reasonable conditions" in light of the COVID-19 pandemic and
because plaintiffs were "older and ha[d] serious underlying health issues ."
Counsel further inquired as to what the water test would entail and what the
Corporation's plan was to fix the leak if it determined the leak originated from
the neighbor's bathroom.
The Corporation's counsel responded via letter dated January 27,
reiterating staff would wear gloves and masks but again declining to provide the
"employees' personal health information" and setting forth what the water test
would entail. Regarding plaintiffs' concerns on how the Corporation would
repair the leak, the Corporation's counsel stated it could not devise a plan until
it determined the source of the leak.
On March 17, 2021, the Corporation's counsel sent plaintiffs an amended
notice to cure. The letter stated the Corporation sent the notice directly to
plaintiffs because they did not have an attorney representing them on the
Corporation's counterclaim at the time.5 Further, the notice stated its purpose
was, in relevant part, to provide plaintiffs with an opportunity to cure their
violation of the lease due to their failure to provide access to their apartment and
5
Plaintiffs' prior attorney had moved to be relieved as counsel, which the court
granted on February 24, 2021.
A-0795-23
16
to place them on notice regarding additional objectionable conduct.
The notice set forth the parties' communications regarding the December
22, 2020 leak, stating, "[t]o date, you have continued to refuse to provide access
and are in breach of the . . . [l]ease." The letter also stated despite the March
2020 notice, plaintiffs continued their objectionable conduct, citing plaintiffs
calling Walsh a "liar" and Sinisi a "piece of shit." The letter further asserted
that on June 16, 2020, plaintiffs "entered the security office and cursed out and
insulted staff." Counsel advised plaintiffs the Corporation intended to move for
injunctive relief seeking access to the apartment, and the Corporation reserved
its right to terminate plaintiffs' stock and lease. On March 18, 2021, plaintiffs
sent a letter to the court, confirming receipt of the March 17 notice.
On March 31, 2021, the Corporation moved for injunctive relief seeking
"entry and access" to plaintiffs' apartment to investigate and repair the leak in
the apartment. Due to the COVID-19 restrictions, the Corporation stated its
employees and agents would wear face masks and maintain a distance of at least
six feet from plaintiffs when they entered the apartment. On April 16, the trial
court granted the Corporation's application and ordered plaintiffs to provide the
Corporation access to their apartment on or before April 23. The order required
the Corporation's staff to wear face masks and maintain at least six feet of
A-0795-23
17
distance from plaintiffs and required the Corporation to provide plaintiffs with
the names of the individuals who would enter the apartment. On April 19, the
Corporation's counsel emailed plaintiffs' new attorney, 6 asking for dates and
times when plaintiffs would make their apartment available for the water test.
After receiving no response, counsel sent a follow-up email on April 22.
On April 23, plaintiffs' attorney responded plaintiffs were available on
either May 6 or May 7. The Corporation's counsel subsequently advised it
would conduct the water test on May 6. In addition, the Corporation's counsel
stated plaintiffs recently reported "an additional minor discoloration on a part of
their living room ceiling[,] which could be the result of a leak[,]" and the
Corporation wanted to assess the ceiling issue on the same day it conducted the
water test.
The Corporation's counsel emailed plaintiffs' attorney on May 3, asking
to confirm the May 6 date for the water test. Plaintiffs' counsel responded on
May 5, advising plaintiffs had communicated with Walsh and decided to address
the living room ceiling issue first and resolve the leak on a later date.
On May 20, 2021, the Court entered a case management order, in which
6
The docket reflects plaintiffs' new attorney entered an appearance on March
29, 2021.
A-0795-23
18
it again ordered plaintiffs' attorney to provide the Corporation's counsel, by end
of day, with dates on which the Corporation could enter the apartment "to
address the outstanding leak issue, per prior orders." That same day, the
Corporation's counsel emailed plaintiffs' attorney, asking for the dates to inspect
the apartment. The following day, the Corporation's counsel emailed plaintiffs'
attorney again, noting no dates had been provided. The Corporation's counsel
also noted staff advised him plaintiffs stated they would be away until mid-June
and would therefore be unavailable to conduct the water test, which counsel
stated was "not acceptable." A few hours later, the Corporation's counsel sent
another email, advising plaintiffs' neighbor was available for the water test on
either May 26 or May 27. Counsel followed up again on May 24, seeking a
response.
Later on May 24, 2021, plaintiffs' attorney emailed the Corporation's
counsel plaintiffs could provide access to the apartment on June 22 or June 24.
The email also advised plaintiffs would be out of town and would not return
until June 14. The Corporation's counsel responded on May 28, selecting June
22 as the date for the water test, with June 24 being a "back[-]up date."
On June 22, the Corporation's counsel emailed plaintiffs' attorney,
advising plaintiffs had canceled the water test and told management they would
A-0795-23
19
be unavailable until after July 8. Plaintiffs' attorney responded on June 24, 2021,
stating plaintiffs "had suddenly been offered a substantial business opportunity
out of town" and had to leave "immediately."
Later that same day, management emailed a notice of a Board meeting to
all shareholders. The notice indicated the Board would meet via Zoom on July
1, 2021, to vote to "terminate [the] stock and lease of particular shareholders
and to authorize corporate counsel to send appropriate notices and take legal
action." The Corporation's portal reflected it sent notice of the meeting via email
to plaintiffs. In addition, the general manager of the Corporation testified staff
also placed notice of the meeting in the common areas of each building.
The Board met on July 1, 2021, with the meeting minutes reflecting six
directors were present and one absent. In addition, the Corporation's counsel
was present, as well as the general manager and the assistant general manager.
Howard Pearl, the Board's secretary, and Richard Ng, the Board's president,
testified the Board authorized the Corporation's attorney to run the meeting. All
six directors, satisfying the two-thirds majority required, ultimately voted in
favor of terminating plaintiffs' stock and lease.
At his deposition, Pearl testified while he did not personally investigate
the truthfulness of the allegations against plaintiffs, he had witnessed Melissa's
A-0795-23
20
"poor behavior" "on various occasions." Pearl also explained he voted in favor
of the termination based on his personal knowledge, as well as the documents
presented to the Board, including the security incidents and police reports.
Similarly, the Board president stated he reviewed security footage of the
February 4, 2020 incident with Berger and the November 7, 2019 incident with
Rachesky prior to the vote. Regarding the Board's decision, the president
testified, "[w]hen the [B]oard observed the quanti[t]y of incidents, examples of
objectionable behavior in the quantity that we observed, we made the business
decision to terminate the stock and lease held by [plaintiffs]." Another Board
member testified there was a "barrage of complaints" against plaintiffs, and the
Board had "overwhelming evidence" justifying the termination of plaintiffs'
stock and lease.
The Board issued a confidential resolution outlining its decision . The
resolution stated plaintiffs had engaged in "numerous disputes and
confrontations with Corporation staff and other residents," as well as "various
violations of the House Rules, such as improper use of the package room,
parking in unassigned spaces, and refusing to permit access to their apartment."
It cited the March 12, 2020 notice and set forth the five incidents contained
therein. The resolution also cited the March 17, 2021 notice and stated plaintiffs
A-0795-23
21
"ha[d] refused, and continue[d] to refuse, to provide the Corporation access to
the apartment." The resolution further stated because plaintiffs had not cured
their objectionable conduct under paragraphs 31(e) and (f) of the lease, the
Board was exercising its business judgment to terminate their stock and lease .
On July 2, 2021, the Corporation's counsel sent a notice to terminate
plaintiffs' lease and stock to plaintiffs' counsel, citing plaintiffs' objectionable
conduct and failure to provide access to the apartment as the basis for the Board's
decision. The letter also advised plaintiffs needed to vacate the apartment by
July 13, 2021. The letter further indicated it was sent to plaintiffs' counsel via
email and certified and regular mail.
On July 9, 2021, plaintiffs filed an order to show cause with temporary
restraints, challenging the Board's July 1, 2021 vote to terminate their stock and
lease and seeking to enjoin the Corporation from requiring plaintiffs to deliver
possession of the apartment and surrender their stock certificate. On August 9,
2021, the court entered an order stating, "[t]he parties have consented to submit
their disputes concerning termination of plaintiffs' interest in [the Corporation]
to mediation with the court-appointed mediator." The court also entered a
separate order, requiring the Corporation to send, directly to plaintiffs, the notice
of termination it had previously sent to their attorney. Thereafter, the parties
A-0795-23
22
attended mediation but were unable to resolve the dispute.
On August 12, 2021, the Corporation filed an amended answer and
counterclaim. In the amended counterclaim, the Corporation set forth the facts
surrounding the two notices to cure it had sent plaintiffs and alleged plaintiffs
had failed to provide them with access to their unit to investigate a water leak
that arose in December 2020. The Corporation also added a fourth count to its
counterclaim, seeking termination of plaintiffs' stock and the ejectment of
plaintiffs from the apartment per the Board's July 1, 2021 vote.
On July 7, 2023, the Corporation moved for summary judgment on its
counterclaim, seeking an order terminating plaintiffs' stock and lease and
ejecting them from the apartment. That same day, plaintiffs cross-moved for
summary judgment on the Corporation's counterclaim.
The court entertained oral argument and reserved its decision. On August
23, 2023, the court, as discussed more fully below, rendered an oral decision,
granting summary judgment to the Corporation. The court found the Board
appropriately terminated plaintiffs' stock and lease based on plaintiffs'
objectionable conduct and failure to provide access to their apartment in
connection with the leak. The court memorialized its decision in an order. In
addition to terminating plaintiffs' stock and lease, the order stated the court was,
A-0795-23
23
"on its own initiative, stay[ing] the enforcement of this [o]rder to afford . . .
[p]laintiffs the opportunity, should they choose to file a motion for leave to
[a]ppeal," and barring the Corporation from enforcing the order "until [the]
resolution of any [a]ppellate filings."
Plaintiffs moved for reconsideration of the summary judgment order. The
court denied plaintiffs' motion for reconsideration on September 22, 2023,
finding plaintiffs "fail[ed] to raise any facts or issues not previously considered ."
On September 26, 2023, the trial court entered an amended order for summary
judgment, clarifying the enforcement of the August 23, 2023 order was stayed
for forty-five days, but it was not the intention of the court to stay the matter
pending appeal.
The Corporation also moved for attorneys' fees in connection with its
counterclaim, pursuant to the attorneys' fee provision in the lease, and plaintiffs
opposed the application. On November 3, 2023, the court entered an order
"direct[ing] the entry of the August 23, 2023 [or]der as a final judgment ."
On November 14, 2023, plaintiffs filed a notice of appeal under Docket
No. A-0795-23. On November 27, plaintiffs moved before this court to stay the
trial court's August 23, 2023, September 26, 2023, and November 3, 2023 orders
pending appeal. On November 30, 2023, the Corporation moved to dismiss the
A-0795-23
24
appeal, arguing the matter was not ripe given the trial court had not yet issued
an order on its motion for attorneys' fees.
On December 14, this court entered an order temporarily remanding the
matter "to the trial court to issue its decision on [the Corporation]'s pending
motion for counsel fees," providing "[e]ither party may appeal or cross -appeal
that order," and any appeal "will be consolidated with the existing appeal." We
then entered another order, staying the eviction pending the remand and any
subsequent appeal.
During the remand period, plaintiffs moved to vacate the court's grant of
summary judgment to the Corporation under Rule 4:50-1. On January 3, 2024,
the trial court entered an order and statement of reasons, granting the
Corporation's motion for attorneys' fees in the amount of $301,859.03 . On
January 5, 2024, the court held a conference with the parties, where it questioned
whether it had jurisdiction to consider plaintiffs' Rule 4:50 motion, since there
was a pending appeal. Thereafter, the court entered an order on January 19,
2024, denying plaintiffs' Rule 4:50 motion "based on [a] lack of jurisdiction per
Rule 2:9-1."
On February 6, 2024, plaintiffs filed a notice of appeal under Docket No.
A-1665-23, challenging the court's January 3, 2024 and January 19, 2024 orders.
A-0795-23
25
We subsequently consolidated the appeals.
II.
A.
Plaintiffs challenge the court's summary judgment order entered in favor
of the Corporation, arguing there were procedural and substantive deficiencies
with the Board's decision. They assert the business judgment rule does not
shield the Corporation's conduct because "rigid adherence to procedures" is
required when a board seeks to impose discipline that would forfeit vested
rights. They argue they did not receive proper notice pertaining to their alleged
objectionable conduct because, pursuant to the lease and bylaws, the Board's
secretary must serve the Corporation's notices, and the notices must be sent to a
shareholder at the building, neither of which was done in this case. Plaintiffs
contend under the Corporation's governing documents, a shareholder 's
objectionable conduct must be "repeated," and neither notice in this case
referenced any repeated conduct by them. They further allege the June 24, 2021
notice of the July 1, 2021 Board meeting did not constitute proper service.
Plaintiffs also assert the Board meeting was a "sham" and purposely scheduled
for a date when plaintiffs were out of town and could not attend. Finally,
A-0795-23
26
plaintiffs argue there were disputed issues of fact concerning their alleged
failure to provide access to their apartment.
We address plaintiffs' arguments utilizing familiar standards of summary
judgment and appellate review. We review a grant of summary judgment de
novo, applying the same standard as the motion judge. Samolyk v. Berthe, 251
N.J. 73, 78 (2022). That standard requires a determination be made as to
"whether 'the pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, if any, show that there is no genuine issue
as to any material fact challenged and that the moving party is entitled to a
judgment or order as a matter of law.'" Branch v. Cream-O-Land Dairy, 244
N.J. 567, 582 (2021) (quoting R. 4:46-2(c)).
"To decide whether a genuine issue of material fact exists, the trial court
must 'draw[] all legitimate inferences from the facts in favor of the non-moving
party.'" Friedman v. Martinez, 242 N.J. 449, 472 (2020) (alteration in original)
(quoting Globe Motor Co. v. Igdalev, 225 N.J. 469, 480 (2016)). "An issue of
fact is genuine only if . . . the evidence submitted by the parties on the motion,
together with all legitimate inferences therefrom favoring the non-moving party,
would require submission of the issue to the trier of fact." R. 4:46-2(c). By
comparison, "[t]o the extent that the grant or denial of summary judgment is
A-0795-23
27
based on an issue of law, we owe no deference to an interpretation of law that
flows from established facts." State v. Perini Corp., 221 N.J. 412, 425 (2015).
Membership in a cooperative corporation is not a traditional form of
property ownership. See Presten v. Sailer, 225 N.J. Super. 178, 189 (App. Div.
1988) (noting "cooperative ownership is hybrid and sui generis"); Plaza Rd.
Coop., Inc. v. Finn, 201 N.J. Super. 174, 180 (App. Div. 1985) (finding that a
cooperative apartment association is a "unique form of property ownership").
Generally, a corporate entity is formed, and that entity has legal title to the real
property of the cooperative. Presten, 225 N.J. Super. at 184-85. Individuals
then purchase shares of the corporation's stock, enabling them to occupy a
particular apartment within the cooperative. Id. at 185. The shareholder and the
corporation typically enter into a proprietary lease, which provides the
shareholder with an exclusive right of occupation. See Sulcov v. 2100 Linwood
Owners, Inc., 303 N.J. Super. 13, 20 (App. Div. 1997); Presten, 225 N.J. Super.
at 188 ("The proprietary lease grants an interest in real property."); N.J.S.A.
46:8D-3(k) (defining a proprietary lease as "a grant of a long[-]term exclusive
right of possession and occupancy of a designated unit to a co[-]owner or a grant
of a leasehold of the cooperative structure").
Because the cooperative takes the form of a corporation, corporate law
A-0795-23
28
governs its internal management. Plaza Rd. Coop., Inc., 201 N.J. Super. at 180.
Thus, a cooperative's governing body is entitled to the protection of the business
judgment rule. See Comm. for a Better Twin Rivers v. Twin Rivers
Homeowners' Ass'n, 192 N.J. 344, 369 (2007) (discussing the application of the
business judgment rule in cases involving homeowners' associations); Alloco v.
Ocean Beach & Bay Club, 456 N.J. Super. 124, 134-35 (App. Div. 2018)
(affirming the application of the business judgment rule to the decision of a
board of a homeowners' association); Sulcov, 303 N.J. Super. at 31 (noting the
business judgment rule applies to decisions taken by a cooperative's board).
"The business judgment rule has its roots in corporate law as a means of
shielding internal business decisions from second-guessing by courts." Seidman
v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 175 (2011) (quoting Green Party v.
Hartz Mountain Indus., 164 N.J. 127, 147 (2000)). If a board's decision is "made
in good faith based on reasonable business knowledge," then it is "immune from
liability from actions brought by others who have an interest in the business
entity." Ibid. (quoting Green Party, 164 N.J. at 147). The rule creates "'a
rebuttable presumption' that the actions of a Board are valid." Alloco, 456 N.J.
Super. at 136 (quoting In re PSE & G S'holder Litig., 173 N.J. 258, 277 (2002)).
The rule has a two-step inquiry: (1) whether the board's actions were authorized;
A-0795-23
29
and (2) whether there was fraud, self-dealing, or unconscionable conduct. See
id. at 135; Seidman, 205 N.J. at 175. The business judgment rule, however, does
not apply to decisions that are beyond the authority of a cooperative's governing
documents. See Sulcov, 303 N.J. Super. at 31.
The challenger to the corporate action bears the burden of showing the
board's action was tainted by fraud, self-dealing, or unconscionable conduct.
Alloco, 456 N.J. Super. at 136. If the challenger meets their burden, the
presumption is rebutted, and the burden shifts to the corporation to show the
transaction was fair. Ibid.
"[T]he relationship between a cooperative and its shareholders should be
determined by its [c]ertificate, by-laws, and proprietary lease," and those
documents "must be read together." Sulcov, 303 N.J. Super. at 30. The
governing documents are analyzed under principles of contract interpretation.
See Boyle v. Huff, 257 N.J. 468, 477 (2024) (stating a condominium
association's bylaws are subject to contract interpretation); Reilly v. Riviera
Towers Corp., 310 N.J. Super. 265, 271 (App. Div. 1998) (noting the proprietary
lease was the operative contract between the board of a cooperative and its
shareholders).
This court reviews the trial court's interpretation of a contract de novo.
A-0795-23
30
Barila v. Bd. of Educ. of Cliffside Park, 241 N.J. 595, 612 (2020). "It is well-
settled that '[c]ourts enforce contracts based on the intent of the parties, the
express terms of the contract, surrounding circumstances[,] and the underlying
purpose of the contract.'" In re County of Atlantic, 230 N.J. 237, 254 (2017)
(first alteration in original) (quoting Manahawkin Convalescent v. O'Neill, 217
N.J. 99, 118 (2014)) (additional internal quotation marks omitted). "The plain
language of the contract is the cornerstone of the interpretive inquiry; 'when the
intent of the parties is plain and the language is clear and unambiguous, a court
must enforce the agreement as written, unless doing so would lead to an absurd
result.'" Barila, 241 N.J. at 616 (quoting Quinn v. Quinn, 225 N.J. 34, 45
(2016)). An ambiguity exists if it appears that a term is "susceptible to at least
two reasonable alternative interpretations." Chubb Custom Ins. Co. v.
Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008). Because a court must
enforce a contract as written, it cannot "rewrite a contract for the parties better
than or different from the one they wrote for themselves." GMAC Mortg., LLC
v. Willoughby, 230 N.J. 172, 186 (2017) (quoting Kieffer v. Best Buy, 205 N.J.
213, 223 (2011)).
Here, the trial court found the Corporation provided proper notice to
plaintiffs. It first concluded the Corporation sent plaintiffs "numerous notices"
A-0795-23
31
of their objectionable conduct and their refusal to grant access to the apartment .
The court noted the Corporation sent plaintiffs notice of the July 1, 2021 Board
meeting via email and that it sent plaintiffs' counsel a notice of termination dated
July 2, 2021. The court then stated, given the "protracted litigation[,] . . . it is
unfathom[able] to suggest . . . plaintiff[s] weren't aware of the notices." It
further noted the Corporation properly served the notices on plaintiffs' counsel ,
given there was litigation pending between the parties.
Regarding the access issue, the court concluded the docket reflected
plaintiffs' failure to provide access to their apartment, namely, the court's April
and May 2021 orders compelling plaintiffs to provide access. As for the
termination due to plaintiffs' objectionable conduct, the court found the Board's
actions were proper and fell within the protections of the business judgment rule .
It further concluded plaintiffs' claims of the Board's bias and unconscionable
conduct were "not substantiated."
Initially, we address plaintiffs' claim we should apply "heightened
vigilance" in assessing the Board's exercise of its business judgment. In support
of their claim, they cite two cases from New York courts: Horwitz v. 1025 Fifth
Ave., Inc., 777 N.Y.S.2d 482 (N.Y. App. Div. 2004), and 13315 Owners Corp.
v. Kennedy, 782 N.Y.S.2d 554 (N.Y. Civ. Ct. 2004). Both cases state courts
A-0795-23
32
should apply "heightened vigilance" in assessing whether a board properly
exercised its business judgment in circumstances where the board seeks to
terminate a lease. See Horwitz, 777 N.Y.S.2d at 483; 13315 Owners Corp., 782
N.Y.S.2d at 565.
Both Horwitz and 13315 Owners Corp. cite another case, 40 W. 67th St.
Corp. v. Pullman, 760 N.Y.S.2d 745 (N.Y. 2003), for the proposition a court
should apply this heightened standard. See 777 N.Y.S.2d at 483; 782 N.Y.S.2d
at 559-65, 568-71. In Pullman, the cooperative's shareholders voted to terminate
the defendant's lease based on objectionable conduct. 760 N.Y.S.2d at 747. The
court confirmed the business judgment rule applied to the cooperative's decision
to terminate a lease. Ibid. It noted the defendant had adequate notice of the
meeting to terminate, and the cooperative acted via supermajority vote and
issued a resolution specifying its reasons for its actions, including findings
related to the defendant's objectionable behavior. Id. at 752. Thus, regardless
of the "heightened vigilance" standard, New York courts also apply the business
judgment rule in circumstances concerning a cooperative's termination of a
shareholder's lease. See id. at 747, 749-51.
Although some New Jersey cases have looked to New York law in matters
involving cooperative associations, we are aware of no controlling authority in
A-0795-23
33
this state where the "heightened vigilance" standard has been adopted, and we
decline to do so here. See, e.g., Reilly, 310 N.J. Super. at 270 (looking to New
York law concerning a cooperative's imposition of a sublet fee); Sulcov, 303
N.J. Super. at 29-30 (looking to New York case law on transfer fees imposed by
cooperatives); Presten, 225 N.J. Super. at 186 (noting "New York seems to have
had more experience with cooperative apartment developments than other
states"). Accordingly, we apply the business judgment rule to this matter, as the
trial court did, and not the heightened standard plaintiffs request.
Plaintiffs next argue they were not given proper notice of the notices to
cure. Paragraph 27 of plaintiffs' lease states, "[a]ll notices . . . from either party
. . . shall be in writing and sent by registered mail, return receipt requested," and
if the notice was to the shareholder, "addressed to the [b]uilding." That same
paragraph also provides either party could, "by notice served in accordance
herewith[,] designate a different address for service of notices or demands."
The Corporation does not dispute it served the March 12, 2020 notice to
cure on plaintiffs' counsel rather than on plaintiffs directly. However, the
second notice, dated March 17, 2021, was served via regular and certified mail,
in accordance with the lease. The question, therefore, is whether service of the
March 12, 2020 notice on plaintiffs' attorney constituted proper notice.
A-0795-23
34
We are satisfied the court did not err in finding plaintiffs had notice of the
March 12, 2020 notice. As of March 2020, the parties were engaged in
litigation, and plaintiffs had retained counsel. Plaintiffs' counsel acknowledged
receiving the March 12, 2020 notice and advised his "clients [we]re working on
a detailed factual response," and requested additional time to respond. The
essence of notice provisions is to ensure parties receive proper notice. In 243
South Harrison Street Corp. v. Ogust, for example, the court noted the purpose
of a lease termination provision requiring service by certified or registered mail
is to ensure the defaulting party receives proper notice. 113 N.J. Super. 74, 78
(Cnty. Ct. 1971) (quoting E. Eighty-Second St. Corp. v. Rogers, 183 N.Y.S. 297,
300 (N.Y. App. Div. 1920)) (holding the intent of the parties, evidenced by the
certified and registered mail provision of the lease, sought "to insure the delivery
of the notice, and to settle any dispute that might arise between the part ies as to
whether or not the notice was duly received"). Here, there is no dispute
plaintiffs' counsel received the March 12, 2020 notice from the Corporation.
Our courts prioritize the objective of notice—actual receipt—over the precise
method of delivery specified in the contract. The purpose of notice provisions
is not to rigidly enforce the specified method of delivery but to ensure proper
notice to the defaulting party, which service of the March 2020 notice on
A-0795-23
35
plaintiffs' counsel accomplished here.7
We are likewise unpersuaded by plaintiffs' assertion the Board's secretary
was required to issue the notice to cure. Article IV, section 4 of the bylaws
required the secretary to "attend to the giving and serving of all notices of the
Corporation . . . ." The plain language of this section does not require the
secretary to personally sign and serve all notices. Accordingly, we determine
the court did not err in permitting the service of the notice to cure to be delegated
to the Corporation's counsel.
Moreover, we are unconvinced by plaintiffs' argument the Board could
not terminate their lease and stock based upon their objectionable conduct
because there was no demonstration they engaged in objectionable conduct that
was "repeated after written notice" under paragraph 31(f) of the lease.
The language of the lease allows for termination of the lease if the
shareholders repeated their objectionable conduct after written notice. Because
we determined plaintiffs were properly served the March 2020 notice, the
7
We are also mindful of the Corporation's concern that because the parties were
in litigation, Rule of Professional Conduct (RPC) 4.2 prohibited counsel from
directly communicating with plaintiffs. RPC 4.2 states an attorney should not
communicate directly with a party they know is represented by counsel in a
dispute. Matter of Robertelli, 248 N.J. 293, 318 (2021).
A-0795-23
36
Board's March 2021 notice was sufficient to put plaintiffs on notice of their
continued objectionable conduct. Plaintiffs argue the notices did not contain
any "overlapping" conduct. However, the lease did not require repeated conduct
in the sense that plaintiffs had to engage in identical conduct involving the same
residents or staff. Rather, the provision only required the Corporation identify
repeated objectionable conduct, which it did in its March 2021 notice.
Plaintiffs' challenge to the June 24, 2021 notice also fails because that was
a notice of a Board meeting, not a shareholders meeting. As to Board meetings,
the bylaws state as little as two days' notice could be provided to directors, and
the notice could be served personally, by mail or by telephone. Plaintiffs were
emailed notice of the meeting. The Corporation notes, in addition to emailing
the notice to all shareholders, the notice was also posted in the common areas of
all six of the Corporation's buildings, with the agenda "as required by . . .
N.J.A.C. 5:26-8.12(c)." Furthermore, plaintiffs' assertion the Corporation
prevented them from attending the July 1, 2021 Board meeting is unavailing,
given the meeting was held virtually. Although plaintiffs were out of town, it is
unclear why this would have prevented them from attending the virtual meeting.
Plaintiffs also challenge the merits of the trial court's decision, arguing
there were disputes of fact that should have precluded the entry of summary
A-0795-23
37
judgment. First, the record contains multiple security incident reports and police
reports corroborating the objectionable conduct. The record also shows
plaintiffs continued to berate the Corporation's staff after receiving the March
2020 notice to cure.
Plaintiffs fault the Board for failing to investigate the incidents of
objectionable conduct. However, the Board members testified they reviewed
the security incident reports, police reports, and security footage before voting
to terminate plaintiffs' stock and lease. Moreover, plaintiffs do not allege on
appeal the Board's vote was a product of fraud, self-dealing, or unconscionable
conduct, which is necessary to overcome the presumption of validity under the
business judgment rule. Thus, the record supports the instances of objectionable
conduct.
Likewise, the court did not err in its determination there were no issues of
fact in dispute regarding plaintiffs' failure to provide access to their apartment.
Paragraph 25 of the lease provided the Corporation had a right to access a
shareholder's apartment, at a reasonable time and upon notice, to make or
facilitate repairs. Further, paragraph 31(e) provided the Corporation could
terminate the shareholder's lease if the shareholder was in default of any
provision under the lease and such default continued for thirty days after being
A-0795-23
38
provided with notice.
The Corporation provided plaintiffs with written notice of their default
under the lease and their violations of paragraph 25 of the lease via the March
17, 2021 notice to cure. Thirty days later, on April 16, 2021, the court entered
an order compelling plaintiffs to provide access to their apartment. Thirty-four
days after that (and sixty-four days from the March 17 notice), the court entered
another order compelling plaintiffs to provide dates for the Corporation to access
their apartment to address the December 2020 water leak. The record shows the
Corporation did not obtain access to plaintiffs' apartment until July 21, 2021,
well after the Board's vote to terminate plaintiffs' lease and stock on July 1,
2021. Therefore, based on this record, the court did not err in concluding the
Board had a proper basis to vote to terminate plaintiffs' stock and lease.
Plaintiffs' statement of material facts in support of their cross-motion for
summary judgment did not address the merits of the access issue. 8 And, in
plaintiffs' response to the Corporation's statement of material facts, they
8
At oral argument, plaintiffs' counsel asserted "access was ultimately
provided," but he could not direct the court towards any document in the record
supporting that argument.
A-0795-23
39
admitted only they provided access to their unit on July 22, 2021.9 On appeal,
plaintiffs rely upon Melissa's certification, which sought to vacate the summary
judgment order, in support of their Rule 4:50-1 motion to argue they provided
access to their apartment in a timely manner. However, that motion was filed
after the court granted the Corporation's motion for summary judgment, and , as
such, the facts in the certification were not before the trial court when it ruled
on the summary judgment motions. Thus, those facts do not provide a basis for
reversal.
Plaintiffs also contend the Corporation failed to raise the access issue in
their counterclaim and "no amended pleading making any relevant allegations
was ever filed." However, the record reflects the Corporation amended its
counterclaims on August 12, 2021. The amended counterclaims clearly set forth
facts related to the December 2020 leak and the access issues.
We reiterate that on April 16, 2021, the trial court ordered plaintiffs to
give the Corporation access to their apartment on or before April 23. When
plaintiffs failed to grant access, the court, on May 20, 2021, again issued an
order requiring plaintiffs to allow the Corporation access to their property. In
9
This date appears to be a typo, since in Melissa's certification in support of
plaintiffs' Rule 4:50-1 motion, she certified she provided access to the unit on
July 21, 2021.
A-0795-23
40
sum, as of July 1, 2021, plaintiffs were in default for more than thirty days under
paragraph 25 of their lease for failing to provide the Corporation access to their
unit, and accordingly, we discern no error in the court's conclusion the Board
was authorized to terminate their stock and lease.
B.
Plaintiffs further argue the trial court erred in declining to consider their
Rule 4:50-1 motion because the rule requires a motion to vacate an order be filed
with the trial court. They contend Melissa's certification, filed in support of
plaintiffs' motion to vacate the trial court's grant of summary judgment to the
Corporation, raised genuine disputed facts regarding the access issues. Plaintiffs
further contend because the Appellate Clerk's Office refrained from issuing a
briefing schedule for the appeal until all proceedings before the trial court had
concluded, the trial court had authority to hear the motion without infringing on
our jurisdiction.
We review a trial court's decision on a Rule 4:50-1 motion with
"substantial deference" and note we should not reverse the trial court unless
there was "a clear abuse of discretion." U.S. Bank Nat'l Ass'n v. Guillaume, 209
N.J. 449, 467 (2012).
Rule 4:50-1 allows a trial court to set aside a final judgment or order for
A-0795-23
41
the following reasons:
(a) mistake, inadvertence, surprise, or excusable
neglect; (b) newly discovered evidence which would
probably alter the judgment or order and which by due
diligence could not have been discovered in time to
move for a new trial under Rule 4:49; (c) fraud (whether
heretofore denominated intrinsic or extrinsic),
misrepresentation, or other misconduct of an adverse
party; (d) the judgment or order is void; (e) the
judgment or order has been satisfied, released or
discharged, or a prior judgment or order upon which it
is based has been reversed or otherwise vacated, or it is
no longer equitable that the judgment or order should
have prospective application; or (f) any other reason
justifying relief from the operation of the judgment or
order.
[(citation reformatted).]
Relief under the rule "is available only in 'exceptional circumstances.'" 257-261
20th Ave., Realty, LLC v. Roberto, 259 N.J. 417, 436 (2025) (quoting Hous.
Auth. of Morristown v. Little, 135 N.J. 274, 290 (1994)).
Here, plaintiffs filed a notice of appeal under Docket No. A-0795-23 on
November 14, 2023, challenging the August 23, 2023 grant of summary
judgment to the Corporation. On December 14, 2023, we temporarily remanded
for a decision on the then-pending application for attorneys' fees. Plaintiffs filed
A-0795-23
42
their Rule 4:50-1 motion10 to vacate on December 27, 2023, and the trial court
denied it based on lack of jurisdiction on January 19, 2024.
When plaintiffs filed their motion to vacate under Rule 4:50-1, this matter
was already on appeal. The scope of the limited remand was confined to the
Corporation's attorneys' fee application. Accordingly, the court did not misuse
its discretion when it determined it did not have jurisdiction under Rule 2:9-1 to
consider the application. See In re Application of Plainfield-Union Water Co.,
14 N.J. 296, 302 (1954) (noting the filing of a notice of appeal "divests the lower
court of jurisdiction save as reserved by statute or rule" and such jurisdiction is
restored only pursuant to mandate by this court). Unless it is to correct or
enforce an order, "the ordinary effect of the filing of the notice of appeal is to
deprive the [trial] court . . . of jurisdiction to act further in the matter under
appeal unless directed to do so by the appellate court." Pressler & Verniero,
Current N.J. Court Rules, cmt. 1 on R. 2:9-1 (2026).
After the Corporation moved to dismiss the appeal as interlocutory, we
determined a limited remand was necessary to allow the trial court to decide the
pending motion for attorneys' fees. See State v. Hogue, 175 N.J. 578, 583 (2003)
10
The record does not indicate which subsection of Rule 4:50-1 plaintiffs relied
upon in their motion.
A-0795-23
43
(noting "[a] limited remand to the trial court pending an appeal is appropriate"
when it is necessary for the full resolution of a case).
The trial court did not have jurisdiction to hear plaintiffs' motion to vacate.
While styled as a motion under Rule 4:50-1, plaintiffs' arguments read more as
an attempt to relitigate the summary judgment motion. Plaintiffs argue Melissa's
certification, attached to their Rule 4:50-1 motion, sought to raise "considerable
questions of fact" as to the access issues. However, the appropriate time to raise
those issues of fact would have been in opposition to the Corporation's motion
for summary judgment. A Rule 4:50-1 motion is intended to apply to instances
to correct "a grave injustice," not to be a proverbial second bite at the apple. See
Hous. Auth. of Morristown, 135 N.J. at 289. Accordingly, the trial court did not
misapply its discretion in denying plaintiffs' motion.
C.
Plaintiffs also challenge the court's grant of attorneys' fees to the
Corporation. They first assert the unilateral attorneys' fee provision under the
lease violates New Jersey public policy. Next, they contend under the plain
language of the lease, the Corporation was not entitled to recover fees incurred
in pursuing a counterclaim unrelated to plaintiffs' affirmative claims. Finally,
plaintiffs insist the attorneys' fee application was vague, irrelevant, and included
A-0795-23
44
administrative time and block billing.
We conclude the lease plainly provided for attorneys' fees with regard to
a counterclaim, and plaintiffs' argument this provision violates public policy is
unpersuasive. The trial court also conducted a thorough review of the time
entries and appropriately struck vague and double billing entries.
"In general, New Jersey disfavors the shifting of attorneys' fees." Litton
Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 385 (2009). "However, 'a
prevailing party can recover those fees if they are expressly provided for by
statute, court rule, or contract.'" Ibid. (quoting Packard-Bamberger & Co. v.
Collier, 167 N.J. 427, 440 (2001)). "When the fee-shifting is controlled by a
contractual provision, the provision should be strictly construed in light of our
general policy disfavoring the award of attorneys' fees." Ibid.
Regarding the amount of fees, "a reviewing court will disturb a trial court's
award of counsel fees 'only on the rarest of occasions, and then only because of
a clear abuse of discretion.'" Id. at 386 (quoting Packard-Bamberger, 167 N.J.
at 444). "The threshold issue in determining whether an attorneys' fee award is
reasonable is whether the party seeking the fee prevailed in the litigation." N.
Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 570 (1999).
"[T]he party must establish that the 'lawsuit was causally related to securing the
A-0795-23
45
relief obtained; a fee award is justified if [the party's] efforts are a necessary and
important factor in obtaining the relief.'" Litton, 200 N.J. at 386 (second
alteration in original) (quoting N. Bergen, 158 N.J. at 570). The party must also
"show that 'the relief granted had some basis in law.'" N. Bergen, 158 N.J. at
571 (quoting Singer v. State, 95 N.J. 487, 494 (1984)).
Rule 4:42-9(b), which governs attorneys' fees, requires "all applications
for the allowance of fees [to] be supported by an affidavit of services addressing
the factors enumerated by RPC 1.5(a)." See also Litton, 200 N.J. at 386-87.
The factors enumerated by RPC 1.5(a) are:
(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude
other employment by the lawyer;
(3) the fee customarily charged in the locality for
similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the
circumstances;
(6) the nature and length of the professional
relationship with the client;
(7) the experience, reputation, and ability of the lawyer
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or lawyers performing the services;
(8) whether the fee is fixed or contingent.
The trial court issued a comprehensive, well-reasoned written decision
examining the Corporation's request for attorneys' fees. The court rejected
plaintiffs' claim that under the plain language of the lease, the Corporation was
not entitled to recover fees related to its counterclaims. The trial court also
reviewed the RPC 1.5(a) factors. It determined the hourly rate the Corporation's
attorneys charged was reasonable in light of the attorneys' experience and
background, and the rates were below the industry standard. The court also
found the fee was reasonable based on the time and labor required in the case,
noting plaintiffs "aggressively pursued their claims and resisted and opposed
virtually all discovery requests from the Corporation as well as [those from]
other defendants." It recognized the amount of fees the Corporation requested
was "unusual" but that the amount was warranted given plaintiffs' aggressive
litigation tactics and the fact the Corporation succeeded on its ejectment claim .
Regarding plaintiffs' arguments, the court determined, under the plain
language of the lease, all fees the Corporation incurred in defending against
plaintiffs' claims or pursuing its counterclaims were warranted. It found the
entries relating to the access issues were warranted because plaintiffs' failure to
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allow access to their apartment provided the basis for the Corporation's
ejectment action. As for plaintiffs' claims of block billing, the court stated it
was "an acceptable practice." It rejected plaintiffs' argument the Corporation's
attorneys billed for purely administrative time. However, the court found there
were multiple entries that consisted of double billing and accordingly deducted
$2,975 from the total fee award. Additionally, it found several vague entries
totaling $1,969.50 and deducted that amount from the fee award. In total, the
court awarded the Corporation $301,859, representing $293,283 in fees and
$8,576 in costs.
Paragraph 28 of plaintiffs' lease provided as follows:
If the [l]essee is at any time in default hereunder and
the [l]essor incurs any expense (whether paid or not) in
performing acts which the [l]essee is required to
perform, or in instituting any action or proceeding
based on such default, or defending or asserting a
counterclaim in any action or proceeding brought by the
[l]essee, the expense thereof to the [l]essor, including
reasonable attorneys' fees and disbursements, shall be
paid by the [l]essee to the [l]essor, on demand, as
additional rent.
As the trial court correctly noted, the plain language of the lease authorizes the
Corporation to recover attorneys' fees in connection with "defending or asserting
a counterclaim." As long as the Corporation's claim is related to a shareholder's
default under the lease, paragraph 28 allows it to recoup attorneys' fees and
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costs. Plaintiffs seek to add additional language, narrowing the scope of the fees
provision to only those counterclaims related to their affirmative claims.
However, it is well established a court cannot "rewrite a contract for the parties
better than or different from the one they wrote for themselves." Kieffer, 205
N.J. at 223. Moreover, the counterclaim arguably could have been asserted in a
separate action, and the Corporation would have been entitled to fees under
those circumstances. Accordingly, plaintiffs' argument is unpersuasive.
Plaintiffs allege a unilateral fee shifting provision violates New Jersey's
public policy because it encourages a party, such as the Corporation here, to
assert retaliatory counterclaims and "litigate relentlessly." We are unconvinced
because the plain language of the provision applied to circumstances where a
shareholder defaulted on their lease obligations. The provision encourages
shareholders to abide by their lease obligations. It does not encourage litigation
but rather discourages shareholder conduct or actions that would run afoul of
their lease.11
Plaintiffs have also failed to provide any authority to support their public
11
Notably, the trial court found plaintiffs had "chose[n] to vigorously litigate
the diverse aspects of the case," continuously engaged in aggressive motion
practice, and hindered discovery.
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policy argument. While certain states, like California, have enacted laws
preventing one-sided attorneys' fees clauses, see Cal. Civ. Code § 1717, New
Jersey has no such categorical prohibition. The New Jersey Legislature has only
prohibited unilateral fee shifting provisions in the context of residential leases.
See N.J.S.A. 2A:18-61.66. The Legislature has not enacted any such statutes
relating to cooperative agreements. Moreover, this statute does not apply in this
case because our courts recognize "the relationship between the association and
a cooperative shareholder is not that of landlord and tenant." See Presten, 225
N.J. Super. at 185-86. Because New Jersey law allows parties to provide for fee
shifting provisions in contracts, there is no support for plaintiffs' assertion such
a unilateral provision violates public policy.
Next, plaintiffs contend they should not be responsible for attorneys' fees
because of the "numerous substantive deficiencies in the claimed fees."
Plaintiffs argue they should not be liable for entries that constitute block billing.
They further assert many of the billing entries do not set forth reasonable
descriptions of the billing activity, "mak[ing] the reader guess whether the
entr[ies are] related to the ejectment" or pertain to matters unrelated to the
subject matter of this action, such as the Kopelman battery and defamation
claim.
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We affirm the trial court's findings regarding its calculation of attorneys'
fees substantially for the reasons set forth in the court's cogent written opinion.
We add the following comments.
"Block-billing involves 'group[ing] together multiple tasks without
specifying how much time each task took.'" NLRB v. Bannum, Inc., 102 F.4th
358, 364 (6th Cir. 2024) (alteration in original) (quoting Miller v. Caudill, 936
F.3d 442, 452 (6th Cir. 2019)). It "is a common practice which itself saves time
in that the attorney summarizes activities rather than detailing every task ," and
such billing should be upheld if the listed activities reasonably correspond to the
number of hours billed. U.S. ex rel. John Does I-II v. Pa. Blue Shield, 54 F.
Supp. 2d 410, 415 (M.D. Pa. 1999). While a substantial number of vague task
descriptions may be a reason to exclude certain billing entries, it is not a reason
to exclude the entire block. Block billing is not per se improper in New Jersey,
and the more appropriate approach for a court is to look at the entire block,
compare the listed activities and the time spent, and determine whether the hours
reasonably correlate to all of the activities performed. Our Supreme Court has
stated, "[i]t is not necessary to know the exact number of minutes spent nor the
precise activity to which each hour was devoted nor the specific attainments of
each attorney." Rendine v. Pantzer, 141 N.J. 292, 337 (1995) (quoting Lindy
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Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp., 487
F.2d 161, 167 (3d Cir. 1973)). Rather, the court's task is to examine the billing
entries and determine if they are reasonable and accurate and whether the hours
billed correspond to the tasks completed. Ibid.
Here, plaintiffs challenge several block billing entries. The court stated it
reviewed these entries "and determined[,] . . . by looking at the entire block and
comparing it to the listed activities in the block, these [entries] [we]re
reasonable." It noted the Corporation provided a "detailed, annotated analysis
of the bills" it submitted. In short, the court determined the entries were specific
enough for it to determine the amount billed was reasonable. The court was
familiar with the extensive litigation in this matter, "which . . . resulted in
unparallel[ed] motion practice and animosity" and over 1500 entries in the court
docket.12 The court did not passively accept the Corporation's submission but
rather properly reviewed the billing entries and provided a basis for its approval
of the fees. We discern no error.
Plaintiffs also challenge several entries, alleging some entries are not
recoverable because they are not related to the Corporation's counterclaim .
Here, the court found the entries which related to the other claims in the case
12
The Corporation notes plaintiffs filed over 225 motions in this case.
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were "inextricabl[y] intermingled" with the counterclaims. For instance,
plaintiffs contend the Corporation is not entitled to fees for attending municipal
court proceedings. It appears while this litigation was pending, there was also
a municipal court matter involving Kopelman and plaintiffs arising out of the
September 4, 2018 incident. The trial court found these entries were reasonable
because they were related to the Corporation's counterclaim against plaintiffs.
In fact, the Corporation cited the incident involving Kopelman in its
counterclaim as further evidence of plaintiffs' disruptive conduct within the
building.
There were also several entries for communications with the Corporation's
insurance counsel, who defended against plaintiffs' affirmative claims. Again,
it is reasonable the Corporation's attorneys would be in communication with the
insurance counsel that was defending the Corporation from plaintiffs' claims ,
since the affirmative claims and the counterclaims were related. Plaintiffs
highlight entries related to the counterclaim regarding the objectionable conduct
and the access issues, communications with the court, and responding to motions
or discovery issues in the case, all of which were reasonable and necessary for
counsel's representation of the Corporation's case. We are unpersuaded the court
erred in its conclusion.
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As for plaintiffs' argument there were time entries for administrative tasks,
we agree with the trial court these entries were not purely for administrative
time. The bills reflect these entries relate to discovery issues, such as redacting
documents for production and reviewing the court's scheduling orders.
Attorneys carried out these tasks, which involved work an administrative staff
member could not carry out, such as reviewing documents for privilege. Thus,
we conclude the court did not misapply its discretion in rejecting plaintiffs'
argument.
Finally, plaintiffs challenge numerous entries on the grounds they were
vague and not specific enough. Notably, plaintiffs also contended before the
trial court there were certain double billing entries in the Corporation's records.
The trial court agreed, in part, with plaintiffs and found certain entries were
indeed vague. The court also found there were certain items that constituted
double billing and made appropriate reductions for those items. We agree the
court appropriately identified certain vague entries, some of which simply stated
"Communication," "Correspondence," and "Review," among other general
terms. However, aside from the entries the court identified, the remaining
entries appear specific enough to discern the activities the attorneys carried out.
In sum, the court conducted a painstaking review of the time entries, and there
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is no evidence the court misapplied its discretion by failing to deduct other
entries for vagueness.
We further observe the court appropriately reviewed each of the factors
set forth in RPC 1.5(a) and made detailed findings on each. Further, while the
total award is substantial, this case involved complex legal claims and extensive
discovery and motion practice that spanned nearly four years. In light of that
background, the court did not misapply its discretion in concluding the counsel
fees were reasonable.
To the extent we have not specifically addressed any remaining arguments
plaintiffs raised, we conclude they lack sufficient merit to warrant discussion in
a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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