Alternative Dispute Resolution – commonly referred to as “ADR” – has been an especially hot topic for community associations since the New Jersey Appellate Division’s 2012 decision in Bell Tower Condominium Association, Inc. v. Haffert. In that case, the Court held that “housing-related disputes” under the Condominium Act include disputes over the validity of special assessments for repairs and improvements to the common elements. Many commentators subsequently suggested that this holding meant that all disputes between an association and a homeowner must be submitted to ADR. Not so. The Appellate Division recently provided additional guidance on ADR in a March 25, 2014 unpublished opinion, Townsquare Village Homeowners Association, Inc. v. Walton. In that case, this firm successfully argued that the right to ADR has been waived once a person has participated in a trial on the underlying issues.
In Townsquare Village, the association obtained a judgment for unpaid monthly assessments after participating in a one-day trial with the homeowners. After winning at trial, the association filed an application for an award of attorneys’ fees with the trial court. In opposition to the application for attorneys’ fees, the homeowners filed a motion demanding that the judgment for monthly assessments be vacated, and that the matter be submitted to ADR as required under the Condominium Act (and the Planned Real Estate Development Full Disclosure Act Regulations). When the homeowners’ motion was denied, they appealed the matter to the Appellate Division.
On behalf of the association, this firm argued that the homeowners waived whatever right they had to participate in ADR when they elected to participate in a trial. The Appellate Division agreed – even though a judgment for attorneys’ fees had not yet been awarded in the case – and held that the underlying merits of the case had already been decided by the trial court, which was also in the best position to make a ruling on attorneys’ fees. Therefore, the association was no longer required to participate in ADR regarding the matter.
The Townsquare Village case clearly demonstrates that the expansiveness of the ADR mandate for associations may be more limited than many commentators previously thought.