Cooperatives & Condominiums

Limits In 1913 Declaration No Longer Binding

Forest Hills Gardens Corp. v. West Side Tennis Club

NYLJ 11/17/05, p. 31, col. 2

AppDiv, Second Dept

(memorandum opinion)

In an action by a homeowners association for unpaid maintenance, the association appealed from the Supreme Court's denial of its summary judgment motion, and defendant tennis club cross-appealed from the Supreme Court's denial of its motion for summary judgment dismissing the complaint and for judgment on its counterclaims. The Appellate Division modified to award summary judgment to the association, holding that the club was no longer subject to the limits imposed in the 1913 declaration filed by the original developers.

The 1913 declaration filed by the original developer limited annual maintenance charges for one of the two tennis club parcels to $400 for so long as the parcel was used for club purposes. The other parcel was subject to the same maximum mill rate as all of the other parcels within the community. Since 1924, the association has imposed charges on the club parcels in excess of that specified in the declaration, although at rates lower than those imposed on other owners. Beginning in 2001, the club refused to pay more than the $400 specified in the 1913 agreement. The association then informed the club that parking decals would no longer be issued to nonresident club members, and brought this action to recover unpaid maintenance. The club counterclaimed, alleging that the charges were limited by the agreement and that the association had acted unreasonably and in bad faith when it refused to issue decals. Both parties moved for summary judgment, and the court denied both motions.

In holding that the association was entitled to summary judgment, the Appellate Division noted that the 1913 agreement provided for termination of the original charges after 1923. Then, in 1924, the club agreed to increase its maintenance charges to a millage rate comparable to other owners, and subsequently signed extension agreements at periodic intervals, all agreeing to the increased maintenance charges. The court went on to note that the business judgment rule prevented inquiry into the reasonableness of the maintenance charges, so long as they were assessed in good faith and in furtherance of the association's interests. Here, the club failed to raise questions of fact with respect to the association's good faith. Similarly, the court found no evidence in the record to suggest that the parking fees were unreasonable or enacted in bad faith. Finally, the court found no evidence in the record to support the claim that the association acted in bad faith by refusing to issue parking decals as a consequence for the club's failure to pay maintenance.

Limits In 1913 Declaration No Longer Binding

Forest Hills Gardens Corp. v. West Side Tennis Club

NYLJ 11/17/05, p. 31, col. 2

AppDiv, Second Dept

(memorandum opinion)

In an action by a homeowners association for unpaid maintenance, the association appealed from the Supreme Court's denial of its summary judgment motion, and defendant tennis club cross-appealed from the Supreme Court's denial of its motion for summary judgment dismissing the complaint and for judgment on its counterclaims. The Appellate Division modified to award summary judgment to the association, holding that the club was no longer subject to the limits imposed in the 1913 declaration filed by the original developers.

The 1913 declaration filed by the original developer limited annual maintenance charges for one of the two tennis club parcels to $400 for so long as the parcel was used for club purposes. The other parcel was subject to the same maximum mill rate as all of the other parcels within the community. Since 1924, the association has imposed charges on the club parcels in excess of that specified in the declaration, although at rates lower than those imposed on other owners. Beginning in 2001, the club refused to pay more than the $400 specified in the 1913 agreement. The association then informed the club that parking decals would no longer be issued to nonresident club members, and brought this action to recover unpaid maintenance. The club counterclaimed, alleging that the charges were limited by the agreement and that the association had acted unreasonably and in bad faith when it refused to issue decals. Both parties moved for summary judgment, and the court denied both motions.

In holding that the association was entitled to summary judgment, the Appellate Division noted that the 1913 agreement provided for termination of the original charges after 1923. Then, in 1924, the club agreed to increase its maintenance charges to a millage rate comparable to other owners, and subsequently signed extension agreements at periodic intervals, all agreeing to the increased maintenance charges. The court went on to note that the business judgment rule prevented inquiry into the reasonableness of the maintenance charges, so long as they were assessed in good faith and in furtherance of the association's interests. Here, the club failed to raise questions of fact with respect to the association's good faith. Similarly, the court found no evidence in the record to suggest that the parking fees were unreasonable or enacted in bad faith. Finally, the court found no evidence in the record to support the claim that the association acted in bad faith by refusing to issue parking decals as a consequence for the club's failure to pay maintenance.