OCEAN CLUB CONDOMINIUM ASSOCIATION, INC., A NONPROFIT CORPORATION OF THE STATE OF NEW JERSEY v. ALBERT N. GARDNER, AND MLM ASSOCIATES AND JOSEPH M. MURPHY

After taking control of the operations of the Ocean Club Condominium in Atlantic City, the condominium association sued the developer, alleging, among other things, that the developer had failed to pay its proportional share of common expenses during the approximately year-and-a-half period when it was acting as the association. Specifically, it argued that the developer had failed to pay its share of the so-called replacement reserve component of the common expense assessment, and moreover had failed to properly account for that portion of replacement reserves it had collected from the unit owners during the same period. The developer countered that it was not obligated to contribute to replacement reserves for unsold units, and it had properly applied amounts collected from the unit owners for replacement reserves to legitimate common expenses of the association.

After a bench trial and additional submissions from both parties regarding allocation and accounting issues, Judge Gibson determined that the developer was responsible for its share of replacement reserves based on unsold units, and awarded plaintiff damages in the amount of $138,378.00.

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Gardner and MLM and Murphy appealed. The Superior Court of New Jersey, Appellate Division affirmed the judgment of the Chancery Division except that the net Final Judgment entered against defendants was reduced by $13,197. See: 723 A.2d 623 (N.J. Super. A.D.1998). The date shown above is the date of the appellate court decision and not the trial date. Reported by JAB.