HOLIDAY CITY HOMEOWNERS CORPORATION VS. SCOTT KERICO (C-000074-18, OCEAN COUNTY AND STATEWIDE) (CONSOLIDATED)
A-5542-18/A-0199-19
| N.J. Super. Ct. App. Div. | Sep 7, 2021Background
- Holiday City is an age-restricted common-interest community whose Declaration bars purchasers under 55 from owning units; the association enforces assessments and transfer restrictions.
- Scott Kerico (53 at purchase) bought two Holiday City homes at sheriff’s sale to renovate and resell to 55+ buyers; he did not intend to occupy them.
- Holiday City sued for declaratory relief and specific performance, seeking a ruling that Kerico’s ownership violated the governing documents and related statutes, and asked for attorneys’ fees; Kerico counterclaimed.
- The trial court (Mar. 29, 2019) granted summary judgment to Holiday City ordering transfer to 55+ persons and denied Kerico’s summary judgment; later (Aug. 1, 2019) entered a small monetary judgment for unpaid assessments and denied Holiday City’s request for ~$20,000 in fees.
- On appeal, the Appellate Division held Kerico had standing but dismissed the substantive ownership dispute as moot (Kerico no longer owned the houses and is now 55); it affirmed the denial of attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Standing to challenge ownership restriction | Holiday City: Kerico lacked standing to challenge Declaration because he was not a bona fide owner and did not appeal earlier interlocutory findings | Kerico: He faced direct adverse relief (forced transfer without compensation) and therefore had a concrete stake | Appellate court: Kerico had standing; trial-court portions finding otherwise were incorrect |
| 2. Validity of the 55+ ownership restriction under governing documents, RCFDA/MLUL/HOPA/FHA/LAD | Holiday City: Restriction is valid and consistent with federal, state, and local law and ordinances | Kerico: Statutes/regulations do not require ownership be limited to 55+, and restriction may violate LAD/FHA (familial-status) | Court: Issue moot — Kerico no longer owns the properties and is now 55; court declined to decide merits |
| 3. Entitlement to attorneys' fees under frivolous-claim statutes and governing documents | Holiday City: Kerico’s defenses were frivolous, entitling Holiday City to fees (N.J.S.A. 2A:15-59.1 and governing documents) | Kerico: Defenses raised unsettled legal issues; Holiday City did not give required statutory notice and fee request was disproportionate | Court: Denial of fees affirmed — trial court did not abuse discretion; claims were not frivolous and notice/ proportionality issues exist |
| 4. Whether appellate court should decide the broader legal questions despite mootness (public importance) | Holiday City/Berkeley: The legal question implicates public interest and other communities | Kerico: Moot because properties sold and circumstance changed | Court: Declined to decide; no compelling basis to resolve novel issues now because of mootness and intervening regulatory developments |
Key Cases Cited
- Conley v. Guerrero, 228 N.J. 339 (2017) (standard of review for summary judgment).
- Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189 (2016) (summary judgment standard and procedure).
- Hammett v. Rosensohn, 46 N.J. Super. 527 (App. Div. 1957) (restrictive covenants construed narrowly; policy disfavoring land-use restrictions).
- Phillips v. Hunter Trails Cmty. Ass'n, 685 F.2d 184 (7th Cir. 1982) (FHA violation where association used purchase restrictions to discriminate).
- Cape May Harbor Vill. & Yacht Club Ass'n, Inc. v. Sbraga, 421 N.J. Super. 56 (App. Div. 2011) (homeowners' associations and effect of private governing documents).
- Packard-Bamberger & Co. v. Collier, 167 N.J. 427 (2001) (abuse-of-discretion review for attorney-fee awards).
- Wisniewski v. Murphy, 454 N.J. Super. 508 (App. Div. 2018) (mootness doctrine and when appellate courts may nonetheless decide issues).