BATTLE AT TWIN RIVERS
Response To The Amicus Curiae Brief Of The CAI
Judges of the Appellate Division:
accept this letter brief in response to the amicus curiae brief (Acb) of the
Community Associations Institute (CAI).
I. THE BUSINESS JUDGMENT
RULE DOES NOT APPLY TO THIS CASE
previously argued in Plaintiffs’ Reply Brief, the business judgment rule is
inapplicable to this case. The Plaintiffs’ claims arise under the constitutional and
statutory laws of the state, and such rights cannot be trumped by the business
judgment rule. (Prb6)
In Green Party of New Jersey v. Hartz Mountain Industries, the
New Jersey Supreme Court clearly stated that the business judgement rule is
inapplicable to a party who “seeks to enforce a constitutionally guaranteed
right” or “to determine the reasonableness of time, place, and manner
regulations of free speech . . . .” 164
N.J. 147, 148 (2000). Those are precisely the issues involved in this
case. In the recent opinion of
the Appellate Division in Verna v. The Links at Valleybrook Neighborhood
Association, the court held that the business judgement rule was
inapplicable to decisions beyond the authority of the board of a community
association. 371 N.J. Super.
77, 92-93 (2004).
CAI’s focus on case law that reviews the general authority of a community
association board (ACb4-6) misses the mark.
The Plaintiffs do not dispute the fact that a community association
board manages common property and has the power to assess fees for common
The Plaintiffs do, however, dispute rules and regulations that go
beyond this mandate and serve to violate rights articulated by New Jersey
courts. Further, the CAI’s citation to case law in other
jurisdictions whose constitutions include a state-action doctrine (ACb6-8) is
unpersuasive under New Jersey case law. (Prb10-11)
excessive and unfettered discretion to restrict the expression of members’
dissenting views violates the equal access principle under Guttenberg
Taxpayers and Rentpayers Ass’n v. Galaxy Towers Condominium Ass’n, 297
N.J. Super. 404 (Ch. Div. 1996), on remand from 296 N.J. Super.
101 (App. Div. 1995), aff’d, 297 N.J. Super. 309 (App. Div.
1996), certif. denied, 149 N.J. 141 (1997), which stands for the
proposition that a community association cannot turn itself into a
“political isolation booth.” 296
N.J. Super. at 347; 297 N.J. Super. at 410; (see also
restrictions on political sign postings, imposition of excessive fees for
renting common areas, denial of reasonable access to the community newspaper,
and its various ways of diluting members’ voting powers also violate the
free speech rights articulated in New Jersey Coalition Against War in the
Middle East v. J.M.B. Realty, 138 N.J. 326 (1994), cert. denied,
516 U.S. 812 (1995). See
also Galaxy Towers, supra (determining that a residential
condominium is a constitutional actor subject to free speech provisions of the
New Jersey constitution).
record in this case is replete with evidence of TRHA’s exercise of
unfettered discretion infringing upon its residents’ rights to free speech.
Homeowners in Twin Rivers may not display political signs on their
lawns; must pay $165 (plus a $250 refundable deposit) in order to hold a
meeting at the community room already maintained by the board as a common
area; have unequal access to voice their dissenting views on community
governance in the monthly newsletter; are disfranchised if they contest petty
regulations that impose unreasonable fines; and are subject to a weighted
voting system in which one’s vote is based on the value of one’s property.
CAI disregards these many restrictions on its Twin Rivers residents’ rights
when it glosses over the entire record in blind reiteration of its claim that
the business judgment rule fully protects residents from “invalid and
unenforceable restrictions and improper board action.”
(ACb12) Freedom of
communication cannot be left to the virtually unfettered discretion of the
TRHA Board as would be permitted by the business judgment rule.
If it were, communities like Twin Rivers would inevitably become the
“political isolation booth[s]” warned against in Galaxy Towers. 296 N.J. Super. at 347.
any consideration of the business judgment rule is irrelevant to the case at
hand. This case concerns the manner in which TRHA’s regulations
have gone beyond the purview of mere maintenance of common property and have
improperly extinguished its residents’ rights of expression.
In these situations, state courts and constitutions are the only
appropriate arena for resolving these constitutional issues.
See Wayne Hyatt, Common Interest Communities: Evolution and
Reinvention, 31 J. Marshall L. Rev. 303, 340-341 (Winter 1998).
Where an association like TRHA has over-controlled the process by which
constituents may govern, courts can provide a remedy with some degree of
autonomy, certainty, and predictability.
See id. at 348.
The Law Requires State Constitutional Standards
Be Applied To Community Association Board Actions That Infringe On Basic
Rights To Speech and Assembly
all its arguments, the CAI disregards constitutional holdings on point and
even mischaracterizes its own guru, Professor Wayne Hyatt.
CAI incorrectly dismisses the importance of the recent Appellate Division
opinion in Verna, 371 N.J. Super. 77 (App. Div. 2004) and its
applicability to the case at bar. (ACb18)
In finding plaintiff, who ran for a seat on the association’s
governing board, to be a public figure for the purposes of a defamation suit,
the court held it was appropriate to apply constitutional standards to the
governance of private homeowners’ associations.
Id. at 96.
as in Verna, this case involves issues concerning the manner in which
10,000 residents of Twin Rivers are governed.
The TRHA also must be accountable to appropriate constitutional
standards applicable to public entities when unreasonable restrictions are
placed on the basic rights of speech and assembly.
See id. at 96-98.
concluding New Jersey to be “among the states in which residential community
associations are most common,” the Verna court recognized the
pervasive role associations like TRHA play in our larger community.
371 N.J. Super. at 97 (citing Mulligan v. Panther Valley
Prop. Owners Ass’n, 337 N.J. Super. 293, 301 (App. Div. 2001);
and David J. Kennedy, Residential Associations as State Actors: Regulating
the Impact of Gated Communities on Nonmembers, 105 Yale L.J. 761, 793 n.24
light of this background, CAI’s assertion that the 1989 Bluvias
opinion remains the controlling law rings hollow.
(ACb15-17) Not only did
the Bluvias majority fail to address the complex role of associations
like TRHA today,
it also qualified its opinion to leave open the possibility of revisiting
future cases that concerned “unreasonable restraints and restrictions on
property in violation of . . . common law.”
114 N.J. at 590.
the Bluvias co-op, Twin Rivers operates as “a quasi-governmental
entity” and the TRHA Board “operates much like a Township Council.”
(Pa222) As its former
administrator wrote, TRHA’s “governmental duties include the fiduciary
responsibility to enforce the Trust documents as authored, to establish policy
and to establish procedures to accomplish both.”
Id. Even CAI itself
previously acknowledged in an amicus curiae brief in another case that
community associations “have quasi-governmental attributes.”
this record demonstrates, Twin Rivers functions as a “quasi-municipality,”
and, therefore, should also be held to some constitutional standards.
See, Evan McKenzie, Privatopia: Homeowner Association and the
Rise of Residential Private Government 178 (Yale Press 1994) (stating that
“government now has no choice but to address the social and political
consequences of the spread [of community associations]” and “the best way
to do this is to view the spread of [community associations] as a de facto
privatization decision [by government] and evaluate it in that context.”); (see
also Prb17-18). Contrary
to CAI, applying constitutional standards to TRHA’s restrictive governance
rules will help free Twin Rivers homeowners from oppressive governance schemes
and foster democratic procedures and proper self-governance.
CAI brief also takes out of context Professor Hyatt’s
statement that “public policy is not a warrant for courts to run
associations.” (ACb14, quoting Hyatt, Evolution at n. 173)
In the same article, Professor Hyatt also states that in extreme cases
it is justified to strike down restrictions if it appears to violate public
policy. Hyatt, Evolution
robust application of constitutional doctrine will ensure the protection of
basic rights of residents of New Jersey community associations in an era when
community associations are rapidly becoming a dominant form of housing and
municipal services delivery in major parts of this State.
(Pb13 n.10-11; see Prb20-22)
“[C]ommunity association law is  sui generis, essentially quite new,
and predominately judge-made law that is itself evolving.
The evolution must keep pace with the industrial evolution and must be
multidimensional.” Hyatt, Evolution
CAI urges the judiciary to leave the rights of more than a million New Jersey
homeowners to the discretion of boards bound only by the toothless standards of
the business judgment rule. But as
the United States Supreme Court once observed, a “prime history of our
Constitution . . . is the story of the extension of constitutional rights and
protections to people once ignored and excluded.”
U.S. v. Virginia, 518 U.S. 515, 557 (1996)
December 6, 2004
for Plaintiffs acknowledges the assistance of Mira Ohm, a student enrolled in
the Constitutional Litigation Clinic, Rutgers Law School - Newark, in the
preparation of this brief.
A recent Wyoming Supreme Court decision comes to the same conclusion:
“The directors [of a homeowners association] are analogous to a city
council, and the general manager is comparable to a city manager.
Entities that possess the characteristics of a governing body or are
effectively the equivalent of such because they exercise traditional
governmental functions ought to be regarded as the proper subjects of public
controversies . . . . The lot owners of Star Valley Ranch should have the
same rights as the citizens of a municipality to criticize or comment upon
the actions of their elected representatives.”
Martin v. The Committee for Honesty and Justice at Star Valley
Ranch, 2004 WL 2423518, *5 (Wyo.)
 Significant differences of the authority of the Bluvias coop from associations like TRHA include nominal maintenance charges; an elected board only responsible for basic street cleaning, sewer maintenance and snow removal; and no authority governing matters such as architectural design, recreational amenities, pet control, parking regulation, or judicial authority to impose fines for rules violations. (Prb8-9) Moreover, there is no indication in the opinion that Bluvias’ board had any authority to restrain communications among residents such as sign-posting and community room operations. Id.
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