Siller v. Hartz Mountain Association, Inc.

Condominium-unit owners (the unit owners) (plaintiffs) at the Harmon Cove condominium filed suit to prevent a settlement between Hartz Mountain Associates (the developer) (defendant) and the Harmon Cove I Condominium Association, Inc., which was the unit owners’ association, and the Harmon Cove Recreation Association (collectively, the associations) (defendants), for construction defects in the condominium’s individual units and the common elements. The trial court dismissed the unit owners’ complaint against the developer and permitted the associations to settle (on the unit owners’ behalf) the claims with the developer for the alleged construction defects. The appellate court affirmed, and the unit owners sought and were granted a petition for certification in the state supreme court. The unit owners alleged that the proposed settlement was unreasonable, unlawful, and inadequate. Specifically, the unit owners alleged that the developer, who had at one time controlled the associations, had continued to unlawfully exercise control and undue influence over the associations and that the associations and the developer were unlawfully settling claims relating to the owners’ individual units. The parties did not dispute that state condominium law charged the associations with the duty to repair the common elements, empowered the associations to collect assessments for that purpose, and prohibited individual unit owners from performing any work on the common elements, or that state condominium law permitted the associations to sue third parties for damage to the condominium’s common areas and to apply any recovered sums to the repair expenses of the common areas.