Condominium Found Not Liable for Punitive Damages After Indefinitely Suspending Privileges of Owners
New Jersey's Punitive Damages Act (the "Punitive Act") only allows for punitive damages when the plaintiff has proven by "clear and convincing evidence, that the defendant's acts or omissions which caused the harm were actuated by actual malice or accompanied by a wanton and willful disregard of persons who foreseeably might be harmed by those acts or omissions." The Damages Act defines "actual malice" as "an intentional wrongdoing in the sense of an evil-minded act." Furthermore, "wanton and willful disregard" is defined as "a deliberate act or omission with knowledge of a high degree of probability of harm to another and reckless indifference to the consequences of such act or omission."
At the end of February, Richard Linderman and I won a directed verdict motion, after the close of the owners' presentment of its case to a jury, on behalf of a Northern New Jersey condominium, dismissing an owners' claim for punitive damages arising from that condominium's indefinite suspension of their pool privileges, and asking the police to remove the owner from the pool.
The plaintiffs claimed that they should be awarded punitive damages because the condominium wrongfully, and with "an evil mind", suspended their membership privileges for approximately a year and a half, and thereafter asked the police to remove one of the plaintiffs from the pool.
After hearing only the owners' evidence, the court agreed with the condominium that the bylaws did allow for the suspension of privileges, that the condominium took no action without consulting with legal counsel first and that the owner willfully visited the pool after being warned repeatedly that such a visit would lead to a call to the police. Additionally, and importantly, the court agreed with the condominium that its having offered ADR, which the owners expressly rejected, within a month of the suspension was evidence of good faith and reasonable conduct, undercutting the owners' claim of the condominium's "evil mind".
This decision shows that condominiums need not fear claims for punitive damages as long as they act in good faith, consult with and rely upon their attorneys, and make ADR or some form of alternative dispute resolution available.
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