The State Appeals Court has just issued an opinion awarding monthly condominium assessments and some penalties, but reversing a lower court’s sizable award of counsel fees. In Cross Roads Condominium Association v. Cosentino, Appellate Division Docket Number A-3599-20, decided on September 28, 2022, the Court ruled that the trial court did not adequately review the Association’s request for counsel fees.

At issue were claims that a unit owner was delinquent in the payment of some assessed common fees, and also violated several rules regarding pets and unauthorized external improvements. Many associations have similar rules. The Association issued several violation notices and alleged that the unit owner did not comply with the rule requirements in each instance.

The association filed suit and asked for $3,055.40 for unpaid fees and fines and $1,659.90 in counsel fees. But the amount sought at trial for counsel fees was raised to $13,447.73 based on extra work performed by counsel allegedly as result of the unit owner’s continued non compliance. The trial judge found the fee amount to be high but not “unconscionable.”

On appeal the court upheld the portion of the award relating to assessed fees and penalties but revered the counsel fee award. The appeals court noted that it is rare for an appeals court to reverse a lower court’s counsel fee award. But in this case, the court believed that the court’s analysis was not sufficiently thorough.

And the appeals court noted the significant different between the amount of counsel fees sought in the complaint and the amount actually awarded – that difference being roughly ten fold.

Associations must take care to ensure that counsel fees are commensurate with an underlying award. Instances where the initial attorney fee demand is much lower than what is eventually awarded will no doubt invite extra scrutiny by an appeals court.

The case is unique because there is nothing obviously wrong about the attorneys fee award by the trial court or the association’s request to be reimbursed. But what stands out are two factors that proved to matter: the attorney fee award was much higher that the outstanding monthly fees and penalties. And it was much higher than the amount originally requested by the association. Going forward, these might be seen as red flags that associations should try to avoid.