Tort Immunity, COVID-19, and Community Associations – Points to Consider
March 3rd, 2021 | Community Association Law Blog
By Eric F. Frizzell.
As community associations consider opening their pools and gyms during the pandemic, numerous association boards are giving renewed consideration to the topic of tort immunity and whether to amend their by-laws to provide their associations with the limited immunity against lawsuits for bodily injury that is allowed by New Jersey law. In specific, a New Jersey statute, N.J.S.A. 2A:62A-13, provides:
“a. Where the bylaws of a qualified common interest community specifically so provide, the association shall not be liable in any civil action brought by or on behalf of a unit owner to respond in damages as a result of bodily injury to the unit owner occurring on the premises of the qualified common interest community.
b. Nothing in this act shall be deemed to grant immunity to any association causing bodily injury to the unit owner on the premises of the qualified common interest community by its willful, wanton or grossly negligent act of commission or omission.”
The immunity permitted by this statute does not provide complete protection, by any means, against a lawsuit that seeks to hold an association liable for COVID-19 related claims. Although it is certainly better for an association to have the immunity provision in its by-laws than to not have it, it has limits and is only one component of an association’s wall of defenses against such claims.
Here are some key points to consider regarding limits on the immunity available under the statute.
1. The statute defines “unit owner” as “the person owning a unit or that person’s spouse.” Therefore, an association’s by-laws can provide immunity against suit only by unit owners and their spouses, but not by any other category of person such as children, tenants, guests, staff, and contractors.
2. By its terms, the immunity only applies to the “association” – not to its board, individual board members, or property manager. Attorneys will likely argue over whether the term “association” includes such individuals. Moreover, board members who are sued may be entitled to indemnification by the association pursuant to state law and/or the association’s by-laws, and property managers who are sued may be entitled to indemnification under their management agreement. So even if the “association” is immune, it may be financially obligated to indemnify these other parties.
3. The immunity applies to “bodily injury”. The statute does not define that term. Plaintiffs’ attorneys are sure to argue that an illness like COVID-19 is not a “bodily injury”, or at least not the kind of “bodily injury” that was intended by the statute, such as a physical injury due to slipping and falling on an icy sidewalk. This issue is likely to be the subject of heated debate between attorneys for plaintiffs and associations, and it will be up to the courts to decide it.
4. The statute does not apply to suits for bodily injury caused by the “willful, wanton, or grossly negligent act or omission of the association.” Therefore, an attorney who sues an association for a COVID-19 claim is likely to allege that the association was grossly negligent in its operation and management of its pool, gym, or other facility that was the alleged source of transmission of the virus. While it may be difficult to prove gross negligence in most cases, the Association will still be compelled to incur significant uninsured defense costs to defend against such claims.
5. The amendment must be approved by the owners of at least two-thirds of the units held by unit owners other than the developer. Getting this many votes – especially before pool season would normally start – may be quite challenging, especially since some unit owners may not want to limit their ability to sue the association. In addition, in my opinion the amendment should not be enacted by utilizing the streamlined method allowed by the “Radburn” statute (under which a by-law amendment enacted by a board is deemed final unless 10% of the membership return a rejection ballot within 30 days of being notified of its enactment). Since the tort immunity statute expressly requires approval by owners of at least two-thirds of the units held by unit owners other than the developer, adopting the amendment utilizing the “Radburn” process could be challenged for failing to have obtained the 2/3 unit owner vote. And then it would be up to a court to decide whether the Radburn statute supersedes the tort immunity statute regarding the required vote – a situation to avoid.
6. Plaintiffs’ attorneys may argue that an immunity provision contained in the original by-laws written by the developer, instead of in a by-law amendment approved by the unit owners after 75% of the units had been sold by the developer, is not valid. The legislative history of the statute indicates that it was revised to address a concern that conferring immunity upon a condominium community in its early stages of construction would result in the de facto conferring of immunity upon the developer of the project. The legislative history also suggests that this concern may have been the reason why the term “Association” was defined as “the entity responsible for the administration of a common interest community in which 75% or more units have been conveyed to unit owners other than the developer” – meaning that immunity could only be granted by a vote of the non-developer unit owners to amend the by-laws. Like the definitions of “bodily injury” and “association”, courts will have to decide these issues and interpret the law as new cases arise.
To summarize, there is no major downside to amending an association’s by-laws to confer tort immunity on the association, and associations are well advised to do so. However, like COVID-19 itself, there is no such thing as complete immunity, and Boards and managers should understand what protection the statute affords – and what it does not.
As always, please contact us if you have any questions about this topic.
This bulletin is for informational purposes only and does not constitute legal advice. Check with your association’s attorney before taking legal action.