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All Seasons Marina, LLC v. All Action Water Sports

February 4, 2008

ALL SEASONS MARINA, LLC, PLAINTIFF-RESPONDENT,
v.
ALL ACTION WATER SPORTS AND RAY LEPS, DEFENDANTS-APPELLANTS, AND ALL ACTION WATER SPORTS AND RAY LEPS, THIRD-PARTY-PLAINTIFFS/ APPELLANTS,
v.
BRIAN TERSAGA, THIRD-PARTY-DEFENDANT/RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-250-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 19, 2007

Before Judges Axelrad, Payne and Messano.

Defendants/third-party plaintiffs, All Action Water Sports (All Action) and its principal Ray Leps, appeal 1) the motion judge's September 1, 2006, order that granted plaintiff All Seasons Marina, L.L.C. (the Marina) and its principal, third-party defendant Brian Tersaga's (collectively, plaintiffs), motion to compel arbitration and dismiss the pleadings; and 2) the denial of defendants' subsequent motion for reconsideration.

Defendants contend that the motion judge erred in concluding that 1) there was a valid written lease in effect between the parties; and 2) that a provision contained therein requiring "any dispute arising" under the lease to "be settled by arbitration" required dismissal of the pleadings and referral of the matter to arbitration. Alternatively, defendants argue that plaintiffs were estopped from compelling arbitration because they filed this action in the Law Division and had prosecuted the lawsuit for more than two years before invoking the clause. Lastly, defendants argue that in deciding the motion, the judge considered exhibits submitted by plaintiffs that were furnished after the close of discovery and were otherwise inadmissible under the rules of evidence.

We conclude that the motion record presented material factual disputes that could not be resolved without a trial or plenary hearing, foreclosing the determination that defendants were legally bound by the terms of the purported lease, and in particular its arbitration clause. We therefore reverse and remand for further proceedings consistent with this opinion.

The Marina is the owner of certain property located at 611 Roosevelt Boulevard in Marmora. All Action maintained a business at that location selling and servicing marine equipment and watercraft. The Marina filed its complaint alleging All Action had breached the parties' lease agreement by failing to pay rent owed for December 2003 and leaving the property in "intolerable condition," requiring the cleaning, repair, and rebuilding of the property. The Marina also alleged All Action and Leps committed various intentional torts resulting in property damage and clean up costs. Additionally, the Marina alleged All Action had not satisfied the outstanding balance for fuel purchased on credit prior to the termination of the lease.

In a single answer filed on June 22, 2004, defendants generally denied the allegations in the complaint. They also specifically denied that "a written [l]ease [a]greement exist[ed]." The Marina filed an amended complaint that sought punitive damages, and defendants filed an answer that now included a counterclaim against the Marina and a third-party complaint against its owner Tersaga. The counterclaim and third-party complaint alleged, among other things, that Tersaga had defamed defendants, maliciously abused process against defendants, and otherwise interfered with All Action's business.

After engaging over the next two years in discovery, plaintiffs moved to compel arbitration. Essentially they argued that the written lease between the Marina and All Action with a start date of April 1, 1995, and an expiration date of March 31, 1999, was thereafter "renewed and ratified" by defendants in a letter dated March 17, 2003.*fn1 Pursuant to paragraph twenty-three of the lease, plaintiffs argued that any dispute arising under the lease should be submitted to binding arbitration. They alleged that defendants refused to arbitrate the dispute and they now sought a court order compelling arbitration and dismissing the pleadings.

In support of the motion, plaintiffs attached the purported lease, a copy of the March 17, 2003, letter, and a variance application filed on behalf of All Action with the Township of Upper zoning board of adjustment. That application sought approval for an amended site plan and a variance regarding a sign on the property. Attached to the application was a signed copy of the parties' 1995 lease.

The March 17, 2003, letter was signed by Tersaga and addressed to Leps. It began, "[P]lease allow me to confirm that All Seasons [] will continue to enjoy its relationship with All Action, and welcome you as a tenant for the next twelve [] to twenty-four [] months. There will be no change in the price of your tenancy, nor any other changes to the terms previously in place." Tersaga's letter concluded, "If you wish to remain with us for the balance of 2003, please sign this letter and it will act as an addendum to any existing lease that currently exists between us." The letter was countersigned by Leps.

Defendants opposed the motion and cross-moved for a further discovery extension. Defense counsel attached to his opposition portions of Leps's deposition testimony in which he denied ever signing a written lease for the property, did not know whose signature appeared on the written lease, and insisted that his arrangement with All Seasons's prior owner was a verbal tenancy agreement. Defense counsel acknowledged that Leps had countersigned the March 17, 2003, letter, but noted it made no reference to any written lease agreement and noted the variation in the signature on the letter from that on the lease.

On September 1, 2006, the motion judge heard oral arguments on the motion and cross-motion. Defense counsel noted that the variance application had never been produced in discovery. He advised the judge that his client was on vacation, and he had not had any opportunity to confer with him regarding the circumstances that surrounded the variance application, but that Leps "indicated to [him] that he did not file the documentation." Plaintiffs' counsel countered by claiming he had produced the variance application in ...


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