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Lucas Development, LLC v. Lucas Brothers

June 9, 2008

LUCAS DEVELOPMENT, LLC, PLAINTIFF-RESPONDENT,
v.
LUCAS BROTHERS, INC., DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-350-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 7, 2008

Before Judges Wefing, Parker and Koblitz.

Defendant Lucas Brothers, Inc. (Lucas Brothers) appeals from an order entered on July 6, 2007 granting plaintiff's motion to enforce a settlement agreement set forth in the draft settlement agreement and release dated May 16, 2007. We reverse and remand.

Defendant Lucas Brothers is a construction company that was owned in equal shares by three brothers, Antonio, Joao and Luis Lucas. Plaintiff Lucas Development, LLC (Lucas Development) is a real estate holding company that was also owned by the three brothers.

In April 2006, the brothers decided to restructure the corporate entities. At the time, defendant was engaged in public bid pavement work. Plaintiff had substantial real estate holdings and was involved in various development projects. In April 2006, the brothers entered into a Stock Purchase and Sale Agreement (Agreement) in which Antonio agreed to pay $1,500,000 and give three parcels of real estate to Joao and Luis, who would then own defendant Lucas Brothers. Antonio was to receive full ownership of plaintiff Lucas Development and fourteen parcels of real estate. The real estate was all located in Marlboro Township.

During negotiations, all parties recognized that plaintiff intended to construct a commercial building on its property, and the sewer system servicing the building on plaintiff's property would have to be connected to a sewage pump station and sewer line located on defendant's property. Accordingly, the Agreement required defendant to record an easement granting plaintiff "complete access to [the existing] sewerage pump station for the purpose of connecting to and using [the existing] sewer line."

In December 2005, prior to entering the Agreement, plaintiff sought approval from the Marlboro Township Planning Board (Board) for construction of the commercial building, associated parking and site amenities. In approving plaintiff's plans, the Board noted "that the [proposed] concrete curb extends well onto [defendant's property], which is not part of this application. According to the property owner list[,] both parcels are currently owned by the same entity, however an access shall be provided."

On June 16, 2006, at the closing of the Agreement, defendant executed in favor of plaintiff a sewer easement (Sewer Easement), the purpose of which was "to provide access for maintenance to the existing 2 inch sanitary sewer line and use of the existing sewer line [located on defendant's property]."

Subsequently, a dispute over the permitted use of defendant's property arose, prompting plaintiff to file a Verified Complaint against defendant on November 3, 2006, seeking to enforce certain rights that it claimed existed under the Sewer Easement. Plaintiff alleged that defendant violated the Sewer Easement by denying plaintiff access to defendant's property to connect the new building on plaintiff's property to the pump station and sewer line located on defendant's property. Along with the complaint, plaintiff submitted an application for an order to show cause seeking a preliminary injunction directing defendant to provide access to the pump station and sanitary sewer line on its property.

On November 6, 2006, the trial court directed defendant to show cause why a preliminary injunction should not be granted. On November 20, 2006, defendant answered, denying plaintiff's allegations, and counterclaimed for alleged breach of the Sewer Easement by using the property for an unauthorized purpose and by constructing improvements on the property which were not permitted. Defendant further alleged that plaintiff owed it money for certain post-closing adjustments and sought an order preventing plaintiff from using the Sewer Easement for any purpose other than to access the sewer line and requiring plaintiff to remove all improvements, including the curbing that it had installed.

On December 1, 2006, the trial court entered two orders: one directed defendant to grant plaintiff access to that portion of defendant's property subject to the Sewer Easement to allow plaintiff to connect its building to the pump station and sewer line on defendant's property; the other prohibited plaintiff from using defendant's property subject to the Sewer Easement for any reason other than to install, connect or maintain the sewer line. Defendant's application for relief concerning the improvements was adjourned to February 2, 2007.

Meanwhile, in an effort to resolve their dispute, the parties engaged in settlement discussions concerning the various issues. During the course of those negotiations, the parties agreed to arbitrate the monetary issues related to the post-closing adjustments. The parties further agreed that defendant's application for relief would be ...


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