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Paradise Park Homeowners Association, Inc. v. Riverdale Management Associates

December 24, 2008

PARADISE PARK HOMEOWNERS ASSOCIATION, INC., A CORPORATION OF THE STATE OF NEW JERSEY; LORETTA DIBBLE, PRESIDENT OF THE PARADISE PARK HOMEOWNERS ASSOCIATION AND OWNER OF 32 PARADISE PARK, HIGHLANDS, N.J.; FRANCIS WOLZEIN AND DAWN WOLZEIN, OWNERS OF 30 PARADISE PARK; FRANCIS GORMAN, FORMERLY THE OWNER OF 31 PARADISE PARK; AND MARY INCE, FORMERLY THE OWNER OF 48 PARADISE PARK, PLAINTIFFS-APPELLANTS,
v.
RIVERDALE MANAGEMENT ASSOCIATES, A PARTNERSHIP OF THE STATE OF NEW JERSEY; DONALD E. SOMERS, GENERAL PARTNER OF RIVERDALE MANAGEMENT ASSOCIATES; LISA MCGUIRE, GENERAL PARTNER OF RIVERDALE MANAGEMENT ASSOCIATES; JEFF SOMERS, GENERAL PARTNER OF RIVERDALE MANAGEMENT ASSOCIATES; NAVESINK CAPITAL PARTNERS, LLC, A LIMITED LIABILITY COMPANY OF THE STATE OF NEW JERSEY, JAMES BOLLERMAN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY WITH NAVESINK CAPITAL PARTNERS, LLC; DEFENDANTS-RESPONDENTS, AND MARTIN BARGER, ESQ., AN ATTORNEY-AT-LAW OF THE STATE OF NEW JERSEY; GARY EDELSON, A SUSPENDED ATTORNEY-AT-LAW OF THE STATE OF NEW JERSEY;*FN1 AND NATIONWIDE PROPERTY TRANSFER SERVICES, LLC, A LIMITED LIABILITY COMPANY OF THE STATE OF NEW JERSEY, DEFENDANTS, AND SANDY HOOK DEVELOPERS, LLC, A LIMITED LIABILITY COMPANY OF THE STATE OF NEW JERSEY, DEFENDANT/INTERVENOR-RESPONDENT.



On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-189-06.

The opinion of the court was delivered by: Fuentes, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued October 23, 2008

Before Judges Winkelstein, Fuentes and Gilroy.

Plaintiff Paradise Park Homeowners Association, Inc. ("the Association"), is a New Jersey corporation formed to represent the residents of the Paradise Park mobile home park ("the Park") located in the Borough of Highlands, New Jersey. The individually named plaintiffs, Loretta Dibble, Francis Wolzein, Dawn Wolzein, Francis Gorman, and Mary Ince, are owners or former owners of mobile homes situated on leased lands within the Park. The Association was formed in accordance with the Mobile Home Protection Act ("the Act"), N.J.S.A. 46:8C-2 to -21. Under certain circumstances, the Act grants mobile home park residents a right to certain notices triggered by the sale of the property, and a concomitant right of first refusal. N.J.S.A. 46:8C-11; N.J.S.A. 46:8C-12.

Defendants Donald E. Somers, his daughter Lisa McGuire, and his son Jeff Somers are general partners of Riverdale Management Associates ("Riverdale Management"). This group owned the Park until March 2005 when they sold it to defendant James Bollerman and his company Navesink Capital Partners, LLC ("Navesink Capital").

Defendants did not notify plaintiffs of the sale as required by the Act because they asserted that the sale fell under the Act's exemption contained in N.J.S.A. 46:8C-13(a), that is, any sale "not made in contemplation of changing the property to a use or uses other than as a private residential leasehold community."

Plaintiffs commenced this action seeking enforcement of their right of first refusal under the Act, specific performance, to quiet title, and other related remedies. Before engaging in extensive discovery, both parties moved for summary judgment, arguing that the case was ripe for disposition as a matter of law. The trial court agreed. After hearing oral argument, the judge granted defendants' motion and dismissed the complaint. The court held that plaintiffs had not established that the sale was made "in contemplation" of changing the use of the property as a mobile home park.

Plaintiffs now appeal, arguing that the trial court erroneously limited the focus of its analysis to the terms of the contract for sale, thereby ignoring a plethora of evidence showing defendants' true state of mind. Specifically, plaintiffs argue that the trial court should have considered Bollerman's conduct during contract negotiations in light of his attempts to change the property's zoning scheme to permit high- end residential development. According to plaintiffs, this, together with Somers's refusal to modify the contract to reflect the buyers' true future intent, amounted to clear evidence that the sale was made "in contemplation" of changing the property's use as a mobile home park.

Defendants argue that the trial court correctly found that plaintiffs' alleged evidence concerning the parties' conduct during pre-contract negotiations amounted to nothing more than mere speculation. Under these circumstances, defendants' assert that the trial court properly found that the terms of the contract were the best indicator of the parties' state of mind.

Thus framed, we are required to determine whether the sale of this mobile home park triggered the rights conferred by the Legislature to residents of these communities in N.J.S.A. 46:8C-11 or N.J.S.A. 46:8C-12. As a corollary to this analysis, we are also required to determine whether defendants are entitled to invoke the exemption outlined in N.J.S.A. 46:8C-13(a) as a complete defense to plaintiffs' action.

We now hold that summary judgment in favor of defendants and against plaintiffs was improvidently granted. In adopting the Mobile Home Protection Act, the Legislature intended to protect the continuation of mobile home communities, and to promote and encourage ownership and self-governance by the residents of these communities. Toward that end, when an owner of a mobile home park decides to sell, or receives a bona fide offer to buy, the residents of mobile home communities are statutorily entitled to a right of first refusal. N.J.S.A. 46:8C-11; N.J.S.A. 46:8C-12.

Under N.J.S.A. 46:8C-13(a), a seller may claim that the transaction is exempt from this statutory scheme because the sale was not made "in contemplation" of changing the use of the property as a mobile home community. We now define the term "in contemplation" of changing the use as denoting a state of mind involving less commitment to action than would an "intent" to change the use. In this context, we further hold that a seller invoking such an exemption must have a rational, good faith basis to believe, under all of the attendant circumstances, that the sale was not made "in contemplation" of changing the use of the property. Based on the evidence presented to the trial court, we are satisfied that a rational factfinder could find that Somers, as the seller, did not have a good faith basis to invoke the exemption in N.J.S.A. 46:8C-13(a). We thus reverse the trial court's grant of summary judgment and remand.

I.

Paradise Park is located at the foot of Locust Street, between the Sandy Hook Bay Marina and the Borough of Atlantic Highlands. As of 2004, the Park totaled approximately 3.776 acres, and contained fifty-eight existing spaces for mobile homes and three "stick-built" homes, for a total of sixty-one housing units. The property has been used as a mobile home park for more than fifty years.

Somers purchased the Park property in March 1972 through a wholly owned corporation named Oakland Service Company ("Oakland"). Oakland transferred title to the property to Riverdale Management in 2000 "for tax reasons." According to Somers, although his son and daughter assisted him in operating the property, "they relied upon my management decisions related to both the operation of the mobile home park, and the sale of the mobile home park."

At all times relevant to this case, Bollerman was the President of Bollerman Real Estate Services, and the managing partner of Sandy Hook Developers and Navesink Capital Partners.*fn2

On June 10, 2003, Sandy Hook Developers purchased approximately 7.3 acres of land known as 1 Willow Street in Highlands (the marina property) from Robert Aragon for $4,000,000. This property included the Sandy Hook Bay Marina and a restaurant, directly adjoining the Park property.

Sometime in 2004, Bollerman came to Somers's office to discuss a real estate matter unrelated to this case. During casual conversation, both men mentioned their respective ownership interests in the marina property and the adjacent mobile home park property. According to Somers, "[w]e then talked about the sale of [the mobile home park] and I told him my demand. He never met it." Bollerman's recollection of this first meeting corroborated Somers's account of the events. According to Bollerman, "[i]f anything was said about the purchase of the trailer park property, it was a passing comment which certainly was not the focus of our meeting."

A.

About the same time, Bollerman became aware that sections of the mobile home property encroached onto the marina property. After ascertaining the magnitude of the encroachment, Bollerman attempted several times to bring the encroachment to Somers's attention with the hope of resolving this problem amicably. Despite these efforts, Somers did not take action to rectify that situation.

On October 10, 2003, Sandy Hook Developers filed a five-count complaint against Riverdale Management asserting encroachment and trespass upon the marina property. The complaint alleged that Riverdale Management: (1) was renting portions of the marina property land to its mobile home trailer owners as parking spaces; (2) had wrongly granted an easement over marina property to the local electrical utility company in order to provide electrical service to the Park's residents; and (3) had directly, or through its predecessor in title, added fill to the marina property in the mid-1990s, thus causing damage and deterioration to the property.

After joinder of issue, Sandy Hook Developers filed a motion for summary judgment against Riverdale Management. In a certification submitted in opposition to the summary judgment motion, although disputing the accuracy and sufficiency of the evidence against him, Somers conceded that "two small sheds behind the boat repair shop" encroached upon Bollerman's property. He concluded by arguing that "if any encroachments are established," he had acquired legal title to such lands under the doctrine of adverse possession.

On June 23, 2004, the court granted Sandy Hook Developers' motion for summary judgment. The court limited the remedy afforded Sandy Hook Developers to injunctive relief, directing Riverdale Management to "remove all encroachments of the Defendant, its tenants, agents[,] servants or employees" from the marina property within sixty days of the date of the order. All remaining issues, including any award of monetary damages, were transferred to the Law Division.

Based on these legal developments, Bollerman acknowledged that he could now bargain with Somers to acquire the mobile home park from a position of strength. He thus instructed his attorney to explore settlement options with Somers that specifically included the purchase of the Park property. He made this point clear in his certification submitted in this case in opposition to plaintiffs' motion for summary judgment.

It was at that time I directed [former attorney] Gary Edelson to explore options to settle the matter by way of a purchase of the Paradise trailer park property. I came to realize at that time that it was virtually impossible for Donald Somers to comply with the Court Order. By that time, we had a very clear focus on the extent of the encroachments on the property. There were many encroachments and some were very substantial, even the power lines supplying the property with power, ran off of poles which had been illegally placed on property owned by Sandy Hook [Developers]. Mr. Somers would have had to incur staggering expense to relocate all of the encroachments on his property, if, indeed, it was possible at all.

I knew that Mr. Somers was in a virtually impossible position, and, quite frankly, saw it as a potential opportunity to purchase property and clean up a mess on an adjacent property that effected [sic] my investment in Sandy Hook Bay Marina. I also had a concern that Mr. Somers may devise a solution that would exacerbate a bad situation. (Emphasis added.)

B.

The Borough of Highlands began revising its master plan in 2002. According to the master plan published in the Borough's official website:

[T]he Borough created a Master Plan subcommittee comprised of residents and individuals representing the following groups: Township Council, Planning Board and the Economic Development Committee. The Master Plan subcommittee was in charge of directing the Smart Growth Plan process.

The Subcommittee and the Planning Board [were] charged with creating a future vision for the Borough and building consensus to implement the Plan. This Master Plan provides a long-term guide for the Borough's future and stresses positive and pro-active cooperation among residents, business owners, and the Borough to achieve the objectives of the Plan . The Plan serves as a policy statement and provides framework for the Borough's implementation ordinances. [The Borough of Highlands Master Plan, http://www. highlandsnj.us/index.htm]

On June 4, 2004, Somers wrote a letter to the Highlands Planning Board, intending that it be accepted in lieu of his formal testimony.*fn3 In this letter, Somers identified himself as the owner of the Park. He notes that "the trailer park [began] over 50 years ago," when trailers were mostly eight feet wide. The Park spaces are thus configured to accommodate these now outmoded trailers. The modern fourteen-foot-wide mobile homes do not fit well into the existing layout.

Under the then prevailing zoning requirements for front, rear, and side yard clearances, only fifteen or sixteen modern mobile homes could fit on the site. According to Somers, it had become necessary to apply to the Zoning Board of Adjustment for a variance whenever a mobile home was replaced. Arguing that the site's mobile home use had become obsolete, Somers asserted that the park, as presently constituted, would not be able to accommodate the modern mobile homes sold in today's market.

Somers thus urged the Board to re-zone the park property to permit the development of single-family type homes. In so doing, Somers made the following statements about the potential development of the site, and the resulting benefits to the municipality:

The property was zoned Waterfront Commercial until 10-12 years ago when it was changed to MH (mobile-home). I am requesting that you advocate re-zoning the property to permit single-family town homes. My conversations with several developers indicate that a property of this size would comfortably yield 45-50 very desirable single family (2BR) homes as opposed to the current 61. How would this benefit the Highlands?

1. The density issue with all of its "baggage" is reduced if you desire.

2. No increase in Municipal services, Police, water, sewer, first aid etc.

3. Esthetically, you will have great improvement over the existing "arrangement" of 20 to 40yr old mobile-homes, some of which are poorly maintained. The Park owner has little to say over this.

4. This proposal shall cost the Boro virtually nothing, will increase the tax base considerably and will enhance the value of ...


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