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PSL, L.L.C. v. Terhune

January 22, 2009


On appeal from the Superior Court of New Jersey, Law Division, Ocean County, L-2508-07.

Per curiam.


Argued October 28, 2008

Before Judges Fuentes and Chambers.

Plaintiff PSL, L.L.C. (PSL) appeals from the order of January 24, 2008, dismissing its amended complaint with prejudice on the basis that the parties' settlement barred the claim. We reverse and remand for a plenary hearing to determine whether plaintiff's claim for damages survived when defendant failed to perform in accordance with the settlement.

Plaintiff is the owner of a mobile home park in which it leases mobile home spaces to tenants who own their own mobile homes placed in the rented spaces. Defendant, Earl Terhune, owned a number of the mobile homes in the park. In February 2002, plaintiff and defendant entered into the Lease and Mobile Home Park Management Agreement. Under this agreement, plaintiff gave defendant a ninety-nine year lease for the mobile home park. In return, defendant agreed to pay a monthly rental to plaintiff in amounts that gradually increased over the years, and he agreed to pay the taxes, assessments, utility charges, repairs, improvement expenses, maintenance costs, and insurance premiums for the property. Defendant was entitled to the rents paid by the tenants on the mobile home spaces.

In December 2002, only ten months into the lease, plaintiff filed an order to show cause and complaint, contending defendant had failed to pay rent for three months and had defaulted in his management duties. Plaintiff asserted claims for conversion and breach of contract and sought an accounting, termination of the agreement, compensatory and punitive damages, as well as injunctive relief. Defendant filed an answer and counterclaim asserting claims for breach of contract and interference with contract, contending that defendant had failed to honor an oral agreement to provide a second well for the park and that in July 2002,*fn1 plaintiff told the tenants to pay the rent to plaintiff and not defendant. We will not review the protracted procedural history that followed and that included the appointment of two receivers. When the case was set for trial in the fall of 2006, the parties reached a settlement of the case with the help of a mediator.

By the time of the settlement, plaintiff maintained that defendant owed it $374,912. Although failing to make payments to plaintiff, defendant had apparently continued to collect the rents from the mobile home tenants, presumably until the appointment of the first receiver in August 2005. Further, plaintiff alleged that defendant had failed to pay taxes on the property as the agreement required.

On October 13, 2006, the parties and their respective counsel, the mediator, and the receiver were all present in court, and the mediator placed the terms of the settlement on the record. The principal for plaintiff and defendant were placed under oath, and they both consented to the terms of the settlement. Under the settlement, defendant agreed to purchase the property for $1.2 million dollars, and the closing was to take place on or before December 13, 2006. The mediator stated:

The deposit in this case will be the Lease and Mobile Home Park Management Agreement which is also a subject of this lawsuit.

When we say deposit, the parties understand that if Mr. Terhune is not able to close on or before that date that the Lease and Mobile Home Park Management Agreement will be subject to a Court Order voiding the agreement. That will be the penalty - that is a bad word. I know - that will be the -deposit will be forfeited by Mr. Terhune if he is not able to close on or before that date. There will be, of course, agreement language which we would normally find in an agreement of sale for real estate which we will incorporate into a formal Consent Order to submit to the Court.

The settlement placed defendant in charge of the park on the day of the settlement. Defendant agreed to pay any outstanding bills that had not been paid by the receiver, and he would be responsible for any future bills, and in turn could collect rents from the park. The record further indicates that if defendant defaulted on the closing, the court would enter an order "voiding the agreement."

The mediator advised the court that the parties had requested that he prepare the order memorializing the settlement. He further stated that the parties agreed that all the material terms of the settlement were provided to the court and that "[i]f there are minor terms that need to be adjusted or any language, the parties have agreed that I will be the binding arbitrator with respect to the terms of the agreement."

After a discussion to allow defendant to purchase the property in the form of an L.L.C. and allowing defendant to apply for a certificate of occupancy and any permits prior to the closing, the mediator then stated: "General release, all the language with respect to waiver ...

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