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State of New Jersey, Department of Community Affairs, Bureau of Housing Inspection v. Elmar Realty


February 9, 2011


On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket Nos. DJ-040228-2008, DJ-258525-2009 and DJ-129208-2009.

Per curiam.


Submitted January 11, 2011

Before Judges Carchman and Waugh.

Defendant Elmar Realty, LLC appeals from an order of the Law Division denying its motion to vacate three docketed judgments entered in favor of the State of New Jersey. Defendant asserts that a general release executed in connection with a settlement of then outstanding liability applied to these judgments. We disagree and affirm.

These are the facts. The Department of Community Affairs, Bureau of Housing Inspection (the Bureau), acting under the authority of the Hotel and Multiple Dwellings law, N.J.S.A. 55:13A-1 to -28, conducted a series of inspections of properties owned by defendant located in East Orange. This inspection revealed imminent lead hazard violation in three apartments. The result was a docketed judgment against defendant, DJ-059925-2007. Thereafter, defendant moved to vacate the judgment. The parties appeared on the motion on December 7, 2007, at which times the parties reached a settlement. Under the terms of the settlement, defendant would abate the lead paint violations in the apartments; defendant would provide to the Bureau Lead Hazard Free Certificates for the apartments; defendant would pay the Bureau $5,000 as a compromise penalty; and the Bureau would consent to vacate the docketed judgment.

While the settlement was agreed to on December 7, 2007, the written Stipulation of Settlement, which was drafted by defendant's counsel, was not signed by counsel until May 2008. The delay in the execution of the stipulation resulted from defendant's inability to abate the violations by the agreed upon date of December 26, 2007, and was also caused in part because of personal issues with defendant's counsel which arose in early 2008.

During the pendency of that litigation, an inspection in May 2006 revealed general violations, and a subsequent reinspection indicated that the violations had not been abated. The parties entered into a settlement wherein the violations were to be abated by a date certain and a compromise penalty of $2,500 was agreed to. The parties also agreed that if the violations were not abated, the Bureau reserved the right to docket the judgment.

A second reinspection followed revealing that the violations had not been abated. As a result of this failure to abate and comply with the terms of the second agreement, the Bureau forwarded a request to file a judgment in the amount of $8,074, and a judgment was docketed on January 18, 2008 as DJ-040228-2008. The Bureau also issued a new Notice of Statutory Violation and Order to Pay Penalty in the amount of $46,000.

This notice resulted in a second judgment in the amount of $46,936, which was docketed on August 9, 2009 as DJ-258525-2009.

The Bureau conducted an additional inspection of one of the East Orange properties on December 15, 2006.*fn1 This inspection revealed lead paint violations, which were set forth in a June 21, 2007 Inspection Report. On July 29, 2008, the Bureau conducted a reinspection of the subject premises which revealed that the lead paint violations discovered by the original inspection had not been abated. As a result of the reinspection, on January 15, 2009, the Bureau issued to defendant a Notice of Statutory Violation and eventually filed docketed judgment DJ-129208-2009.

In December 2009, defendant filed a motion to vacate docketed judgments DJ-040228-2008, DJ-258525-2009 and DJ-129208-2009. Defendant asserted that the prior settlement between the parties (DJ-059925-2007) resolved all disputes as to the fines and penalties which are the subject of these judgments. In denying defendant's motion, Judge Sumners concluded that the written Stipulation of Settlement applied to the imminent hazard lead paint violations in the apartments, and to the docketed judgment, DJ-059925-2007, which resulted from those lead paint violations. He found that the general release did not apply to other penalties or docketed judgments because the date of the settlement was December 7, 2007, and the settlement could not have encompassed penalties which were issued after that date.

On appeal, defendant asserts that the settlement agreement should be enforced as to all penalties. It focuses on the language of the release and claims that the release covered all outstanding docketed judgments as opposed to the judgment specifically addressed in the settlement. Defendant, in advancing this argument, relies on the language contained in clause five of the settlement agreement. That clause provides:

As a result of this Settlement Agreement, the parties hereby release and discharge the other from any and all actions, causes of action, suits, debts, demands, whether in law or in equity.

Neither party to this dispute challenges that underlying policy advanced by our courts that we encourage settlements. Pinto v. Spectrum Chems. & Lab. Prods., 200 N.J. 580, 594 (2010). We recognize settlement agreements as contracts and will enforce them as we do other contracts. Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 475 (App. Div. 2009) (quoting Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983)).

However, in enforcing a settlement agreement, we adhere to the basic contract principle that where there is a disagreement as to the interpretation of the contract, we will determine the intent of the parties. Lederman v. Prudential Life Ins. Co. of America, Inc., 385 N.J. Super. 324, 339 (App. Div.), certif. denied, 188 N.J. 353 (2006).

In his analysis of the contract and discernment of the intent of parties, Judge Sumners concluded that the Stipulation of Settlement pertained only to the penalties issued on the imminent lead hazards in apartments 108, 205 and 304. Defendant's counsel drafted the written stipulation. "[W]here an ambiguity appears in a written agreement, the writing is to be strictly construed against the draftsman." Highland Lakes Country Club & Cmty. Ass'n v. Franzino, 186 N.J. 99, 122 (2006) (quotations omitted).

Defendant's argument that the general release applies to all other outstanding issues on the property is without merit. No mention was made of other penalties, and we find no basis to suggest that there was any intent to include them.

We conclude that the judge's analysis was correct and we affirm essentially for the reasons set forth in his thoughtful and thorough oral opinion of February 4, 2010. We add one additional comment.

Generally, a release does not apply to subsequent claims, Bilotti v. Accurate Forming Corp., 39 N.J. 184, 204 (1963), and we find no basis from diverging from that basic principle here.

Apparently, the delay in execution of the settlement agreement was based on collateral issues not germane to the issues here.


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