Affordable Housing Institute : US

I taut I taw a tummawy judgment!

 

Last Tuesday, the New Jersey Appellate Court gave a big Christmas present to the beleaguered owners of mobile homes in Paradise Park, a 61-home mobile home park ideally situated on the waterfront in northern New Jersey near New York Harbor. 

 

I’ve been following this story for 2½ years (early posts on Paradise Park may be found in Part 1, Part 2, Part 3, Part 4, Part 5, most recently in a two-part post a month ago highlighting the slow expulsion from Paradise via a war of attrition, and drawing attention to the upcoming appellate court decision seeking to reverse a remarkable – one might even say ludicrous – district court summary judgment in favor of the defendants (that is, the park buyer and seller).

 

Now the appellate court has ruled the district court was wrong, and the residents will have the chance to prove that they do have the right to buy the park, and hence protect their homes.  In so doing, the ruling (available here in .pdf) defines and clarifies the New Jersey law in important, helpful, and really interesting ways.

 

The ruling’s header (partial)

 

Facts on the ground

 

All litigation starts with an actual dispute in which facts are contested, and the story here is particularly complicated and relevant, not so much for the law but for the people living in Paradise Park.

 

Readers interested only in the legal aspects should jump down to The law and the facts, but those of you with a prurient interest in land disputes should stay with me for this part:

 

Wanna take a peek at land use facts?

 

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.

 

Sixty-one homes on 3.776 acres is over 16 homes to the acre, or about 2,700 square feet of land per home.  Let’s call that a rectangle 80 feet long by 35 feet wide. Considering that even a small mobile home is 15 feet wide by 40 feet long, it’s evident that the homes are crammed chock-a-block on the site. 

 

 

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.”

 

Meanwhile, the marina next door had been purchased by Mr. Bollerman, via his company Sandy Hook Developers.  A border dispute arose:

 

You stay on your side of the border, comrade, and we’ll stay on ours

 

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.

 

Evidently it was, because in short order, Mr. Bollerman won:

 

On June 23, 2004, the court granted Sandy Hook Developers’ motion for summary judgment.  

 

Meaning that Mr. Bollerman had a valid and enforceable claim against his abutter, Mr. Somers, owner of the land on which Paradise Park sits.

 

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.

 

The unique feature of real estate, as we’ve seen before, is the obvious one – you cannot move it. 

 

That’s “moving chattel,” not moving cattle!

 

So ‘removing encroachments’ is no mere matte of picking up your chattel and depositing them back on your own property, but of fundamentally changing the site configuration – and in some cases that may be impossible.

 

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.

 

Shall we discuss a settlement?

 

Here, as elsewhere in the case, Mr. Bollerman’s conduct suggests an Occam’s Razor theory of his motivations.  Every action he took is consistent with him wanting to acquire the Paradise Park site, combine it with his existing marina, and eliminate the mobile homes. 

 

When in doubt, the simplest theory is the best

 

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, and 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 the entire encroachment son 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 concern that Mr. Somers may devise a solution that would exacerbate a bad situation. (Emphasis added.)

 

There’s nothing whatsoever wrong with Mr. Bollerman’s desire to change the abutting land’s use.  From a purely real estate perspective, it’s almost certainly higher value than a mobile home park, and a use that most bystanders in the Borough of Atlantic Highlands would favor.  All the real estate economic logic in the world favors such a conversion.

 

Logically, you can’t make a redevelopment without breaking tenancy rights

 

If the record is any guide, it wasn’t until later that Mr. Bollerman discovered a barrier to his plan – a state-level resident protection statute that, if applicable, would entirely scupper the conversion.

 

We’re protected by statute

 

But there’s one important obstacle – a state-level statutory protection.

 

The law and the facts: sale of a mobile home park that ‘contemplates a change in use’

 

At factual issue is whether, in 2004, when the owner group (controlled by Donald Somers) agreed to sell to their abutter, an entity controlled by James Bollerman, a conversion away from a mobile home park was contemplated. 

 

I wonder what ‘contemplate’ means?

 

This matters because:

 

[Under] 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.

 

The seller and buyer asserted that no such right of first refusal was available to the residents because:

 

[Section] 46:8C-13, denoted as “sales or transfers not subject to §§ 46:8C-11 and46:8C-12,” … delineates a total of twelve separate transactions or transfers of title that are exempt from the right of first refusal provisions discussed herein. These are the exemptions:

 

a. Any sale or transfer of the property of a private residential leasehold community which is not made in contemplation of changing that property to a use or uses other than as a private residential leasehold community.

 

Was a change in use ‘contemplated’?  In their contract, the seller (Somers) and buyer (Bollerman) made self-serving statements that no Sirree, they had no contemplation of a change in use.

 

No change in use, no Sirree!

 

Defendants countered by emphasizing that the only reliable indicator of the defendants’ state of mind during and after the contract negotiations is the contract itself. They asserted that the court’s focus should thus be limited to whether the contract contains any indication that a change in the property’s use was ever contemplated. According to defendants, the obvious answer to this query is “no.”

 

That’s what they said.  The plaintiffs (the mobile home owners) argued one had to look at what they did:

 

Plaintiffs argued that from its inception, the buyers showed an interest in developing this site as part of the larger parcel of land comprising the marina area. According to plaintiffs, the encroachment litigation and its settlement, the defendants’ efforts to amend the municipal zoning scheme, and the attempts, by both seller’s and buyer’s counsel, to conceal the true nature of the transaction in order to avoid the notice requirements of the Act, are indicative of the defendants’ state of mind.

 

Trust what I said, not what I did!

 

What does ‘in contemplation’ mean?

 

Having heard the parties, the appellate court had to interpret the statute’s legislative phrase ‘in contemplation,’ a challenge in statutory construction.

 

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.

 

This the court did:

 

 

[Continued tomorrow in Part 2.]

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