A Christmas present for Paradise Park: Part 4, the burden of proof
[Continued from yesterday's Part 3 and the previous Part 1 and Part 2.]
You think that’ll impress me?
So far, in examining the ruling (available here in .pdf) that remanded back to district court a series of actual questions about whether the Paradise Park residents were entitled to the New Jersey Mobile Home Protection Act, we’ve seen that the appellate court – even though it cannot rule on facts – gave the residents multiple Christmas presents:
The more we read the decision, the more presents we found!
1. A definition of ‘in contemplation’ that it appears certain the factual record will support – meaning that the residents’ right of first refusal should be triggered.
2. A finding that the seller, Mr. Somers, has to form a good faith view – meaning that more than likely, Mr. Somers will agree that notice should have been given.
3. A road map for plaintiff counsel as to what evidence to put before the trial court as to whether a change in use was ‘in contemplation, and some heavy dicta indicating the appellate court thinks it was.
On March 4, 2005, the parties passed papers, and on March 5 the seller gave notice to the residents that they had a new park owner.
All hell broke loose:
On April 1, 2005, the residents of the Park filed a certificate of incorporation formally creating the Paradise Park Homeowners Association.
Behind the scenes, the residents were frantically rushing about to organize themselves. This takes time.
Three days later, the Association filed a notice of rights under N.J.S.A. 46:8C-16(b), with the office of the Monmouth County Clerk. The notice was formally recorded on April 26, 2005.
As a public-policy matter, I really favor notice provisions. Statutory rights are useless unless they are manifested by action, and the beneficiaries of those rights, who are normally just plain folks, have no reason to be expert in the real estate business and no justification for coming together as a group until they are galvanized by an external event/ threat. So it takes them time to get their act together, find out what rights they have, assemble a team to help them with those rights, and become a viable counterparty. A notice period is entirely appropriate, provided hat notice doesn’t turn into obstacle (as in Mitchell-Lama) or pillory (as in LIHPRHA).
I was just trying to exercise my contractual rights
Meanwhile, as a practitioner, I have sometimes spent a lot of management strategic time debating whether our client has to give a notice, and if so when, and what the notice should say. A notice once given cannot be ungiven, and a notice that imprints people’s consciousness with fear does damage even if one’s motives are entirely pure.
From May to August 2005, the sellers made several attempts to record the deed.
From this, I cannot infer whether the buyers had or hadn’t paid the cash consideration; sellers have the obligation to record title because they are the owner of record and the county clerk won’t recognize someone who isn’t on the current title. Because the residents’ association had filed its notice of rights, the county clerk also was doing what he or she should have
The Clerk’s office rejected these attempts because the deed did not contain the affidavit required under the Act. The deed was finally recorded on August 2, 2005.
The record is silent on how that one got recorded. Sometimes a clerk’s office just slips up.
Hope that’s not recorded
Ever since then, the plaintiffs have been suing Mr. Bollerman, seeking to secure what they believe is their right of first refusal to purchase the land, and hence to preserve their homes. They previously lost on summary judgment in district court, in an opinion remarkable for its narrow-mindedness:
The motion judge accepted defendants’ arguments. Referring first to the exemption in N.J.S.A. 46:8C-13(a), and the affidavit filing requirement under N.J.S.A. 46:8C-14, the court then reasoned as follows:
[T]he contemplation of the parties is not just what the parties to the transaction will tell the Court they intended. Instead it is also reflected by the contract as well as the consideration paid at closing.
Here, the consideration paid at closing was identical to that provided for in the contract. As such, the contract was clearly not a ruse for a different deal.
As we saw above, the appellate court blew up this syllogism. As it said:
Try another argument
We also hold that the trial court improperly narrowed the focus of its analysis to the “four corners” of the written contract between Bollerman and Somers, thereby ignoring a wealth of probative evidence of defendants’ state of mind concerning the future use of the Park property.
Not content to demolish one trial court conclusion, the appellate court tackles another one, the trial judge’s conclusion that:
In addition to that, I accept the certifications everyone filed saying that they have no intention of changing the use, no intention of doing anything further.
The appellate court blew this up also, citing the need to consider all the evidence.
Keep trying …
If I thought for one minute there was one scintilla of evidence here that they were trying to do this deal to circumvent the law, I would not be making the decision that I am making here today. There is no evidence in this record anywhere that that was the case. It is clear to me from the consideration paid and the language of the contract that that’s not the case.
Jaw. Drop.
Evidently the appellate court was as stunned as I was, for its ruling says early on:
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.
[Big snip]
According to plaintiffs, these letters and subsequent negotiations leading to the extension of the due diligence period are probative of the parties’ true state of mind with respect to the future development of the Park property. Plaintiffs argue that the trial court’s dismissal of this evidence in the context of deciding to grant defendants’ motion for summary judgment amounted to reversible error.
*
We agree with plaintiffs’ position.
That, dear readers, is what victory reads like.
I love the smell of judicial decisions in the morning
Why is this important?
Aside, that is, from the very human story of the residents who are fighting to preserve their homes?
We keep trying to attract attention
This is a big decision, for listen to how the appellate court speaks to the policy issues:
Although not expressly stated in its text, it seems clear that the Legislature adopted the Act to promote and enhance the ownership of mobile home parks by the residents of such parks. Toward that end, the Act provides for the formation of self-governing boards or associations by mobile home owners. N.J.S.A. 46:8C-15. Continuation of the use of park lands for such purposes is the indispensable adjunct driving this public policy.
Whether or not you like a mobile home park in your town, says the court, the legislature has decided that existing mobile home park residents are entitled to protection, and the law must carry out that policy conclusion.
Judicial review of individual statutory sections of the Act must, therefore, be guided and informed by these two overarching legislative policies:
1. Tto continue the use of mobile home parks on lands currently used for such a purpose; and
2. To encourage and promote ownership and self-governance by the residents of these parks.
The residents have to have a chance to organize and use the rights the legislature has granted, else the legislative intent is frustrated.
So much for legislative intent
A consistent theme running throughout these exemptions is that none of the transfers or conveyances carry a significant risk of changing the property’s use to something other than as a mobile home park. That is, if properly carried out in good faith, none of these transactions undermine the Legislature’s commitment to encourage park-ownership by mobile home residents, and self-governance in mobile home communities.
In other words, for a sale to be exempt from triggering resident rights, it must not increase the threat to those rights.
This is an entirely sound public-policy principle, one that finds its expression in numerous affordable housing preservation statutes.
Mobile homes are the dark matter of the affordable housing universe – significant, important, and ignored.
Good faith is the linchpin of this analysis. If courts permit interested parties to utilize these statutorily recognized transactions as legislative loopholes, i.e., as a means of circumventing the procedural and substantive rights bestowed to mobile home park residents in N.J.S.A. 46:8C-11 and N.J.S.A. 46:8C-12, then the public policy rationale embodied in the Act is frustrated.
Conclusion
The decision is well reasoned, complete — much useful information in the framing in Sections I and II. The parol evidence of Mr. Bollerman’s history of negotiating with Mr. Somers to buy the park only after securing significant victories on uncorrectable easements is very powerful in undermining the presumption that the Somers-Bollerman sale price represented true market value … and hence did not have ‘in contemplation’ a change in use.
The court’s clarity of standard about legislation intent, where the burdens of exemption light, and how to construe ‘contemplation,’ are important advances in terms of making this law adjudicable and enforceable.
Since any summary judgment request requires that all facts in question be construed against the asker, the judge could not give the residents summary judgment. However, the judge’s findings as to substance are very important and make it highly likely the residents will win on the retrial of the factual issues.
The residents won as much as they possibly could win at this stage. While 2009 will see more litigation, for now the court has given the
Reversed and remanded for further proceedings consistent with this opinion.
Thank you, Your Honor – you know my clients are always the good guys
Merry Christmas, and Happy New Year,
Say goodbye to 2008
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