LACONIA — Following a brief hearing in Belknap County Superior Court yesterday, the dispute over the future ownership of Briarcrest Estates appears headed for trial in March.
The dispute hinges on a statute enacted in 1987 that requires owners of manufactured housing parks, upon receiving an offer to purchase their park, to "consider any offer received from the tenants or a tenants' association" and to "negotiate in good faith with the tenants concerning a potential purchase." Failure to comply carries a liability to the tenants of $10,000 or 10 percent of the purchase price, whichever is greater.
In July, the Mark and Ruth Mooney, who own the park, accepted an offer from Hometown America Corporation of Chicago to purchase Briarcrest Estates for $10 million. In accord with the law, tenants representing about 40 percent of the 241 units in the park incorporated as the Lakemont Cooperative and matched the $10 million offer.
In response, the Mooneys, represented by attorney Paul Fitzgerald, asked the Belknap County Superior Court to approve the sale of the park to Hometown America, claiming that since a majority of tenants oppose cooperative prefer commercial ownership of the park, approving the transaction would be in keeping with the intent of the statute to safeguard the best interests of tenants. Last week a majority of tenants, represented by attorney Phil McLaughlin, filed a petition with the court opposing the sale of the park to the cooperative along with a motion to intervene in the litigation on behalf of the Mooneys.
The Lakemont Cooperative, represented by attorney Robert Shepherd, asked the court to dismiss the Mooneys' petition, arguing that as the owners of the park they were in no position to represent the interests of its residents. Moreover, the cooperative reminded the court that the law does not prescribe that it include a specific number, let alone the majority, of tenants to make an offer and pursue the transaction.
In objecting to the cooperative's petition to dismiss, Fitzgerald argued that the term "tenants" and "tenants association," which are nowhere defined, are ambiguous, but can only reasonably taken to refer to a majority of the tenants. Consequently, he concludes that the Mooneys "owe(s) conflicting duties of good faith" to both the cooperative and the majority and could face a liability of $1 million for failing to bargain in good faith with either.
Fitzgerald asked the court to resolve the ambiguity of the statute and in the meantime to deny the cooperative's motion to dismiss the case along with its requests to order that the law is not ambiguous and the cooperative does not require a majority. And finally to refrain from ordering the Mooneys to negotiate with the cooperative until the case resolved.
When the parties appeared before Justice James D. O'Neill, III yesterday Shepherd insisted that the law is not at all ambiguous and that Fitzgerald, by reading tenants to mean majority, was seeking to add words to it that amounted to "a distortion of the plain meaning of the statute." He said that since the majority of tenants have not tendered an offer for the park, there was nothing to negotiate with them. By tenants, he said the statute refers to "the tenants who made the offer."
Speaking for the majority of tenants, McLaughlin told the court he was familiar with the legislative history of the statute, which rested on the premise that given the opportunity, a majority of tenants would choose to purchase their parks. Consequently, the statute does not contemplate the circumstances that have arisen at Briarcrest Estates. He offered the court a "hypothetical," wondering how the statute would apply if the majority opposed to cooperative ownership incorporated as a tenants association, offered to acquire the park on terms identical to those proposed by Hometown America and assigned its right to purchase to the commercial entity.
After listening to the arguments presented by all three parties, O'Neill granted the motion of the majority of tenants to intervene and ordered the case to trial on March 22.