Judge says Briarcrest case to be decided on meaning of 'good faith'

LACONIA — The dispute over the future ownership of Briarcrest Estates moved closer to trial this week when Justice James D. O'Neill , III of Belknap County Superior Court denied the motion of the Lakemont Cooperative to dismiss the petition of Mark and Ruth Mooney, owners of the manufactured housing park, asking the court to approve their sale of the park to Hometown America Corporation. In the process, O'Neill clearly signaled that the case will turn on what it means to negotiate in "good faith".
The dispute hinges on a statute that requires park owners, 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 Mooneys accepted a $10-million offer from Hometown America. Tenants representing a minority of the 241 units in the park incorporated as the Lakemont Cooperative and matched the $10 million offer.
In response, the Mooneys asked the court to approve the sale to Hometown America, claiming that since a majority of tenants preferred commercial to cooperative ownership of the park, approving the transaction would be in keeping with the intent of the statute to safeguard the best interests of tenants. Subsequently a majority of tenants petitioned the court opposing a sale to the cooperative and asking to intervene 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, Shepherd reminded the court that the law does not prescribe that the cooperative 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 be taken to refer to a majority of the tenants. Consequently, he concluded that the Mooneys "owe 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. He asked the court to resolve the ambiguity of the statute.
At a hearing in November, 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.
In declining to dismiss the Mooney's petition O'Neill found that the issues it raised did not qualify for dismissal proceedings. At the same time, he held that the court need not find the statute ambiguous. Instead, he ruled that the essence of the Mooney's claim is by choosing to sell to Hometown America because a majority of the tenants do not want the park to be owned by a cooperative they have met the requirement to negotiate in good faith. "Thus," he concluded, "the crux of this matter is what constitutes 'negotiate in good faith,' not what constitutes tenants or tenants association."
The case is expected to be tried on March 22.