LACONIA — The tussle over the future ownership of Briarcrest Estates may take a fresh turn with the decision of Justice James D. O'Neill, III of Belknap County Superior Court not to dismiss the petition of Mark and Ruth Mooney, owners of the manufactured housing park, asking the court to approve its sale to Hometown America Corporation. The Mooneys had recently signaled a willingness to instead negotiate a sale to a group of tenants in order to avoid a lengthy and costly legal battle but O'Neill's ruling in their favor may motivate them to rethink the matter.
In July the Mooneys accepted a $10-million offer from Hometown America. State law requires park owners, upon receiving an offer, 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.
When tenants representing a minority of the 241 units formed the Lakemont Cooperative and presented a matching offer, the Mooneys went to court, where they were supported by a majority of tenants who prefer commercial to cooperative ownership.
Jim Cowan, president of the Lakemont Cooperative, which contested the petition, said yesterday that "we're not remotely surprised" by O'Neill's ruling. He said that recently the Mooneys wrote to all tenants of the park indicating that they intended to withdraw their "court action" rather than become mired in prolonged and expensive litigation as well as to open negotiations with the Lakemont Cooperative.
Cowan said that he anticipated the Mooneys will sign the purchase and sales agreement submitted by the cooperative, which he noted has been amended to exactly match the competing offer, then provide the financial information the cooperative requires to pursue its due diligence and arrange the financing to purchase the park.
However, the Mooneys have yet to withdraw their petition and O'Neill's decision may cast the situation in a new light. In support of the Mooney's petition, attorney Paul 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 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.
Meanwhile, attorney Philip McLaughlin, representing the majority of tenants claimed that while the statute fails to anticipate that a majority of tenants will prefer commercial to cooperative ownership it neither prohibits them from intervening in the litigation nor from intervening in the present action" or bars the Mooneys from weighing their interests when fulfilling their duty to bargain in good faith. He asked the court to conclude that the Mooneys "may, as they discharge their statutory duty to bargain in good faith, take into account, that good faith extends to consideration beyond the will of the minority (whether in an association or not) and should consider the will and the reasons for the opposition of the majority."
In declining to dismiss the Mooney's petition O'Neill held that the court need not find the statute ambiguous. Instead, he ruled that the essence of the Mooney's claim is that 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."
While the statute implies that the duty to negotiate in good faith is owed solely to the cooperative, O'Neill's ruling leaves open the prospects that if the cooperative represents a minority of tenants, the same duty may be owed to the majority and that park owners may be spared liability for fulfilling it.
Should the decision lead to the Mooneys to pursue the litigation, the case will be tried on March 22.
Whatever the outcome for the tenants of Briarcrest Estates, the issues raised by the case will likely prompt reconsideration of the statute governing the sale of manufactured housing parks.