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PSL, L.L.C. v. Terhune

A-3162-07T1 (N.J. Super. App. Div. 2009) (Unpublished)

AGREEMENTS; SETTLEMENTS —Settlements are to be interpreted according to contract law and if a settlement agreement is clear and unambiguous, it is to be interpreted in accordance with its language, but if unclear or ambiguous, then parole or extraneous evidence can be considered in order to determine the intent of the parties.

A mobile home park owner leased spaces for ninety-nine years to the owner of a group of mobile homes. According to the lease, the tenant was to pay rent as well as taxes, repairs, expenses, and insurance premiums on the homes. In exchange, the tenant was to receive the rent from persons residing in his mobile homes. Ten months following the signing of the lease, the landlord sued its tenant for failure to pay rent and for other breaches of the lease. The parties eventually entered into a settlement under which the tenant was to purchase the mobile home park and also to pay all outstanding bills not paid by the receiver appointed to oversee the park. The owner defaulted on the settlement agreement and the lease was terminated by the lower court in accordance with the terms of the settlement. The tenant was barred from entering the park except to collect rents or make repairs on its mobile homes. The landlord’s remaining claims were dismissed by the Court.

On the landlord’s appeal, the Appellate Division pointed out that according to contract law, under which settlements were to interpreted, agreements that are clear and unambiguous are to be interpreted according to their language, but if unclear or ambiguous, parole, or extraneous evidence can be considered in order to determine the intent of the parties. Here, the Court found that the settlement agreement did not explicitly allow or bar the landlord from seeking damages in the event of default on the part of the tenant. It also found that factual questions remained as to whether the landlord had a right to pursue his damage claims upon default. As a result, the Court reversed the lower court’s decision which had dismissed the landlord’s damages claims and remanded the matter for a determination as to whether the landlord could pursue its claims according to the terms of the settlement agreement.


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