STRAUS ASSOCIATES II VS. MURRAY BERMAN Â (C-000102-15, BERGEN COUNTY AND STATEWIDE), A-5578-15T3

Background

Straus and Berman each owned 50% of Jackson Health Care Associates (JHCA); CareOne was the tenant on the property. Plaintiffs Straus and CareOne sued Berman seeking specific performance to force lease renewal or require Berman to sell his JHCA interest.
The parties mediated and executed a written mediation settlement agreement (the Agreement) stating Straus or its assigns would pay Berman $7,500,000 for his JHCA interest, closing within six months but not before Jan 2, 2016, with 30 days' notice and rents distributed until closing. The mediator and counsel signed the Agreement.
Post-mediation drafts of a final settlement added section 8.15 permitting a like‑kind (1031) exchange; the clause originally disclaimed plaintiff obligations and excluded property conveyance. Later, shortly before closing, Berman’s counsel inserted language allowing plaintiffs to take title to “the Property,” enabling a “drop‑and‑swap” 1031 mechanism.
Plaintiffs objected to the late addition; Berman refused to close without the drop‑and‑swap language. Plaintiffs moved to enforce the mediation Agreement; Berman cross‑moved to enforce the draft final agreement including the 1031 structure or to restore the case to the trial calendar.
The trial judge found the signed mediation Agreement contained all material terms and did not include a required 1031 exchange; the judge struck the added drop‑and‑swap language, ordered closing within 30 days, denied Berman’s cross‑motion and reconsideration, and denied fees. Berman appealed.

Issues

Issue	Plaintiff's Argument (Straus)	Defendant's Argument (Berman)	Held
Whether the signed mediation Agreement was enforceable as written	The Agreement set forth the material terms (party, interest, price, timing, notice, rent distribution) and is binding	No dispute existence; Berman argued the parties had agreed to additional material (1031) terms at mediation that must be enforced	Court enforced the signed Agreement; it contained the essential terms and was binding
Whether a 1031 like‑kind exchange was an essential/required term of the settlement	No — mediation Agreement lacked any requirement of a 1031 exchange and parties did not agree on it as an essential term	Yes — a 1031 exchange (and drop‑and‑swap mechanism) was agreed to at mediation and was essential because it materially affected tax consequences (~$2.5M)	Court held the 1031 exchange was not an essential term; the Agreement contained the necessary elements for a complete transaction
Whether the late insertion of the drop‑and‑swap language into the draft final agreement binds Straus	Plaintiffs never accepted that change; it was added late and materially changed the Agreement	Berman contended post‑mediation drafts reflected the parties’ understanding and plaintiffs tacitly accepted earlier drafts	Court found the late addition materially altered the deal; struck the language and ordered performance of the original Agreement
Whether an evidentiary hearing or reconsideration was required to decide disputed mediation intent	Plaintiffs argued mediation communications are privileged and the signed agreement controls; no hearing required	Berman sought an evidentiary hearing to prove mediation intent and contested terms; also sought reconsideration	Court declined a hearing (mediation privilege, written signed settlement controlling) and found no abuse of discretion in denying reconsideration

Key Cases Cited

Nolan v. Lee Ho, 120 N.J. 465 (1990) (a settlement agreement between litigants is a contract)
Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415 (App. Div. 1998) (contract interpretation is a question of law reviewed de novo)
Kieffer v. Best Buy, 205 N.J. 213 (2011) (appellate court reviews contract interpretation with no special deference)
Amatazzo v. Kozmiuk, 305 N.J. Super. 469 (App. Div. 1997) (when existence of a settlement is disputed, an evidentiary hearing may be required)
Lahue v. Pio Costa, 263 N.J. Super. 575 (App. Div. 1993) (parties may be bound by agreed essential terms even if mechanics are left for later drafting)
Berg Agency v. Sleepworld-Willingboro, Inc., 136 N.J. Super. 369 (App. Div. 1975) (signed document containing basic terms can be binding despite intent to prepare a formal agreement)
Comerata v. Chaumont, Inc., 52 N.J. Super. 299 (App. Div. 1958) (agreement on necessary terms is binding even if parties expect a formal agreement later)
D'Atria v. D'Atria, 242 N.J. Super. 392 (Ch. Div. 1990) (reconsideration appropriate only for palpably incorrect decisions or overlooked probative evidence)
Willingboro Mall, Ltd. v. 240/242 Franklin Ave., L.L.C., 215 N.J. 242 (2013) (communications during mediation are privileged)