BOE Settles 2008 Contract Lawsuit For $550,000

The Roselle Park Board Of Education (BOE) – at the end of their February 28th meeting – approved to settle a lawsuit filed against the school district in 2014. The amount of the settlement is $550,000.

The litigation stemmed from a chain of events that started almost a decade ago in 2007. None of the current sitting BOE members served back then. Alexander Balaban – who served on the BOE until last year when he decided not to run for re-election – was on the board in 2007 and 2008. The School Superintendent at the time was Patrick Spagnoletti who retired in 2013, a year before the lawsuit was filed.

According to the statement read by BOE President Chris Miller, the then-board agreed to lease property at 430 East Westfield Avenue – presumably for the district’s pre-kindergarten program. This is the building next to the Roselle Park Animal Hospital at the corner of Linden Road and East Westfield Avenue.

In June of 2008, the board voted to terminate the contract for the property. Six years later, in accordance with NJSA ยง2A:14-1, the property owner filed a lawsuit on June 4th of 2014, claiming breach of contract and a legal term called detrimental reliance.

According to court papers, the BOE entered into a lease agreement with the property owner in February of 2007 for 6,175 sq. ft. for a five-year lease at $123,5000 a year with a 2½% increase every year. This would have totaled $649,156.57 over five years in payments. The complaint filed by 430 Westfield Ave, LLC stated that the BOE failed to provide construction plans until December of 2007, five months after the agreed upon date of July 1, 2007. The BOE applied for a hearing before the Roselle Park Planning Board with a June 16, 2008, date but on June 6th, the BOE notified 430 Westfield Ave, LLC that it was no longer interested in occupying the premises and withdrew its application. This was a breach of the contract, according to the complaint. Detrimental reliance was claimed because the property owner “detrimentally relied upon the explicit promises made” by the BOE in its lease agreement. The plaintiff claimed it suffered damages as a result of the breach of the lease agreement.

The breakdown of payments is listed below. The first payment of $250,000 is due by March 15th. When asked how this will impact the current school year, the business administrator stated that preemptive measures were taken in previous school year budgets to satisfy the first settlement payment.

Due Date
2016-2017 School Year
March 15, 2017
2017-2018 School Year
August 1, 2017
January 1, 2018
2018-2019 School Year
August 1, 2018
January 1, 2019

Although a second payment will be made this calendar year, it will be put into the 2017-18 school year budget. The same applies for the payment in August of 2018.

The billing analysis of legal fees related to this litigation revealed that the cost from 2014 to 2017 was $19,266.09.

Below is a copy of the settlement agreement as well as a transcript of the statement read by BOE President Chris Miller and the original complaint.

Download Settlement Agreement

Statement read by BOE President Chris Miller

On or about February 26, 2007, the then sitting Roselle Park Board of Education approved a contract to lease property located at 430 [East] Westfield Avenue, Roselle Park, New Jersey. The purpose of the lease was to house an education program for the district. In order to occupy the property, the property needed to be renovated – through construction – so the property would be compliant with New Jersey educational laws regarding school building acceptable standards. Despite the requirements of the contract, the property was not complete and ready for district use in accordance with acceptable timelines. As a result, the then-Board of Education and then-district administration made a decision to terminate the contract on or about June 24, 2008. Approximately six years later, in June 2014, a lawsuit was filed against the board by 430 Westfield Avenue, LLC claiming detrimental reliance and damages of approximately $1.3 million.

In response to the claim, the board retained special legal counsel to represent it in this action. In January 2017, the parties attended an in-person conference with the judge assigned to this matter. Under the judge’s guidance and recommendation, the parties reached a tentative settlement. After several discussions, all of the terms of that settlement have been agreed upon and the board will vote to accept the terms of that settlement tonight.

The settlement includes full release and waivers for the board, indemnification for the board from all subcontractors who worked on the property, and the withdrawal of the plaintiff’s complaint with prejudice. The settlement also results in payments from the board to the plaintiff of less than 50 cents on the dollar. In order to have minimal impact on the district’s budget, the board diligently negotiated a settlement payable over three budget years.

The terms of the settlement payments are as follows:

  • $250,000 payable within 30 days of the board’s approval of the settlement, but not later than March 15, 2017.
  • $100,000 paid by August 1, 2017;
  • $100,000 paid by January 1, 2018;
  • $50,000 paid by August 1, 2018;
  • $50,000 paid by January 1, 2019;

The total value of the settlement is $550,000.

Download 2014 Complaint