GEBROE-HAMMER ASSOCIATES VS. WEST GREEN GABLES, LLC (L-6496-16, ESSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0481-18T2
GEBROE-HAMMER ASSOCIATES,
Plaintiff-Respondent,
v.
WEST GREEN GABLES, LLC,
Defendant-Appellant,
and
JEFFREY WITTMANN,1
Defendant.
Submitted July 9, 2019 – Decided July 30, 2019
Before Judges Hoffman and Currier.
On appeal from the Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-6496-16.
Nemergut & Duff, attorneys for appellant (Paul J.
Nemergut, III, of counsel and on the briefs; Jeffrey
Zajac, on the briefs).
1
Defendant Jeffrey Wittmann was dismissed under a consent order in July 2018.
Brach Eichler, LLC, attorneys for respondent (David J.
Klein, of counsel and on the brief).
PER CURIAM
In this matter arising out of a commercial real estate transaction, plaintiff
Gebroe-Hammer Associates sought a commission for procuring a buyer for the
property owned by defendant West Green Gables, LLC (defendant or LLC).
Defendant appeals from the entry of two summary judgment orders in favor of
plaintiff. After a review of the contentions in light of the record and applicable
principles of law, we affirm.
Defendant owns property consisting of twenty-one apartment-type
townhouses. Under an operating agreement, Jeffrey2 and his wife, Susan, each
held a fifty percent interest in the LLC. The certificate of formation listed
Jeffrey as the registered agent. Section 5.1 of the LLC's operating agreement
provided that "[t]he [LLC] shall be managed by the [m]embers. . . . Members
owning more than fifty percent (50%) of the [p]ercentages then held by all
[m]embers shall have the right to act for and bind the [LLC] in the ordinary
course of its business." The agreement defined a "member" as "each [p]erson
signing this Agreement and any [p]erson who subsequently is admitted as a
2
We use the Wittmann's first names for ease of the reader.
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member of the [LLC]." The operating agreement was not affected by the
Wittmann's divorce in 2013; Jeffrey and Susan remained the sole members.
Susan died in 2015 and her estate passed to the Wittmann's daughters.
Under the operating agreement, the daughters became interest holders, not
members. Susan's brother, John Stefanicha, was the executor of her estate.
Plaintiff is a commercial real estate brokerage firm. In July 2016, Adam
Zweibel, plaintiff's vice-president, came to Jeffrey's office inquiring about
Jeffrey's interest in selling the property. Zweibel was aware that the LLC owned
the property. However, in their conversations, Zweibel stated Jeffrey advised
that he was the LLC's owner. Although Zweibel and Jeffrey differ in their
accounts of this, and the two subsequent conversations between them, the men
ultimately signed a document entitled "AGREEMENT FOR EXCLUSIVE
RIGHT TO SELL OR EXCHANGE" (listing agreement).
The listing agreement gave plaintiff the exclusive right to list and sell the
property, setting a $5.2 million purchase price and a $250,000 commission to
plaintiff upon it "procuring a purchaser." Zweibel signed the listing agreement
on behalf of plaintiff. Jeffrey signed in an individual capacity, acknowledging
in the document that he was "the owner [] or authorized [a]gent [] of [the] owner"
of the property. There was no reference to the LLC.
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The listing agreement, originally dated August 2, 2016, was amended with
handwritten notations on August 8, 2016. Jeffrey's initials appear on the
document in multiple places. Jeffrey testified during depositions that he had an
attorney review the listing agreement prior to signing it.
On August 8, Greenstacks LLC proffered a letter of intent (LOI), meeting
the purchase price and deposit terms in the listing agreement. The LOI was not
binding on the parties, but was subject to the execution of a purchase sale
agreement within two weeks after Jeffrey accepted the LOI. Greenstacks also
provided Zweibel with proof of available funds, which Zweibel forwarded to a
mortgage broker to obtain financing.
Jeffrey signed the LOI the following day, and instructed Zweibel to
forward it to Jeffrey's attorney to prepare a contract. When a contract was not
forthcoming, Zweibel inquired of Jeffrey and his attorney as to its status. Jeffrey
and his counsel eventually advised Zweibel that Jeffrey did not intend to proceed
with the sale. Jeffrey stated he told Zweibel that he had to confer with
Stefanicha, as Susan's executor, about the transaction. When Jeffrey eventually
contacted Stefanicha several weeks later, Jeffrey said Stefanicha was not
interested in getting involved in the sale.
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Zweibel subsequently informed Greenstacks that Jeffrey would not
proceed with the sale. Nevertheless, Greenstacks continued to inquire about the
property's availability for many months after these events.
Plaintiff instituted suit, asserting it was entitled to its commission under
the LOI for procuring a buyer for the property. After discovery, defendant and
Jeffrey filed summary judgment motions. Plaintiff opposed the motions and
moved for partial summary judgment.
In a May 16, 2018 comprehensive oral decision, Judge Keith E. Lynott
found Jeffrey had authority to execute the listing agreement on behalf of
defendant. He therefore denied defendants' motions. In his ruling, Judge Lynott
noted the explicit definitions of "member" and "interest holder" in the operating
agreement. Because a member was only a person who either signed the
agreement or who was subsequently admitted as a member, and only Jeffrey and
Susan had signed the agreement, the judge determined they were the only two
members.
However, Susan's death triggered an involuntary withdrawal of a member
under Section 6.3.1. The operating agreement provided that a successor of a
withdrawn member became an interest holder, not a member. Therefore, Judge
Lynott found that, upon Susan's death, Jeffrey became the sole member of the
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LLC. Moreover, Jeffrey acted in that capacity by continuing to manage the LLC
after Susan's death. Without any other members, only Jeffrey was authorized
under the operating agreement to act on behalf of the LLC. Therefore, as the
sole member, the judge concluded that Jeffrey was authorized to act on behalf
of the LLC and execute the listing agreement.
In addressing plaintiff's motion for partial summary judgment, Judge
Lynott concluded plaintiff had not met its burden to establish Greenstacks "was
a ready, willing and able purchaser" of the property. Therefore, he denied the
motion without prejudice.
In a second summary judgment application, plaintiff provided
certifications from Zweibel and Elliot Treitel, a mortgage broker. Judge Lynott
noted that a Greenstacks's representative sent a "bank register" to Zweibel on
August 5, 2016, showing a bank account balance of $8.9 million. Zweibel
contacted Treitel, a vice president at Meridian Capital Group, LLC, on August
8, 2016 to procure mortgage financing for Greenstacks to purchase the property.
Treitel acknowledged receiving the information and certified that he
believed at the time, and continue[s] to believe, based
on [his] nearly [twenty years] of experience at
Meridian, that there was a high likelihood of
Greenstacks obtaining a mortgage for 75% of the
purchase price, at prevailing market rates, through
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Meridian[,] had Meridian processed the application on
behalf of Greenstacks.
Based on the above information, Judge Lynott determined plaintiff had
demonstrated its procurement of a ready, willing and able prospective purchaser.
He stated:
The facts establish that Greenstacks entered a [LOI],
commenced and pursued financing, had sufficient
assets to obtain such financing and to complete the
purchase and exhibited continuing interest in the
transaction and that the broker followed up on the
prospective purchaser's behalf as to the preparation of
a definitive contract.
Therefore, plaintiff was entitled to a $250,000 commission and the entry of
partial summary judgment. 3
We review a summary judgment order de novo, applying the same
standard used by the trial court. Davis v. Brickman Landscaping, Ltd., 219 N.J.
395, 405 (2014) (citations omitted). We must determine whether, viewing the
facts in the light most favorable to the non-moving party, the moving party has
demonstrated there are no genuine disputes as to any material facts and they are
entitled to judgment as a matter of law. R. 4:46-2(c); Davis, 219 N.J. at 406;
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
3
The only issue remaining was whether plaintiff was entitled to attorney's fees
under the listing agreement as a prevailing party.
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On appeal, defendant does not assert a genuine issue as to any of the
material facts; therefore, the facts are uncontroverted. Instead, defendant
contends that the judge erred in concluding Jeffrey was authorized to sign the
listing agreement and LOI, and in finding plaintiff was entitled to a commission.
After reviewing the record, we are satisfied that Judge Lynott's legal
conclusions, as supported by the uncontroverted facts, are unassailable. We,
therefore, affirm substantially for the reasons expressed in his well-reasoned
opinions. We add the following brief comments.
Section VI of the operating agreement prohibited members from
transferring their membership interest. However, a member had the right to
surrender his or her interest and voluntarily withdraw from the LLC. The
agreement also contemplated an involuntary withdrawal such as a member's
death. In that case, "the successor of the withdrawn [m]ember shall thereupon
become an interest [h]older but shall not become a [m]ember."
When Susan died in 2015, her estate became an interest holder, but not a
member under the operating agreement. Therefore, in 2017, at the time of these
events, Jeffrey was the LLC's only member. Only Jeffrey could manage the
LLC, and take any actions on its behalf. Jeffrey demonstrated this awareness in
continuing to run the business and in executing the listing agreement and LOI.
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He further acted as defendant's authorized agent in forwarding the LOI to his
attorney and requesting the drafting of a purchase sale contract.
We are unpersuaded by defendant's argument that plaintiff was not
entitled to a commission. Plaintiff presented an executed LOI, and produced
financial information from the proposed buyer and evidence that the buyer could
procure the required financing. Plaintiff's proffered evidence was not
challenged.
As we have previously stated:
[W]here the broker has procured a purchaser willing
and able to buy on the seller's terms as stated to the
broker, and there is a failure of the principals to enter
into a formal contract of sale by reason of the seller's
fault, as, e.g., where he ha[s] subsequently changed his
mind . . . the seller is liable to the broker.
[Stanchak v. Cliffside Park Lodge, L.O. of M., Inc., 116
N.J. Super. 471, 480 (App. Div. 1971).]
Without any evidence to the contrary, plaintiff established it had procured a
ready, willing, and able buyer for the purchase. Jeffrey's change of heart, after
executing the listing agreement and LOI on behalf of defendant, cannot eradicate
defendant's obligation under the agreement.
Affirmed.
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