SETH POLLACK VS. QUICK QUALITY RESTAURANTS, INC.(L-1000-14, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1967-15T2
SETH POLLACK and SP REALTY
ADVISORS, LLC,
APPROVED FOR PUBLICATION
Plaintiffs-Appellants/
Cross-Respondents, October 26, 2017
v. APPELLATE DIVISION
QUICK QUALITY RESTAURANTS,
INC.,
Defendant-Respondent/
Cross-Appellant.
______________________________
Argued September 25, 2017 – Decided October 26, 2017
Before Judges Sabatino, Whipple, and Rose.
On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No.
L-1000-14.
Michael J. Epstein argued the cause for
appellants/cross-respondents (Epstein Law
Firm, PA, attorneys; Mr. Epstein, of counsel
and on the briefs; Michael A. Rabasca, on the
briefs).
John R. Wenzke argued the cause for
respondent/cross-appellants (Lasser Hochman,
LLC, attorneys; Mr. Wenzke, of counsel and on
the brief).
The opinion of the court was delivered by
WHIPPLE, J.A.D.
In this appeal, as an issue of first impression, we are asked
to consider whether a tenant exercising a right of first refusal
to adopt terms of a sale contract for certain premises is obligated
to pay a commission to a third-party broker that secured a
prospective buyer. Because there was no contractual relationship
here between the tenant and the third-party broker, or other basis
to impose liability for the commission, we affirm.
We discern the following relevant facts from the record.
Randall Corporation and Garbrook Corporation (the sellers) entered
into a twenty-two-year lease with defendant, Quick Quality
Restaurants, Inc., at the Butler Plaza Shopping Center (Butler
Plaza) commencing December 1, 1994. The lease provided defendant
a right of first refusal.
According to the pertinent lease provision, if the sellers
received a bona fide purchase offer for Butler Plaza, the sellers
were obligated to serve a copy of the proposed purchase contract,
with any additional terms, to defendant and afford defendant a
limited opportunity to meet such terms. To exercise this right,
defendant had ten days to provide the sellers with an unqualified
written acceptance, which would operate as the final contract and
bind defendant. Defendant had no right under the lease to
communicate with the third party. The lease also provided:
2 A-1967-15T2
Tenant and landlord each warrant and represent
to the other that it has not dealt or
negotiated with any real estate broker or
salesman in connection with this Lease
Agreement. Each party indemnifies and holds
harmless the other party from all damages,
commissions, legal fees, litigation expenses
and other liabilities incurred as a result of
a breach of the foregoing warranty and
representation by either party.
Plaintiff Seth Pollack is a licensed real estate broker and
principal of co-plaintiff SP Realty Advisors, LLC, and had a
business relationship with Robert Levi. Levi introduced Pollack
to the sellers, who were planning to sell Butler Plaza. During
initial talks, the sellers made clear any brokerage commission
paid would come from the purchaser.
Plaintiffs and Levi found a potential purchaser, Levin
Properties, LLC (Levin). Plaintiffs and a representative for
Levin orally agreed Levin would pay plaintiffs a broker's
commission of 1.5% of the purchase price. According to Pollack,
Levin's representative also agreed to draft a commission agreement
and confirmed via email, on April 3, 2013, the broker's commission
would be 1.5%.
On June 26, 2013, the sellers and Levin entered into a
contract of sale for Butler Plaza for $14,500,000 (the Levin
contract). The Levin contract identified Pollack as the broker
and specifically stated, "[p]urchaser shall pay a real estate
3 A-1967-15T2
commission to Broker pursuant to a separate agreement."
Additionally, the Levin contract provided the inspection period
would begin eleven days following defendant's receipt of the
contract if defendant did not exercise its right of first refusal.
On July 10, 2013, Levin's representative sent Pollack a
proposed commission agreement, which stated, "[u]ntil this
agreement is signed by Levin Properties, . . . it is understood
and agreed that it shall have no force and effect." Levin never
signed the agreement.
As required by the lease, defendant was provided with a copy
of the Levin contract by the sellers' counsel. Levin's and
plaintiffs' names were redacted from defendant's copy. Although
the Levin contract required the purchaser to pay a real estate
commission to the broker pursuant to a separate agreement, no such
separate agreement was incorporated into the Levin contract or
otherwise provided to defendant. Accordingly, defendant was
unaware of plaintiffs' identity and the percentage of the broker's
commission. On July 3, 2013, defendant's counsel sent a letter
to the sellers' counsel advising him the required due diligence
materials were not included with the contract and therefore the
ten-day period to exercise the right of first refusal would not
commence until the materials were provided.
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On July 9, 2013, the sellers' counsel emailed Levin and the
sellers, informing them defendant had asked about the broker's
commission and inquired whether it should be disclosed to
defendant. Defendant's counsel testified that, as part of due
diligence, he asked the sellers' counsel about the broker's
commission and counsel advised, "Don't worry about it. You don't
need to know." The sellers' counsel also informed defendant's
counsel that the separate broker's commission agreement "[is] not
binding on you." Defendant's counsel then asked the sellers'
counsel for the name of the broker, a copy of the brokerage
agreement, and the amount of the brokerage fee. The sellers'
counsel emailed defendant's counsel stating, "Our purchaser has
indicated to us that the commission that they will pay is $217,500
[(1.5%)] of the purchase price."
Later that day, defendant and the sellers agreed defendant
had until July 19, 2013 at 5:00 p.m. to exercise the right of
first refusal. On July 19, 2013, defendant exercised its right
of first refusal, agreeing to be bound by the terms of the Levin
contract. The sellers' counsel testified defendant would be
obligated to pay the broker's commission because defendant gave
an unqualified written acceptance of the terms.
Almost three months later, in October 2013, Pollack called
defendant's counsel who was unaware Pollack was the "broker" in
5 A-1967-15T2
the Levin contract. Defendant's counsel and Pollack had a previous
professional relationship. Pollack told defendant's counsel he
was now working for a new firm and posed a hypothetical situation,
asking for advice. Pollack asked defendant's counsel whether the
broker involved in a contract of sale is entitled to a commission
when a tenant exercised its right of first refusal contained in
the lease. According to defendant's counsel, he then realized
Pollack was the unidentified broker and informed him that it was
inappropriate for him to pose the hypothetical because of the
conflict of interest.
On October 17, 2013, Pollack emailed defendant's counsel and
stated:
I understand the conflict of interest you have
with regards to the Butler [Plaza]
transaction, however I would like to know if
your client intends on paying [the] Broker
commission . . . I am entitled to based on
. . . my commission agreement with Levin,
which is incorporated in the [Levin contract].
Defendant's counsel responded on October 21, 2013, informing
Pollack that defendant
does not recognize your firm as being a broker
on the transaction. [Defendant] had a
preexisting right of first refusal and no
broker was involved in that transaction. We
have not been provided with any brokerage
agreement and have no knowledge of the "Levin"
party that you reference in your email to me.
6 A-1967-15T2
The sellers and defendant closed on the purchase of Butler
Plaza on December 2, 2013. No commission was paid to plaintiffs.
On January 28, 2014, plaintiffs filed a complaint against
defendant asserting breach of contract, breach of an implied
covenant of good faith and fair dealing, unjust enrichment, quantum
meruit, and third-party beneficiary. Plaintiffs asserted
defendant's right of first refusal required it to match any and
all terms of the Levin contract, including the broker's fees
referenced in the contract. Defendant counterclaimed asserting a
violation of the Consumer Fraud Act (CFA) N.J.S.A. 56:8-1 to -198.
On August 5, 2015, plaintiffs moved for summary judgment and,
on September 11, 2015, defendant cross-moved for summary judgment.
The Honorable Brian R. Martinotti, J.S.C., issued an order and a
twenty-two page written decision denying plaintiffs' motion,
granting defendant's motion, and dismissing defendant's
counterclaim. The judge found no signed writing memorializing an
agreement between defendant and plaintiffs that required defendant
"to comply with a contract it did not intend to become a party
to." Additionally, the judge found the statute of frauds barred
the enforceability of the unsigned commission agreement against
defendant.
The judge found the terms of the separate commission agreement
between plaintiffs and Levin were not incorporated into the
7 A-1967-15T2
contract of sale provided to defendant, nor were they disclosed
to defendant when it was provided with a copy of the approved
offer. Moreover, plaintiffs were not third-party beneficiaries
because defendant never received a copy of the separate commission
agreement, did not know the identities of the purchaser or broker
until Pollack contacted defendant's counsel months later, and
there was never an agreement between plaintiffs and defendant.
Additionally, the judge found the redacted information in the
Levin contract belied plaintiffs' argument that they were an
intended third-party beneficiary.
As to unjust enrichment, the judge found defendant "would
have been able to exercise its right upon submission of any buyer's
offer accepted . . . regardless of whether that buyer was procured
by a broker or not." As such, plaintiffs did not bestow a benefit
upon defendant other than that which it had already secured for
itself. Lastly, the judge dismissed plaintiffs' arguments on
quantum meruit because they had not established defendant knew
Pollack expected defendant to pay him.
As to defendant's claim under the CFA, the judge found
plaintiffs made no material misrepresentations or omissions to
induce defendant to purchase Butler Plaza and dismissed the
counterclaim. Plaintiffs and defendant both appealed.
8 A-1967-15T2
I.
On appeal, plaintiffs argue the trial court should have found
they were third-party beneficiaries of the right of first refusal.
Plaintiffs also assert defendant breached an implied covenant of
good faith and fair dealing, that their claims were not barred by
the statute of frauds, and they are entitled to recover under a
theory of quantum meruit.
When reviewing a trial court's grant of summary judgment, we
are "bound by the same standard as the trial court under Rule
4:46-2(c)." State v. Perini Corp., 221 N.J. 412, 425 (2015)
(citations omitted). We "consider whether the competent
evidential materials presented, when viewed in the light most
favorable to the non-moving party, are sufficient to permit a
rational factfinder to resolve the alleged disputed issue in favor
of the non-moving party." Ibid. (quoting Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 540 (1995)). "To the extent that
the grant or denial of summary judgment is based on an issue of
law, we owe no deference to an interpretation of law that flows
from established facts." Ibid. (citing Town of Kearny v. Brandt,
214 N.J. 76, 92 (2013)).
A.
For the same reasons given by the trial judge, we reject
plaintiffs' argument they were third-party beneficiaries. The
9 A-1967-15T2
sellers and Levin may have intended Pollack to benefit from the
Levin contract because he was specifically identified as the
"broker." However, the Levin contract did not bind defendant to
the separate commission agreement. Plaintiffs argue the court's
focus on their lack of involvement with defendant's lease was
erroneous and had no bearing on their status as a third-party
beneficiary. We disagree.
To determine whether a party is in fact a third-party
beneficiary, the court must "focus[ ] on whether the parties to
the contract intended others to benefit from the existence of the
contract, or whether the benefit so derived arises merely as an
unintended incident of the agreement." Broadway Maint. Corp. v.
Rutgers, State Univ., 90 N.J. 253, 259 (1982). Therefore, "[t]he
determining factor as to the rights of a third-party beneficiary
is the intention of the parties who actually made the contract."
Ibid. (citation omitted). The parties who made the contract are
the ones who agreed upon the terms and create the rights and
obligations that come from the contract. Ibid.Ultimately, the "real test is whether the contracting parties
intended that a third party should receive a benefit which might
be enforced in the courts; and the fact that such a benefit exists
or that a third party is named, is merely evidence of this
intention." Ibid. If there was no intention that a third person
10 A-1967-15T2
would receive a benefit from the contract, "then the third person
is only an incidental beneficiary, having no contractual
standing." Ibid. The contract need not specifically identify the
plaintiff, as long as the "pertinent provisions of the contract
and the surrounding circumstances" demonstrate the parties
intended the plaintiff to receive a direct benefit from the
contract. Model Jury Charge (Civil) § 4.10B "Third Party
Beneficiary" (2009). The question here is not whether a broker
could ever be a third-party beneficiary; it is whether these
plaintiffs are third-party beneficiaries of this contract between
the sellers and defendant.
The sellers and Levin accounted for plaintiffs' services when
they executed the Levin contract, listing plaintiffs as the broker
and tasking Levin's representative with preparing a separate
written commission agreement. However, the Levin contract and the
separate commission agreement were not finalized, because
defendant exercised its right of first refusal. The Levin
contract, when provided to defendant, was redacted and when
defendant sought information regarding the broker, the sellers did
not disclose it. Additionally, defendant's 1994 lease agreement
with the sellers expressly excluded brokerage commissions.
There was never any manifestation after the 1994 lease
agreement that plaintiffs, or any broker for that matter, would
11 A-1967-15T2
receive a direct benefit. As such, defendant did not intend for
plaintiffs to receive a direct benefit from the contract between
the sellers (defendant's landlord) and itself. Defendant's right
of first refusal was not contingent upon a broker's involvement
in procuring a potential purchaser. The right of first refusal,
instead, was contingent upon the seller's receiving a bona fide
offer for the property, regardless of how the potential purchaser
was procured.
We also reject plaintiffs' argument that the trial judge
erred by ignoring the existence of a valid commission agreement
with Levin because it was never executed. The separate commission
agreement, which Levin drafted, stated "[u]ntil this agreement is
signed by Levin Properties, . . . it is understood and agreed that
it shall have no force and effect." We concur with the trial
judge.
B.
We turn to plaintiffs' argument they were entitled to a
commission by virtue of the right of first refusal in the lease.
A right of first refusal "limits the right of the [landlord] to
dispose freely of his property by compelling him to offer it first
to the party who has the first right to buy." St. George's
Dragons, LP v. Newport Real Estate Grp., LLC, 407 N.J. Super. 464,
482 (App. Div. 2009) (quoting Mazzeo v. Kartman, 234 N.J. Super.
12 A-1967-15T2
223, 229 (App. Div. 1989)). The right of first refusal depends
on how the parties decide to structure it. Ibid. Here, the right
was structured in contemplation of "a bona fide third-party offer
as the triggering event." Ibid. (quoting Mazzeo, supra, 234 N.J.
Super. at 229).
We construe a right of first refusal provision under the same
rules of construction as any other type of contract. Ibid. We
"ascertain the intention of the parties as revealed by the language
used, the situation of the parties, the attendant circumstances,
and the objects the parties were striving to attain." Celanese
Ltd. v. Essex Cty. Imp. Auth., 404 N.J. Super. 514, 528 (App. Div.
2009). Where the terms of a contract are clear, we enforce the
contract as written and ascertain the intention of the parties
based upon the language. CSFB 2001-CP-4 Princeton Park Corp.
Ctr., LLC v. SB Rental I, LLC, 410 N.J. Super. 114, 120 (App. Div.
2009).
To establish a breach of contract claim, plaintiffs must
prove: the parties entered into a contract, containing certain
terms; plaintiffs performed what was required under the contract;
defendant did not fulfill its obligation under the contract; and
defendant's breach caused a loss to plaintiffs. Globe Motor Co.
v. Igdalev, 225 N.J. 469, 482 (2016) (citing Model Jury Charge
(Civil) § 4.10A "The Contract Claim – Generally" (May 1998)).
13 A-1967-15T2
Plaintiffs bear the burden of proving each element by a
preponderance of the evidence. Ibid.
"[W]hen a broker[,] who had been duly authorized by the owner
to find a buyer for his property[,] produced a willing and able
purchaser who entered into a contract to buy on terms agreeable
to the owner, the broker has fulfilled his undertaking" and is
entitled to a commission. Ellsworth Dobbs, Inc. v. Johnson, 50
N.J. 528, 543 (1967). As for a broker's right to receive a
commission when a tenant exercises the right of first refusal,
plaintiffs have provided no compelling precedent either from New
Jersey or elsewhere to support this claim.
Case law from other jurisdictions has addressed this issue.
In Fallenius v. Walker, 787 P.2d 203, 205-06 (Colo. App. 1989),
the Colorado Court of Appeals found the purchaser was required to
pay the broker's commission because it was included in the
contracting price, and not doing so would violate the terms of the
right of first refusal provision requiring the purchaser to accept
all contractual terms. Ibid. Fallenius is not factually analogous
here, however, because the Levin contract did not include the
broker's commission in the contracting price. Indeed, the contract
specifically stated the purchase price was $14,500,000 and the
broker's commission would be determined in a separate agreement.
14 A-1967-15T2
In City National Bank v. Lundgren, 307 So. 2d 870, 972 (Fla.
Dist. Ct. App. 1975), the Florida appellate court held a purchaser
exercising a right of first refusal, who was aware of the
obligation to pay the broker, could not unconditionally exercise
the right of first refusal and opt out of the obligation to pay
the broker. Here, by contrast, the contract of sale did not
require defendant to pay plaintiffs.
Lastly, plaintiffs cite to Simmons v. Plummer, 120 N.M. 481,
483-84 (1995), which found a broker was entitled to a commission
despite a party's exercise of the right of first refusal because
the broker procured a willing and able potential purchaser. There,
however, the seller was obligated to pay the commission, not the
third party who exercised the right of first refusal. Ibid.The trial judge found Stein v. Chalet Susse International,
Inc., 492 N.E.2d 369 (Mass. App. Ct. 1986), more persuasive for
the proposition that a holder of a right of first refusal is not
obligated to pay a broker's commission when it was the third-party
purchaser who agreed to pay the commission at the close of the
purchase. In Stein, a broker sought to recover a broker's
commission from the holder of the right of first refusal. Id. at
369-70. The triggering event for the right of first refusal was
a "bona fide written offer from a fully disclosed party." Id. at
370. The broker claimed the right holder was liable because he
15 A-1967-15T2
succeeded the third-party purchaser's position who agreed to a
certain price and promised to pay a commission at the completion
of sale. Id. at 371-72. Because the sale was never completed
between the broker and the third-party purchaser, the court found
the language of the agreement controlled and the broker was only
entitled to a commission at the close with the third-party
purchaser. Ibid. Additionally, the court stated it was the
brokers who deliberately "gave up their right to look to the seller
for a commission and failed to secure a firm substitute for that
right." Id. at 372.
While not binding on this court, Stein is instructive. Like
the broker in Stein, plaintiffs deliberately relinquished the
right to seek a commission from the sellers and negotiated with
Levin to receive a commission, while aware of defendant's right
of first refusal. The contract provided to defendant did not
define plaintiffs as a broker, nor was any commission agreement
incorporated therein. Additionally, the commission agreement,
which was not signed by Levin, expressly stated the commission
would be paid upon the close of title under the terms of the
contract made between the sellers and Levin. As Levin and the
sellers never closed on the sale of Butler Plaza, plaintiffs are
not entitled to a commission.
16 A-1967-15T2
Plaintiffs argue that when defendant exercised the right of
first refusal and entered into the contract, it agreed to be bound
by the obligations set forth in the Levin contract, including the
obligation to enter into a separate agreement with plaintiffs to
pay the broker's commission. Therefore, plaintiff's claim
defendant breached the contract by not entering into the separate
agreement. We stated in St. George's Dragons, supra, 407 N.J.
Super. at 483, any ambiguities in the contract must be construed
in favor of the non-drafting party.
Construing the contractual ambiguities in favor of the non-
drafting party, defendant did not breach the contract. Levin
agreed to pay $14,500,000 and to enter into a separate agreement
with the plaintiffs on June 26, 2013. The trial judge found the
July 10, 2013 commission agreement had no force or effect because
it was never signed and expressly made plaintiffs' commission
payable upon the closing of title of the contract between sellers
and Levin. Because the closing of title never occurred between
the sellers and Levin, plaintiffs are not entitled to a commission.
The trial judge correctly applied St. George's Dragons,
supra, 407 N.J. Super. at 483-85, because the holder of the right
of first refusal must accept the terms and conditions of the third-
party offer only if the contract is unambiguous. There, we held
an ambiguously worded contract did not demonstrate the parties
17 A-1967-15T2
intended the holder to pay the commissions in addition to matching
the third-party offer. Id. at 485. Here, the ambiguous wording
in the Levin contract, requiring purchaser to pay a "broker" a
commission pursuant to a separate agreement not incorporated into
the contract, creates no inference that defendant is obligated to
pay plaintiffs' commission.
C.
Plaintiffs' other theories of recovery are also unavailing.
In every contract in New Jersey there is the implied covenant of
good faith and fair dealing, Wilson v. Amerada Hess Corp., 168
N.J. 236, 244 (2001), to which every party to a contract is bound.
Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr.
Assocs., 182 N.J. 210, 224 (2005). While this covenant "cannot
override an express term in a contract, a party's performance
under a contract may breach that implied covenant even though that
performance does not violate a pertinent express term." Wilson,
supra, 168 N.J. at 244. The covenant requires that parties to a
contract "refrain from doing 'anything which will have the effect
of destroying or injuring the right of the other party to receive'
the benefits of the contract." Brunswick Hills Racquet Club,
Inc., supra, 182 N.J. at 224-25 (quoting Palisades Props., Inc.
v. Brunetti, 44 N.J. 117, 130 (1965)).
18 A-1967-15T2
A party who claims there has been a breach of this covenant
must provide proof of "bad motive or intention." Id. at 225. The
party must also "provide evidence sufficient to support a
conclusion that the party alleged to have acted in bad faith has
engaged in some conduct that denied the benefit of the bargain
originally intended by the parties." Ibid. (citing 23 Williston
on Contracts § 63:22 at 513-14 (Lord ed. 2002)).
Plaintiffs argue defendant acted with bad motives when it
inquired as to the amount of the commission, but then made no
further inquiries. But the record demonstrates defendant was
unaware of plaintiffs' identity when it signed the contract.
Defendant asked the sellers for information about the broker and
the commission price because the name of the broker was redacted
and there was supposed to be a separate commission agreement,
which was not part of the contract provided to defendant. Pollack
did not attempt to contact defendant at the time the contract was
signed. Rather, defendant did not learn of plaintiffs' involvement
as a broker for the sellers until the phone call to defendant's
counsel in October.
Defendant did not act in bad faith, denying plaintiffs' the
benefit of the bargain originally intended by the parties as
defendant did not know of plaintiffs' existence or involvement.
Plaintiffs were not listed on the contract and the sellers, the
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other party to the contract, never disclosed plaintiffs' identity
or their role in the sale of Butler Plaza to defendant. Therefore,
defendant did not breach the implied covenant of good faith and
fair dealing because plaintiffs were never intended to benefit
from the contract between the sellers and defendant.
D.
We also find no merit in plaintiffs' argument that the trial
court improperly barred their claims under the statute of frauds.
Plaintiffs contend that the acceptance of the contractual terms
required defendant to execute a separate written broker's
commission agreement. Pursuant to the statute of frauds, N.J.S.A.
25:1-16(b) provides:
[A] real estate broker who acts as agent or
broker on behalf of a principal for the
transfer of an interest in real estate . . .
is entitled to a commission only if before or
after the transfer the authority of the broker
is given or recognized in a writing signed by
the principal or the principal's authorized
agent, and the writing states either the
amount or the rate of commission.
A broker will only be entitled to a commission pursuant to an oral
agreement if:
within five days after making the oral
agreement and before the transfer or sale, the
broker serves the principal with a written
notice which states that its terms are those
of the prior oral agreement including the rate
or amount of commission to be paid[.]
20 A-1967-15T2
[N.J.S.A. 25:1-16(d)(1).]
"[S]trict compliance with the statute of frauds is essential
for a broker to recover a commission for the sale of real estate."
C&J Colonial Realty v. Poughkeepsie Sav. Bank, 355 N.J. Super.
444, 473 (App. Div. 2002), certif. denied, 176 N.J. 73 (2003).
Our courts disapprove of business practices where brokers rely on
the "hope" that a commission "'will be voluntarily paid even though
there is no legal obligation to do so,' and their wish 'to avoid
the possibility of the refusal of an owner to sign at the outset
a document of authority the full import of which the latter may
not be sure.'" Coldwell Banker Commercial/Feist & Feist Realty
Corp. v. Blancke P.W. LLC, 368 N.J. Super. 382, 392 (App. Div.
2004) (quoting McCann v. Biss, 65 N.J. 301, 308 (1974)).
The statute of frauds may be satisfied when the property,
seller, broker, and price is identified, even if the exact amount
of the commission is not listed as long as the "proposal which
states a net price to the owner or that the purchaser is to pay
the broker's commission is uniformly held to comply with the
statute." Stanchak v. Cliffside Park Lodge, L.O. of M., Inc., 116
N.J. Super. 471, 477-78 (App. Div. 1971). In order to satisfy the
statute of frauds, the writing must signify or "fairly" imply the
broker is selling the property on behalf of the owner. Id. at
478.
21 A-1967-15T2
Here, no written broker's commission agreement was in effect
between any of the parties. The separate commission agreement
drafted by Levin specifically stated until it was mutually signed,
it "shall have no force and effect." Only Pollack signed the
separate commission agreement; Levin never signed it.
Accordingly, while defendant may stand in the shoes of Levin by
adopting all of the terms in the contract of sale, the separate
commission agreement was not part of it.
While defendant was informed that the prospective purchaser
would pay a commission, there was never a suggestion that defendant
owed plaintiffs for the broker's commission. Contrary to
plaintiffs' claims, defendant did not refuse to comply with the
contract. Defendant attempted to obtain the information about the
broker's commissions but was told it would not apply. The
property, seller, and price were identified in the contract, but
the broker and the broker's commission was not; therefore,
plaintiffs did not strictly comply with N.J.S.A. 25:1-16. See C&J
Colonial Realty, supra, 355 N.J. Super. at 473; Stanchak, supra,116 N.J. Super. at 477-78.
There was no signed written agreement between plaintiffs and
defendant, which required defendant to pay 1.5% of the purchase
price in commission to plaintiffs. Therefore, the trial judge did
not err in finding "[a]bsent a signed writing memorializing an
22 A-1967-15T2
agreement between [defendant] and [plaintiff] Pollack, he may not
require [defendant] to comply with a contract it did not intend
to become a party to."
We also reject plaintiffs' assertion that the oral agreement
between themselves and Levin for 1.5% of the purchase price,
confirmed via email to defendant, binds defendant. Defendant was
never a party to the oral agreement between Levin and plaintiffs.
Additionally, when plaintiffs became aware defendant exercised its
right of first refusal, plaintiffs did not serve notice upon
defendant of the terms of the oral agreement. See N.J.S.A. 25:1-
16(d)(1). No agreement complied with N.J.S.A. 25:1-16(b) or
N.J.S.A. 25:1-16(d)(1).
E.
Plaintiffs' quantum meruit argument that defendant was
unjustly enriched is also devoid of merit. In order to recover
under a theory of quantum meruit, plaintiffs must establish: "(1)
the performance of services in good faith, (2) the acceptance of
the services by the person to whom they are rendered, (3) an
expectation of compensation therefor, and (4) the reasonable value
of the services." Starkey v. Estate of Nicolaysen, 172 N.J. 60,
68 (2002).
Plaintiffs argue Pollack performed extensive brokerage
services in good faith, procured Levin as the purchaser of Butler
23 A-1967-15T2
Plaza, Levin accepted the services, plaintiffs expected to be
paid, and Levin agreed to pay Pollack 1.5% of the sale price,
which was the reasonable value of the services provided.
However, plaintiffs, did not perform services for defendant's
benefit. The benefit received by defendant, the ability to
exercise the right of first refusal, was obtained through
defendant's own negotiations in 1994, and paid for through a higher
rent. Plaintiffs had no involvement in the 1994 lease agreement
and cannot now argue Pollack bestowed a benefit, by his procurement
of Levin as a potential purchaser of Butler Plaza, which unjustly
enriched defendant.
II.
In its cross-appeal, defendant argues the trial judge erred
in finding plaintiffs did not violate the CFA, and should have
awarded it attorney's fees. Because plaintiffs did not make any
knowing misrepresentations that induced defendant to purchase
Butler Plaza, the trial judge correctly found defendant's CFA
counterclaim was without merit.
The CFA was enacted in order to address "fraudulent practices
in the marketplace and deter such conduct by merchants."
Thiedemann v. Mercedes-Benz USA, 183 N.J. 234, 245 (2005). The
CFA protects the public, even if the merchant has acted in good
faith. Gennari v. Weichert Co. Realtors, 288 N.J. Super. 504, 533
24 A-1967-15T2
(App. Div. 1996). Specifically, it was designed "to protect the
public from sharp practices and dealings in the marketing of
merchandise and real estate which could victimize the public by
luring the consumer into a purchase through fraudulent, deceptive,
or similar kinds of selling or advertising practices." Ibid.(citations omitted).
The CFA provides a cause of action to
[a]ny person who suffers an ascertainable loss
of moneys or property, real or personal, as a
result of the use or employment by another
person of any method, act, or practice
declared unlawful under this act[,] . . . may
bring an action . . . in any court of competent
jurisdiction.
[N.J. Citizen Action v. Schering-Plough Corp.,
367 N.J. Super. 8, 12 (App. Div.), certif.
denied, 178 N.J. 249 (2003) (citing N.J.S.A.
56:8-19).]
To establish a claim under the CFA, plaintiffs must prove: (1)
unlawful conduct by defendant; (2) an ascertainable loss on the
part of plaintiffs; and (3) a causal relationship between
defendant's unlawful conduct and plaintiffs' ascertainable loss.
Id. at 12-13.
The CFA sets forth three general categories of unlawful
conduct: affirmative acts; knowing omissions; and regulatory
violations. Thiedemann, supra, 183 N.J. at 245. While "[a]
practice can be unlawful even if no person was in fact misled or
25 A-1967-15T2
deceived," the determination will turn on whether there was "[t]he
capacity to mislead." Cox v. Sears Roebuck & Co., 138 N.J. 2, 17
(1994).
Defendant argues plaintiffs violated the Real Estate Brokers
and Salesman Act (the Act), N.J.S.A. 45:15-1 to -42. The Act was
designed to "protect consumers by excluding undesirable,
unscrupulous and dishonest persons . . . from the real estate
business." Sammarone v. Bovino, 395 N.J. Super. 132, 138 (App.
Div.), certif. denied, 193 N.J. 275 (2007). N.J.S.A. 45:15-1
requires a real estate broker to be licensed and N.J.S.A. 45:15-
3.1 states that a licensed real estate broker may pay a referral
fee or commission to a person not licensed in New Jersey, as long
as that person is a licensed real estate broker in another
jurisdiction.
Defendant contends plaintiffs violated the Act because
Pollack initially agreed to split the broker's commission with
Levi, satisfying the first element of a CFA claim. Levi was not
a licensed broker in any jurisdiction, and was not authorized to
receive a real estate broker's commission. However, when Pollack
learned that Levi did not have a real estate license, he and Levin
informed Levi they could not split the commission with him.
Accordingly, plaintiffs did not violate N.J.S.A. 45:15-3.1.
Additionally, neither plaintiffs nor Levi contacted defendant
26 A-1967-15T2
until well after defendant exercised its right of first refusal.
Consequently, the record demonstrates there were no material
misrepresentations which could have induced defendant into
purchasing Butler Plaza.
Defendant also argues plaintiffs' attempt to collect a
commission from defendant violated the statute of frauds and
attempting to collect a commission without an agreement was an
"unconscionable commercial practice" in violation of the CFA.
Asserting there was an "ascertainable loss," defendant argues it
paid an additional $2,946 in closing costs for counsel to review
plaintiffs' commission claims. Here, defendant has not
established unlawful conduct by plaintiffs. Plaintiffs did not
induce defendant to exercise its right of first refusal by a
misrepresentation or knowing omission, especially since defendant
was unware of plaintiffs' involvement as brokers, and Levi's
uncompensated initial role. Therefore, defendant has not
established a claim under the CFA, and the trial judge correctly
dismissed defendant's counterclaim.
Affirmed.
27 A-1967-15T2