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LOUIS SCHLESINGER CO. v. KRESGE FOUND.

November 22, 1966

LOUIS SCHLESINGER COMPANY, a corporation of New Jersey, Plaintiff,
v.
The KRESGE FOUNDATION, a Michigan corporation, and Kresge Department Store, Inc., a Delaware corporation, Defendants



The opinion of the court was delivered by: WORTENDYKE

 WORTENDYKE, District Judge:

 In this action the plaintiff, a New Jersey licensed real estate broker, seeks commissions for services alleged to have been rendered in connection with the letting by the defendant, The Kresge Foundation (hereinafter referred to as the Foundation), of additional space in the Foundation's department store building at 715 Broad Street, Newark, New Jersey to Western Electric Company (hereinafter Western), an existing tenant in said building pursuant to an agreement between the Foundation and the plaintiff, dated December 12, 1956 (hereinafter referred to as the 1956 commission agreement).

 The action was commenced by the filing of a complaint in the Superior Court of New Jersey, Law Division, Essex County, from which it was removed to this Court by reason of diversity of citizenship between the plaintiff and the Foundation; the requisite jurisdictional amount being conceded.

 The complaint alleges that on December 12, 1956 the defendants, the Foundation and Kresge Department Store, Inc. (hereinafter Kresge), entered into a written agreement with the plaintiff to pay commissions to the latter for services rendered in procuring Western as a tenant in the department store building aforesaid; "* * * said commissions to be in accordance with the rates and rules published by the Detroit (Michigan) Real Estate Board which were in effect at that time." The Detroit rules provided as follows:

 
"2. FOR NEGOTIATING LEASES: The commission for negotiating leases shall be as follows:
 
5% of the aggregate rental for one year or less, but in no instance less than one-half of the first month's rent. * * * $25.00
 
On leases for more than one year 5% of the aggregate rental for the first year and 2 1/2% of the aggregate rental for the next four years, and 2% of the aggregate rental for the next five years, and 1% of the aggregate rental for the balance of the term up to and including the 50th year.
 
LEASE WITH PRIVILEGE OF RENEWAL
 
(c) Where lessee avails himself of privilege of renewal or extension of lease, or takes on additional space under provisions of original lease, the negotiating broker shall be entitled to additional compensation at same rates as applied to original case, when and as said lessee avails himself of such privileges."

 The complaint further alleges the following: (1) On or about February 15, 1957, through the negotiations of plaintiff, Western entered into a lease with the defendant Foundation for a period of ten years for space on the eighth and ninth floors of the department store building, said term to commence on the date of delivery of one half of the leased space on the eighth floor. (2) On or about April 12, 1957, the Foundation paid to the plaintiff $81,552.27 for services rendered in connection with the successful negotiation of the aforesaid lease. (3) On or about June 9, 1964, Western acquired additional space on three additional floors of the building. *fn1" Plaintiff claims a right to a commission in connection with this additional letting, to include interest.

 Process upon the complaint as filed in the Superior Court was by way of a Writ of Attachment which was executed by levy upon the Foundation's department store. An Order denying defendant's motion to dismiss or to quash the Writ of Attachment was made by this Court on December 16, 1964 for the reasons stated in this Court's Opinion filed December 10, 1964.

 Plaintiff filed an amended complaint against the defendant Foundation on December 9, 1964 in which plaintiff again alleges the 1956 commission agreement between the Foundation and plaintiff; the provisions of the rules of the Detroit Real Estate Board; and the ten-year lease of February 15, 1957 between the Foundation and Western, procured through the negotiations of the plaintiff. Annexed to the amended complaint is a copy of the lease of February 15, 1957, which granted to the lessee a renewal option for an additional five-year period, and a right of first refusal to lease any additional space in the building which might become available during the ten-year term of the lease, at a rental to be agreed upon by the parties. The amended complaint again alleges the April 12, 1957 payment of $81,552.27 by the Foundation to the plaintiff, and the acquisition by Western of the additional space under the lease of June 9, 1964. Plaintiff alleges that it was not advised of the pendency of negotiations leading up to the execution of the 1964 lease and was thereby excluded from participation in said negotiations.

 The plaintiff charges the following in its amended complaint: (1) "To the extent that the 1964 lease provides for a term beyond the expiration date of the ten year tenancy provided for in the 1957 lease, such taking constitutes a renewal of the lease as to the eighth and ninth floors by the tenant exercised pursuant to the privilege of renewal in the 1957 lease." (2) "The letting aforesaid as to the fifth, sixth and seventh floors constitutes the taking of additional space under the provisions of the original lease agreement of 1957." Accordingly, plaintiff seeks "* * * the full amount of commissions due and payable upon the execution of the lease agreement of June 9, 1964" pursuant to the 1956 commission agreement and the rates and rules of the Detroit Real Estate Board.

 The defendant Foundation admits that the 1956 commission agreement was duly executed and that the Detroit rules as set forth in the complaint were published March 15, 1956. The Foundation also admits its entry into the 1957 lease with Western; the payment by defendant to plaintiff of $81,552.27 on April 12, 1957; and the execution of the 1964 lease with Western. In a series of affirmative defenses, the defendant also pleads as follows:

 
(1) Lack of subject matter jurisdiction in the Court because of the impropriety of the issuance of the Writ of Attachment.
 
(2) Lack of personal jurisdiction over the Foundation because it was not served with process within the District of New Jersey.
 
(3) Lack of jurisdiction in this Court over the person and property of the Foundation because no process other than the Writ of Attachment was served and ...

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