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COLDWELL BANKER COMMER. REAL ESTATE SERVS. v. WILS

May 20, 1988

COLDWELL BANKER COMMERCIAL REAL ESTATE SERVICES, a Division of Coldwell Banker Commercial Group, Inc., a Delaware Corporation, Plaintiff
v.
RICHARD D. WILSON, et al., Defendants


Maryanne Trump Barry, United States District Judge.


The opinion of the court was delivered by: BARRY

Plaintiff, Coldwell Banker Commercial Real Estate Services ("Coldwell Banker"), brings this action against defendants Richard D. Wilson and Justin A. Tokarski, individually and trading as Justin Realty Co., alleging breach of contract, fraud and misrepresentation. *fn1" On the eve of trial, defendants now move for summary judgment. For the reasons that follow, that motion will be denied in part and granted in part.

 This dispute arises out of the development of what plaintiff describes as a "hotel/convention center/office building" located in the Meadowlands. On November 14, 1980, plaintiff secured an exclusive listing agreement with the owners of a 26 acre tract in East Rutherford referred to by the parties as the "Kero-Bosin Tract." Plaintiff, which had substantial and ongoing relationships with several hotel chains, expressed to the owners its belief that the site was suitable for hotel development. In fact, plaintiff had already shown the site to the Sheraton Corporation ("Sheraton") as early as September, 1980. It was apparently plaintiff's expertise that led the owners of the property, which was zoned for hotel use, to retain plaintiff rather than some other broker. In mid-February, 1981, after the property had been listed, plaintiff's representatives, Robert Singer and Ronald Sutherland, again presented the Kero-Bosin tract to Sheraton in the person of Charles DesLauriers. Correspondence from Singer further advised Mr. DesLauriers that efforts were ongoing to locate a developer for the project. *fn2"

 On March 20, 1981, Singer spoke with Gene Preston from Troast Enterprises ("Troast"), a developer, and offered Troast the property. They spoke again about the property on April 2nd and 17th. Singer then spoke to defendant Richard Wilson, a principal in defendant Justin Realty, on April 30th who informed him that Troast was interested and that he, Wilson, represented the developer. Wilson and Singer, along with one of the owners of the property, Mr. Bosin, and his attorney, Mr. Friedman, met for lunch that day, and according to Singer, Wilson explained that he was a partner with Troast with experience developing Meadowlands property, and that Troast "would do nothing in the Meadowlands without consulting [me]." Affidavit of Robert Singer para. 6. Wilson then stated that he represented the Troast interests with reference to this deal, and asked for half the sales commission as co-broker if Troast purchased the property. Plaintiff, through Singer, agreed to split the fee "notwithstanding the fact that Coldwell Banker had already presented its package to Mr. Preston." Id. Wilson, Singer, Friedman and Bosin then met on or about May 4th with John Troast, a principal of Troast Enterprises. Troast expressed his interest in the property and agreed to make an offer. Singer states that Troast made an offer "on or about June 5, 1981" although there is no record proof of a written offer until Troast's letter of June 19, 1981 setting forth the terms and accompanied by a $ 5,000.00 check as a good faith deposit drawn on Justin Realty's trust account.

 Around the same time, Singer contacted Wilson to inform him of plaintiff's efforts to interest a hotel chain in the property. Singer states that he told Wilson at the time that plaintiff would expect a fee of either one percent of the total project cost or $ 1,000.00 per room if any hotel chain introduced to Troast by plaintiff invested in the property. Wilson promised to speak to Troast.

 On July 16, 1981, a meeting was held at plaintiff's offices. In attendance were John Troast, Preston, plaintiff's representatives Sutherland and Singer, three officials from Sheraton, and Wilson. Although no agreement was reached, Sheraton and Troast discussed the possibility of a joint venture. After the meeting, Sutherland, in Singer's presence, took Wilson and Troast aside and informed them that Coldwell Banker expected a fee if Sheraton and Troast agreed to a joint venture.

 Throughout the summer Troast continued to engage in negotiations with Sheraton. Wilson kept plaintiff abreast of the talks although plaintiff's representatives were concerned over their exclusion from the meetings. Wilson is said by Singer to have allayed their fears by reiterating his promises to protect plaintiff's hotel fee by virtue of his equity interest in the project. On September 5, 1981, Bosin and his wife entered into a contract to sell the property to Troast. The agreement lists Coldwell Banker and Justin Realty as co-brokers. The parties seem to agree, that although facially binding on the parties, the agreement contained so many contingencies and was subject to certain practical difficulties such as zoning issues, it was just the first step in an arduous process.

 In fact, the deal did not close until September 17, 1984. During the interim, Troast continued to negotiate with Sheraton as well as other interested hotel chains and Wilson continued to assure plaintiff that if Sheraton signed on its fee would be protected. By August of 1983, it became apparent that a deal between Troast and Sheraton was imminent. Wilson told Singer to send a letter to Troast outlining their understanding of the agreement on the hotel fee. Accordingly, Sutherland wrote Troast on September 6, 1983 informing it, for the first time in writing, of plaintiff's expectation of receiving a fee equal to one percent (1%) of the total cost of the proposed 450 room hotel.

 Wilson, who had earlier sought part of the hotel fee, then wrote Singer on September 9, 1983, attaching a copy of the September 6th letter and setting out his understanding that, as with the land sales commission, Wilson would share in the hotel fee if the fee exceeded $ 200,000.00.

 At this point the deal began to unravel. On October 19, 1983, Wilson called Singer to inform him that Troast did not believe that plaintiff had earned the hotel fee. Sutherland then met with principals of Troast who not only objected to the hotel fee but also informed him that Wilson had never represented Troast on any aspect of the deal. They further suggested that if plaintiff wanted the hotel fee it should pursue Wilson for it and withhold Wilson's half of the land sales commission.

 Presumably plaintiff decided this was a good idea because Singer then contacted Friedman, who was preparing the documents for the closing, to arrange for the commission check to be paid only to Coldwell Banker. Singer informed him, Friedman says for the first time, of Coldwell Banker's claim to the hotel fee. Friedman objected to paying the sales commission only to plaintiff noting that the contract between Troast and the Bosins expressly named Justin Realty and Coldwell Banker as co-brokers. Friedman urged plaintiff to resolve its problems with Wilson so that the closing, which was fast approaching, would not be disrupted.

 On January 31, 1984, Friedman informed Singer of a proposed closing date of March 1, 1984 and enclosed a copy of the proposed agreement. Again, Singer insisted on the whole commission and again Friedman refused to act in what he termed a mediating role between Wilson and plaintiff. Singer, getting nowhere with Friedman, tried to resolve the matter with Wilson. Wilson then agreed, in exchange for half the fee, to write Singer a letter setting forth Wilson's promise to "support any action taken by Coldwell Banker [against Troast] for their [hotel fee]," and to testify "that John Troast was told by me (in September 1981 and May/June of 1983) that a fee to Coldwell Banker would be due if he proceeded to consummate a partnership with the Sheraton Hotel chain." With Wilson's February 29, 1984 letter in hand, plaintiff agreed to share the sales commission.

 What plaintiff did not know was that Wilson, too, could work both sides of a deal. Just two months earlier, Wilson had written a letter to John Troast in which, using carefully chosen words, he set forth his "understanding" that "to the best of my knowledge at the original meeting with the Sheraton [representatives] there were no discussions and certainly no agreement between you and Coldwell Banker concerning the payment of such commissions." On September 17, 1984, the Kero-Bosin tract was finally conveyed to a joint venture comprised of Troast, Sheraton and other smaller partners including an entity in which Wilson had a share. The sales commission was split equally between plaintiff and Justin Realty, $ 241,740.00 to each.

 Without parsing out each count of the complaint and the precise legal theory relied upon, it appears that plaintiff's claim is essentially two-fold. Under plaintiff's first theory the defendants are liable for the hotel fee because Wilson's false representations regarding his relationship with Troast amounted to a breach of Wilson's implied warranty of authority. Under this theory, breach of the warranty would render Wilson liable on the contract. In the alternative, plaintiff alleges that Wilson's false representations induced plaintiff to share the sales commission, and now that it has been disclosed that Wilson did not represent Troast, defendants should be required to disgorge their half.

 Defendants move for summary judgment contending: a) plaintiff cannot collect a fee earned in violation of state law; b) defendants, as agents of a disclosed principal, cannot be liable for that principal's contractual obligations; c) the contract for the hotel fee is vague and, therefore, unenforceable for lack of definite terms; d) the contract is not supported by consideration except past consideration; e) there is inadequate proof of fraud; and f) a guarantee by a third party must be in writing to be enforceable. I hold that plaintiff's collection of the hotel fee would violate New Jersey public policy and plaintiff, therefore, may not proceed on its contractual theory. *f ...


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