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R.A. Intile Realty Co. v. Raho

Decided: July 2, 1992.


Schwartz, J.s.c.


[259 NJSuper Page 443] On August 21, 1989 plaintiff, R.A. Intile Realty Co., Inc. a licensed real estate broker, filed a three count complaint

against defendants, Michael F.P. Raho and Debra Raho (jointly referred to either as "the Raho defendants," or "Raho"). Also joined as defendants were John Kimble ("Kimble") and O. Realty Corp., which is either a fictitious name or a company solely owned and controlled by Kimble, but those defendants have never been served. It appears from the certification of plaintiff's counsel that Kimble cannot be located and that O. Realty Corp. is neither a New Jersey corporation nor a foreign corporation licensed to do business in New Jersey and, accordingly, if not a fictitious name, that entity has not been located for service of process.

The first count of the complaint charges the Raho defendants with breach of a real estate brokerage agreement arising out of the sale of a four acre tract of land on which a home is situated located on Glen Avenue in Llewellyn Park, West Orange, New Jersey (hereinafter the "Glen Avenue home"). Title to the Glen Avenue home was transferred by deed dated May 13, 1988, from Raho to O. Realty Corp. Plaintiff alleges that on or about November 26, 1987 it and Raho entered into an oral agreement pursuant to which plaintiff was authorized to find a buyer for the Glen Avenue home at $1,200,000 and that if successful, plaintiff was to be paid a six percent commission. Plaintiff alleges in the first count that the oral agreement was confirmed by letter dated November 27, 1987. Plaintiff further alleges that it complied with N.J.S.A. 25:1-9 by mailing that letter on November 27, 1987 by ordinary mail to Raho. Plaintiff further contends that it procured Kimble as a purchaser; that Raho sold the property to Kimble's company, O. Realty Corp., for $957,000; that plaintiff thereby became entitled to receive a commission of $57,420; and that Raho breached the contract with plaintiff by refusing to pay said commission.

The second count alleges that all the defendants named in the complaint entered into a conspiracy to fraudulently conceal the sale of the Glen Avenue home from plaintiff, thereby fraudulently depriving it of said commission. Plaintiff seeks compensatory and punitive damages on the second account.

In the third count, plaintiff seeks compensatory and punitive damages for alleged tortious interference with plaintiff's contractual rights and with plaintiff's prospective business advantage by all the defendants.

The Raho defendants now move for summary judgment, alleging that plaintiff's claim for a brokerage commission is barred by the statute of frauds, N.J.S.A. 25:1-9. Plaintiff has filed a cross motion seeking leave to amend the complaint by alleging in paragraph 3 of the first count that the written notice (the letter of November 27, 1987) was personally served, as well as served by ordinary mail, upon Raho.

The summary judgment motion requires resolution of the following legal issues:

(1) What proofs will suffice to establish a fact question under N.J.S.A. 25:1-9 as to whether the broker's written notice was "personally" served on the seller within five days?

(2) Will a broker's written notice which makes no express reference to an oral agreement between broker and seller, is signed by the broker and requests the sellers' signatures be sufficient under the statute of frauds to impliedly inform the seller of an oral agreement to pay commissions on which the broker relies solely because the notice refers to a "negotiated commission rate"?

(3) Does a broker who has failed to send a proper written notice of an oral brokerage agreement to the seller within five days have a right to maintain a contract action for commissions where the parties subsequently orally reconfirm or modify the earlier agreement and the broker sends a written notice to the sellers within five days of such oral reconfirmation or modification incorporating by reference the alleged prior commission agreement?

(4) Must the broker's written notice make reference to the seller's asking price or the duration of the oral agreement to satisfy the statute of frauds?

(5) Where the broker complies with the statute of frauds, is the broker's claim limited to one for breach of contract or may the broker also seek damages against the seller for common law fraud or tortious interference with the broker's contractual rights and prospective business advantage?

Although numerous factual disputes are raised by the certifications of the parties, certain background facts appear undisputed. These may be summarized as follows.

The Rahos, both in 1987 and at present, reside on Edgehill Court in Llewellyn Park, West Orange, New Jersey (the "Edgehill home"). On April 1, 1987 Raho contracted to purchase a six acre tract of real estate on Glen Avenue, in Llewellyn Park (the "Glen Avenue property") from Alvin Mancusi-Ungaro ("Mancusi-Ungaro"). Prior to the purchase of the Glen Avenue property, Mancusi-Ungaro informed Raho that Kimble had been interested in purchasing that six acre tract and the selling broker had shown them several written offers made by Kimble to Mancusi-Ungaro.

Before Raho closed title on the Glen Avenue property on October 1, 1987, the property was subdivided into two parcels, one of which was an unimproved two acre parcel and the other was a four acre parcel on which was situated a large home, heretofore referred to as the Glen Avenue home, and out of which this litigation arises.

Following the subdivision and closing on the Glen Avenue property, Raho listed the Edgehill home and the two acre unimproved parcel located on Glen Avenue for sale with plaintiff. Raho executed two written multiple listing contracts, agreeing to pay plaintiff a five percent commission upon the sale of each property. The multiple listing contracts stated a selling price for each property and contained a provision for sharing of commissions with any cooperating broker who may have effected a sale. Both agreements were to remain in effect during specified dates between July 1987 and January 1988, and provided that the commission stipulated in the agreement

was to be paid if the property was sold to a person to whom the property was shown by plaintiff within three (3) months after the listing contract expired.

The Raho defendants have certified that they intended to move into the Glen Avenue home after they sold the Edgehill home, but upon advice of plaintiff's realtor associate, Linda Grabowski ("Grabowski"), continued to reside in the Edgehill home because it was more marketable if it was shown while it was being lived in and furnished. According to Grabowski, Raho informed her sometime prior to November 1987 that they would be interested in selling the Glen Avenue home if it could be done directly and without advertising it for sale. Grabowski makes no mention in her certification of when or where this alleged conversation with Raho took place or whether at that time a selling price or brokerage agreement with plaintiff concerning the Glen Avenue home was discussed.

Grabowski asserts that on November 24, 1987 she received a phone call from one Shirley Naso who expressed an interest in inspecting a house in Llewellyn Park which plaintiff had advertised in the preceding Sunday Star Ledger (the "Horvat house"); that she met Ms. Naso with her boyfriend Kimble at the Horvat house on November 25, 1987; that Grabowski knew Kimble because she previously worked for him; and that Kimble was not interested in the Horvat house. They then discussed the Glen Avenue home and Kimble, stating he did not know Raho, requested that Grabowski set up an appointment for him to meet with Raho.

Grabowski claims she had a telephone conversation with both Rahos on November 25, 1987 during the course of which she informed them that she had a prospective purchaser for the Glen Avenue home; that they were both extremely interested and that they were asking $1,200,000, but would not list the Glen Avenue home as an exclusive or multiple listing because of alleged concerns by Raho over the possible adverse reaction of other residents of Llewellyn Park if it became known that

the Rahos had purchased the Glen Avenue home for investment or speculation. Grabowski further asserts that Raho agreed during this conversation to pay plaintiff a commission if a sale was consummated and that they would permit Kimble, the prospective purchaser, to inspect the Glen Avenue home the next day. Grabowski further asserts that on November 26, 1987 she again called defendants to confirm a 2:00 p.m. appointment with Kimble the next day at the Glen Avenue home. Grabowski certifies that during that conversation, the defendants agreed to pay plaintiff a six percent commission if a sale was consummated with Kimble.

The Raho defendants deny having had any conversations in or prior to November 1987 concerning the sale of the Glen Avenue home. In their certifications both assert that during that time period they had no desire to sell the Glen Avenue home because they intended to move into it as soon as their Edgehill home was sold. Mrs. Raho asserts that she received one short phone call from Grabowski sometime during the Thanksgiving 1987 weekend; that Grabowski told her Kimble wanted to tour the Glen Avenue home; and that she asked her husband to walk through the home with Kimble. Mrs. Raho denies she ever discussed selling the Glen Avenue home with Grabowski, using plaintiff as a broker or listing the property with plaintiff. She further denies discussing a rate of commission or the time period of any brokerage agreement with Grabowski.

Janet Intile ("Intile"), who in 1987 was also a real estate associate with plaintiff, arranged to meet Kimble at the Glen Avenue home on November 27, 1987 because Kimble was over an hour late for the 2:00 p.m. appointment on November 27th and Grabowski had a 3:00 p.m. appointment with someone else. Intile asserts that she met Kimble, Kimble's mother and Shirley Naso at the Glen Avenue home sometime after 3:15 p.m. that day and that they were shown through the house by Mr. Raho. Intile claims that Kimble made an offer of $900,000 during this

visit, but that Mr. Raho told Kimble his asking price was $1,200,000.

Mr. Raho admits that during their November 27 meeting at the Glen Avenue home, Kimble offered $900,000 to purchase the house, but Mr. Raho asserts that he repeatedly told Kimble that he was not interested in selling the house and that he and his wife were looking forward to moving into the Glen Avenue home as soon as they sold their Edgehill home. (This assertion by Mr. Raho raises the obvious question as to why he was showing the house at that time if he had no desire to sell and was expecting to move in himself.) Mr. Raho further denies ever having had any Discussions with Intile regarding the use of plaintiff as a broker for the Glen Avenue home or any listing agreement or rate of commission for the sale of that property.

Grabowski certifies that on November 27, 1987, some time prior to 2:00 p.m., she prepared the letter of that date which confirmed the telephone conversations she had with Raho on November 26, 1987. Grabowski asserts that one copy of the November 27, 1987 letter was mailed. Intile states she personally placed that letter in a mail box located on Northfield Avenue between Westview Road and Rock Spring Avenue in West Orange at about 5:00 p.m. on November 27, 1987. Grabowski certifies that she took another copy of that letter with her with the intent of delivering it to Raho after the meeting that afternoon with Kimble. Because Kimble was late and Grabowski had another appointment at 3:00 p.m., Grabowski left Llewellyn Park and telephoned Intile to request she meet Kimble at the Glen Avenue home. Grabowski asserts that she returned to Llewellyn Park later that day. When she arrived, she learned that Kimble and Intile had departed moments earlier and, because she was aware that Raho had social guests for the weekend and she didn't wish to disturb them, Grabowski left a copy of the November 27, 1987 letter with a security guard at the gatehouse with instructions to advise Raho that there was a letter for them at the gatehouse.

Grabowski certifies that she had several telephone calls with Mrs. Raho between November 28 and 30, 1987 concerning the progress of negotiations with Kimble. Grabowski asserts that during one of these telephone conversations Mrs. Raho acknowledged receipt of the November 27, 1987 letter and that they discussed the six percent commission that plaintiff was to receive if the sale to Kimble was consummated. Grabowski further claims that she advised Mrs. Raho to show the November 27 letter to their attorney, Dennis Dowd. Grabowski states that she spoke with Ms. Naso and with Mrs. Raho on December 5, 1987. During the course of those conversations, Grabowski asserts that Mrs. Raho requested the opportunity to open direct negotiations with Kimble in an effort to get him to increase his offer and that Mrs. Raho requested Kimble's telephone number, but that Grabowski did not provide the number at that time.

Mrs. Raho denies Grabowski's version of the conversations of November 28 and 30, 1987 and December 5, 1987. Mrs. Raho claims that during her conversations with Grabowski between late November 1987 and December 20, 1987, she never discussed an interest in selling the Glen Avenue home, let alone using plaintiff as broker, and that she never discussed any rate of commission, length of agreement or selling price.

Mr. Raho denies having had any conversation with Grabowski or Intile between November 27 and December 20, 1987 and further denies ever having received the letter of November 27, 1987 through the mail or having seen it prior to December 20, 1987.

Mrs. Raho states that the first time she saw the November 27, 1987 letter was on December 20, 1987 when it was found, along with an undated handwritten note from Grabowski, in a basket of Christmas candy which had been left by Grabowski with one of the security guards at the Llewellyn Park gatehouse. Mrs. Raho denies that she was ever personally served

with the November 27, 1992 letter and that she ever received that letter in the mail.

The handwritten note from Grabowski which was enclosed in the Christmas candy package reads as follows:

Debbie & Michael,

These letters are just the formality we follow with an open listing.

They should be presented to Dennis if anything should materialize with John Kimble

Please call me if you need any additional assistance.

And have a wonderful Christmas & New Year's.


Mrs. Raho asserts that she became incensed when she read the November 27, 1987 letter and immediately called Grabowski and left a message on her answering machine. Mrs. Raho states that when Grabowski returned her call on December 21, 1987, she told Grabowski she had no plans to sell the Glen Avenue home and that they had neither discussed nor negotiated any listing or commission agreement with plaintiff nor agreed to a six (6) percent commission. During the phone call of December 21, 1987, Mrs. Raho claims she expressed anger and shock at receiving what she regarded as a back dated letter (the November 27 letter) from Grabowski. Mrs. Raho claims the letter of December 21, 1987 sent by Grabowski which she admits she received a few days later contains an inaccurate description of their conversation of December 21, 1987.

Grabowski's version of the December 21, 1987 telephone conversation completely contradicts that of Mrs. Raho. Grabowski describes a cordial conversation in which she discussed with Mrs. Raho the status of the negotiations with Kimble and again confirmed that a six percent commission would be paid to plaintiff if the sale was consummated. She claims that she then gave Mrs. Raho the telephone number for Kimble and made an appointment with Raho for 7:00 p.m. that evening. Grabowski asserts that this appointment was cancelled later in the day by Mrs. Raho because Mrs. Raho claimed she was having a dinner party at her home that evening. Grabowski

further claims that on December 23, 1987 she left at the Llewellyn Park gatehouse the letter of December 21, 1987 along with her handwritten note in a Christmas candy platter gift for Raho.

The listing agreement between the Raho defendants and plaintiff on the Edgehill home expired on January 6, 1988 and was not renewed. On February 18, 1988 the Raho defendants listed both the Edgehill home and the Glen Avenue home with Degnan & Boyle. Mrs. Raho states that the reason for listing both homes was that the Edgehill home remained unsold and Raho could no longer afford to carry the mortgage and property taxes for both homes.

Of significance is the fact that the listing with Degnan & Boyle on the Glen Avenue home excluded Kimble. Mrs. Raho asserts that their reason for excluding Kimble from the listing agreement with Degnan & Boyle was their awareness of Kimble's interest in the Glen Avenue home from their conversations with Mancusi-Ungaro and the selling broker.

The Glen Avenue home was sold to O. Realty Corp. on May 13, 1988. Mrs. Raho concedes that the Raho defendants understood at that time that O. Realty Corp. was owned and controlled by Kimble.

The legal issues raised by Raho defendants' motion for summary judgment must be resolved in the light of this disputed factual background.

N.J.S.A. 25:1-9, upon which defendants rely, provides in pertinent part as follows:

Any broker or real estate agent selling or exchanging real estate pursuant to an oral agreement with the owner of such real estate, who shall actually effect such sale or exchange before such oral agreement shall have been repudiated or terminated by the owner in writing as hereinafter provided, may recover from such owner the amount of commission on such sale or exchange, if the broker or agent shall, within five days after the making of the oral agreement and prior to the actual sale or exchange of such real estate, serve upon the owner a notice in writing, setting forth the terms of the oral agreement and stating the rate or amount of commission to be paid thereunder, and if the owner shall not

have repudiated or terminated the oral agreement prior to the actual sale or exchange of the real estate.

The owner may, at any time after receiving from the broker or agent the notice mentioned in . . . this section, repudiate or terminate the oral agreement by serving upon the broker or agent, prior to the actual sale or exchange of the real estate by the broker or agent, a notice in writing to that effect, in which case the oral agreement shall be null and void, and no recovery of any commission shall be had under the oral agreement, unless the broker or agent in good faith shall have entered into negotiations with a prospective customer, and such negotiations shall be pending at the time of the repudiation or termination of the oral agreement, and the sale or exchange is subsequently consummated between the owner and such customer, in which case the broker or agent may recover his commission on such sale or exchange, notwithstanding the repudiation or termination of the oral agreement.

The notice provided for in this section shall be served either personally or by forwarding the same to the person to be served, by registered mail, to his last known post-office address.

Defendants assert two grounds for summary judgment under the above statute: (1) that the alleged written notice (the November 27, 1987 letter) was not served upon them personally or by registered mail within five days of the making of the alleged oral agreement, and (2) that the written notice did not comply with the statute because it did not purport to confirm the terms of the alleged oral agreement.

The standards governing the granting of motions for summary judgment pursuant to R. 4:46 require that the party moving for summary judgment exclude all reasonable doubt as to the existence of any genuine issue of material fact. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 110 A.2d 24 (1954); Shanley & Fisher, P.C. v. Sisselman, 215 N.J. Super. 200, 521 A.2d 872 (App.Div.1987). The papers supporting the motion are to be closely scrutinized and the opposing papers indulgently treated. However, summary judgment is appropriate against a party who fails to furnish any evidence on an issue on which that party would bear the burden of proof at trial. ...

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