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Atlantic Commercial Group, Inc. v. Dunham

July 8, 1997


On appeal from the Superior Court of New Jersey, Law Division, Cape May County.

Approved for Publication July 8, 1997.

Before Judges Michels, Kleiner, and Coburn. The opinion of the court was delivered by Michels, P.j.a.d.

The opinion of the court was delivered by: Michels

The opinion of the court was delivered by


Plaintiff Atlantic Commercial Group, Inc. appeals from a summary judgment of the Law Division entered in favor of defendants George W. Dunham, III and Barbara A. Dunham in this action to recover real estate commissions in connection with the sale of commercial property in Cape May County, New Jersey. This appeal primarily concerns N.J.S.A. 45:15-3, which precludes any real estate broker from suing for commissions "without alleging and proving that he was a duly licensed real estate broker at the time the alleged cause of action arose." The pivotal issue is whether that provision bars an action by a broker who was licensed when he rendered his real estate brokerage services in a transaction that resulted in an option contract, but whose license had lapsed by the time of the actual closing of title years later. The trial court held that pursuant to N.J.S.A. 45:15-3, the broker's unlicensed status at the time of the closing precluded its suit for commissions even though the broker had been licensed at all times while performing the relevant brokerage services. We disagree and now reverse.

Plaintiff, a New Jersey licensed real estate brokerage corporation, was retained by defendants in the summer of 1988 to represent them in connection with the sale of their commercial property, a marina known as "Dad's Place," located in Wildwood, New Jersey. On June 28, 1988, plaintiff and defendants signed a listing agreement. In October 1988, plaintiff's employees, Bruce M. Doner and Edward Temple, New Jersey licensed real estate brokers, found buyers, Luke, Mary Ann, and Mars Anagnou (the Anagnous), for the marina. On October 31, 1988, defendants and Luke and Mary Ann Anagnou executed a written contract for the sale of the property. The closing on the marina was scheduled for November 30, 1988; however, the closing did not occur on that date. The reason that the closing did not occur is in dispute.

It is uncontroverted that defendants did not have good marketable title to convey at the time of the closing. Defendants testified that they had unmarketable title because the State claimed title to a portion of their property due to a riparian right in a stream that previously had been filled. Defendants, however, contend that there was no reason for them to clear the title to the property because the buyers were unable to close title since they (the buyers) could not obtain the necessary financing. Although they stated that the closing did not occur because the buyers could not obtain financing, defendants eventually acknowledged that the buyers had obtained financing, but simply had not signed the mortgage commitment.

Plaintiff, on the other hand, contends that the closing did not occur solely because defendants did not have marketable title. Plaintiff claimed that the buyers were ready, willing, and able to close on the designated date. In his deposition, Mars Anagnou testified that the Anagnous had received a mortgage commitment from a bank prior to the closing date. Mars Anagnou asserted that the only reason that they did not close title was because defendants could not produce a marketable title. Mars Anagnou also explained that he and his father only lost their mortgage commitment after 1989. An addendum to the contract for sale appears to indicate the reason the closing did not occur was because defendants did not have clear title, rather than because the buyers were unable to obtain financing.

In any event, the closing of title did not occur in 1988. Instead, on March 6, 1989, defendants and the Anagnous, with plaintiff's assistance, entered into a lease purchase agreement by adding an addendum to their original sales agreement. The lease agreement was for a term of five years and granted the Anagnous an option to buy the marina at an agreed upon price. Thereafter, the Anagnous took possession of the marina. Defendants paid plaintiff six percent of all rent payments they received from the Anagnous over the next five years. The rents defendants received were not put towards the Anagnous' ultimate sale price, but the commissions that plaintiff received on the rent paid were to be applied towards any commission that may be due plaintiff on the future sale of the marina.

Soon after entering into the lease, the Anagnous fell behind in their rent payments. Thus, by January 1994, the Anagnous owed defendants approximately $45,000 in back rent and $12,000 in real estate taxes. Initially, defendants asked plaintiff to help them collect the rent from the Anagnous. As a result, Temple contacted the Anagnous, but the Anagnous still did not make the necessary rent payments.

Towards the end of 1993, John Lemisch, defendants' financial advisor and agent, contacted the Anagnous to inquire whether they were going to purchase the marina or whether they wanted to get out of the deal. The Anagnous indicated that they wanted to buy the marina. Nonetheless, defendants decided to retake possession and operate the marina. As a result, a meeting was scheduled between defendants and the Anagnous for February 23, 1994. The record is not entirely clear as to the status of the lease at the time of the February 1994 meeting. Yet, the meeting took place on the scheduled date, and the Anagnous and their attorney, defendants and their attorney, and Lemisch were present. Plaintiff's agents did not attend the meeting. Defendants claimed that the purpose of the meeting was to set up a procedure for them to retake possession and operate the marina. Nevertheless, during the meeting, Luke Anagnou made an impassioned plea to defendants to give his family another opportunity to purchase the marina, and defendants acquiesced. As a consequence, the Anagnous paid all rent arrearages due; plaintiff was paid a commission on this rent payment.

On March 14, 1994, defendants and the Anagnous entered into a new lease purchase agreement. Plaintiff was not involved with the new agreement. The new agreement provided for structured rent payments so that the Anagnous could pay a greater amount of rent in the summer, thereby taking into account the seasonality of the marina business. It also required the Anagnous to pay a security deposit to defendants and gave defendants a security interest in property at the marina. The agreement recited a purchase price of $585,000, which was less than the original purchase price of $622,179. Yet, the parties and the property were the same as those in the first lease purchase agreement. No provision was made in the new lease purchase agreement for commissions to be paid to plaintiff. In fact, Lemisch advised defendants before they entered into the new agreement that they would not have to pay plaintiff any commission on any future sale. In September 1994, the Anagnous closed title to the marina, and no commission was paid to plaintiff. At the time of closing, plaintiff was not a licensed New Jersey real estate broker, as its license had expired on February 15, 1992.

Plaintiff instituted this action against defendants to recover the commissions allegedly due as a result of the sale of the marina to the Anagnous. After issue was joined and pretrial discovery completed, plaintiff and defendants each moved for summary judgment. Defendants claimed that (1) plaintiff's action was barred under N.J.S.A. 45:15-3; (2) plaintiff was not entitled to commissions under the clear language of the lease purchase agreement; and (3) plaintiff was not entitled to commissions because it was not the efficient producing cause of the September 1994 sale of the marina. Following argument, the trial court granted defendants summary judgment on the ground that plaintiff's cause of action arose when the closing occurred in September 1994, and since plaintiff was ...

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