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Prestia Realty Inc. v. Hartz Mountain Industries

July 10, 1997

PRESTIA REALTY INC., PLAINTIFF-APPELLANT,
v.
HARTZ MOUNTAIN INDUSTRIES, INC., DEFENDANT-RESPONDENT.



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

Before Judges Dreier and D'Annunzio. The opinion of the court was delivered by Dreier, P.j.a.d.

The opinion of the court was delivered by: Dreier

The opinion of the court was delivered by

DREIER, P.J.A.D.

Plaintiff, Prestia Realty Inc., appeals from the dismissal of its amended complaint for failure to state a claim upon which relief can be granted, R. 4:6-2(e), and the denial of its motion for reconsideration. *fn1 In 1990, plaintiff brokered a lease agreement between 3-V Chemical Corporation as lessee and defendant, Hartz Mountain Industries, Inc., as lessor. Under the underlying brokerage agreement, plaintiff was entitled to an initial real estate commission as well as an additional commission upon renewal. In 1995, plaintiff learned that the lease had been renewed; however, no commission had been paid. Plaintiff therefore commenced this action against the lessor to recover its commission. In the interim between the lease and the renewal, however, plaintiff's real estate license lapsed, and defendant successfully contended in the trial court that N.J.S.A. 45:15-3 prevented plaintiff from maintaining this action.

The statute provides:

No person, firm, partnership, association or corporation shall bring or maintain any action in the courts of this State for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he was a duly authorized real estate broker at the time the alleged cause of action arose.

[N.J.S.A. 45:15-3 (emphasis added).]

The statute was interpreted by the Real Estate Commission in a regulation, N.J.A.C. 11:5-1.10i, which states that the language "at the time the alleged cause of action arose" in the statute is deemed "to mean at the time that the brokerage services which form the basis for the alleged claim to compensation were rendered." N.J.A.C. 11:5-1.10i(1). The regulation further states specifically that the statute does not require that the commission claimant be licensed at the time the commission was to be paid. N.J.A.C. 11:5-1.10i(2). This regulation, by its clear terms, would have specifically authorized the commission in the case before us:

The Commission does not construe this language as requiring licensure at the time of the renewal of a lease to enable a claimant to sue for compensation based upon a promise, made or in effect when the lease was originally executed, to pay additional consideration to the claimant in the event that the lease was renewed.

[Ibid. ]

When the trial Judge granted defendant's motion, she stated in her initial order of July 12, 1996, that the "clear meaning of N.J.S.A. 45:15-3 cannot be diluted or altered by Commission's interpretation of N.J.A.C. 11:5-1.10. Cause of action did not arise until renewal was signed." In her order of September 13, 1996, denying the motion for reconsideration, she stated further:

Order of 7/12/96 stands. Plaintiff relies [on] N.J.A.C. interpretation which is flawed. Clear meaning of the N.J.A.C. provision is that broker must have held a valid license at time of lease renewal to make this claim. Same reasons as previously stated.

We cannot agree with the Judge's interpretation of the statute. We must construe what the Legislature meant by requiring the claimant to be "a duly authorized real estate broker at the time the alleged cause of action arose." N.J.S.A. 45:15-3 (emphasis added). The use of the term "cause of action" might have meant at the time the broker obtained a right to a renewal commission without further action on the broker's part, subject to the later agreement of the parties to the lease. Alternatively, the language could refer to the time of an actual renewal, or even to a later time when a demand for the commission was denied by the owner. It was only at this latest time that there technically was a "cause of action" in the sense of "a group of operative facts ... giving rise to one or more rights of action." Brian A. Garner, A Dictionary of Modern Legal Usage 140 (2nd Ed. 1995). The term "right of action" is there defined as "the right to take a particular case to court." Ibid. But here we must look at the purpose of the act to determine whether ...


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