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GK Realty Services, LLC v. Stopar

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 13, 2008

GK REALTY SERVICES, LLC, PLAINTIFF-APPELLANT,
v.
ALESH AND TANJA STOPAR, DEFENDANTS-RESPONDENTS, AND JIMMY ZORN AND JIMMY'S REAL ESTATE HOLDING COMPANY, LLC, (PREVIOUSLY IDENTIFIED AS JIMMY'S COOKIES), DEFENDANTS.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1744-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 10, 2007

Before Judges S. L. Reisner, Gilroy and Baxter.

Plaintiff, GK Realty Services, LLC, appeals from the November 3, 2006, order of the Law Division, dismissing its complaint against defendants Alesh and Tanja Stopar for a real estate broker's commission, based on a jury verdict of no cause for action. We affirm.

I.

Plaintiff is a licensed commercial real estate company owned by Greg Kelman, a licensed real estate broker. Defendant Jimmy Zorn is the owner and operator of defendant Jimmy's Real Estate Holding Company, LLC (JREH), and of Jimmy's Cookies, Inc. Alesh and Tanja Stopar, husband and wife, are owners of commercial property located at 18-01 River Road, Fair Lawn (the Property).

Plaintiff began its business relationship with Zorn in 1992 when Kelman solicited Zorn to rent, on behalf of Jimmy's Cookies, a building for which Kelman was the listing agent. Zorn leased that building for two consecutive five-year terms, and before the second term expired in August 2003, Zorn decided to relocate Jimmy's Cookies to a larger building. Zorn discussed the relocation with Kelman and other real estate agents, and looked at various properties with them. However, near the end of the second lease term, because Zorn had not located a suitable property, he extended his lease for eighteen months (until February 2005).

In April 2004, Kelman located the Property and scheduled a meeting with Alesh Stopar. Alesh met Kelman at the Property and informed him how to enter the building when showing it to prospective buyers. Kelman asked Alesh to give plaintiff an exclusive listing on the Property. However, Alesh declined because he had already contacted Team Resources, a real estate brokerage firm with which he had done business before to list the Property.

Shortly after meeting Alesh, Kelman showed the Property to Zorn. Zorn was interested in purchasing the Property and authorized Kelman to offer Alesh $2,525,000. By an e-mail dated April 15, 2004, Kelman sent the offer to Alesh, stating that if the Stopars agreed to sell the Property to Zorn, plaintiff would receive a commission equal to 5% of the sale price. Within a day of his receipt of Kelman's e-mail, Alesh informed Kelman that because he was ready to sign an exclusive listing agreement with Team Resources, he wanted to contact its staff for advice on the matter. Alesh discussed Zorn's offer with David Cantor, an employee of Team Resources. Cantor offered to give Jimmy's Cookies a forty-five day "exclusive." Alesh agreed.

On April 20 and 21, 2004, Cantor and the Stopars executed a six-month exclusive-listing agreement, which provided that the Stopars would pay Team Resources a 5% commission based on the sale price, if it secured a sale of the Property without the aid of another broker. However, if another broker was involved in the sale, then the Stopars would pay a 2% commission to Team Resources, and a 4% commission to the other broker. If Jimmy's Cookies entered into contract for the Property within forty-five days from the date of the agreement, Team Resources would receive no commission on the sale. Although the listing agreement was silent as to whether plaintiff would receive a commission if the Stopars sold the Property to Jimmy's Cookies, Alesh believed plaintiff would have been entitled to a commission, if Kelman had secured the sale within forty-five days of its execution.

Around the time the Stopars and Team Resources executed the listing agreement, Alesh rejected Zorn's offer, explaining to Kelman that he wanted $2,700,000 for the Property. Kelman relayed that to Zorn, and about a week later Zorn authorized Kelman to offer $2,575,000. On April 26, 2004, Kelman met Alesh in his office and informed him of Zorn's second offer. In an April 27, 2004, e-mail, Kelman confirmed that offer to Alesh and reiterated that if the Stopars sold the Property to Zorn they would pay Kelman a 5% commission.

By letter dated April 29, 2004, Alesh rejected Zorn's second offer, explaining that he would not sell the Property for less than $2,700,000. Alternatively, Alesh suggested a five-year rental agreement with an option to buy in October 2006, for $2,850,000. Zorn refused the counteroffer, instructing Kelman to offer Alesh $2,625,000; Kelman did that in an April 30, 2004, e-mail, which also included the 5% commission provision. Alesh verbally responded that he would not accept less than $2,700,000 for the Property.

Ten to fourteen days later, Kelman contacted Alesh, offering to reduce his commission by $25,000 if Alesh would accept Zorn's $2,625,000 offer. Alesh refused, and the negotiations ended. Kelman began searching for other properties for Zorn, and Alesh began negotiations with another potential buyer.

In June 2004, Zorn contracted to purchase a property in Carlstadt. The broker on that deal was Fred Fisher, an agent of Team Resources. Zorn informed Kelman about the contract, and asked Kelman to follow up with him in about one month. According to Kelman, he continued to look for properties for Zorn in the interim. Zorn, however, was unaware that Kelman had been looking for properties for him because Kelman had not contacted him again until January 2005. In September 2004 Zorn decided not to purchase the Carlstadt property and continued his search.

In October 2004 Zorn drove past the Property and noticed a Team Resources sign on the lot. Because he saw people inside the building, he stopped and asked them if anyone had any information on the building. Subsequently, he was given Alesh's card, and Zorn telephoned him, inquiring whether the Property was still available. Alesh responded affirmatively. According to Zorn, he did not call Kelman to find out if the Property was still for sale because he wanted a quick answer, and had not heard from Kelman "in a while."

During their brief conversation, Alesh asked Zorn if he had previously looked at the Property with Kelman. Zorn replied yes, and neither discussed Kelman any further. Alesh testified that he neither contacted Kelman, nor did he ask Zorn to contact him because Team Resources had been given the exclusive listing for the Property.

On October 26, 2004, the Stopars signed a second exclusive agreement with Team Resources because the first agreement expired or was about to expire during that month. The second agreement differed from the first in terms of commission, providing that Team Resources would receive a 5% commission on any sale, but that if Jimmy's Cookies bought the Property, then Team Resources would receive a flat fee of $50,000. The second listing agreement, however, did not contain a commission-sharing provision in the event that another broker was involved in a sale. Sometime between October 2004 and December 2004, Zorn agreed to buy defendants' property for $2,700,000. Although Zorn had initially believed that the Property was overpriced at $2,700,000, he agreed to buy it because he "had become a bit more desperate," as his lease was about to expire and his rent was about to double.

In December 2004, Kelman learned that Zorn and Alesh had negotiated a sale of the Property. Kelman went to Alesh's office demanding a commission, but Alesh refused to discuss the matter with him. Alesh did not believe Kelman was entitled to a commission because Kelman had not secured a sale within forty-five days of the first exclusive agreement.

In January 2005, Zorn and the Stopars executed a contract of sale. Kelman played no part in either the negotiations or the drafting of the contract; Cantor, Zorn's agent through Team Resources, handled the matter. The contract closed title in June 2005.

On March 9, 2005, plaintiff filed its complaint against Jimmy's Cookies and the Stopars, alleging that plaintiff was the procuring broker on the sale of the Property. The complaint alleged causes of action in breach of contract, malicious interference with plaintiff's prospective economic advantage, and quantum meruit. On November 10, 2005, plaintiff filed an amended complaint, which substituted JREH as defendant for Jimmy's Cookies and added Jimmy Zorn as a defendant. The amended complaint contained seven counts: 1) breach of contract; 2) breach of the covenant of good faith and fair dealing; 3) breach of an implied contract; 4) tortious interference with plaintiff's contract with the Stopars; 5) tortious interference with plaintiff's prospective economic advantage; 6) violation of the New Jersey Antitrust Act; and 7) tortious refusal to deal (conspiracy).

The matter was tried to a jury. Near the close of plaintiff's case, plaintiff dismissed all claims against Jimmy Zorn and JREH, and agreed to the dismissal of Counts Four through Seven against the Stopars. At the end of plaintiff's case, the Stopars moved for an involuntary dismissal. The court granted the motion in part, dismissing Counts One and Two, determining that they were barred by the statute of frauds (SOF); and denied the motion as to the third count, alleging breach of an implied contract. Although the amended complaint did not specifically seek damages under a quantum meruit theory, the trial judge concluded that this theory was included within the claim of breach of an implied contract, and permitted plaintiff to proceed to the jury on those two theories of recovery. Following the jury's verdict of no cause for action, the trial judge entered the confirming order of November 3, 2006, from which plaintiff now appeals.

On appeal, plaintiff argues:

POINT I

THE TRIAL COURT ERRED IN DISMISSING THE CONTRACT CLAIMS BECAUSE THE UNIFORM ELECTRONIC TRANSACTIONS ACT PERMITS SERVICE OF A BROKER'S STATUTE OF FRAUDS NOTICE VIA ELECTRONIC MAIL.

POINT II

THE TRIAL COURT MIS-CHARGED ON AN ASPECT OF QUANTUM MERUIT AND IN SO DOING ALSO AFFECTED THE VERDICT ON IMPLIED CONTRACT.

POINT III

THE TRIAL COURT ERRED IN EXCLUDING PLAINTIFF'S EXPERT WITNESS.

II.

Plaintiff argues, as it did in the Law Division, that the trial judge erred in granting the Stopars' motion for an involuntary dismissal, dismissing plaintiff's claims based on a breach of an express contract for failing to comply with the service requirements of the SOF. N.J.S.A. 25:1-16(d). Plaintiff contends that it complied with the service requirements of the SOF by confirming an oral commission agreement with Alesh via e-mail, as permitted by the Uniform Electronic Transactions Act (UETA), N.J.S.A. 12A:12-1 to -26. Plaintiff asserts that the UETA permits service by electronic means, provided that the parties agree to accept service in that manner, as "determined from the context and surrounding circumstances, including the parties' conduct." N.J.S.A. 12A:12-5(b). Plaintiff further argues that Alesh's giving Kelman his e-mail address, accepting Kelman's e-mail, and responding to Kelman's e-mails, proved that Alesh agreed to accept service by e-mail, or at least, raised a fact question of whether he so agreed. We disagree.

We review a trial court's grant of a defendant's motion for judgment at the close of the plaintiff's case, R. 4:37-2(b), de novo, that is, by applying the same legal standard as the trial court. Epperson v. Wal-Mart Stores, Inc., 373 N.J. Super. 522, 527 (App. Div. 2004). Under the rule, the trial court is required to deny the motion "if the evidence, together with the legitimate inferences therefrom, could sustain a judgment in plaintiff's favor." R. 4:37-2(b). Stated another way, if the trial court determines that, after accepting as true all the evidence presented in a plaintiff's case and providing the plaintiff with the "'benefit of all inferences which can reasonably and legitimately be deduced therefrom, reasonable minds could differ, the motion must be denied.'" Zive v. Stanley Roberts, Inc., 182 N.J. 436, 442-41 (2005) (quoting Verdicchio v. Ricca, 179 N.J. 1, 30 (2004)). If we determine "there is no genuine issue of material fact, we decide whether the trial court's ruling on the law was correct." Turner v. Wong, 363 N.J. Super. 186, 199 (App. Div. 2003). "However, '[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Ibid. (quoting Manalapan Realty, L.P. v. Twp. of Manalapan, 140 N.J. 366 (1995)).

The statute of frauds precludes a broker from receiving a commission unless: (1) "[t]he authority of the broker is expressed or recognized in a writing signed by the seller or buyer or authorized agent, and the writing states either the amount or the rate of commission[,]" N.J.S.A. 25:1-16(c), or (2) the broker acts pursuant to an oral agreement and:

(1) within five days after making the oral agreement and before the transfer or sale, the broker serves the principal with a written notice which states that its terms are those of the prior oral agreement including the rate or amount of commission to be paid; and

(2) before the principal serves the broker with a written rejection of the oral agreement, the broker either effects the transfer or sale, or, in good faith, enters negotiations with a prospective party who later effects the transfer or sale.

[N.J.S.A. 25:1-16(d).]

That statute also directs the manner in which the notices from the broker to the principal are to be served. "The notices provided in this section shall be served either personally, or by registered or certified mail, at the last known address of the person to be served." N.J.S.A. 25:1-16(e).

Plaintiff does not dispute that the Stopars never signed a commission contract. Rather, plaintiff argues that Alesh had orally agreed to pay Kelman a 5% commission if Kelman procured a sale to Jimmy's Cookies, and that the three e-mails Kelman sent Alesh confirmed that agreement.

The issue of whether a real estate broker's written notice, confirming a broker's oral commission agreement, pursuant to N.J.S.A. 25:1-16(d), may be served in a manner other than provided by N.J.S.A. 25:1-16(e) was recently addressed by this court and answered in the negative. See Coldwell Banker Commercial/Feist & Feist Realty Corp. v. Blancke, P.W., 368 N.J. Super. 382, 392 (App. Div. 2004) (rejecting a broker's assertion that notice by telefax and possibly ordinary mail met the service requirements of N.J.S.A. 25:1-16(e)).

In Coldwell Banker, the real estate brokers had sent by telefax communication, and possibly by ordinary mail, a letter to their client, the lessor, reconfirming an oral agreement by the lessor to pay the brokers a 5% commission if the brokers procured a lease for the lessor's property. Id. at 391. The lessor received the letter, but did not respond to it. Id. at 385. Thereafter, the brokers procured a lease without obtaining a written commission agreement. Id. at 386-87. When the brokers attempted to collect the 5% commission, the lessor refused to pay, not because the brokers were not entitled to a commission, but because a 5% commission was too much. Id. at 387-88.

On appeal from the trial court's entry of a judgment in favor of the brokers, we determined that the SOF precluded the brokers from recovery on the basis of breach of contract because the brokers did not have a contract or a writing that confirmed an oral agreement that complied with the SOF. Id. at 391. We concluded that the fax communication and possibly-mailed letter were not served in accordance with N.J.S.A. 25:1-16(e), and the SOF requires strict compliance. Id. at 392-93. Although we determined that the brokers could not pursue a breach of contract claim, we concluded they could seek recovery of a commission on the theory of quantum meruit. Id. at 397-98. Here, because plaintiff did not seek to confirm its claimed entitlement to a real estate commission with Alesh, pursuant to a method provided by N.J.S.A. 25:1-16(e), the trial court correctly granted judgment dismissing plaintiff's claim for a brokers' commission based on breach of an express contract. Id. at 392.

Plaintiff contends that Coldwell Banker is distinguishable, underscoring that Coldwell Banker concerned a faxed letter and did not address the UETA. While that is correct, we are satisfied that the holding in Coldwell Banker applies to any type of delivery that is not contained in N.J.S.A. 25:1-16(e). The purpose of N.J.S.A. 25:1-16(e) is to "provide[] a level of certainty for both parties" by clearly delineating the requirements needed to create a binding agreement. Id. at 392. If a broker were not held to strict compliance with those requirements, then the purpose of the statute would be "partially eroded" because sellers would not know which communications require a response and which do not. Id. at 393. Moreover, any method of delivery that lacks the certainty that personal and certified mail affords, is insufficient to bind the seller of real estate:

[w]ithout further personal verification, the sender has no way of knowing that the fax was ever removed from the machine and no knowledge of which individual actually received it . . . . The methods of personal service, certified mail and registered mail, overcome this deficiency by providing verification that the notice reached its destination and the name of the individual who received it. [Id. at 393.]

In addition, even if e-mail had constituted proper service under N.J.S.A. 25:1-16(e), plaintiff's express contract claims would still fail because plaintiff did not establish that Kelman had sent the e-mails to Alesh as confirmation of a prior oral agreement that the Stopars would pay Kelman a real estate broker's commission. N.J.S.A. 25:1-16(d). Neither Kelman or Alesh testified to making an oral commission agreement, nor did the e-mails purport to confirm such an agreement. The record does not contain any evidence establishing that the Stopars agreed to pay Kelman a commission. At most, the April 2004 listing agreement suggests that Alesh agreed to pay Kelman a commission if Kelman secured a sale within forty-five days of that agreement, but not beyond that.

III.

Plaintiff argues next that the trial judge provided the jury with an erroneous answer to the jury's question on the second factor of plaintiff's quantum meruit claim. Plaintiff contends that the trial judge erred in answering the jury's question because the answer informed the jury that it could not find for plaintiff, if plaintiff played no part in the ultimate sale of the Property. Plaintiff asserts that this was error because plaintiff's theory of the case was that it had been unlawfully excluded from the ultimate sale. We conclude that the argument is meritless.

Quantum meruit is an equitable principle that allows recovery when one party would be unjustly enriched by a benefit that another has conferred on it. Coldwell Banker, supra, 368 N.J. Super. at 401.

To recover under a theory of quantum meruit, a plaintiff must establish: "(1) the performance of services in good faith, (2) the acceptance of the services by the person to whom they were rendered, (3) an expectation of compensation therefore, and (4) the reasonable value of the services." [Starkey v. Estate of Nicolaysen, 172 N.J. 60, 68 (2002) (quotations omitted).]

The trial judge initially instructed the jury as follows:

If you find that the plaintiff GK Realty rendered services which were an efficient procuring cause of the ultimate sale as described earlier for the defendants Stopar, despite defendant Stopar[s'] refusal to agree in writing or orally to the essential terms of the brokerage agreement, plaintiff GK Realty may be entitled to recover in quantum meruit for the reasonable value of its services in that context.

Quantum meruit is a form of quasi contract recovery and rests on the equitable principle that a . . . person or persons shall not be allowed to enrich themselves unjustly at the expense of another. Courts generally allow the recovery in quasi contract when one party has conferred a benefit on another and the circumstances are such that in -- to deny recovery would be unjust.

To recover under the theory of quantum meruit the plaintiff has . . . to affirmatively answer the following four factors:

1. Did the plaintiff provide value brokerage services in good faith?

2. Did the defendant Stopars accept the plaintiff's GK Realty's services in the sale of the property?

3. Was there an . . . expectation of payment of compensation by both parties, GK Realty and Stopars in regard to the sale of the property?

4. What is the reasonable value of plaintiff GK Realty's services in the context of the ultimate sale and being an efficient procuring cause in the ultimate sale of the property?

During deliberation the jury asked whether the phrase "sale of the property," in the second part of the quantum meruit instruction, "refer[s] to the process of selling or the ultimate sale." Over plaintiff's objection, the judge answered the question as follows:

It refers to the ultimate sale. As you recall, there are four together and the last one talks in terms of efficient procuring cause in the ultimate sale of the property in the context of the ultimate sale. So, that's what he is seeking.

So, it's not just a selling. It is . . . those conjunctions. Does that answer your question?

JURORS: Yes.

A short time later the jury returned a verdict for the Stopars.

The charge, read as a whole, was proper. It correctly explained the elements of a quantum meruit claim as applied to the facts of this case. See Sun Source v. Kuczkir, 260 N.J. Super. 256, 264-65 (App. Div. 1992), certif. denied, 133 N.J. 439 (1993). The fourth factor of a quantum meruit claim requires a jury to determine the reasonable value of the broker's service in relation to a sale that the broker procured. We are satisfied that the second factor, asking whether the seller accepted the broker's services, relates to the ultimate sale of the Property. Accordingly, the judge properly instructed the jury.

IV.

Plaintiff contends that the trial judge erred in refusing to allow plaintiff to call Edward Russo as an expert witness on the issue of "substantial break," as it relates to the efficient-producing-cause doctrine. We again disagree.

The substantial break doctrine provides that a broker may receive a commission on a sale, which the broker caused to occur by producing a buyer who was willing and able to consummate a sale and by facilitating the negotiations which lead to the sale without a substantial break in the negotiations. Michele Matthews, Inc. v. Kroll & Tract, 275 N.J. Super. 101, 106 (App. Div. 1994). Simply stated:

[T]he negotiations with the customer or prospect need not be uninterrupted so long as the continuity of the broker's agency in bringing the transaction to a conclusion can be established, but if the negotiations are broken off, and the broker thereafter abandons his efforts, or there is a substantial break in negotiations and the transaction is subsequently concluded by the principal without the aid of the broker, he may be denied any commissions. [Leadership Real Estate, Inc., supra, 271 N.J. Super. at 184 (quoting 12 Am. Jur. 2d Brokers § 190 (1964)).]

Here, plaintiff sought to call Russo to testify that, in the commercial real-estate business, a five to six-month break in negotiations does not amount to a "substantial break" in negotiations. The trial judge denied plaintiff's request, reasoning that Russo's testimony would not have aided the jury in resolving the factual issue. The judge determined the issue was not so "esoteric" that a jury could not decide it on its own.

We defer to a trial court's evidentiary ruling, absent an abuse of discretion. Green v. N. J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999); Dinter v. Sears, Roebuck & Co., 252 N.J. Super. 84, 92 (App. Div. 1991). "As a general rule, admission or exclusion of proffered evidence is within the discretion of the trial judge whose ruling is not disturbed unless there is a clear abuse of discretion." Dinter, supra, 252 N.J. Super. at 92; see also Purdy v. Nationwide Mut. Ins. Co., 184 N.J. Super. 123, 130 (App. Div. 1982). Our role is not to substitute our judgment for that of the trial judge, but to decide whether the judge pursued a manifestly unjust course. Green, supra, 160 N.J. at 492. The existence of other properly admitted evidence in the record may render error, committed in either the exclusion or admission of specific evidence, harmless. State v. Doyle, 77 N.J. Super. 328, 344 (App. Div. 1962), aff'd, 42 N.J. 334 (1964).

N.J.R.E. 702 governs the admission of expert testimony. The rule provides: "[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise." There are three requirements for the admission of expert testimony:

(1) the intended testimony must concern a subject matter that is beyond the ken of the average juror; (2) the field testified to must be at a state of the art that such an expert's testimony could be sufficiently reliable; and (3) the witness must have sufficient expertise to offer the intended testimony. [State v. Kelly, 97 N.J. 178, 208 (1984).]

We conclude that the trial judge properly excluded Russo's testimony because the subject matter on which plaintiff called Russo to testify was not so esoteric as to be outside the common knowledge of the jury. Moreover, Russo's testimony would have been inadmissible as a net opinion. See Jiminez v. GNOC Corp., 286 N.J. Super. 533, 540 (App. Div.), certif. denied, 145 N.J. 374 (1996).

Russo is the President and Chief Operating Officer of Russo Development, LLC, an entity, which owns, develops, and manages industrial property in New Jersey. Russo has never possessed either a real estate broker's license or a real estate salesperson's license; nor has he ever worked for a real estate sales firm. Russo's report, provided in discovery, was essentially written by plaintiff's counsel and reviewed by Russo's personal counsel, and reviewed and modified by Russo before it was released. The report failed to disclose the basis for Russo's conclusions, other than his personal opinion. Moreover, we are satisfied that any error in prohibiting Russo's testimony concerning the doctrine of "substantial break" was harmless, because plaintiff was permitted to argue the issue to the jury and the trial judge correctly instructed the jury concerning the doctrine.

Affirmed.

20080313

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