April 15, 2008
MARIO ARGENZIANO AND MARAGEN CORPORATION, PLAINTIFFS-APPELLANTS,
THOMAS YACCARINO, ATLANTIC GROUP REALTY, BY THE SEA REAL ESTATE, LLC, WILLIAM WEBBER,*FN1 ANDREW BOECKEL,*FN2 LIBERTY CIRCLE LLC, TROUTMAN PORT, LLC AND JOSEPH MEEHAN, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-8090-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted April 1, 2008
Before Judges Coburn and Grall.
Plaintiffs appeal from the dismissal of their complaint in an action seeking damages for breach of a contract for the sale of real estate, breach of the realtor's fiduciary duties, fraud, conspiracy to defraud and legal malpractice. We affirm substantially for the reasons stated by Judge Cifelli in his oral decisions of April 13 and August 28, 2007, and provide a brief explanation for our conclusion that plaintiffs' claims of error lack sufficient merit to warrant more than brief discussion in a written opinion. R. 2:11-3(e)(1)(E).
The following factual statement is based on the complaint, admissions made at oral argument on defendants' motions and the evidential materials submitted on the motions for summary judgment. The land at issue consists of five lots, with a total area of approximately five acres. The lots are designated as 9, 10, 11, 12 and 13 of Block 380 on the tax map for the City of Long Branch. The land was owned by plaintiff Maragen Corporation. In June 2002, plaintiff Mario Argenziano, the sole shareholder, officer and director of Maragen Corporation, decided to sell the property. Defendant Thomas Yaccarino, who is associated with defendant Atlantic Group Realty, Inc. (Atlantic), approached Argenziano and told him that he had an interested buyer. Yaccarino had represented buyers in previous sales of property held by Argenziano, and Yaccarino and Atlantic managed rental properties held by Argenziano. The interested buyer was defendant By the Sea Real Estate, LLC (By the Sea). Argenziano did not sign a listing agreement with either Yaccarino or Atlantic. He agreed that Atlantic Group would be paid a brokerage commission of $100,000 through any contract of sale with By the Sea.
On October 18, 2002, defendant William Webber, on behalf of By the Sea, and plaintiff Argenziano, on behalf of Maragen, executed a contract under which Maragen agreed to transfer the property to By the Sea for $2,000,000. Argenziano retained defendant Joseph Meehan, an attorney, in connection with this transaction.
The contract for sale addresses payment of brokerage commissions. Argenziano warranted that there were no "brokerage commissions due to any broker by reason of [his] act . . . other than to Atlantic . . ." By the Sea agreed to "be solely responsible for paying" Atlantic a brokerage commission of $100,000.
The contract was contingent upon By the Sea obtaining all approvals it required to improve the property with "market rate residential townhome units." The parties agreed that By the Sea would have a twenty-two month period, beyond an initial due diligence period of a minimum of sixty days, to secure the approvals. They further agreed that upon payment of an additional $50,000, which would not be credited against the purchase price, By the Sea could obtain a six-month extension if it had been "diligently seeking" the approvals. By the Sea was required to pay $5000 toward the purchase price every ninety days between the expiration of the initial due diligence period and closing.
On October 17, 2004, By the Sea tendered $50,000 and sought a six-month extension. Argenziano, on advice of defendant Meehan and contrary to his own view of By the Sea's diligence and his desire to cancel the contract, accepted the $50,000 and agreed to the extension.
The contract prohibits assignment. The relevant paragraph provides:
This Agreement shall not be assigned without the written consent of the Seller, except that the Buyer may have the right to transfer the Agreement prior to closing to an entity formed by it and controlled by it or its principal for the purpose of developing the Property. Any such assignment shall not relieve the Buyer of any obligations hereunder.
Prior to the closing of the sale from plaintiffs to By the Sea, Webber signed a contract agreeing to sell lots 11, 12 and 13 of Block 380 to Liberty Circle, LLC for $1,500,000. Defendant Yaccarino and his partner in Atlantic, defendant Andrew Boeckel, signed the agreement as the buyers. On the same day, Webber signed a second contract agreeing to sell lots 9 and 10 of Block 380 to defendant Troutman Port, LLC for $1,000,000. Defendants Yaccarino and Boeckel signed that contract as the buyers. Both contracts were signed on January 13, 2005, and both proposed a closing date of April 15, 2005, with a $50,000 credit to the buyers if closing were to take place on or before April 1, 2005.
The closing on the transfer from Argenziano to By the Sea took place on March 30, 2005, at the office of Argenziano's attorney, defendant Meehan. According to Argenziano, Meehan told him that he could not attend the closing. The closing on the transfer from By the Sea to defendants Liberty Circle, LLC and Troutman Port, LLC also took place on March 30, 2005. Plaintiffs received the contract price for the property.
In their complaint, plaintiffs allege that they received less than fair-market value for the property. They further allege that By the Sea's contracts to sell the properties to Troutman Port, LLC and Liberty Circle, LLC amounted to assignments, which were in breach of the contract's anti-assignment clause and inconsistent with good faith and fair dealing. Plaintiffs further allege that in withholding information about the prohibited assignments, By the Sea, Liberty Circle, LLC, Troutman Port, LLC, Webber, Boeckle and Yaccarino engaged in a conspiracy to defraud that consisted of the withholding information about the assignments, which amounted to a breach.
Judge Cifelli concluded that plaintiffs' complaint alleging breach of contract and conspiracy to defraud against Webber, By the Sea, Liberty Circle, LLC, and Troutman Port, LLC failed to state a claim upon which relief can be granted. See R. 4:6-2(e). The judge concluded that, regardless of the timing of the transfers from By the Sea to Liberty Circle, LLC and Troutman Port, LLC, these purchasers from By the Sea did not acquire any rights to demand plaintiffs' performance of the contract between plaintiffs and By the Sea. On that basis, the judge found that plaintiffs could not establish a breach of the anti-assignment clause or a conspiracy to defraud premised on concealment of the contracts that plaintiffs alleged were prohibited assignments.*fn3
On appeal plaintiffs contend that in deciding this motion to dismiss for failure to state a claim, the judge improperly went beyond the pleadings without affording plaintiffs a reasonable opportunity to present all pertinent material. See R. 4:2-6(e). We disagree.
A complaint that does not set forth a legal basis for granting the plaintiff relief is properly dismissed. Sickles v. Cabot Corp., 379 N.J. Super. 100, 106 (App. Div.), certif. denied, 185 N.J. 297 (2005). An assignment is a transfer of the assignor's right to demand performance to an assignee who acquires the right to demand performance. Restatement (Second) of Contracts § 317(1) (1981). Plaintiffs did not allege that By the Sea's contracts gave any other person a right to demand from them the performance they promised to give By the Sea. The question of law -- whether By the Sea's contracts to transfer the property amounted to an assignment -- was properly resolved on the basis of plaintiffs' pleadings. The pleadings did not suggest a cause of action for breach of the anti-assignment clause or conspiracy to defraud based upon concealment of the contracts.*fn4 See Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (discussing the standard for dismissal based on failure to state a claim). Accordingly, we affirm the orders dismissing plaintiffs' claims against defendants By the Sea, Webber, Boeckel, Troutman Port, LLC and Liberty Circle, LLC.
We also reject plaintiffs' claim that Judge Cifelli erred in granting summary judgment in favor of the remaining defendants -- Yaccarino, Atlantic, and Meehan. Like the trial court, we must view the evidential materials presented on the summary judgment motions in the light most favorable to plaintiffs and give them the benefit of all favorable inferences. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); Kramer v. Ceiba-Geigy Corp., 371 N.J. Super. 580, 602 (App. Div. 2004). Viewed in the light most favorable to plaintiffs, this record was not adequate to defeat defendants' motions.
With respect to Yaccarino and Atlantic, plaintiffs alleged breach of a fiduciary relationship.*fn5 Plaintiffs acknowledged that they had not signed a listing agreement and that Yaccarino approached Argenziano and informed him that By the Sea was an interested buyer. By the Sea agreed to pay the brokerage commission. Thus, there is no evidence to support an inference that plaintiffs retained Yaccarino or Atlantic to secure a purchaser under circumstances that could give rise to a duty of absolute and undivided loyalty. See Silverman v. Bresnahan, 35 N.J. Super. 390, 394-95 (App. Div. 1955). Moreover, plaintiffs offered no legal authority to support their claim of a fiduciary duty arising from their dealings with Yaccarino and Atlantic as agents for other buyers or as managers of this property.
With respect to defendant Meehan, plaintiffs' claim was that the attorney breached a duty of care owed to plaintiffs by advising them to grant a six-month extension to buyers and thereby caused plaintiffs to lose an opportunity to retain the property and its appreciated value. Although plaintiffs produced an affidavit of merit, they did not provide an expert report or request an adjournment of the summary judgment motion to permit them to secure one. Thus, they did not have evidence to establish that the attorney breached a duty of care. McGrogan v. Till, 167 N.J. 414, 425 (2001) (listing elements of a legal malpractice claim). Further, the materials submitted on the motions did not include any information about the value of the property on the date plaintiffs gave By the Sea additional time to perform. Without that evidence, plaintiffs could not establish damages sustained as a consequence of the attorney's advice. Ibid.
For the foregoing reasons, and those stated by Judge Cifelli in his oral decision of August 27, 2008, we affirm the orders awarding summary judgment in favor of defendants Yaccarino, Atlantic and Meehan.