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Classic Homes Realty v. E.J.G. Properties

November 20, 2008

CLASSIC HOMES REALTY, PLAINTIFF-APPELLANT,
v.
E.J.G. PROPERTIES, INC. AND ERIC J. GULOTTA, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5218-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 29, 2008

Before Judges Skillman, Graves and Grall.

Plaintiff Classic Homes Realty, a realty brokerage firm, appeals from a grant of summary judgment in favor of defendants, Eric J. Gulotta and his real estate development company, E.J.G. Properties, Inc. (collectively EJG). The claims at issue on appeal are for commissions due under separate agreements for two of EJG's properties, New Mills Village and Elton-Adelphia.*fn1

We reverse the grant of summary judgment in favor of EJG under the New Mills Village agreement and affirm the grant of summary judgment on the Elton-Adelphia agreement. Because the claims are distinct, we discuss them separately. In both cases, we consider the evidential materials submitted on the motion in the light most favorable to Classic to determine whether EJG is entitled to judgment as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

I.

On November 17, 2000, Classic, through its owner Gerald Pellegrini, brokered the sale of a forty-two-lot subdivision in Pemberton known as New Mills Village. EJG paid $2,500,000 for the property. Classic accepted a reduced commission on the sale to EJG, approximately $40,000 instead of $100,000, in return for EJG's promise to list the individual lots with Classic after developing the tract. This agreement between EJG and Classic was not memorialized in a writing, and Pellegrini continued to bring additional properties to EJG's attention, as he had prior to the New Mills Village transaction.

EJG gave the listing on the properties in New Mills Village to another broker. Nonetheless, before EJG completed the New Mills Village development, Classic and EJG signed a "commission agreement." EJG promised to pay Classic a total of $30,000 at a rate of $1000 per lot at each closing on the next thirty lots. According to Pellegrini, the $30,000 was offered and accepted to encourage the parties' business relationship and to resolve Classic's grievance about the $60,000 commission Classic waived in reliance on EJG's promise to give Classic the New Mills Village listings. Gulotta characterized his agreement to pay $30,000 as a business accommodation.

EJG sold forty-one of the properties in New Mills Village. EJG paid Classic only $15,000 under the New Mills Village commission agreement.

The trial court granted summary judgment in favor of EJG on the ground that the agreement was unenforceable because it lacked consideration. The court concluded that EJG's prior promise to list the properties with Classic in return for waiver of a portion of its commission on the sale of the property to EJG, which was never reduced to writing, could not constitute "present consideration" for the new agreement. In addition, the court found that this agreement did not obligate Classic to perform a service or give up an enforceable right or other thing of value in exchange for the $30,000 EJG agreed to pay.

"No contract is enforceable, of course, without the flow of consideration - both sides must 'get something' out of the exchange." Cont'l Bank of Pa. v. Barclay Riding Acad., Inc., 93 N.J. 153, 170 (quoting Friedman v. Tappan Dev. Corp., 22 N.J. 523, 533 (1956)), cert. denied, 464 U.S. 994, 104 S.Ct. 488, 78 L.Ed. 2d 684 (1983). The "'bargained-for exchange of promises or performance'" may consist "'of an act, a forbearance, or the creation, modification, or destruction of a legal relation. See Restatement (Second) of Contracts § 71 (1981).'" Martindale v. Sandvik, Inc., 173 N.J. 76, 87 (2002) (quoting Shebar v. Sanyo Bus. Sys. Corp., 111 N.J. 276, 289 (1988)). A "'very slight advantage to one party, or a trifling inconvenience to the other, is a sufficient consideration to support a contract when made by a person of good capacity . . . .'" Id. at 87-88 (quoting Traphagen's Ex'r v. Voorhees, 44 N.J. Eq. 21, 31 (Ch. 1888)). Equivalence is not required. Id. at 87.

Generally, something given "before the promise was made, and, therefore, without reference to it, cannot, properly speaking, be legal consideration." Broad St. Nat'l Bank v. Collier, 112 N.J.L. 41, 45 (Sup. Ct. 1933). It is, however, well-recognized that a promise to surrender or forbear pursuit of a disputed claim is legally sufficient consideration. See Restatement, supra, § 74 & illustration 4. Such consideration need not be recited in the agreement and can be established by other evidence. J.I. Kislak Realty Corp. v. 6051 Boulevard E. Corp., 192 N.J. Super. 280, 283 (App. Div. 1983).

Classic's evidence, if believed, is adequate to demonstrate that Classic surrendered a claim. Pellegrini explained the $30,000 agreement as one fostering a mutually advantageous business relationship jeopardized by EJG's failure to honor a promise to list the New Mills Village lots with Classic in return for Classic's acceptance of a commission $60,000 lower than the one due. Gulotta's characterization of their ...


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