On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-221-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Gilroy and Chambers.
On February 25, 2008, following a bench trial, the trial court entered judgment against defendants Dr. Michael Cohen and Aron Rosenberg, "individually, jointly and severally," in the amount of $54,000, together with pre-judgment interest from March 1, 2005.*fn1 Rosenberg appeals; Cohen does not. We affirm in part; reverse in part; and remand to the trial court for further proceedings consistent with this opinion.
Plaintiff, A. Neumann and Associates, LLC, engages in the brokering of businesses and is affiliated with Business Brokers Network of Dallas, Texas. Achim Neumann is plaintiff's principal owner and president. Cohen is a retired physician and the former owner of NSH, a licensed, but non-operating adult day health care (ADHC) facility.*fn2 The primary asset of NSH is the March 13, 2001 approval by the State of New Jersey, Department of Health and Senior Services, the Division of Long-Term Care Systems, to establish and operate a 185-slot ADHC facility*fn3 in Neptune City.
On March 16, 2004, Cohen and Neumann executed plaintiff's Standard Engagement Agreement (engagement agreement). Under the engagement agreement, Cohen, as seller, granted plaintiff an exclusive right to sell NSH for a period of one year at a price of $450,000. Paragraph 3 of the engagement agreement provided that, for a period of two years after termination of the one-year exclusivity period, plaintiff would be entitled to a full commission if Cohen sold the business to a purchaser introduced to him by plaintiff.
Paragraph 10 of the engagement agreement governs the broker's commission. The agreed-upon commission was 15% of the listed sale price ($450,000) or $67,500. That paragraph also provided for a 15% minimum commission of the actual sale price, but under no circumstances less than 15% of 80% of the listed sale price ($360,000), or $54,000, if Cohen sold NSH for less than $450,000. Paragraph 11D of that agreement set forth events triggering Cohen's obligation to pay plaintiff a broker's commission for reasons other than procuring a sale. Included among the triggering events was Cohen's unilateral withdrawal of the "[b]usiness from the market and/or [if Cohen] otherwise attempt[ed] to terminate th[e] Agreement prior to its expiration date."
Pursuant to the engagement agreement, Neumann produced several prospective purchasers of NSH, one of whom was Rosenberg. On May 12, 2004, prior to providing Rosenberg with confidential information pertaining to NSH, at Neumann's request, Rosenberg signed plaintiff's "Standard Buyer's Confidentiality and Warranty Agreement" (confidentiality agreement) to protect not only Cohen's privacy, but also plaintiff's broker commission.
In the preamble to the confidentiality agreement, Rosenberg acknowledged that plaintiff possessed a valid broker's agreement with Cohen for the sale of NSH on a commission basis. Pursuant to Paragraph 3 of the confidentiality agreement, Rosenberg agreed not to contact Cohen "for any reason whatsoever without the prior consent of [plaintiff]. All contacts with [Cohen] . . . will be made through or by [plaintiff] unless otherwise agreed to by [plaintiff] in writing."
Paragraph 7 of the confidentiality agreement provided, in pertinent part, that Rosenberg, for a period of three years from the date of its execution, would not enter into any agreement for the purchase of NSH, "unless such agreement to purchase provides for commission to be paid [to plaintiff], with the commission . . . defined as the amount agreed upon by [plaintiff] and [Cohen] in the '[s]tandard [l]isting
[a]greement' . . . ." Under the same paragraph, Rosenberg agreed that if he violated that provision he would be liable "for and pay said commission to [plaintiff] upon demand without any obligation on [plaintiff's] part to first exhaust any legal remedies against [Cohen]."
After Rosenberg reviewed NSH's confidential information, he made an offer to purchase NSH through plaintiff for $325,000. On July 14, 2004, plaintiff telefaxed the offer to Cohen. The offer was not accepted. Rather, Cohen's attorney sent a letter to Neumann on the same day terminating the engagement agreement. Subsequent to the July 14, 2004 letter, Neumann conversed with Cohen's attorney about Rosenberg's offer. During that conversation, Cohen's attorney advised Neumann that Cohen was negotiating directly with Rosenberg. ...