April 8, 2009
TRACEY LINDEMAN, PLAINTIFF-RESPONDENT,
MICHAEL MULLIGAN AND DANA MULLIGAN, DEFENDANTS-APPELLANTS.
On appeal from Superior Court of New Jersey, Law Division, Salem County, Docket No. DC-2032-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 17, 2009
Before Judges Skillman and Espinosa.
After a bench trial, the trial court entered judgment against defendants for $7,953.94 plus costs, representing plaintiff's out-of-pocket expenses for materials he installed in making improvements to the kitchen in premises he leased from defendants.
Plaintiff and defendant Dana Mulligan were both real estate brokers who knew each other before defendants leased the subject premises to plaintiff. The premises consists of what the lease described as "a 1950s era brick rancher" located on Route 40 in Pilesgrove. The lease, which was for a one-year term from October 5, 2005 to October 5, 2006, provided for $1400 per month rent. The lease contemplated that plaintiff might purchase the premises during the course of the lease term:
Landlord and Tenant have agreed to credit Tenant for all rent payments timely made toward Tenant's payment of a purchase price for the Property in the event Landlord and Tenant come to an agreement whereby Tenant shall purchase the property for an agreed upon price.
According to plaintiff, the kitchen was in poor condition at the beginning of his tenancy:
The kitchen was in very much disarray from, you know, I guess years of neglect or something. I don't know. It was real old. The cabinets were falling off the wall. The doors, if you slid them -- the cabinets did not open up. They slid. They were just sliding cabinets, and as you slid them they get jammed and fall off on you. It was just in -- the floors were really bad. You wouldn't want to walk on them with your bare feet. It was in quite disarray.
Consequently, plaintiff decided to make improvements to the kitchen.
Plaintiff discussed those proposed improvements with Mrs. Mulligan and obtained her approval:
Q: And what was the nature of the discussions you had with Dana Mulligan?
A: They were just that I was going to fix up the kitchen. Oh, yeah, go for it. You know, that was the answer.
Q: Okay. Did you tell her -
A: At that time I think they were still in belief that I was going to be buying the property so whatever improvements that were made to the property from me were going to be offset in the sale price of the home. That's the way it was brought to me.
Q: Okay. Did you tell Mrs. Mulligan what improvements you were making?
Q: Did you tell her where the materials were being acquired?
Plaintiff testified that Mrs. Mulligan further agreed that "if I did not buy the property that upon sale of the property I'd be reimbursed for the cabinetry and flooring that I put in."
Plaintiff also testified that Mrs. Mulligan approved of the appearance of the improvements he installed in the kitchen:
Q: Was there any conversation between Mrs. Mulligan and you when you were installing any of the counter top, cabinet, flooring, stoves, --
A: There was -
Q: -- microwave?
A: -- there wasn't a lot of conversation. It was -- there was a lot of wow, you know, nice. They liked what I was doing. It was very nice. That's all I got out of it.
Q: You say they liked it; did Mr. Mulligan see it?
A: I wasn't talking about Mr. Mulligan.
Ms. Dana Mulligan was there. Pretty much everybody that came in loved the kitchen and Dana, -- Dana -- she was the same way.
Before completing the improvements to the kitchen, plaintiff decided not to purchase the leased premises from defendants. According to plaintiff, he discussed with Mrs. Mulligan continuing to reside in the premises for an additional six months without payment of rent in order to defray the cost of the improvements. However, she refused on the ground that defendants needed the additional rent. Plaintiff also stated that on one occasion, Mrs. Mulligan said that "she wishes she could pay me out of her own [for the improvements], but she didn't want to go against Mike [defendant Michael Mulligan] on that."
Mrs. Mulligan denied having any discussions with plaintiff regarding the installation of improvements to the kitchen. According to Mrs. Mulligan, she first became aware plaintiff had installed improvements in the kitchen when she visited the premises in the spring of 2006, at which time she said:
"Tracey, why did you do that," and he said "because you had a shity [sic] kitchen. You had your cabinets falling off." And, I said, "Tracey, we can't pay for this," and he said, "oh, you can just give me what you can. You just work it out."
Mrs. Mulligan acknowledged that, after plaintiff decided not to purchase the premises, she and her husband prepared a website to advertise the premises for sale, which stated that it had a new kitchen and included a picture of the new kitchen.
The trial court credited plaintiff's testimony regarding his discussions with Mrs. Mulligan and found Mrs. Mulligan's testimony not to be believable. The court specifically found that Mrs. Mulligan "consented" to the installation of the improvements to the kitchen. The court also found that when Mrs. Mulligan gave that consent, plaintiff was interested in purchasing the premises and that "[t]here was an agreement between Mrs. Mulligan and [plaintiff] that he would get some form of credit at closing for the materials he used in doing the renovations." In addition, the court found that after plaintiff decided not to purchase the premises, Mrs. Mulligan agreed to reimburse him for the costs of improvements but defendants failed to honor that agreement. Based on these findings, the court concluded that defendants had a quasi-contractual liability to plaintiff for the costs of the materials he purchased to install the improvements. However, the court denied plaintiff's claim for compensation for his labor in installing the improvements. Accordingly, the court entered judgment in plaintiff's favor against defendants for $7,953.40, plus costs.
On appeal, defendants do not dispute the trial court's credibility findings. However, they advance a series of legal arguments for reversal of the judgment, most of which are based on the fact that the agreement the trial court found Mrs. Mulligan made with plaintiff regarding the installation of improvements was oral rather than written. We reject those arguments and affirm the judgment.*fn1
Defendants argue that the parol evidence rule barred plaintiff from presenting evidence relating to his oral agreement with Mrs. Mulligan concerning installation of improvements in the kitchen. The parol evidence rule only bars evidence of alleged "prior or contemporaneous agreements or understandings" to alter the term of an integrated written agreement. Garden State Plaza Corp. v. S.S. Kresge Co., 78 N.J. Super. 485, 496 (App. Div.), certif. denied, 40 N.J. 226 (1963). Consequently, the parol evidence rule does not apply to an oral agreement between the parties subsequent to execution of a written agreement. See Cooper v. Bergton, 18 N.J. Super. 272, 277-78 (App. Div. 1952). Mrs. Mulligan's agreement with plaintiff regarding installation of improvements in the kitchen was made after execution of the lease. Therefore, the parol evidence rule did not bar the introduction of evidence regarding that agreement.
Defendants also argue that the Statute of Frauds barred plaintiff from presenting evidence relating to his oral agreement with Mrs. Mulligan. Defendants' lease of the premises to plaintiff was for one year. Consequently, the lease was not subject to the Statute of Frauds, which applies only to leases for more than three years. N.J.S.A. 25:1-12. Moreover, the parties' agreement regarding plaintiff's installation of improvements in defendants' premises did not constitute "an agreement to transfer an interest in real estate" within the intent of N.J.S.A. 25:1-13.
In addition, defendants argue that evidence of the parties' agreement was barred by a provision of the lease which stated:
This Lease can only be changed by an agreement in writing by both the Tenant and the Landlord.
However, such a provision in a lease or other contract does not "disable [the parties] from amending, supplementing or replacing the contract by a later agreement made orally or by conduct objectively manifesting a new understanding." Lewis v. Travelers Ins. Co., 51 N.J. 244, 253 (1968).
Finally, defendants argue that the evidence presented by plaintiff was insufficient to warrant imposition of quasi-contractual liability for the costs of the materials plaintiff installed in the premises. To establish unjust enrichment as a basis for quasi-contractual liability, "a plaintiff must show both that defendant received a benefit and that retention of that benefit without payment would be unjust." VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994). Such liability may be imposed where "the plaintiff expected remuneration from the defendant, or if the true facts were known to plaintiff, he would have expected remuneration from defendant, at the time the benefit was conferred." See Callano v. Oakwood Park Homes Corp., 91 N.J. Super. 105, 109 (App. Div. 1966). Quasi-contractual liability does not require any showing of an agreement between the parties for payment to plaintiff. Id. at 108. "It rests on the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another, and on the principle of whatsoever it is certain a man ought to do, that the law supposes him to have promised to do." Id. at 108-09. In view of the broad equitable principle upon which it is based, "[q]uasi-contractual liability has found application in a myriad of situations." Id. at 109.
Although quasi-contractual liability may be imposed without any showing of agreement between the parties, the trial court found that "[t]here was an agreement between Mrs. Mulligan and [plaintiff] that he would get some form of credit at closing for the materials he used in doing the renovations" -- that "it would work into the purchase price, that he would get his money back because when he bought the property they wouldn't increase the price because of the work he did, and he would have done the work to the house that he is buying." Thus, "plaintiff expected remuneration from the defendant[s]" when he installed the improvements in their premises. Callano, supra, 91 N.J. Super. at 109.
In addition, the court found that after plaintiff decided not to purchase the premises, Mrs. Mulligan agreed to pay for the costs of materials for the improvements either from commissions she earned as plaintiff's broker in the purchase of another property or out of the proceeds from defendants' sale of the subject premises. In any event, even if defendants had not agreed to reimburse plaintiff for the costs of materials used in the improvements, the evidence indicates that defendants "received a benefit" from those improvements, as evidenced by the fact that they mentioned the "new kitchen" in their advertisement for the sale of the premises, and consequently that "retention of that benefit without payment [to plaintiff] would be unjust." VRG Corp., supra, 135 N.J. at 554. Therefore, the trial court properly entered judgment in plaintiff's favor for the costs of those materials.