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Robert DeRuggiero, Inc. v. Sanchez

December 24, 2009


On Appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1254-07.

Per curiam.


Argued December 2, 2009

Before Judges Graves and J.N. Harris.

Defendants appeal from the January 26, 2009, judgment awarding plaintiff $64,500 for a real estate broker's commission, plus $10,438.40 in prejudgment interest, after a bench trial. We affirm as to the broker's commission, but reverse and remand on the issue of the prejudgment interest.


In early 2003, defendants Oscar and Zunilda Sanchez utilized plaintiff Robert DeRuggiero, Inc. (the broker) to acquire real property located at 610-612 12th Street, Union City. The property contained a six-unit residential structure with a side lot that defendants rented out as parking spaces.

On January 21, 2003, Sanchez formed a business entity to manage the property, defendant Oz Properties, L.L.C. (Oz), and duly registered it with the State of New Jersey. The couple transferred the property to Oz by a deed dated March 31, 2003, which was not recorded until July 24, 2003.

As part of their long-term plan for the property, defendants hired an architect and sought to obtain residential zoning approvals to develop the property for a much higher density. However, within one year after the acquisition, defendants instead decided to try to sell the property.

In early 2004, Oscar Sanchez contacted Roger Ruiz (Ruiz), a real estate agent affiliated with plaintiff, regarding the sale of the property. On January 8, 2004, Oscar Sanchez--presumably on behalf of Oz, the nominal owner--executed an "Exclusive Right to Sell Agreement" (listing agreement) with plaintiff, listing the property for sale at a starting price of $1,050,000. The broker's commission was agreed to be five percent of the sales price.

The listing agreement was limited in its duration; it commenced on January 8, 2004, and expired on July 8, 2004. Nevertheless, it contained an extension provision, which still gave plaintiff the right to the five percent commission if the property were sold to a purchaser within 180 days after the expiration date of the listing agreement. The commission would be earned only if plaintiff or a cooperating broker introduced the buyer to defendants during the term of the listing agreement. This provision effectively extended the listing agreement and entitlement to a potential broker's commission to January 8, 2005. It was never expressly extended or renegotiated beyond that date.

In due course, Ruiz submitted defendants' listing to the Hudson County Multiple Listing. Basil Skaltsis (Skaltsis), of Corporate Realty, located in Hoboken, saw the listing and telephoned Ruiz on an undisclosed date to discuss a client he believed was interested in defendants' property. The interested party was Daniel Johnson (Johnson), a developer of mid-rise residential condominiums who was working through his business entity, Genesis I-Union City, L.P. (Genesis).

Johnson was in the process of attempting to assemble properties for a condominium project. Johnson's original proposal contained 156 units but was reduced to seventy-two units after negative public reaction. Defendants' property would have comprised ten units in Johnson's plan.

Johnson authorized an offer to purchase defendants' property, which Skaltsis presented to Ruiz on an unidentified date. After discussions went back and forth, the realtors for Johnson and defendants arrived at an agreement, memorialized in a Memorandum of Sale (Memorandum) dated February 23, 2004, which outlined the terms of a proposed transaction. The selling price indicated in the Memorandum was in the amount of $1,000,000. The real estate commission was to be five percent, split in half for plaintiff and Corporate Realty to each retain 2.5%.

Because the deal involved commercial property, the transaction was turned over to the attorneys for both sides in order to prepare a formal contract of sale. Ruiz organized a meeting among the principals, their attorneys, and the brokers' agents.

Ruiz testified that his participation after that meeting was limited and that he was never asked to do anything more in connection with the transaction. He and plaintiff also were never paid a commission, and Ruiz was not even aware that the transaction had been consummated until a chance meeting with Oscar Sanchez at a Pathmark grocery store in Weehawken months later.

On September 10, 2004, the individual defendants (not including the nominal title holder Oz) and Genesis entered into a written "Agreement for Sale of Real Estate" (Agreement) for a purchase price of $1,200,000. Section 4.02 of the Agreement conditioned Genesis's obligation to purchase the property upon obtaining all zoning approvals required for constructing a multi-unit building on the premises based on "a minimum fifteen units per lot allowance." The same provision also granted to Genesis a period of 180 days from the date of the Agreement's execution "to file and pursue the necessary zoning applications." Genesis had the further option of extending ...

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