June 28, 2010
ASSOCIATED BUSINESS BROKERS, INC., PLAINTIFF-RESPONDENT,
DOMINICK F. CALDERONE, JR., DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-330-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted June 3, 2010
Before Judges Stern and J. N. Harris.
This appeal involves a business broker's commission and related fees connected with the unsuccessful sale of a carpet cleaning business. After a two-day, two witness bench trial, plaintiff was awarded an aggregate judgment for $38,168.50, which included the broker's commission, prejudgment interest, and contractual attorneys fees plus costs. Defendant appeals, and we reverse.
Plaintiff Associated Business Brokers, Inc. (Associated) is a corporate business broker. Defendant Dominick F. Calderone, Jr. is an individual associated with High Quality Carpet Cleaning, Inc. (High Quality),*fn1 who held himself out as its owner. Calderone had founded and operated High Quality for several years, but wanted a "change [in] scenery." He decided to sell the business due to resultant difficulties stemming from personal injuries he had suffered in an automobile accident.
On April 5, 2004, Associated and Calderone entered into plaintiff's standard, pre-printed so-called listing agreement (Brokerage Agreement) pursuant to which Associated would endeavor to sell the "assets of the business"*fn2 of High Quality. The only contracting parties were the two parties to this litigation, which does not include the corporate entity High Quality. A commission--equal to ten percent of the purchase price, plus certain adjustments--was agreed to be paid by Calderone to Associated according to the terms of the Brokerage Agreement if any one of the following conditions was satisfied:
(1) Associated "procures a purchaser, ready, willing and able to purchase the Subject on the proposed terms set forth above;"*fn3
(2) Calderone "sell[s], lease[s], trade[s], or otherwise dispose[s] of all or any part of the Subject," regardless of Associated's involvement, during the period April 5, 2004 until October 31, 2004;
(3) Calderone "enter[s] into any offer and acceptance; enter[s] into a contract of sale; accept[s] a deposit; open[s] an escrow or record[s] a notice of intention to sell the Subject;"
(4) Calderone "withdraw[s] the Subject from sale or purport to terminate this Agreement prior to" October 31, 2004;
(5) Calderone "fail[s] or refuse[s] to complete a sale, lease, trade or [dispose] of all or any part of the Subject after entering into a written agreement to do so;"
(6) Calderone "sell[s], lease[s], trade[s] or otherwise dispose[s] of all or any part of the Subject within five years after" October 31, 2004, to any "person, firm or entity referred to the Subject" by Associated;
(7) Calderone "sell[s], lease[s], trade[s] or otherwise dispose[s] of all or any part of the Subject within five years after" October 31, 2004, to any "person, firm or entity with whom Calderone commenced and/or continued negotiations between April 5, 2004 and October 31, 2004, regardless of Associated's involvement;" or
(8) Calderone "should in any manner breach this Agreement."
The integrated Brokerage Agreement provided that the purchase price would be $200,000,*fn4 with a required down payment of fifty percent, with the balance payable between three and five years after the sale at an interest rate of between six and seven percent per year. Additionally, the Brokerage Agreement contained provisions representing that "no agreement or condition exists other than those set forth herein" (¶ 14) and "[a]ny change(s) to this [Brokerage] Agreement must be in written form and signed by Broker [plaintiff] and me [defendant]" (¶ 15). A list of High Quality's customers and tangible business assets was provided to Associated by Calderone, along with the owner's handwritten profit and loss statement indicating High Quality's annual gross revenue of $265,000 and net profit of $132,400,*fn5 presumably for the enterprise's last fiscal period.
In July 2004, Associated's principal, Dominic V. Penna, and Calderone engaged in intense conversations regarding a disposition of High Quality that ultimately resulted in Leonid and Galina Natenzon executing a unilateral written "Offer to Purchase Agreement" (the Natenzon Offer), which was formally submitted to High Quality and Calderone by plaintiff. The salient terms of the Natenzon Offer included a proposed purchase price of $225,000 with a down payment of $110,000, and the balance of $115,000 consisting of (1) the buyers' assumption of an indebtedness of approximately $35,000 due on a 2003 Ford E-350 box truck*fn6 and (2) a promissory note in the amount of $80,000 payable over four years with interest of five percent per year. The Natenzon Offer stated that it was conditioned upon the gross sales of High Quality being "approximately $265,000 a year," and its net profit "approximately $160,000 a year." The Natenzon Offer further required that defendant agree to a covenant not to compete, which would provide that Calderone "will not become engaged directly or indirectly in a like or similar business within a radius of fifty miles from [662 North Meadow Drive, Bound Brook, New Jersey] for five years from the date of closing."
The Natenzon Offer was never accepted by Calderone, notwithstanding Penna's persistent efforts to convince Calderone to negotiate in good faith. The trial evidence strongly supports the trial court's determination that Calderone "had a change of heart" regarding the sale, which, among other things, led Calderone to refuse mail from Associated and to otherwise stall until the Natenzons hopefully became disinterested. Associated did not bring forth any other prospective purchasers for the assets of the business, and the Brokerage Agreement expired by its express terms.
This breach of contract action was commenced by Associated on the theory that the Natenzon Offer satisfied one of the eight aforementioned enumerated predicate acts contained in the Brokerage Agreement that triggered a right to a commission. After trial, the Law Division judge issued a written opinion concluding that plaintiff was entitled to a broker's commission in the amount of $26,250.*fn7 The trial judge focused his attention predominately--but not exclusively--upon the events of July 13, 2004, which had resulted in the memorialization of the Natenzon Offer. The court found that Penna "had a detailed recollection" of events and ably explained the differences between the conditions contained in the Brokerage Agreement and the Natenzon Offer. As between the only two witnesses who testified, "Penna's testimony and documentation regarding the course of events [is] simply more credible."
The judge held that "there was a course of dealing between the parties resulting in an adjustment in terms more generally in defendant's favor." Accordingly, "the course of dealing between the parties... provides ample evidence that the contract had evolved in a fashion if anything more favorable to defendant and the evidence thus showed that the [Brokerage Agreement] was not the last word as to the deal." Essentially concluding that Calderone suffered from a type of seller's remorse--or he just wanted a more profitable deal--and acted with "bad faith," the trial court determined that plaintiff had, indeed, "procure[d] a ready, willing and able buyer in accordance with the terms of the [Brokerage Agreement] as reasonably altered by the course of dealing between the parties." We discern that the trial judge adduced that by participating in discussions with Penna and the Natenzons, which eventually led to the written Natenzon Offer, a reasonable amendment of the Brokerage Agreement was established. We disagree, and reverse.
The factual conclusions that undergird a judgment following a non-jury trial shall not be disturbed unless "they are so wholly unsupportable as to result in a denial of justice." In re Guardianship of J.N.H., 172 N.J. 440, 472 (2002) (internal citations omitted). "Findings by the trial judge are binding on appeal when supported by adequate, substantial and credible evidence." Triffin v. Automatic Data Processing, Inc., 411 N.J. Super. 292, 305 (App. Div. 2010) (citing Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974)). That we might have reached a contrary result or even that all testimonial and evidentiary issues were resolved in favor of one side in a close case is irrelevant to our scope of review on appeal. State v. Elders, 192 N.J. 224, 244 (2007) (citing State v. Johnson, 42 N.J. 146, 162 (1964)). We routinely defer to the factual assessments of trial courts because of their personal knowledge garnered from hands-on and face-to-face experiences in the crucible of the trial. Monogram Credit Card Bank of Georgia v. Tennesen, 390 N.J. Super. 123, 133 (App. Div. 2007) (applying the principle of deference under the "feel of the case" doctrine).
We do not, however, owe any deference to the trial court's legal conclusions. As to these, our review is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); Hirl ex rel Hirl v. Bank of Am., N.A., 401 N.J. Super. 573, 585 (App. Div. 2008), aff'd o.b., in part, 198 N.J. 318 (2009).
In light of these firmly-settled principles, we have no basis to peer around the trial court's stated assessment that it found plaintiff's testimony to be the more credible account of what occurred, or even to second guess the conclusion that some of defendant's conduct was, in fact, in bad faith. That, however, does not inevitably lead to the conclusion that the trial court's judgment should be affirmed.
Where we depart from the trial court's reasoning is not in its factual assessment that parsed the parties' contractual arrangement. Rather, we disagree with the legal conclusion that the Natenzon Offer was "in accordance with the terms of the [Brokerage Agreement]." In reaching this inaccurate determination, the Law Division judge found that through a course of conduct--mainly events that occurred on July 13, 2004- -Associated and Calderone "reasonably amended [the Brokerage agreement] in a mutual way to carry out the original listing agreement." However, the parties had bargained for something entirely different. That is, any amendment to the Brokerage Agreement had to be the product of a memorialized writing signed by both parties.
The trial court misplaced its reliance upon Conway v. 287 Corporate Ctr. Assocs., 187 N.J. 259 (2006), a case that confirms the principle that the parol evidence rule "prohibits the introduction of evidence that tends to alter an integrated written document." Id. at 268. Clearly, the use by the trial court of parol evidence was appropriate to plumb the shared intention of the parties to the Brokerage Agreement. The trial court, however, misapplied the parol evidence rule by substantiating "that the [Brokerage Agreement] had evolved;" "that the [Brokerage Agreement was not the last word as to the deal;" and "the terms of the [Brokerage Agreement was] reasonably altered by the course of dealing between the parties."
"Courts generally should not tinker with a finely drawn and precise contract entered into by experienced business people that regulates their financial affairs." Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 223 (2005); See also Dunkin' Donuts of Am., Inc. v. Middletown Donut Corp., 100 N.J. 166, 183-84 (1985). In this case, given the vagaries inherent in the process of selling the assets of a business, the parties strictly expressed that amendments to their relationship be the product of written memorializations, and not subject to ad hoc adjustments based upon something that they never agreed to: an undefined "course of dealing."
More importantly, it cannot be said as a matter of law that the Natenzon Offer was an objective improvement in favor of defendant. For example, although Calderone wanted a "change [in] scenery," he never promised in the Brokerage Agreement to provide the prospective buyers of High Quality's assets with a covenant not to compete. Furthermore, his written representations regarding the gross revenue and net profit of High Quality that became part of the Brokerage Agreement did not approach what the Natenzon Offer demanded. It may not have been performed politely, but it was entirely reasonable for Calderone to refuse to accept the Natenzon Offer because it drifted significantly away from the contractual moorings of the Brokerage Agreement. Even though Calderone's methods of avoiding Penna were rightly criticized by the trial court, such crass conduct was insufficient either to amend the Brokerage Agreement or to confer an entitlement to an equitable judgment upon plaintiff.
In the end, the trial court's recalibration of the contractual relationship between the parties is without provenance in the law. "[I]t is not the function of the court to make a better contract for the parties, or to supply terms that have not been agreed upon. If the terms of a contract are clear, [the court] must enforce the contract as written and not make a better contract for either party." Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999) (internal citations omitted).
The judgment of the Law Division is reversed in its entirety and the matter is dismissed with prejudice. In the absence of prevailing for the recovery of the broker's commission, plaintiff cannot enjoy reallocation of its counsel fees and costs. Litton Indus. v. IMO Indus., 200 N.J. 372, 386 (2009) (recognizing that the threshold issue "is whether the party seeking the fee prevailed in the litigation." (quoting North Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 570 (1999)).