October 28, 2011
DOLAN COMMERCIAL REAL ESTATE SERVICES, INC., PLAINTIFF-APPELLANT,
MOISHE MANA, AVISHAY LEVANOVSKY, M MANAGEMENT, INC. AND PROLOGIS, INC., DEFENDANTS, AND GRM INFORMATION MANAGEMENT SERVICES, INC. F/K/A GUARANTEE RECORDS MANAGEMENT, INC., DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2864-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 3, 2011
Before Judges Parrillo, Alvarez and Skillman.
Plaintiff is a real estate brokerage firm. Defendant Guarantee Records Management (GRM) is engaged in the business of storing business records.
GRM frequently seeks real estate for use in conducting this business and has utilized plaintiff's services for this purpose on multiple occasions. When those efforts have resulted in a lease between GRM and another party, GRM has paid plaintiff a commission.
In the beginning of November 2004, plaintiff received a request from GRM's representatives to find a "high cube building" near another site GRM had leased in Jersey City. Plaintiff presented GRM with a proposed written exclusive brokerage agreement for the lease of such a building, but GRM's representatives refused to sign the agreement.
Thereafter, plaintiff began looking for properties suitable for GRM's needs and eventually sent a list of available properties to Avishay Levanovsky, who was GRM's chief operating officer at that time. After receiving the list, Levanovsky asked plaintiff to schedule a visit to the Greenville Yards building in Jersey City, which was one of the properties on the list.
On November 4, 2004, plaintiff's principal, William E. Dolan, took Levanovsky to tour the Greenville Yards property. During this visit, Dolan introduced Levanovsky to the property owner's exclusive agent at the time, Mr. Thomas Monahan of Colliers & Houston. According to Levanovsky, the building was not suitable for GRM's needs because GRM was seeking a building to buy, not lease, and the Greenville Yards was not for sale at the time. After the November 4, 2004 tour of Greenville Yards, Dolan sent Levanovsky a site plan, along with brochures, building plans, aerial photographs, tax information and rental rates for the Greenville Yards site.
During the next year and a half, plaintiff provided brokerage service to GRM in connection with an unrelated redevelopment project. Some of those services were performed pursuant to a written exclusive brokerage agreement. However, none of those services resulted in GRM buying or leasing any property. Consequently, plaintiff did not earn any brokerage commission based on the performance of those services.
Dolan claims that while performing this work for GRM, he kept reminding Levanovsky that the Greenville Yards site was still available. However, Levanovsky did not further pursue the leasing of the Greenville Yards site.
In June 2006, GRM decided, due to its increased need for space, to lease another property for its records storage business. Levanovsky testified at his deposition that Yossi Harel, GRM's vice-president and general manager for real estate facilities, phoned a number of brokers, including Cushman and Wakefield, to find a property for GRM close to Manhattan with 200,000 to 250,000 square feet of space. Harel only became aware of the Greenville Yards property through Cushman and Wakefield. On behalf of GRM, Jason Goldman of Cushman and Wakefield contacted Marc Petrella, who was the representative of the owner, Prologis, and scheduled an appointment to view the Greenville Yards property. Goldman testified that he took Harel and on one occasion Levanovsky on site visits to the Greenville Yards property. When he took Levanovsky there, Levanovsky said it looked familiar.
From June 2006 to August 17, 2006, Goldman negotiated with Prologis for the lease of the Greenville Yards on behalf of GMR. Through emails and letters, offers and counter offers were exchanged between Goldman, on behalf of GRM, and Petrella, on behalf of Prologis. Multiple drafts of the lease were prepared and sent back and forth between Goldman, GRM, and Prologis.
Dolan was not involved in these lease negotiations. The final lease agreement was signed on August 17, 2006. In the lease agreement, Goldman of Cushman and Wakefield was named the broker. Cushman and Wakefield was paid a five percent commission with respect to the lease of Greenville Yards.
Plaintiff filed a multi-count complaint against GRM, Levanovsky, GRM's principal Moishe Mana and Prologis, seeking recovery of a brokerage commission for its claimed role in GRM's lease of the Greenville Yards site from Prologis. Plaintiff subsequently consented to the voluntary dismissal of his claims against Levanovsky and Mana. After discovery was completed, Prologis and GRM moved for summary judgment. The trial court granted Prologis' motion and dismissed plaintiff's claims against that defendant. The court also granted GRM's motion with respect to all counts of plaintiff's complaint except for the one asserting a claim based on quantum meruit, which the court denied. The court's basic premise in denying GRM's motion to dismiss that claim was that a real estate broker can recover on a claim for quantum meruit without showing that its role in a real estate transaction was an "efficient procuring cause" of the transaction.
GRM filed a motion for reconsideration on the ground this premise was incorrect and that plaintiff was required to show that its activities were an efficient procuring cause of GRM's lease of the Greenville Yards property in order to recover a commission based on quantum meruit. After further briefing and argument, the court agreed with GRM's argument and therefore granted reconsideration and dismissed GRM's quantum meruit claim. In concluding that plaintiff had not presented evidence from which a trier of fact could find that its activities relating to GRM's lease of the Greenville Yards property were an efficient procuring cause of the lease, the court stated:
. . . [T]here's just not enough evidence to . . . support that your client did more than simply introduce these parties initially and maybe did some initial research on the premises . . . . [T]here was just so much time that passed between the initial introduction of the parties and the initial inspection of the parties that . . . it just didn't rise to the level . . . of the other cases.
. . . [T]he element of the efficient producing cause . . . involves more than just mere introductions, . . . mere contacts, mere telephone calls. [GRM] basically says I can't deny that I received phone calls occasionally, but . . . there was no real further involvement, no attempt to negotiate terms, no attempt to negotiate agreements, no further inspections.
Plaintiff has not appealed from the summary judgment in favor of Prologis. Plaintiff's appeal is directed solely at the dismissal of its quantum meruit claim against GRM. It does not challenge the dismissal of its other claims against GRM.
Plaintiff argues that it was not required to show that its actions were the efficient procuring cause of GRM's lease of the Greenville Yards property from Prologis in order to recover a brokerage commission based on quantum meruit. This argument is clearly without merit and only requires brief discussion.
R. 2:11-3(e)(1)(E). "In the real estate business '[t]he role of the broker is to bring buyer and seller together at terms agreeable to both, and both know the broker expects to earn a commission from the seller if he succeeds.' A broker succeeds only if he is the efficient procuring cause of the transaction." C.B. Snyder Realty, Inc. v. BMW of N. Amer., Inc., 233 N.J.
Super. 65, 83 (App. Div.) (quoting Harris v. Perl, 41 N.J. 455, 462 (1964)), certif. denied, 117 N.J. 165 (1989); see also Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 754 (1989) ("[A] broker does not earn his commission by the mere introduction of a buyer to the owner, but he must be the efficient procuring cause of the contract between seller and purchaser.") (quoting Weinstein v. Clementsen, 20 N.J. Super. 367, 372 (App. Div. 1952)). Therefore, even if plaintiff had a written non-exclusive listing agreement with GRM, plaintiff would not have been entitled to a commission unless it could show that it was the efficient procuring cause of the lease to GRM. The doctrine of quantum meruit cannot be invoked as the foundation for an award of damages when a broker would not be entitled to a recovery even if it had a binding written contract with a customer. See ibid.
In arguing that it was not required to show that it was the efficient procuring cause of the lease to GRM in order to recover on the basis of quantum meruit, plaintiff relies primarily upon Weichert Co. Realtors v. Ryan, 128 N.J. 427 (1992), and Coldwell Banker Commercial/Feist & Feist Realty Corp. v. Blacke, 368 N.J. 382 (App. Div. 2004). However, it was undisputed in both of those cases that the broker had been the efficient procuring cause of the real estate transaction at issue. See Weichert, supra, 128 N.J. at 441 ("The record clearly establishes . . . that [the broker] is entitled to recover in quantum meruit for the reasonable value of his services. The trial court's factual finding that [the broker] was the procuring cause of the sale is supported by substantial evidence."); Coldwell Banker, supra, 368 N.J. Super. at 402 ("The evidence is substantial that [the brokers] provided valuable services to [the landlord] in procuring a tenant . . . . There is also little question that [the landlord] was enriched by [the broker's] efforts in procuring a ready and willing tenant."). Therefore, the court did not have occasion in either Weichert or Coldwell Banker to address the issue of whether a real estate broker must be an efficient procuring cause of a real estate transaction in order to recover a commission based on quantum meruit. But the unstated premise of the courts' decisions in both cases was that the brokers had been the efficient procuring causes of the transactions.
In this case, it is clear, for the reasons summarized in the trial court's oral opinion granting GRM's motion for reconsideration and dismissing plaintiff's quantum meruit claim, that no reasonable trier of fact could find that plaintiff was the efficient procuring cause of GRM's lease of the Greenville Yards property. There was a more than a one-and-a-half year hiatus between when Dolan showed the Greenville Yards property to Levanovsky in November 2004 and when GRM leased the property in August 2006. Even viewing the evidence most favorably to plaintiff, it engaged in only minimal efforts to encourage GRM's interest in the property after November 2004. More than oneand-a-half years after Levanovsky's visit to the property, Yossi Harel, GRM's general manager for real estate facilities, called Cushman and Wakefield for assistance in finding a property that met GRM's needs, which resulted in Jason Goldman of Cushman and Wakefield showing the Greenville Yards property to Harel and later Levanovsky. After GRM decided that it had an interest in leasing that site, Goldman engaged in negotiations and the preparation of a lease on GRM's behalf, without any involvement by Dolan or any other representative of plaintiff. Thus, the only reasonable finding that could be made based on the evidence presented to the court on GRM's motion for summary judgment was that Cushman and Wakefield, not plaintiff, was the efficient procuring cause of GRM's lease of the Greenville Yards property from Prologis.
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