January 11, 2012
PARAMUS REALTY, DINGMAN REALTY, AND ROBERT DINGMAN, PLAINTIFFS-APPELLANTS,
G & A BUILDERS, INC.; G & A BUILDERS, LLC; JOSEPH LOGRASSO, A/K/A GIUSEPPE LOGRASSO; JOHN LOGRASSO, A/K/A GIOVANNI LOGRASSO; AND LOGRASSO BUILDERS, INC., DEFENDANTS-RESPONDENTS,
AND VALENTINA AVED AND REMAX REALTY EXCHANGE, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-4860-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 30, 2011
Before Judges Cuff, Lihotz and Waugh.
Plaintiffs Paramus Realty, Dingman Realty and Robert Dingman appeal from an order granting summary judgment to defendants G & A Builders, Inc.; G & A Builders, LLC; Joseph LoGrasso; John LoGrasso; LoGrasso Builders, Inc.; and other unnamed parties, and dismissing their complaint as time-barred. We affirm.
Plaintiff Robert Dingman is a licensed real estate broker and the owner of plaintiffs Paramus Realty and Dingman Realty. Plaintiffs alleged they formed a joint venture with defendants, who are real estate developers. According to plaintiffs, they would receive a commission in return for locating property for defendants, and marketing and selling a residence constructed on the property. Plaintiffs alleged they located several suitable properties, defendants acquired the properties and they constructed residential dwellings on the various lots.
It is not disputed that G. & A. Paramus I, L.L.C. (G & A Paramus), an affiliate of defendants, executed two real estate listing agreements with plaintiff Paramus Realty. Each agreement had a two-year term from July 25, 2001 to July 24, 2003. Each agreement concerned a lot in Paramus on which a house was to be constructed by defendants. G & A Paramus agreed to pay Paramus Realty a 4% commission of the sales price of each property. A similar agreement was executed for another Paramus property on August 1, 2001. Several of the identified properties sold and defendants paid a commission to plaintiffs. On February 25, 2003, however, defendants terminated their business relationship with plaintiffs. At that time several properties remained unsold. One sold on May 28, 2003. The remaining properties sold on October 8, 2003 and March 5, 2004. Plaintiffs did not receive a commission on the last three sales.
It is also not disputed that plaintiffs were aware on February 25, 2003, that defendants had terminated their agreement. Paramus Realty signs were removed from the unsold properties, and defendants listed the unsold properties with a new realtor. Moreover, on March 24, 2003, plaintiffs filed a complaint against defendants in which they alleged defendants' breached the July 25, 2001 agreements. Plaintiffs voluntarily dismissed this complaint.
Plaintiffs filed the present complaint on May 28, 2009. Defendants filed a motion for summary judgment on counts one (breach of contract), two (legal and equitable fraud), and five (wrongful termination of the joint venture) as barred by the six-year statute of limitations governing contract actions.
N.J.S.A. 2A:14-1. Defendants contended that the statute of limitations commenced on February 25, 2003, when they terminated their contractual relationship with plaintiffs. In response, plaintiffs urged that the statute of limitations did not commence to run until defendants sold the first of the three remaining properties on May 28, 2003.
Judge de la Cruz resolved the single legal issue, i.e., when the statute of limitations began to run, by holding that the breach occurred on February 25, 2003, when defendants removed the Paramus Realty signs from the properties, expressly informed Dingman that he would no longer have the exclusive listing of the properties, and listed the properties for sale with another realtor. The judge, therefore, entered judgment in favor of defendants.*fn1
The single issue before this court is whether the statute of limitations commenced on February 25, 2003 or May 28, 2003. We review this legal issue de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
N.J.S.A. 2A:14-1 provides that
[e]very action at law . . . for recovery upon a contractual claim or liability, express or implied, not under seal, or upon an account other than one which concerns the trade or merchandise between merchant and merchant, their factors, agents and servants, shall be commenced within 6 years next after the cause of any such action shall have accrued.
The parties do not dispute the applicability of this statute or that plaintiffs' contractual claims are barred after six years. Moreover, the parties do not dispute that plaintiffs became aware of circumstances that supported a conclusion that a breach of contract occurred on or about February 25, 2003, or that the first of the remaining properties sold on May 28, 2003. This court, therefore, must determine whether the date on which the limitation period began to run occurred on the earlier or latter of those two dates.
By late February 2003, plaintiffs became aware of the conduct that evidenced an anticipatory breach of the contract between them and defendants. On February 25, 2003, the individual defendants informed Robert Dingman that they had no intention of utilizing the services of his agency to market their remaining properties. In a March 10, 2003 letter, Dingman wrote to Joseph LoGrasso that "you have broken our agreement in writing," thereby evincing his knowledge that defendants had breached the contract. It, thus, appears that the statute of limitations began to run during the latter part of February 2003.
Plaintiffs, however, contend that despite the occurrence of acts that could support a conclusion that a breach of contract had occurred in late February 2003, their cause of action did not accrue until defendants conveyed title to one of their properties on May 28, 2003. In support of their contention that the statute of limitations began to run on the latter date, plaintiffs rely on Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528 (1967). Plaintiffs' reliance on Ellsworth Dobbs is misplaced.
The Court in Ellsworth Dobbs did not address the preclusive effect of N.J.S.A. 2A:14-1. Instead, the holding of that case stands for the proposition that a realtor's commission is not earned unless the prospective buyer is capable of performing and the transaction either closes or is terminated by the unilateral act of the seller. Id. at 547-48. Ellsworth Dobbs, thus addresses a necessary component of a realtor's cause of action, i.e., the broker producing a ready, willing and able buyer, rather than the date on which a claim for a commission accrues. See ibid. In asserting that this cause of action did not arise until defendants sold a parcel of property, plaintiffs have confused the closing date in Ellsworth Dobbs with the accrual of the cause of action.
Here, plaintiffs' claim for breach of contract accrued on the date on which defendants announced, by their actions and by an explicit statement, their intention to terminate their relationship with plaintiffs prior to the end of the term set forth in the two listing agreements. See Murphy v. Implicito, 392 N.J. Super. 245, 265 (App. Div. 2007); Coyle v. Englander's, 199 N.J. Super. 212, 223 (App. Div. 1985). At that time plaintiffs knew that defendants had engaged a new realtor. Plaintiffs, therefore, knew that defendants would ultimately sell the remaining properties to third parties, thus depriving them of the commission they were entitled to receive under the listing agreements.
Damages associated with a breach of contract necessarily flow from the breach. The foreseeability of damages, therefore, distinguishes this case from a tort action in which the existence of the tortfeasor's act or omission may be obvious but the harm to the plaintiff does not become apparent until sometime in the future. In such a situation, the statute of limitations, set forth in N.J.S.A. 2A:14-2, does not begin to run until the injury has been discovered. See Roa v. Roa, 200 N.J. 555, 570-71 (2010); Burd v. N.J. Tel. Co., 76 N.J. 284, 291-92 (1978).
By contrast, here the potential for damages, i.e., that defendants might sell the remaining properties and plaintiffs would not receive a commission, was apparent on the date in February 2003 on which plaintiffs became aware that the contract had been breached.*fn2 We, therefore, hold that plaintiffs' complaint was barred by the six-year statute of limitations set forth in N.J.S.A. 2A:14-1, and affirm the November 19, 2010 order for summary judgment, dismissing plaintiffs' complaint.