August 7, 2012
AJR COMMERCIAL REALTY INC., JAMES A. SKOGLUND AND ARTHUR J. REINITZ, PLAINTIFFS-APPELLANTS,
BUSSEL REALTY CORP., STEVE BUSSEL AND RAR2-11 PORT JERSEY NJ QRS, INC., DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-599-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 5, 2011 -
Before Judges Fuentes, Graves and Koblitz.
This case concerns a dispute between two commercial real estate brokerage firms over a commission payment due under a commercial lease. Plaintiffs AJR Commercial Realty, Inc. (AJR), Arthur J. Reinitz and James A. Skoglund brought suit against defendants Bussel Realty Corp., Steve Bussel, and RAR2-11 Port Jersey NJ QRS, Inc. (RREEF) claiming they were entitled to $424,785 in commission for a commercial lease entered into between RREEF and Continental Terminals (Continental). Plaintiffs appeal from the order of the Law Division granting defendants' motion for summary judgment and denying plaintiffs' cross-motion for summary judgment. We affirm.
On January 11, 2005, James Skoglund, a licensed real estate agent, entered into an employment contract with New Jersey Equity Corporation (NJEC), a real estate brokerage firm. Under paragraph 5 of the employment contract, the initial term of employment was for one year. However, unless notice of cancellation was given, the contract was "deemed to be automatically renewed from year to year[.]" In the event of termination, paragraph 5 further provided:
Upon termination, the right of the Salesperson and Broker to any commission which accrued prior to said notice shall not be divested by termination of this Contract. Salesperson shall, upon termination of this Agreement, furnish Broker with a list of all prospects, leads, and probable transactions developed by Salesperson or in which said Salesperson has been engaged. The Salesperson shall not be compensated for any transaction completed following the termination of this Agreement, unless agreed to, in writing, by the Broker. [(Emphasis added).]
Arthur Reinitz, a licensed real estate agent and broker, signed a nearly identical employment contract with NJEC on July 11, 2007. The only relevant difference between the two contracts was that Reinitz agreed to be bound by the restrictive covenant found in paragraph 6:
It is understood and agreed that if for any reason whatsoever there is a termination of this Agreement, the Salesperson co[v]enants and agrees with the Broker that for a period of twelve (12) months after the termination, said Salesperson will not engage in the industrial, commercial and or investment real estate business in the Counties of Middlesex and Somerset, and in any other County of the State in which said Salesperson has operated or conducted activities on behalf of NEW JERSEY EQUITY CORP., during the twelve (12) month period prior to termination. In the event of any violation of this restrictive covenant, the Salesperson does herewith agree that the consequential damages as a result thereof will consist of a waiver of all commissions due the Salesperson following the date of termination, and in addition, shall entitle the Broker to any equitable and injunctive relief appropriate to further enforce this restrictive covenant. [(Emphasis added).]
During the time they were employed by NJEC, Reinitz and Skoglund engaged in numerous discussions with Doug Martocci, Sr., of Continental. As a commodities importer, Continental was looking to lease warehouse space in New Jersey. According to Martocci, in "early 2008" Reinitz and Skoglund showed him "a half of a dozen or a dozen" properties in Elizabeth, Jersey City, and Linden. On April 9, 2008, Skoglund emailed information to Martocci regarding two buildings in Jersey City that were exclusive NJEC listings. Reinitz showed Martocci one of those sites in June 2008. Martocci did not make any lease offers at that time. on June 26, 2008, the owner of NJEC, Steve Nozza, entered into a "Purchase and Sale Agreement of New Jersey Equity Corp. Assets" with Bussel Realty. The agreement had an effective date of July 1, 2008. According to Reinitz and Skoglund, on or about July 1, Nozza informed them that: "[E]ffective July 1st, I'm out of business. Your deals and your customers are your own. Good luck."
Neither Reinitz nor Skoglund executed a termination agreement with NJEC. Nozza did, however, sign Reinitz's and Skoglund's real estate sales licenses as the "terminating broker" that same day. Reinitz and Skoglund considered this action by Nozza to mean that their employment with NJEC was terminated as of July 1, 2008. The question of who had the rights over "the deals" or customers remained unanswered. Although Nozza acknowledged signing plaintiffs' real estate licenses as the "terminating broker," he denied saying to them "[y]our deals and your customers are your own."
On July 7, 2008, Reinitz and Skoglund met with Nozza and Steve Bussel to crystallize their separation from NJEC. It is undisputed that Reinitz and Skoglund made it clear at this meeting that they did not want to be employed by Bussel Realty. Plaintiffs both signed identical "Termination of Employment" letters, prepared on Bussel Realty letterhead, that read as follows:
As you are aware Bussel Realty Corp. has acquired all the assets of New Jersey Equity Corp. As a consequence of that acquisition, all of New Jersey Equity Corp.'s Contractual [sic] Employment Agreements have been assumed by Bussel Realty Corp. Be advised that we are mutually bound by said Contractual [sic] Employment Agreement . .
Since you no longer seek to be employed by Bussel Realty Corp. . . . by New Jersey Real Estate Commission requirements we are hereby executing a formal Termination of Employment Agreement. As per your contract with New Jersey Equity, hereby assumed by Bussel Realty Corp., all your customers, exclusives and transactions in progress belong to Bussel Realty Corp. As per this Termination Agreement, we hereby authorize you to continue to work with the attached list of customer, owners and transactions in progress, as long as it is for the benefit of Bussel Realty Corp. and yourself in accordance with the commission splits in your Contractual [sic] Employment Agreement.
Further, you agree that you will not represent any tenants or customers on the attached list on behalf of any other broker except Bussel Realty Corp. on any renewals, extensions, expansions or sales with their current landlords. Be advised that any violation of this Termination Agreement will result in Bussel Realty Corp. pursuing all their legal rights against you or any other firm you may be associated with. We will seek compensatory damages for any violation of this agreement and you hereby waive any monies due you from New Jersey Equity Corp. and their successor, Bussel Realty Corp. [(Emphasis added).]
The "attached list," referred to several times throughout the Termination Agreement, was signed by both Reinitz and Skoglund and had three categories: (1) Renewals; (2) Under Contract; and (3) Prospects. It is undisputed that Continental was not listed as a prospective client.
Although the contents of the July 7, 2008, letter and "attached list" are undisputed, the events leading up to their execution are hotly contested. Reinitz and Skoglund allege that "verbal threats [were] made in order to get [them] to enter into the termination of employment agreement . . . ." They claim that Bussel Realty would "hold up" their commissions and litigate and contest all their "deals" if they refused to sign the termination agreement. By contrast, Bussel denied making threats of any kind or intimidating plaintiffs into signing any document. According to Bussel, plaintiffs were not "in any way" reluctant to sign the termination agreement.
Following the July 7, 2008 meeting, Reinitz reactivated AJR, a real estate brokerage firm he founded in January 2002. Skoglund joined AJR as a licensed real estate agent. AJR was open for business by July 9, 2008, when Skoglund sent Martocci an email following up on the exclusive NJEC listing he had shown him the prior month. On July 22, 2008, Reinitz and Skoglund met with Martocci, gave him their new AJR business cards and informed him they had left NJEC effective July 1, 2008. Martocci confirmed that any communication he had with plaintiffs in July 2008 were "part of an on-going discussion" to find a potentially suitable warehouse space for Continental's operations.
In September 2008, Martocci found property located in Jersey City that was appropriate for Continental's business needs. AJR submitted an offer to lease the property to its landlord, RREEF. On December 11, 2008, AJR informed all relevant parties to the lease negotiations as follows:
This is to confirm that we've been authorized by our customer, Continental Terminals, Inc. of Kearny, New Jersey, to act as their Exclusive Broker. They have granted us the sole and exclusive right and authority to act as their representative regarding the negotiation and acquisition of the above named property.
Continental and RREEF entered into a lease agreement for the property on January 2, 2009. On that same day, RREEF and AJR executed a "Registration and Commission Agreement," entitling AJR to be paid "a leasing commission in the amount of $424,785.00." On January 15, 2009, counsel for Bussel Realty sent a letter to RREEF claiming "it ha[d] a meritorious claim for th[e] commission and that its ex sales representatives, James Skoglund and Art Reinitz improperly failed to identify Bussel Realty Corp as their broker in this transaction."
Against these facts, Judge John A. Peterson granted defendants' motion for summary judgment and denied plaintiffs' cross-motion seeking the same relief. In his oral opinion delivered from the bench, Judge Peterson noted that both parties stand as equals, being licensed, sophisticated real estate professionals with vast experience in the business of commercial leasing. With respect to plaintiffs, the court found that they "are sophisticated individuals, well familiar with commercial real estate practices and indeed have a substantial amount of experience, [and] training" in the field.
On the question of duress, the principal basis advanced by plaintiffs to explain why they agreed to submit to the terms reflected in the employment termination agreement, Judge Peterson found that the record did not support such a claim. The record showed that the parties negotiated, at arms length, the key terms in the agreement. As Judge Peterson observed: "It went back and forth for a considerable period of time. They're X'd out, white outs, drafts, discussions undergone, and it can't be emphasized enough in the Court's eyes, it was Plaintiff who initiated this whole process. It was not the Defendant."
In an appeal of an order granting summary judgment, we "employ the same standard [of review] that governs the trial court." Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (alteration in original) (internal quotation marks omitted). Under Rule 4:46-2(c), summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law."
We agree with Judge Peterson's analysis and ultimate conclusions, and affirm substantially for the reasons he expressed in granting defendants' motion for summary judgment. As we noted in Quigley v. KPMG Peat Marwick, LLP, 330 N.J. Super. 252, 263 (App. Div.) (quoting 13 Williston on Contracts § 1617 (Jaeger ed. 1970)), certif. denied, 165 N.J. 527 (2000), "[e]conomic duress occurs when the party alleging it is 'the victim of a wrongful or unlawful act or threat,' which 'deprives the victim of his unfettered will.'" Plaintiffs have not presented sufficient evidence to meet this high standard. Although plaintiffs may have been influenced in their actions by economic concerns, there is no evidence that such concerns deprived them of their "unfettered will." Minoia v. Kushner, 365 N.J. Super. 304, 312 (App. Div.), certif. denied, 180 N.J. 354 (2004).
Plaintiffs were obligated to include Continental on the list of "prospects" or assets defendants were entitled to receive as part of the consideration paid to NJEC. The record shows plaintiffs deliberately failed to disclose their prior business relationship as a means of thwarting defendants' contractual rights. This breach by plaintiffs renders moot their attack on the limitations imposed by the restrictive covenant, which prohibits plaintiffs from soliciting potential business opportunities within a defined geographical area. Stated differently, we need not determine whether the geographical limits imposed by the covenant here are too great, because plaintiffs' failure to disclose Continental as a "prospect" provides a wholly independent, self-sufficient legal ground for the relief granted by the trial court to defendants.
Plaintiffs' remaining arguments lack sufficient legal merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
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