Court Opinion

ID: 4214906
Source: CourtListenerOpinion
Date Created: 2017-10-26 13:11:25.679674+00
Date Added: 2024-06-11T14:15:03.672722
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                              SUPERIOR COURT OF NEW JERSEY
                              APPELLATE DIVISION
                              DOCKET NO. A-1967-15T2

SETH POLLACK and SP REALTY
ADVISORS, LLC,
                                   APPROVED FOR PUBLICATION
     Plaintiffs-Appellants/
     Cross-Respondents,               October 26, 2017

v.                                   APPELLATE DIVISION

QUICK QUALITY RESTAURANTS,
INC.,

     Defendant-Respondent/
     Cross-Appellant.
______________________________

         Argued September 25, 2017 – Decided October 26, 2017

         Before Judges Sabatino, Whipple, and Rose.

         On appeal from Superior Court of New Jersey,
         Law Division, Bergen County, Docket No.
         L-1000-14.

         Michael J. Epstein argued the cause for
         appellants/cross-respondents   (Epstein   Law
         Firm, PA, attorneys; Mr. Epstein, of counsel
         and on the briefs; Michael A. Rabasca, on the
         briefs).

         John   R.   Wenzke  argued   the  cause   for
         respondent/cross-appellants (Lasser Hochman,
         LLC, attorneys; Mr. Wenzke, of counsel and on
         the brief).

     The opinion of the court was delivered by
WHIPPLE, J.A.D.

       In this appeal, as an issue of first impression, we are asked

to consider whether a tenant exercising a right of first refusal

to adopt terms of a sale contract for certain premises is obligated

to   pay   a   commission   to   a   third-party      broker    that     secured    a

prospective buyer.     Because there was no contractual relationship

here between the tenant and the third-party broker, or other basis

to impose liability for the commission, we affirm.

       We discern the following relevant facts from the record.

Randall Corporation and Garbrook Corporation (the sellers) entered

into   a   twenty-two-year       lease     with    defendant,      Quick    Quality

Restaurants, Inc., at the Butler Plaza Shopping Center (Butler

Plaza) commencing December 1, 1994.               The lease provided defendant

a right of first refusal.

       According to the pertinent lease provision, if the sellers

received a bona fide purchase offer for Butler Plaza, the sellers

were obligated to serve a copy of the proposed purchase contract,

with any additional terms, to defendant and afford defendant a

limited opportunity to meet such terms.               To exercise this right,

defendant had ten days to provide the sellers with an unqualified

written acceptance, which would operate as the final contract and

bind   defendant.      Defendant     had     no    right   under   the     lease   to

communicate with the third party.            The lease also provided:

                                         2                                  A-1967-15T2
           Tenant and landlord each warrant and represent
           to the other that it has not dealt or
           negotiated with any real estate broker or
           salesman in connection with this Lease
           Agreement. Each party indemnifies and holds
           harmless the other party from all damages,
           commissions, legal fees, litigation expenses
           and other liabilities incurred as a result of
           a breach of the foregoing warranty and
           representation by either party.

     Plaintiff Seth Pollack is a licensed real estate broker and

principal of co-plaintiff SP Realty Advisors, LLC, and had a

business relationship with Robert Levi.            Levi introduced Pollack

to the sellers, who were planning to sell Butler Plaza.                During

initial talks, the sellers made clear any brokerage commission

paid would come from the purchaser.

     Plaintiffs   and     Levi   found   a   potential   purchaser,     Levin

Properties, LLC (Levin).         Plaintiffs and a representative for

Levin   orally   agreed    Levin   would     pay   plaintiffs   a   broker's

commission of 1.5% of the purchase price.            According to Pollack,

Levin's representative also agreed to draft a commission agreement

and confirmed via email, on April 3, 2013, the broker's commission

would be 1.5%.

     On June 26, 2013, the sellers and Levin entered into a

contract of sale for Butler Plaza for $14,500,000 (the Levin

contract).   The Levin contract identified Pollack as the broker

and specifically stated, "[p]urchaser shall pay a real estate

                                     3                                A-1967-15T2
commission     to   Broker      pursuant     to     a    separate    agreement."

Additionally, the Levin contract provided the inspection period

would begin eleven days following defendant's receipt of the

contract if defendant did not exercise its right of first refusal.

     On July 10, 2013, Levin's representative sent Pollack a

proposed     commission    agreement,       which       stated,   "[u]ntil    this

agreement is signed by Levin Properties, . . . it is understood

and agreed that it shall have no force and effect."                  Levin never

signed the agreement.

     As required by the lease, defendant was provided with a copy

of the Levin contract by the sellers' counsel.                      Levin's and

plaintiffs' names were redacted from defendant's copy.                  Although

the Levin contract required the purchaser to pay a real estate

commission to the broker pursuant to a separate agreement, no such

separate agreement was incorporated into the Levin contract or

otherwise    provided     to   defendant.      Accordingly,       defendant   was

unaware of plaintiffs' identity and the percentage of the broker's

commission.     On July 3, 2013, defendant's counsel sent a letter

to the sellers' counsel advising him the required due diligence

materials were not included with the contract and therefore the

ten-day period to exercise the right of first refusal would not

commence until the materials were provided.

                                      4                                  A-1967-15T2
     On July 9, 2013, the sellers' counsel emailed Levin and the

sellers, informing them defendant had asked about the broker's

commission   and    inquired     whether    it   should   be   disclosed      to

defendant.   Defendant's counsel testified that, as part of due

diligence,   he    asked   the   sellers'   counsel   about    the   broker's

commission and counsel advised, "Don't worry about it.               You don't

need to know."      The sellers' counsel also informed defendant's

counsel that the separate broker's commission agreement "[is] not

binding on you."       Defendant's counsel then asked the sellers'

counsel for the name of the broker, a copy of the brokerage

agreement, and the amount of the brokerage fee.                The sellers'

counsel emailed defendant's counsel stating, "Our purchaser has

indicated to us that the commission that they will pay is $217,500

[(1.5%)] of the purchase price."

     Later that day, defendant and the sellers agreed defendant

had until July 19, 2013 at 5:00 p.m. to exercise the right of

first refusal.      On July 19, 2013, defendant exercised its right

of first refusal, agreeing to be bound by the terms of the Levin

contract.    The sellers' counsel testified defendant would be

obligated to pay the broker's commission because defendant gave

an unqualified written acceptance of the terms.

     Almost three months later, in October 2013, Pollack called

defendant's counsel who was unaware Pollack was the "broker" in

                                      5                                A-1967-15T2
the Levin contract. Defendant's counsel and Pollack had a previous

professional relationship.      Pollack told defendant's counsel he

was now working for a new firm and posed a hypothetical situation,

asking for advice.      Pollack asked defendant's counsel whether the

broker involved in a contract of sale is entitled to a commission

when a tenant exercised its right of first refusal contained in

the lease.    According to defendant's counsel, he then realized

Pollack was the unidentified broker and informed him that it was

inappropriate for him to pose the hypothetical because of the

conflict of interest.

     On October 17, 2013, Pollack emailed defendant's counsel and

stated:

          I understand the conflict of interest you have
          with   regards    to   the    Butler   [Plaza]
          transaction, however I would like to know if
          your client intends on paying [the] Broker
          commission . . . I am entitled to based on
          . . . my commission agreement with Levin,
          which is incorporated in the [Levin contract].

Defendant's   counsel    responded   on   October   21,   2013,   informing

Pollack that defendant

          does not recognize your firm as being a broker
          on the transaction.       [Defendant] had a
          preexisting right of first refusal and no
          broker was involved in that transaction. We
          have not been provided with any brokerage
          agreement and have no knowledge of the "Levin"
          party that you reference in your email to me.

                                     6                              A-1967-15T2
       The sellers and defendant closed on the purchase of Butler

Plaza on December 2, 2013.       No commission was paid to plaintiffs.

       On January 28, 2014, plaintiffs filed a complaint against

defendant asserting breach of contract, breach of an implied

covenant of good faith and fair dealing, unjust enrichment, quantum

meruit,     and   third-party      beneficiary.         Plaintiffs     asserted

defendant's right of first refusal required it to match any and

all terms of the Levin contract, including the broker's fees

referenced in the contract.       Defendant counterclaimed asserting a

violation of the Consumer Fraud Act (CFA) N.J.S.A. 56:8-1 to -198.

       On August 5, 2015, plaintiffs moved for summary judgment and,

on September 11, 2015, defendant cross-moved for summary judgment.

The Honorable Brian R. Martinotti, J.S.C., issued an order and a

twenty-two    page   written    decision      denying    plaintiffs'    motion,

granting     defendant's       motion,       and     dismissing   defendant's

counterclaim.     The judge found no signed writing memorializing an

agreement between defendant and plaintiffs that required defendant

"to comply with a contract it did not intend to become a party

to."    Additionally, the judge found the statute of frauds barred

the enforceability of the unsigned commission agreement against

defendant.

       The judge found the terms of the separate commission agreement

between    plaintiffs   and    Levin   were    not    incorporated     into   the

                                         7                               A-1967-15T2
contract of sale provided to defendant, nor were they disclosed

to defendant when it was provided with a copy of the approved

offer.    Moreover, plaintiffs were not third-party beneficiaries

because defendant never received a copy of the separate commission

agreement, did not know the identities of the purchaser or broker

until Pollack contacted defendant's counsel months later, and

there was never an agreement between plaintiffs and defendant.

Additionally, the judge found the redacted information in the

Levin contract belied plaintiffs' argument that they were an

intended third-party beneficiary.

     As to unjust enrichment, the judge found defendant "would

have been able to exercise its right upon submission of any buyer's

offer accepted . . . regardless of whether that buyer was procured

by a broker or not."       As such, plaintiffs did not bestow a benefit

upon defendant other than that which it had already secured for

itself.     Lastly, the judge dismissed plaintiffs' arguments on

quantum meruit because they had not established defendant knew

Pollack expected defendant to pay him.

     As to defendant's claim under the CFA, the judge found

plaintiffs made no material misrepresentations or omissions to

induce    defendant   to   purchase   Butler   Plaza   and   dismissed   the

counterclaim.    Plaintiffs and defendant both appealed.

                                      8                            A-1967-15T2
                                  I.

     On appeal, plaintiffs argue the trial court should have found

they were third-party beneficiaries of the right of first refusal.

Plaintiffs also assert defendant breached an implied covenant of

good faith and fair dealing, that their claims were not barred by

the statute of frauds, and they are entitled to recover under a

theory of quantum meruit.

     When reviewing a trial court's grant of summary judgment, we

are "bound by the same standard as the trial court under Rule

4:46-2(c)."    State v. Perini Corp., 221 N.J. 412, 425 (2015)

(citations    omitted).     We   "consider   whether   the   competent

evidential materials presented, when viewed in the light most

favorable to the non-moving party, are sufficient to permit a

rational factfinder to resolve the alleged disputed issue in favor

of the non-moving party."    Ibid. (quoting Brill v. Guardian Life

Ins. Co. of Am., 142 N.J. 520, 540 (1995)).      "To the extent that

the grant or denial of summary judgment is based on an issue of

law, we owe no deference to an interpretation of law that flows

from established facts."    Ibid. (citing Town of Kearny v. Brandt,

214 N.J. 76, 92 (2013)).

                                       A.

     For the same reasons given by the trial judge, we reject

plaintiffs' argument they were third-party beneficiaries.           The

                                  9                            A-1967-15T2
sellers and Levin may have intended Pollack to benefit from the

Levin contract because he was specifically identified as the

"broker."     However, the Levin contract did not bind defendant to

the separate commission agreement.           Plaintiffs argue the court's

focus on their lack of involvement with defendant's lease was

erroneous and had no bearing on their status as a third-party

beneficiary.    We disagree.

     To   determine    whether   a   party    is   in   fact   a   third-party

beneficiary, the court must "focus[ ] on whether the parties to

the contract intended others to benefit from the existence of the

contract, or whether the benefit so derived arises merely as an

unintended incident of the agreement."             Broadway Maint. Corp. v.

Rutgers, State Univ., 90 N.J. 253, 259 (1982).              Therefore, "[t]he

determining factor as to the rights of a third-party beneficiary

is the intention of the parties who actually made the contract."

Ibid. (citation omitted).        The parties who made the contract are

the ones who agreed upon the terms and create the rights and

obligations that come from the contract.            Ibid.

     Ultimately, the "real test is whether the contracting parties

intended that a third party should receive a benefit which might

be enforced in the courts; and the fact that such a benefit exists

or that a third party is named, is merely evidence of this

intention."    Ibid.   If there was no intention that a third person

                                     10                                A-1967-15T2
would receive a benefit from the contract, "then the third person

is    only    an      incidental      beneficiary,         having       no     contractual

standing."      Ibid.      The contract need not specifically identify the

plaintiff, as long as the "pertinent provisions of the contract

and   the     surrounding       circumstances"          demonstrate           the    parties

intended the plaintiff to receive a direct benefit from the

contract.          Model    Jury     Charge      (Civil)      §    4.10B     "Third       Party

Beneficiary" (2009).            The question here is not whether a broker

could ever be a third-party beneficiary; it is whether these

plaintiffs are third-party beneficiaries of this contract between

the sellers and defendant.

      The sellers and Levin accounted for plaintiffs' services when

they executed the Levin contract, listing plaintiffs as the broker

and   tasking      Levin's     representative         with        preparing    a    separate

written commission agreement.              However, the Levin contract and the

separate      commission        agreement        were    not        finalized,       because

defendant     exercised        its    right      of   first       refusal.      The       Levin

contract,     when     provided       to   defendant,      was      redacted        and   when

defendant sought information regarding the broker, the sellers did

not disclose it.           Additionally, defendant's 1994 lease agreement

with the sellers expressly excluded brokerage commissions.

      There     was    never    any    manifestation          after    the     1994       lease

agreement that plaintiffs, or any broker for that matter, would

                                            11                                        A-1967-15T2
receive a direct benefit.   As such, defendant did not intend for

plaintiffs to receive a direct benefit from the contract between

the sellers (defendant's landlord) and itself.   Defendant's right

of first refusal was not contingent upon a broker's involvement

in procuring a potential purchaser.   The right of first refusal,

instead, was contingent upon the seller's receiving a bona fide

offer for the property, regardless of how the potential purchaser

was procured.

     We also reject plaintiffs' argument that the trial judge

erred by ignoring the existence of a valid commission agreement

with Levin because it was never executed.   The separate commission

agreement, which Levin drafted, stated "[u]ntil this agreement is

signed by Levin Properties, . . . it is understood and agreed that

it shall have no force and effect."     We concur with the trial

judge.

                                B.

     We turn to plaintiffs' argument they were entitled to a

commission by virtue of the right of first refusal in the lease.

A right of first refusal "limits the right of the [landlord] to

dispose freely of his property by compelling him to offer it first

to the party who has the first right to buy."         St. George's

Dragons, LP v. Newport Real Estate Grp., LLC, 407 N.J. Super. 464,

482 (App. Div. 2009) (quoting Mazzeo v. Kartman, 234 N.J. Super.

                               12                           A-1967-15T2
223, 229 (App. Div. 1989)).    The right of first refusal depends

on how the parties decide to structure it.   Ibid.   Here, the right

was structured in contemplation of "a bona fide third-party offer

as the triggering event."   Ibid. (quoting Mazzeo, supra, 234 N.J.

Super. at 229).

     We construe a right of first refusal provision under the same

rules of construction as any other type of contract.      Ibid.     We

"ascertain the intention of the parties as revealed by the language

used, the situation of the parties, the attendant circumstances,

and the objects the parties were striving to attain."       Celanese

Ltd. v. Essex Cty. Imp. Auth., 404 N.J. Super. 514, 528 (App. Div.

2009).   Where the terms of a contract are clear, we enforce the

contract as written and ascertain the intention of the parties

based upon the language.      CSFB 2001-CP-4 Princeton Park Corp.

Ctr., LLC v. SB Rental I, LLC, 410 N.J. Super. 114, 120 (App. Div.

2009).

     To establish a breach of contract claim, plaintiffs must

prove: the parties entered into a contract, containing certain

terms; plaintiffs performed what was required under the contract;

defendant did not fulfill its obligation under the contract; and

defendant's breach caused a loss to plaintiffs.      Globe Motor Co.

v. Igdalev, 225 N.J. 469, 482 (2016) (citing Model Jury Charge

(Civil) § 4.10A "The Contract Claim – Generally" (May 1998)).

                                13                           A-1967-15T2
Plaintiffs    bear     the   burden   of   proving   each    element     by    a

preponderance of the evidence.         Ibid.

      "[W]hen a broker[,] who had been duly authorized by the owner

to find a buyer for his property[,] produced a willing and able

purchaser who entered into a contract to buy on terms agreeable

to the owner, the broker has fulfilled his undertaking" and is

entitled to a commission.        Ellsworth Dobbs, Inc. v. Johnson, 50

N.J. 528, 543 (1967).          As for a broker's right to receive a

commission when a tenant exercises the right of first refusal,

plaintiffs have provided no compelling precedent either from New

Jersey or elsewhere to support this claim.

      Case law from other jurisdictions has addressed this issue.

In Fallenius v. Walker, 787 P.2d 203, 205-06 (Colo. App. 1989),

the Colorado Court of Appeals found the purchaser was required to

pay   the   broker's    commission    because   it   was   included    in     the

contracting price, and not doing so would violate the terms of the

right of first refusal provision requiring the purchaser to accept

all contractual terms. Ibid. Fallenius is not factually analogous

here, however, because the Levin contract did not include the

broker's commission in the contracting price. Indeed, the contract

specifically stated the purchase price was $14,500,000 and the

broker's commission would be determined in a separate agreement.

                                      14                               A-1967-15T2
       In City National Bank v. Lundgren, 307 So. 2d 870, 972 (Fla.

Dist. Ct. App. 1975), the Florida appellate court held a purchaser

exercising    a     right   of       first   refusal,      who    was   aware    of   the

obligation to pay the broker, could not unconditionally exercise

the right of first refusal and opt out of the obligation to pay

the broker.       Here, by contrast, the contract of sale did not

require defendant to pay plaintiffs.

       Lastly, plaintiffs cite to Simmons v. Plummer, 120 N.M. 481,

483-84 (1995), which found a broker was entitled to a commission

despite a party's exercise of the right of first refusal because

the broker procured a willing and able potential purchaser. There,

however, the seller was obligated to pay the commission, not the

third party who exercised the right of first refusal.                      Ibid.

       The trial judge found Stein v. Chalet Susse International,

Inc., 492 N.E.2d 369 (Mass. App. Ct. 1986), more persuasive for

the proposition that a holder of a right of first refusal is not

obligated to pay a broker's commission when it was the third-party

purchaser who agreed to pay the commission at the close of the

purchase.      In    Stein,      a    broker      sought   to    recover   a    broker's

commission from the holder of the right of first refusal.                         Id. at

369-70.     The triggering event for the right of first refusal was

a "bona fide written offer from a fully disclosed party."                         Id. at

370.    The broker claimed the right holder was liable because he

                                             15                                  A-1967-15T2
succeeded the third-party purchaser's position who agreed to a

certain price and promised to pay a commission at the completion

of sale.     Id. at 371-72.      Because the sale was never completed

between the broker and the third-party purchaser, the court found

the language of the agreement controlled and the broker was only

entitled   to   a   commission   at   the   close   with   the   third-party

purchaser.      Ibid.    Additionally, the court stated it was the

brokers who deliberately "gave up their right to look to the seller

for a commission and failed to secure a firm substitute for that

right."    Id. at 372.

     While not binding on this court, Stein is instructive.              Like

the broker in Stein, plaintiffs deliberately relinquished the

right to seek a commission from the sellers and negotiated with

Levin to receive a commission, while aware of defendant's right

of first refusal.        The contract provided to defendant did not

define plaintiffs as a broker, nor was any commission agreement

incorporated therein.       Additionally, the commission agreement,

which was not signed by Levin, expressly stated the commission

would be paid upon the close of title under the terms of the

contract made between the sellers and Levin.               As Levin and the

sellers never closed on the sale of Butler Plaza, plaintiffs are

not entitled to a commission.

                                      16                             A-1967-15T2
      Plaintiffs argue that when defendant exercised the right of

first refusal and entered into the contract, it agreed to be bound

by the obligations set forth in the Levin contract, including the

obligation to enter into a separate agreement with plaintiffs to

pay   the   broker's   commission.       Therefore,     plaintiff's     claim

defendant breached the contract by not entering into the separate

agreement.    We stated in St. George's Dragons, supra, 407 N.J.

Super. at 483, any ambiguities in the contract must be construed

in favor of the non-drafting party.

      Construing the contractual ambiguities in favor of the non-

drafting party, defendant did not breach the contract.                  Levin

agreed to pay $14,500,000 and to enter into a separate agreement

with the plaintiffs on June 26, 2013.        The trial judge found the

July 10, 2013 commission agreement had no force or effect because

it was never signed and expressly made plaintiffs' commission

payable upon the closing of title of the contract between sellers

and Levin.    Because the closing of title never occurred between

the sellers and Levin, plaintiffs are not entitled to a commission.

      The   trial   judge   correctly   applied   St.   George's   Dragons,

supra, 407 N.J. Super. at 483-85, because the holder of the right

of first refusal must accept the terms and conditions of the third-

party offer only if the contract is unambiguous.           There, we held

an ambiguously worded contract did not demonstrate the parties

                                   17                                 A-1967-15T2
intended the holder to pay the commissions in addition to matching

the third-party offer.    Id. at 485.   Here, the ambiguous wording

in the Levin contract, requiring purchaser to pay a "broker" a

commission pursuant to a separate agreement not incorporated into

the contract, creates no inference that defendant is obligated to

pay plaintiffs' commission.

                                 C.

     Plaintiffs' other theories of recovery are also unavailing.

In every contract in New Jersey there is the implied covenant of

good faith and fair dealing, Wilson v. Amerada Hess Corp., 168

N.J. 236, 244 (2001), to which every party to a contract is bound.

Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr.

Assocs., 182 N.J. 210, 224 (2005).      While this covenant "cannot

override an express term in a contract, a party's performance

under a contract may breach that implied covenant even though that

performance does not violate a pertinent express term."     Wilson,

supra, 168 N.J. at 244.    The covenant requires that parties to a

contract "refrain from doing 'anything which will have the effect

of destroying or injuring the right of the other party to receive'

the benefits of the contract."        Brunswick Hills Racquet Club,

Inc., supra, 182 N.J. at 224-25 (quoting Palisades Props., Inc.

v. Brunetti, 44 N.J. 117, 130 (1965)).

                                18                          A-1967-15T2
     A party who claims there has been a breach of this covenant

must provide proof of "bad motive or intention."         Id. at 225.     The

party   must   also   "provide   evidence   sufficient    to   support    a

conclusion that the party alleged to have acted in bad faith has

engaged in some conduct that denied the benefit of the bargain

originally intended by the parties."        Ibid. (citing 23 Williston

on Contracts § 63:22 at 513-14 (Lord ed. 2002)).

     Plaintiffs argue defendant acted with bad motives when it

inquired as to the amount of the commission, but then made no

further inquiries.      But the record demonstrates defendant was

unaware of plaintiffs' identity when it signed the contract.

Defendant asked the sellers for information about the broker and

the commission price because the name of the broker was redacted

and there was supposed to be a separate commission agreement,

which was not part of the contract provided to defendant.         Pollack

did not attempt to contact defendant at the time the contract was

signed. Rather, defendant did not learn of plaintiffs' involvement

as a broker for the sellers until the phone call to defendant's

counsel in October.

     Defendant did not act in bad faith, denying plaintiffs' the

benefit of the bargain originally intended by the parties as

defendant did not know of plaintiffs' existence or involvement.

Plaintiffs were not listed on the contract and the sellers, the

                                   19                             A-1967-15T2
other party to the contract, never disclosed plaintiffs' identity

or their role in the sale of Butler Plaza to defendant. Therefore,

defendant did not breach the implied covenant of good faith and

fair dealing because plaintiffs were never intended to benefit

from the contract between the sellers and defendant.

                                   D.

     We also find no merit in plaintiffs' argument that the trial

court improperly barred their claims under the statute of frauds.

Plaintiffs contend that the acceptance of the contractual terms

required   defendant    to   execute    a   separate   written   broker's

commission agreement.    Pursuant to the statute of frauds, N.J.S.A.

25:1-16(b) provides:

           [A] real estate broker who acts as agent or
           broker on behalf of a principal for the
           transfer of an interest in real estate . . .
           is entitled to a commission only if before or
           after the transfer the authority of the broker
           is given or recognized in a writing signed by
           the principal or the principal's authorized
           agent, and the writing states either the
           amount or the rate of commission.

A broker will only be entitled to a commission pursuant to an oral

agreement if:

           within five days after making the oral
           agreement and before the transfer or sale, the
           broker serves the principal with a written
           notice which states that its terms are those
           of the prior oral agreement including the rate
           or amount of commission to be paid[.]

                                  20                              A-1967-15T2
            [N.J.S.A. 25:1-16(d)(1).]

       "[S]trict compliance with the statute of frauds is essential

for a broker to recover a commission for the sale of real estate."

C&J Colonial Realty v. Poughkeepsie Sav. Bank, 355 N.J. Super.

444, 473 (App. Div. 2002), certif. denied, 176 N.J. 73 (2003).

Our courts disapprove of business practices where brokers rely on

the "hope" that a commission "'will be voluntarily paid even though

there is no legal obligation to do so,' and their wish 'to avoid

the possibility of the refusal of an owner to sign at the outset

a document of authority the full import of which the latter may

not be sure.'"    Coldwell Banker Commercial/Feist & Feist Realty

Corp. v. Blancke P.W. LLC, 368 N.J. Super. 382, 392 (App. Div.

2004) (quoting McCann v. Biss, 65 N.J. 301, 308 (1974)).

       The statute of frauds may be satisfied when the property,

seller, broker, and price is identified, even if the exact amount

of the commission is not listed as long as the "proposal which

states a net price to the owner or that the purchaser is to pay

the broker's commission is uniformly held to comply with the

statute."   Stanchak v. Cliffside Park Lodge, L.O. of M., Inc., 116

N.J. Super. 471, 477-78 (App. Div. 1971).   In order to satisfy the

statute of frauds, the writing must signify or "fairly" imply the

broker is selling the property on behalf of the owner.      Id. at

478.

                                 21                         A-1967-15T2
       Here, no written broker's commission agreement was in effect

between any of the parties.              The separate commission agreement

drafted by Levin specifically stated until it was mutually signed,

it "shall have no force and effect."                 Only Pollack signed the

separate        commission    agreement;        Levin   never       signed     it.

Accordingly, while defendant may stand in the shoes of Levin by

adopting all of the terms in the contract of sale, the separate

commission agreement was not part of it.

       While defendant was informed that the prospective purchaser

would pay a commission, there was never a suggestion that defendant

owed    plaintiffs     for   the   broker's     commission.         Contrary    to

plaintiffs' claims, defendant did not refuse to comply with the

contract.    Defendant attempted to obtain the information about the

broker's    commissions      but   was   told   it   would    not   apply.     The

property, seller, and price were identified in the contract, but

the    broker    and   the   broker's     commission    was    not;   therefore,

plaintiffs did not strictly comply with N.J.S.A. 25:1-16.                See C&J

Colonial Realty, supra, 355 N.J. Super. at 473; Stanchak, supra,

116 N.J. Super. at 477-78.

       There was no signed written agreement between plaintiffs and

defendant, which required defendant to pay 1.5% of the purchase

price in commission to plaintiffs.            Therefore, the trial judge did

not err in finding "[a]bsent a signed writing memorializing an

                                         22                              A-1967-15T2
agreement between [defendant] and [plaintiff] Pollack, he may not

require [defendant] to comply with a contract it did not intend

to become a party to."

     We also reject plaintiffs' assertion that the oral agreement

between themselves and Levin for 1.5% of the purchase price,

confirmed via email to defendant, binds defendant.         Defendant was

never a party to the oral agreement between Levin and plaintiffs.

Additionally, when plaintiffs became aware defendant exercised its

right of first refusal, plaintiffs did not serve notice upon

defendant of the terms of the oral agreement.        See N.J.S.A. 25:1-

16(d)(1).    No agreement complied with N.J.S.A. 25:1-16(b) or

N.J.S.A. 25:1-16(d)(1).

                                       E.

     Plaintiffs'    quantum   meruit    argument   that   defendant   was

unjustly enriched is also devoid of merit.         In order to recover

under a theory of quantum meruit, plaintiffs must establish: "(1)

the performance of services in good faith, (2) the acceptance of

the services by the person to whom they are rendered, (3) an

expectation of compensation therefor, and (4) the reasonable value

of the services."    Starkey v. Estate of Nicolaysen, 172 N.J. 60,

68 (2002).

     Plaintiffs    argue   Pollack     performed   extensive   brokerage

services in good faith, procured Levin as the purchaser of Butler

                                 23                              A-1967-15T2
Plaza, Levin accepted the services, plaintiffs expected to be

paid, and Levin agreed to pay Pollack 1.5% of the sale price,

which was the reasonable value of the services provided.

     However, plaintiffs, did not perform services for defendant's

benefit.       The benefit received by defendant, the ability to

exercise     the   right   of    first    refusal,      was     obtained   through

defendant's own negotiations in 1994, and paid for through a higher

rent.      Plaintiffs had no involvement in the 1994 lease agreement

and cannot now argue Pollack bestowed a benefit, by his procurement

of Levin as a potential purchaser of Butler Plaza, which unjustly

enriched defendant.

                                         II.

     In its cross-appeal, defendant argues the trial judge erred

in finding plaintiffs did not violate the CFA, and should have

awarded it attorney's fees.         Because plaintiffs did not make any

knowing misrepresentations that induced defendant to purchase

Butler Plaza, the trial judge correctly found defendant's CFA

counterclaim was without merit.

     The CFA was enacted in order to address "fraudulent practices

in   the     marketplace   and    deter        such   conduct    by   merchants."

Thiedemann v. Mercedes-Benz USA, 183 N.J. 234, 245 (2005).                      The

CFA protects the public, even if the merchant has acted in good

faith.     Gennari v. Weichert Co. Realtors, 288 N.J. Super. 504, 533

                                         24                                A-1967-15T2
(App. Div. 1996).    Specifically, it was designed "to protect the

public from sharp practices and dealings in the marketing of

merchandise and real estate which could victimize the public by

luring the consumer into a purchase through fraudulent, deceptive,

or similar kinds of selling or advertising practices."                 Ibid.

(citations omitted).

       The CFA provides a cause of action to

            [a]ny person who suffers an ascertainable loss
            of moneys or property, real or personal, as a
            result of the use or employment by another
            person of any method, act, or practice
            declared unlawful under this act[,] . . . may
            bring an action . . . in any court of competent
            jurisdiction.

            [N.J. Citizen Action v. Schering-Plough Corp.,
            367 N.J. Super. 8, 12 (App. Div.), certif.
            denied, 178 N.J. 249 (2003) (citing N.J.S.A.
            56:8-19).]

To establish a claim under the CFA, plaintiffs must prove: (1)

unlawful conduct by defendant; (2) an ascertainable loss on the

part   of   plaintiffs;   and     (3)    a   causal   relationship   between

defendant's unlawful conduct and plaintiffs' ascertainable loss.

Id. at 12-13.

       The CFA sets forth three general categories of unlawful

conduct:    affirmative   acts;    knowing     omissions;   and   regulatory

violations.     Thiedemann, supra, 183 N.J. at 245.               While "[a]

practice can be unlawful even if no person was in fact misled or

                                        25                           A-1967-15T2
deceived," the determination will turn on whether there was "[t]he

capacity to mislead."          Cox v. Sears Roebuck & Co., 138 N.J. 2, 17

(1994).

      Defendant argues plaintiffs violated the Real Estate Brokers

and Salesman Act (the Act), N.J.S.A. 45:15-1 to -42.                     The Act was

designed     to   "protect       consumers      by     excluding        undesirable,

unscrupulous and dishonest persons . . . from the real estate

business."     Sammarone v. Bovino, 395 N.J. Super. 132, 138 (App.

Div.), certif. denied, 193 N.J. 275 (2007).                     N.J.S.A. 45:15-1

requires a real estate broker to be licensed and N.J.S.A. 45:15-

3.1 states that a licensed real estate broker may pay a referral

fee or commission to a person not licensed in New Jersey, as long

as   that   person    is   a   licensed      real   estate     broker    in   another

jurisdiction.

      Defendant      contends     plaintiffs        violated    the     Act   because

Pollack initially agreed to split the broker's commission with

Levi, satisfying the first element of a CFA claim.                      Levi was not

a licensed broker in any jurisdiction, and was not authorized to

receive a real estate broker's commission.               However, when Pollack

learned that Levi did not have a real estate license, he and Levin

informed Levi they could not split the commission with him.

Accordingly,      plaintiffs      did   not    violate       N.J.S.A.     45:15-3.1.

Additionally, neither plaintiffs nor Levi contacted defendant

                                        26                                    A-1967-15T2
until well after defendant exercised its right of first refusal.

Consequently,    the   record     demonstrates     there    were   no   material

misrepresentations       which    could    have    induced    defendant       into

purchasing Butler Plaza.

     Defendant    also    argues     plaintiffs'    attempt    to   collect      a

commission from defendant violated the statute of frauds and

attempting to collect a commission without an agreement was an

"unconscionable commercial practice" in violation of the CFA.

Asserting there was an "ascertainable loss," defendant argues it

paid an additional $2,946 in closing costs for counsel to review

plaintiffs'     commission       claims.       Here,    defendant       has   not

established unlawful conduct by plaintiffs.                Plaintiffs did not

induce defendant to exercise its right of first refusal by a

misrepresentation or knowing omission, especially since defendant

was unware of plaintiffs' involvement as brokers, and Levi's

uncompensated    initial     role.         Therefore,   defendant       has   not

established a claim under the CFA, and the trial judge correctly

dismissed defendant's counterclaim.

     Affirmed.

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