Court Opinion

ID: 4427920
Source: CourtListenerOpinion
Date Created: 2019-08-20 18:58:00.793484+00
Date Added: 2024-06-11T14:23:16.464219
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-0481-18T2

GEBROE-HAMMER ASSOCIATES,

          Plaintiff-Respondent,

v.

WEST GREEN GABLES, LLC,

          Defendant-Appellant,

and

JEFFREY WITTMANN,1

          Defendant.

                    Submitted July 9, 2019 – Decided July 30, 2019

                    Before Judges Hoffman and Currier.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Essex County, Docket No. L-6496-16.

                    Nemergut & Duff, attorneys for appellant (Paul J.
                    Nemergut, III, of counsel and on the briefs; Jeffrey
                    Zajac, on the briefs).

1
    Defendant Jeffrey Wittmann was dismissed under a consent order in July 2018.
              Brach Eichler, LLC, attorneys for respondent (David J.
              Klein, of counsel and on the brief).

PER CURIAM

        In this matter arising out of a commercial real estate transaction, plaintiff

Gebroe-Hammer Associates sought a commission for procuring a buyer for the

property owned by defendant West Green Gables, LLC (defendant or LLC).

Defendant appeals from the entry of two summary judgment orders in favor of

plaintiff. After a review of the contentions in light of the record and applicable

principles of law, we affirm.

        Defendant owns property consisting of twenty-one apartment-type

townhouses. Under an operating agreement, Jeffrey2 and his wife, Susan, each

held a fifty percent interest in the LLC. The certificate of formation listed

Jeffrey as the registered agent. Section 5.1 of the LLC's operating agreement

provided that "[t]he [LLC] shall be managed by the [m]embers. . . . Members

owning more than fifty percent (50%) of the [p]ercentages then held by all

[m]embers shall have the right to act for and bind the [LLC] in the ordinary

course of its business." The agreement defined a "member" as "each [p]erson

signing this Agreement and any [p]erson who subsequently is admitted as a

2
    We use the Wittmann's first names for ease of the reader.
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member of the [LLC]."       The operating agreement was not affected by the

Wittmann's divorce in 2013; Jeffrey and Susan remained the sole members.

      Susan died in 2015 and her estate passed to the Wittmann's daughters.

Under the operating agreement, the daughters became interest holders, not

members. Susan's brother, John Stefanicha, was the executor of her estate.

      Plaintiff is a commercial real estate brokerage firm. In July 2016, Adam

Zweibel, plaintiff's vice-president, came to Jeffrey's office inquiring about

Jeffrey's interest in selling the property. Zweibel was aware that the LLC owned

the property. However, in their conversations, Zweibel stated Jeffrey advised

that he was the LLC's owner. Although Zweibel and Jeffrey differ in their

accounts of this, and the two subsequent conversations between them, the men

ultimately signed a document entitled "AGREEMENT FOR EXCLUSIVE

RIGHT TO SELL OR EXCHANGE" (listing agreement).

      The listing agreement gave plaintiff the exclusive right to list and sell the

property, setting a $5.2 million purchase price and a $250,000 commission to

plaintiff upon it "procuring a purchaser." Zweibel signed the listing agreement

on behalf of plaintiff. Jeffrey signed in an individual capacity, acknowledging

in the document that he was "the owner [] or authorized [a]gent [] of [the] owner"

of the property. There was no reference to the LLC.

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      The listing agreement, originally dated August 2, 2016, was amended with

handwritten notations on August 8, 2016.         Jeffrey's initials appear on the

document in multiple places. Jeffrey testified during depositions that he had an

attorney review the listing agreement prior to signing it.

      On August 8, Greenstacks LLC proffered a letter of intent (LOI), meeting

the purchase price and deposit terms in the listing agreement. The LOI was not

binding on the parties, but was subject to the execution of a purchase sale

agreement within two weeks after Jeffrey accepted the LOI. Greenstacks also

provided Zweibel with proof of available funds, which Zweibel forwarded to a

mortgage broker to obtain financing.

      Jeffrey signed the LOI the following day, and instructed Zweibel to

forward it to Jeffrey's attorney to prepare a contract. When a contract was not

forthcoming, Zweibel inquired of Jeffrey and his attorney as to its status. Jeffrey

and his counsel eventually advised Zweibel that Jeffrey did not intend to proceed

with the sale.    Jeffrey stated he told Zweibel that he had to confer with

Stefanicha, as Susan's executor, about the transaction. When Jeffrey eventually

contacted Stefanicha several weeks later, Jeffrey said Stefanicha was not

interested in getting involved in the sale.

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      Zweibel subsequently informed Greenstacks that Jeffrey would not

proceed with the sale. Nevertheless, Greenstacks continued to inquire about the

property's availability for many months after these events.

      Plaintiff instituted suit, asserting it was entitled to its commission under

the LOI for procuring a buyer for the property. After discovery, defendant and

Jeffrey filed summary judgment motions. Plaintiff opposed the motions and

moved for partial summary judgment.

      In a May 16, 2018 comprehensive oral decision, Judge Keith E. Lynott

found Jeffrey had authority to execute the listing agreement on behalf of

defendant. He therefore denied defendants' motions. In his ruling, Judge Lynott

noted the explicit definitions of "member" and "interest holder" in the operating

agreement.   Because a member was only a person who either signed the

agreement or who was subsequently admitted as a member, and only Jeffrey and

Susan had signed the agreement, the judge determined they were the only two

members.

      However, Susan's death triggered an involuntary withdrawal of a member

under Section 6.3.1. The operating agreement provided that a successor of a

withdrawn member became an interest holder, not a member. Therefore, Judge

Lynott found that, upon Susan's death, Jeffrey became the sole member of the

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LLC. Moreover, Jeffrey acted in that capacity by continuing to manage the LLC

after Susan's death. Without any other members, only Jeffrey was authorized

under the operating agreement to act on behalf of the LLC. Therefore, as the

sole member, the judge concluded that Jeffrey was authorized to act on behalf

of the LLC and execute the listing agreement.

      In addressing plaintiff's motion for partial summary judgment, Judge

Lynott concluded plaintiff had not met its burden to establish Greenstacks "was

a ready, willing and able purchaser" of the property. Therefore, he denied the

motion without prejudice.

      In a second summary judgment application, plaintiff provided

certifications from Zweibel and Elliot Treitel, a mortgage broker. Judge Lynott

noted that a Greenstacks's representative sent a "bank register" to Zweibel on

August 5, 2016, showing a bank account balance of $8.9 million. Zweibel

contacted Treitel, a vice president at Meridian Capital Group, LLC, on August

8, 2016 to procure mortgage financing for Greenstacks to purchase the property.

Treitel acknowledged receiving the information and certified that he

            believed at the time, and continue[s] to believe, based
            on [his] nearly [twenty years] of experience at
            Meridian, that there was a high likelihood of
            Greenstacks obtaining a mortgage for 75% of the
            purchase price, at prevailing market rates, through

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                                      6
             Meridian[,] had Meridian processed the application on
             behalf of Greenstacks.

      Based on the above information, Judge Lynott determined plaintiff had

demonstrated its procurement of a ready, willing and able prospective purchaser.

He stated:

             The facts establish that Greenstacks entered a [LOI],
             commenced and pursued financing, had sufficient
             assets to obtain such financing and to complete the
             purchase and exhibited continuing interest in the
             transaction and that the broker followed up on the
             prospective purchaser's behalf as to the preparation of
             a definitive contract.

Therefore, plaintiff was entitled to a $250,000 commission and the entry of

partial summary judgment. 3

      We review a summary judgment order de novo, applying the same

standard used by the trial court. Davis v. Brickman Landscaping, Ltd., 219 N.J.
395, 405 (2014) (citations omitted). We must determine whether, viewing the

facts in the light most favorable to the non-moving party, the moving party has

demonstrated there are no genuine disputes as to any material facts and they are

entitled to judgment as a matter of law. R. 4:46-2(c); Davis, 219 N.J. at 406;

Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

3
  The only issue remaining was whether plaintiff was entitled to attorney's fees
under the listing agreement as a prevailing party.
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      On appeal, defendant does not assert a genuine issue as to any of the

material facts; therefore, the facts are uncontroverted.     Instead, defendant

contends that the judge erred in concluding Jeffrey was authorized to sign the

listing agreement and LOI, and in finding plaintiff was entitled to a commission.

      After reviewing the record, we are satisfied that Judge Lynott's legal

conclusions, as supported by the uncontroverted facts, are unassailable.     We,

therefore, affirm substantially for the reasons expressed in his well-reasoned

opinions. We add the following brief comments.

      Section VI of the operating agreement prohibited members from

transferring their membership interest. However, a member had the right to

surrender his or her interest and voluntarily withdraw from the LLC. The

agreement also contemplated an involuntary withdrawal such as a member's

death. In that case, "the successor of the withdrawn [m]ember shall thereupon

become an interest [h]older but shall not become a [m]ember."

      When Susan died in 2015, her estate became an interest holder, but not a

member under the operating agreement. Therefore, in 2017, at the time of these

events, Jeffrey was the LLC's only member. Only Jeffrey could manage the

LLC, and take any actions on its behalf. Jeffrey demonstrated this awareness in

continuing to run the business and in executing the listing agreement and LOI.

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He further acted as defendant's authorized agent in forwarding the LOI to his

attorney and requesting the drafting of a purchase sale contract.

      We are unpersuaded by defendant's argument that plaintiff was not

entitled to a commission. Plaintiff presented an executed LOI, and produced

financial information from the proposed buyer and evidence that the buyer could

procure the required financing.         Plaintiff's proffered evidence was not

challenged.

      As we have previously stated:

              [W]here the broker has procured a purchaser willing
              and able to buy on the seller's terms as stated to the
              broker, and there is a failure of the principals to enter
              into a formal contract of sale by reason of the seller's
              fault, as, e.g., where he ha[s] subsequently changed his
              mind . . . the seller is liable to the broker.

              [Stanchak v. Cliffside Park Lodge, L.O. of M., Inc., 116
N.J. Super. 471, 480 (App. Div. 1971).]

Without any evidence to the contrary, plaintiff established it had procured a

ready, willing, and able buyer for the purchase. Jeffrey's change of heart, after

executing the listing agreement and LOI on behalf of defendant, cannot eradicate

defendant's obligation under the agreement.

      Affirmed.

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