Court Opinion

ID: 3152246
Source: CourtListenerOpinion
Date Created: 2015-11-05 15:06:25.58649+00
Date Added: 2024-06-11T11:48:11.180350
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-3796-13T2

MICHAEL CONLEY, JR. and
KATIE M. MAURER,
                                     APPROVED FOR PUBLICATION
     Plaintiffs-Appellants,             November 5, 2015

v.                                     APPELLATE DIVISION

MONA GUERRERO, BRIAN
KRAMINITZ, and MICHELE TANZI,

     Defendants-Respondents.
______________________________

         Argued May 19, 2015 – Decided November 5, 2015

         Before Judges Messano, Ostrer and Tassini.

         On appeal from the Superior Court of New
         Jersey, Chancery Division, Somerset County,
         Docket No. C-12005-14.

         William J. Kearns argued the cause for
         appellants (Kearns & Duffy, P.C., attorneys;
         Mr. Kearns, on the briefs).

         Martin   Liberman  argued   the  cause   for
         respondent Mona Guerrero (Law Offices of
         Martin Liberman, attorneys; Mr. Liberman, on
         the brief).

         Robert J. Machi argued the cause for
         respondents Brian Kraminitz and Michele
         Tanzi (Morgan Melhuish Abrutyn, attorneys;
         Mr. Machi, of counsel and on the brief;
         Joshua Heines, on the brief).

         F. Bradford Batcha argued the cause for
         amicus   curiae  New  Jersey State  Bar
         Association (Sharon A. Balsamo, General
            Counsel, attorney; Miles S. Winder, III,
            President, of counsel; Mr. Batcha, Stuart J.
            Lieberman, and Heather G. Suarez, on the
            brief).

      The opinion of the court was delivered by

OSTRER, J.A.D.

      The issue in this appeal is whether defendant-seller of a

residence      effectively        terminated      her     sale       agreement     with

plaintiffs-buyers during the "three day review" authorized by

the     agreement,     in    accordance        with     New     Jersey     State     Bar

Association v. New Jersey Association of Realtor Boards, 93 N.J.

470   (1983),     mod.,     94    N.J.   449    (1983),        and   N.J.A.C.      11:5-

6.2(g)(2).       Plaintiffs challenged the seller's termination, and

appeal from the summary judgment order of the General Equity

Part dismissing their complaint to enforce the sale agreement.

We affirm.

                                          I.

      The facts are undisputed.               On January 12, 2014, plaintiffs

Michael Conley, Jr. and Katie M. Maurer signed a form contract

to    purchase     a   condominium       unit    in     Bernards      Township     that

defendant Mona Guerrero had offered for sale.                            The   contract

price    was     $292,000,       and   plaintiffs       paid    a    $1000     deposit.

Guerrero signed the contract two days later, and the executed

contract was delivered on Wednesday, January 15, 2014.

                                          2                                    A-3796-13T2
    The    Guerrero-to-Conley1       contract    included    the    standard

attorney   review   provision,       which   provides     that    notice   of

disapproval must be sent to the realtor by "certified mail, by

telegram or by delivering it personally."            It states:

           The Buyer or the Seller may choose to have
           an attorney study this Contract.     If any
           attorney is consulted, the attorney must
           complete his or her review of the Contract
           within the three-day period.  This Contract
           will be legally binding at the end of this
           three-day period unless an attorney for the
           Buyer or the Seller reviews and disapproves
           of the Contract.

                 . . . .

           If an attorney for the Buyer or the Seller
           reviews and disapproves of the Contract, the
           attorney must notify the REALTOR(S) and the
           other party named in this Contract within
           the   three-day  period.     Otherwise  this
           Contract will be legally binding as written.
           The attorney must send the notice of
           disapproval to the REALTOR(S) by certified
           mail, by telegram or by delivering it
           personally.     The telegram or certified
           letter will be effective upon sending.   The
           personal delivery will be effective upon
           delivery to the REALTOR's office.        The
           attorney may also, but need not, inform the
           REALTOR(S) of any suggested revision(s) in
           the    Contract    that   would    make   it
           satisfactory.

As a result of a three-day weekend, the attorney review period

extended   to   Tuesday,   January    21,    2014.     Weichert    Realtors,

1
  For convenience, we use only one buyer's name in referring to
the contract.

                                      3                             A-3796-13T2
through its "authorized representative[]," served as a disclosed

dual agent on the contract.

     After the agreement was executed, Guerrero's agent received

competing    offers      to   purchase        the    property.           Plaintiffs    were

aware   of   this.        They    sent    a       handwritten      note    to   Guerrero,

describing their personal circumstances, and their desire for

the house.     The note stated, "I hope that we are able to come to

an agreement that works for both sides."                        On or about January

15, plaintiffs increased their offer to $298,000.

     Meanwhile,       defendants      Brian         Kraminitz      and    Michele     Tanzi

offered to pay $307,500, as reflected in an agreement they and

Guerrero     signed      on     January    16,       2014.         The    attorneys     for

Guerrero,     and        Kraminitz        and       Tanzi,      negotiated        various

modifications       to    the     contract,         which    the     attorneys      deemed

binding on January 20, 2014.

     On January 16, 2014, the Weichert agent asked Guerrero's

attorney, Martin D. Eagan, to transmit a disapproval of the

Guerrero-to-Conley contract.2              On January 20, 2014, an attorney

2
  Defendant asserted that a second Weichert agent stepped in to
represent only Guerrero, because the original Weichert agent was
a dual agent.       However, the Guerrero-to-Conley contract
identified Weichert as the dual agent and the named agent as
Weichert's representative.  Moreover, the first Weichert agent,
not the second, asked Guerrero's attorney to "void" the
Guerrero-to-Conley contract, noting she was representing both
buyer and seller.

                                              4                                  A-3796-13T2
in   Eagan's      office        by    letter          advised     plaintiffs'            attorney,

William        Kearns,     that       the     Guerrero-to-Conley               agreement           was

terminated,        stating,          "This        will    confirm          that        the    above-

referenced contract has been terminated by the seller and the

realtors are hereby authorized to release the initial deposit

monies    to     the     buyers."           The    letter       was     sent      by    email      and

facsimile to Kearns; the agent at Weichert was "cc'd" on the

email.     It was undisputed that Kearns and the agent received the

letter on January 20, 2014.                       Plaintiffs do not deny that they

also received notice of the letter.

     On    January        23,     2014,      Kearns        faxed      a    letter        to       Eagan

asserting       that     the    Guerrero-to-Conley               contract         was    in       "full

force and effect" because "the 3 days within which an attorney

may terminate this contract has expired."                          Eagan and Kearns then

exchanged emails disputing the effectiveness of the January 20,

2014 notice.       Plaintiffs filed a verified complaint and proposed

order     to    show     cause,       seeking         specific        performance            of    the

Guerrero-to-Conley             contract       and        other     relief.              Plaintiffs

included Kraminitz and Tanzi as defendants.

     Plaintiffs          argued       that    the        January      20    termination             was

ineffective       because        it    was        not     sent     in      accord        with      the

contract's       attorney       review        provision.              Kearns,          plaintiffs'

counsel, admitted: "My clients . . . were informed that their

                                                  5                                          A-3796-13T2
contract would be cancelled as other offers were being received

after their initial offer was made and accepted, and a valid and

binding     contract       executed,        subject      to    attorney      review."

However, he asserted that plaintiffs, in making an increased

offer, did not "rescind or abandon their contract, but were

merely     offering   to    create     a    new    contract    when   and    if   their

contract     was   cancelled      or       disapproved."          Eagan,    Guerrero's

counsel,     asserted      "it   has   become      the   standard     and   customary

practice in residential real estate transactions to use email

and facsimile notification at the time of contract disapproval

in lieu of a certified mailing."

      Judge Edward M. Coleman denied temporary injunctive relief.

As   the   facts   were     undisputed,          Guerrero   and    plaintiffs     filed

competing motions for summary judgment.                       In a cogent written

opinion, Judge Coleman granted defendants' motion, dismissing

plaintiffs' complaint.            Judge Coleman noted that the attorney

review provision requires notice of disapproval to the broker

and the other party, but specifies the method of delivery only

as it relates to the notice to the broker.                         He discussed the

history and purpose of the provision, citing                        N.J. State Bar

Ass'n v. N.J. Ass'n of Realtor Bds., 93 N.J. 470 (1983).                          Judge

Coleman then analyzed three cases that construed the provision —

Kutzin v. Pirnie, 124 N.J. 500 (1991); Romano v. Chapman, 358

                                             6                                A-3796-13T2
N.J. Super. 48 (App. Div.), certif. denied, 176 N.J. 431 (2003);

and Gaglia v. Kirchner, 317 N.J. Super. 292 (App. Div. 1999) —

and found that none controlled the parties' dispute.

    Judge Coleman noted that Kutzin held a contract was not

effectively rescinded where the attorneys for buyer and seller

discussed    modifications   to   the   contract,    but   "there    was    no

evidence of any form of specific disapproval within the review

period."     See 124 N.J. at 507-08.      Unlike in the instant case,

that notice came only after the review period had expired.                 Id.

at 505.     Judge Coleman also discussed Romano, where we held that

once the attorneys approved an agreement during the attorney

review period — which did not occur here — a party may not

terminate, even if the period was unexpired.           358 N.J. Super. at

56-57.

    Finally, Judge Coleman discussed Gaglia, which addressed an

attempt by the buyer to enforce a contract by alleging that his

own notice of disapproval was ineffective because it was sent by

fax and ordinary mail, and only to sellers' counsel.                See 317

N.J. Super. at 298.       Judge Coleman noted that Gaglia was denied

relief because he was not permitted to rely on his own counsel's

deviations from the mandated procedure.

    Judge      Coleman    recognized    that    generally,      clear      and

unambiguous    contract   provisions    must   be   enforced   as   written,

                                    7                               A-3796-13T2
citing Levison v. Weintraub, 215 N.J. Super. 273, 276 (App. Div.

1987).     However, the judge wrote, "[T]his is a [c]ourt of equity

in which we are permitted to apply substance over form," citing

Applestein v. United Bd. & Carton Corp., 60 N.J. Super. 333, 348

(Ch. Div. 1960).      The judge continued:

             The purpose of the attorney review clause
             approved within the settlement in Bar Ass'n
             II, was to "protect parties against being
             bound by broker-prepared contracts without
             the    opportunity   to     obtain   adequate
             protection of their separate interests."
             Levi[]son, supra, 215 N.J. Super. at 277.
             It is undisputed that all parties to this
             transaction were represented by counsel and
             counsel were actually consulted, thus the
             underlying justification for the attorney
             review    clause   itself    was   satisfied.
             Further, Guerrero's breach was minor as it
             is further undisputed that Plaintiffs' were
             on actual notice of Guerrero's termination
             within the three-day period for attorney
             review. The essential purpose of the notice
             provision is to ensure actual notice and
             that was accomplished here.

       This appeal followed.          Plaintiffs argue that Guerrero was

required     to   strictly      adhere        to   the   contractual      provision

specifying     the   methods     of     delivery.        Defendants     and    amicus

curiae, the New Jersey State Bar Association, generally respond

that the termination notice in this case substantially complied

with   the    contract    and    that    actual     notice     was    accomplished,

thereby      satisfying    the    underlying         purpose     of    the     notice

provision.

                                          8                                   A-3796-13T2
                                       II.

      We review the trial court's grant of summary judgment de

novo.     Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330

(2010).       We conclude, as did Judge Coleman, that defendant's

counsel's disapproval of the contract was effective.

      Notice    of   disapproval      must    be    sent    to   both   the    other

contracting party and that party's real estate agent.                       See N.J.

State   Bar    Ass'n,   supra,   93    N.J.    at    476.        In   the   original

settlement between the State Bar and the New Jersey Association

of Realtor Boards, notice was to be provided only to the real

estate professional; however, the Court modified the agreement

to require notice to the contracting parties.                         Compare N.J.

State Bar Ass'n v. N.J. Ass'n of Realtor Bds., 186 N.J. Super.

391, 395 (Ch. Div. 1982) (describing notice only to broker),

with N.J. State Bar Ass'n, supra, 93 N.J. at 477 (language as

modified by the Court).

      The contract prescribes the method of delivery only for

notice to the agent.         Any form of actual notice suffices as

pertains to the buyer.       Based on the history of the provision,

the   method-of-delivery     provision        was    apparently       designed     to

protect the interests of the real estate professionals, not the

contracting parties.       See Peterson v. Pursell, 339 N.J. Super.

268, 276 (App. Div. 2001) (noting that the interests of the

                                        9                                   A-3796-13T2
broker and the party "may not be congruent"); Denesevich v.

Moran, 211 N.J. Super. 554, 557 (App. Div. 1986) (declining to

treat the broker as a "fiduciary so as to impute notice to the

party" in part because "a broker's role is to bring the parties

together and act as a conduit for negotiations").                        By contrast,

the three-day-review itself was designed to protect parties from

being bound by realtor-prepared contracts, without the benefit

of legal counsel.         Levison, supra, 215 N.J. Super. at 276.                    This

obviously served the interests of the legal profession as well.

      The   method-of-delivery        provision,      as   well     as    the    entire

attorney review provision, arose out of a dispute between the

bar   and   the   real    estate    professionals.         The      provisions        are

mandated,    even    if   contracting       parties    would     prefer     to     waive

them.       See   N.J.    State    Bar   Ass'n,      supra,    93    N.J.       at    481

(enjoining    real    estate      brokers     from   preparing      contracts        that

would "waive, disclaim, relinquish or abridge the right of the

parties" to attorney review).

      In this case, plaintiffs' right to notice of disapproval —

which is not subject to the method-of-delivery requirements —

was satisfied.        Instead, plaintiffs seek to enforce the rights

of the agent to notice that complies with the method-of-delivery

requirements.        However, the agent does not complain about the

deviation from the prescribed method of delivery.

                                         10                                     A-3796-13T2
       Even assuming the buyers may enforce the agent's right to

notice     by      the      prescribed      method        of    delivery,          there    was

substantial compliance.                Enforcement of the method-of-delivery

provision here would result in a forfeiture of Guerrero's right

to     disapprove        the    contract.         Given        Guerrero's      substantial

compliance, that forfeiture should be avoided.

       "'To     the    extent       that   the    non-occurrence         of    a    condition

would cause disproportionate forfeiture, a court may excuse the

non-occurrence of that condition unless its occurrence was a

material part of the agreed exchange.'"                         Gazis v. Miller, 378

N.J.     Super.       59,      65   (App.    Div.      2005) (quoting          Restatement

(Second)      of      Contracts,      §    229   (1981)),       aff'd,      186     N.J.    224

(2006).            Disproportionality            is   a      flexible       concept;        its

application           rests     within      the       court's       sound      discretion.

Restatement (Second) of Contracts, § 229 comment b (1981).                                    In

determining whether a forfeiture is disproportionate, we weigh

the extent of forfeiture against "the importance to [plaintiffs]

of the risk from which [they] sought to be protected and the

degree    to     which      that     protection       will     be   lost      if    the    non-

occurrence of the condition is excused . . . ."                         Ibid.

       Here, defendant's right of disapproval was conditioned on

notice that complies with the specified methods of delivery.

However, compliance with the condition was not a material part

                                             11                                       A-3796-13T2
of   the   parties'    agreement;     it     was    imposed    upon    them   by    the

consent judgment in N.J. State Bar Ass'n.                     Enforcement of the

condition would cause a forfeiture — the loss of Guerrero's

right to disapprove the contract and enter into an agreement

with others.       Applying that balance, the weight of Guerrero's

forfeiture    predominates,        inasmuch        as    plaintiffs    avoided      the

result the condition was designed to avoid — lack of actual

notice.     See Del. Steel Co. v. Calmar S.S. Corp., 378 F.2d 386,

387-89 (3d Cir. 1967) (stating that "no legitimate interest" of

the defendant-carrier would be served and it would "plainly be

inequitable"      to   bar    an   action    of     the    plaintiff-shipper        who

failed to timely file a written notice of claim of damage, as

required by a bill of lading, where the carrier received written

notice that the shipped goods were damaged, the carrier was

aware of the damage, and the shipper orally advised the carrier

that a damage claim would be made).

      Substantial      compliance    may     be    more    liberally    applied      in

this case because the attorney review provision, in particular

the notice requirement, is not the product of an arm's length

agreement    of    the       two   contracting          parties.       Rather,      the

provisions are imposed upon buyers and sellers by the consent

judgment approved by the Court in N.J. State Bar Ass'n, supra.

Cf. Corcoran v. St. Peter's Med. Ctr., 339 N.J. Super. 337, 343-

                                        12                                    A-3796-13T2
44 (App. Div. 2001) (applying substantial compliance doctrine to

service of a demand for a trial de novo pursuant to R. 4:21A-

6(b)(1)); 13 Williston on Contracts § 38:12 (Lord ed. 2013)

(distinguishing between contractual provisions expressing "the

will of the parties" and conditions "the law itself had imposed

. . . in absence of or irrespective of the manifested intention

of the parties," which the court may relax "so as to do justice

and avoid hardship.").

       Our holding that the attorney here effectively terminated

the     contract        by    substantially         complying          with      the       notice

requirement        is        not    inconsistent          with        previous     decisions

construing the attorney review provision.                              Plaintiffs contend

that    Peterson,       supra,      compels    a    result       in    their     favor.        We

disagree.       In Peterson, the buyers alleged that the seller's

termination of the sale agreement was untimely.                           339 N.J. Super.

at 271.        We rejected the buyers' argument that the attorney

review    period        commenced      when    the    buyers          delivered        a    fully

executed purchase agreement to the seller's broker, and not to

the seller.      Id. at 273-75.          We held that even if later delivery

to the seller's attorney constituted delivery to the seller —

since    the   seller         had   directed       that    the    signed       contract        be

delivered to her attorney — the termination was timely made

within three days thereafter.                 Id. at 276-77.

                                              13                                       A-3796-13T2
    We held that the buyers were required to strictly adhere to

the contractual and regulatory language.          Id. at 276.    However,

we did so because delivery of a signed agreement to the seller's

real estate broker did not achieve the purpose underlying the

requirement of delivery to the seller.

          Not only does plaintiff's argument violate
          the plain language of the attorney review
          provision, but it ignores the reality of the
          real estate transaction and, indeed, common
          sense.   A broker's interest lay solely in
          negotiating a signed contract and obtaining
          a commission. [A] broker's role is to bring
          the parties together and [to] act as a
          conduit for negotiations.       Its goal is
          simply to put the deal together.          In
          approving the settlement agreement, the
          Supreme Court provided for the intervention
          of an attorney because the interests of the
          broker and those of a party may not be
          congruent.   To clothe the broker with the
          attributes of a fiduciary in this context so
          as to impute delivery to a party by reason
          of delivery to the broker is unrealistic.

          [Ibid.   (internal   quotation           marks   and
          citations omitted).]

    By contrast, undisputed notice to the buyers and their real

estate agent in this case achieves the goal of the provision: to

accomplish actual notice.         We are keenly aware that the actual

notice   did    not   avoid   a   dispute   or   litigation.     But   the

litigation pertained not to the fact of notice, but to its legal

implications.

                                     14                          A-3796-13T2
      Furthermore,      we   are    not    convinced    that    Kutzin,     supra,

compels a different result than we reach here.                  While the Court

referenced the disapproving attorney's failure to comply with

the method-of-delivery requirement, its focus was on the failure

to disapprove at all.        The Court stated:

             To rescind the contract, either party's
             attorney would have had to send notice of
             disapproval during the three-day period to
             both Weichert and Russo "by certified mail,
             by    telegram,    or   by   delivering     it
             personally."    The record reveals that the
             only correspondence between the attorneys
             and the realtors during the three-day period
             in question was Kozinn's September 3rd
             letter to Russo.       That letter did not
             disapprove of the contract; rather, it
             stated   that   "the  *   * *    contract   is
             satisfactory to me as Attorney for the
             Seller with the exception that my clients
             have requested that I hold the deposit
             pending closing," an exception that was
             accepted   by   both  Russo  and    Maccarone.
             Moreover, Kozinn did not send the letter by
             certified mail, nor did he send a copy to
             Weichert.

             [124 N.J. at 507.]

The Court's holding rested not on the method of delivery, but on

the   fact    that    Kozinn's     letters      did   not   disapprove    of    the

agreement.     Moreover, the Court did not consider the doctrine of

substantial compliance, as it did not need to reach the issue

whether delivery was effective.

      Finally,   we    decline     the    Bar   Association's    invitation      to

endorse a revision of the current standard language to recognize

                                          15                              A-3796-13T2
the advent of modern communication methods such as email and the

asserted    obsolescence         of     telegram.            (The       record    includes   no

competent    evidence       on     the    availability             or    unavailability      of

telegram carriers.)         We acknowledge that the Court in N.J. State

Bar   Ass'n,      supra,     did        not     explain      the        purpose    served    by

prescribing       methods     of        delivery        of    a     termination       notice.

However,    one     purpose        of     the        selected      delivery       methods    is

evident: to avoid or limit disputes and litigation over whether

actual delivery was accomplished.

      A   party    may     prove      that      he     or    she    has    sent    notice    by

certified    mail    or     telegram          by     resorting      to    evidence    from     a

third-party — the U.S. Postal Service or a telegram service.

Unless the attorney giving notice personally delivers the notice

himself or herself, a third person would be involved in personal

delivery as well.          Also, the drafters of the settlement in N.J.

State Bar Ass'n, supra, apparently deemed the three required

methods as generally reliable means of accomplishing delivery.

Whether email or facsimile can satisfy that apparent purpose,

and under what conditions, we leave to others to address.

      We observe that in this case, it was not disputed that

actual notice of termination was received by the buyers, their

attorney and real estate agent.                    We do not intend to establish a

general rule that delivery to the realtor by email satisfies the

                                                16                                    A-3796-13T2
prescribed method of delivery.          Rather, based on the facts and

circumstances     presented,   considered       in   light    of   the     legal

principles   we   have   described,     we     affirm   the   trial      court's

determination     that   the   notice     of     disapproval       effectively

terminated the Guerrero-to-Conley agreement.

    Affirmed.

                                   17                                 A-3796-13T2