by: Peter J. Gallagher (@pjsgallagher)
In a decision issued earlier this week, the Appellate Division reinstated a lawsuit against a real estate broker who failed to relay an offer from the buyer to its client, the seller. If you are thinking, as I was, "of course the court would do this, why wouldn't you be able to sue" then read on because the facts of the case make the trial court's decision to dismiss the complaint even more unbelievable. (Of course, at this point in the case, all we have are plaintiff’s allegations, which the court had to assume were true for purposes of evaluating the trial court’s decision on the motion to dismiss.)
In D'Agastino v. Gesher LLC, plaintiff wanted to buy a home in Jackson, New Jersey. The home, which had been foreclosed, was owned by the lender and was being offered for sale at $184,900. Plaintiff instructed his broker to contact the seller's broker and make an offer of $150,000. After receiving no response, plaintiff's broker faxed a written offer to the seller's broker, sent a confirming email to the broker, and eventually tried to contact the seller directly to confirm that the offer was received. None of these efforts were successful.
Seller's broker eventually responded and told plaintiff that the seller had lowered its price to $129,000 and suggested that plaintiff lower its bid. Plaintiff's broker said this "sounded fishy" and advised plaintiff not to lower the bid. Plaintiff took his broker's advice.
Plaintiff's broker then sent seller's broker an email expressing doubt that the broker had presented plaintiff's offer to the seller. In response, on a Friday afternoon, the seller's broker sent plaintiff's broker a contract with an addendum requiring plaintiff's acceptance by 5pm the following Monday. The seller's broker also emailed the buyer's counsel and advised him that neither he nor plaintiff was allowed to make any changes to the contract or "the deal [would] be voided." When Plaintiff did not respond to the seller's broker by the 5 pm deadline, the broker told him that seller had canceled due to his failure to meet the deadline.
Months later, plaintiff learned that the property had been sold to another party for $102,000. Plaintiff further learned that the purchaser was a company created by two brothers, one of whom was a friend of the seller's broker. Plaintiff further learned that the new owner had put the property on the market for an asking price of $339,000 (three times what it paid for the property).
Plaintiff sued the broker and the new owner for: tortious interference; negligence; intentional fraud; fraudulent concealment; consumer fraud; unfair competition; and breach of the implied covenant of good faith and fair dealing. Although plaintiff did not allege breach of contract, the trial court nonetheless dismissed the entire complaint, ruling that plaintiff had no standing to sue and no viable cause of action because he had no signed contract with any of the defendants. Moreover, the trial court appears to have raised this issue on its own, at a case management conference. After the court raised the issue at the case management conference, defendants moved to dismiss, and not surprisingly, the court granted the motion based on the lack of a signed agreement between plaintiff and defendants.
The Appellate Division reversed. holding that plaintiff's complaint could survive a motion to dismiss because, relying on the well-known holding in Printing Mart-Morristown v. Sharp Elec. Corp., it stated the "fundament" of a cause of action for tortious interference. To state a claim for tortious interference, plaintiff would have to allege: (1) a protectable interest; (2) malice (intentional interference without justification); (3) a reasonable likelihood that the interference caused the loss of a prospective gain; and (4) damages. The court held that plaintiff has sufficiently alleged these elements. First, a protectable interest can include the prospect of buying property, and plaintiff’s prospects of buying the underlying property were reasonable since his bid exceeded the eventual asking price. Second, the Appellate Division held that the allegations in the complaint sufficiently suggested malice — that defendants had acted in concert to prevent plaintiff from purchasing the property. Third, the complaint alleged causation and damages. Plaintiff’s offer was more than the asking price and more than the eventual buyer’s offer, so it was reasonable for the Appellate Division to infer that plaintiff would have acquired the property without defendants’ interference. Moreover, plaintiff lost out on the chance to “flip” the property, like the eventual purchaser was attempting to do, for a significant profit, therefore sufficiently alleging compensable damages.
Because the complaint alleged the “fundament” of a cause of action for tortious interference, the Appellate Division ruled that it should not have been dismissed, even though there was no contract between plaintiffs and defendants. The Appellate Division remanded the matter to the trial court, and, in a somewhat unusual move, directed that “on remand, the case be assigned to a different judge” because “the prior judge may find it difficult to ignore his earlier findings.”
[On a side note, anyone who has ever moved to dismiss a complaint in New Jersey state court has probably cited to Printing Mart for its well-known reference to whether a complaint states the "fundament" of a cause of action. It is also probably the only time any of us use the word "fundament," and with good reason because it was a very strange choice of words. According to the American Heritage Dictionary of the English Language, it means: "1.a. The buttocks. b. The anus. 2. The natural features of a land surface unaltered by human beings. 3. A foundation, as of a building. An underlying theoretic basis or principle." Of all the words the court could have chosen to use . . . ]