ShareA New Jersey appellate court has considered a challenge by a real estate broker to the trial court’s decision that the broker breached his fiduciary duty to his clients by misrepresenting the status of property negotiations.
The Curran Group II, L.L.C. (“Developer”) purchases land, acquires the necessary permits for development of the land, and then sells the subdivided parcels to builders or developers. The Developer acquired three large parcels in New Jersey and began the process of obtaining the appropriate development approvals.
The Developer realized that it needed to create additional road access to one of the parcels, and so the Developer retained licensed real estate broker Dennis F. Massimo (“Broker”) to obtain the necessary land to complete the project. The Developer identified two specific lots (“Lots”) that it wanted to acquire. The Lots were eventually purchased by the Broker’s uncle, who obtained the necessary development approvals and then sold the Lots for a significant profit.
The Developer filed a lawsuit against the Broker, alleging that the Broker had misrepresented the status of the negotiations with owners of the Lots and also the owners’ willingness to sell the Lots. The Broker counterclaimed for unpaid commissions. Following a bench trial, the trial court concluded that the Broker had breached his fiduciary duty to the Developer and awarded damages to the Developer. The trial court rejected the Broker’s claims for lost commissions and also the Developer’s allegations concerning violations of the state’s consumer fraud act. Both parties appealed.
The Superior Court of New Jersey, Appellate Division, affirmed the rulings of the trial court. The Broker argued that he had entered into two separate agreements with the Developer which entitled the Broker to commissions from sales made in the development. The trial court had rejected these allegations, finding that the first agreement only entitled the Broker to commissions for sales to certain entities and none of the sales were made to those entities. The court found the second agreement was unenforceable because it involved the Broker splitting commissions with unlicensed persons. The court found that the evidence supported the trial court’s rulings and so the court affirmed the rejection of the Broker’s counterclaim.
Next, the court considered the Developer’s argument that it was entitled to recovery under the state’s consumer fraud act. The act prohibits unconscionable acts, fraud, misrepresentation, or knowing concealment of a material fact in the sale of real estate. The act applies to real estate brokers and other professionals involved in a real estate transaction. However, the Broker’s conduct did not involve a real estate transaction or an attempt to induce a real estate transaction, as the allegations against the Broker centered around his efforts to frustrate the Developer’s acquisition of certain properties. Therefore, the Broker’s conduct did not fall within the state’s consumer fraud act and so the court affirmed the trial court.
Curran Group II, L.L.C., v. Massimo, No. L-3632-02, 2006 WL 2192861 (N.J. Super. Ct. App. Div. July 18, 2006). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].