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A New Jersey appellate court has ruled on whether a broker is entitled to receive a commission for producing a full-price offer four days after the seller withdrew the property from the market but during the term of the listing agreement.
Susan Decker Bibbo ("Seller") listed her home for sale with Island Realty ("Brokerage"). The listing agreement was a standard exclusive listing agreement for six months, from May 1998 to November 1998, and also set forth the commission amounts that the Brokerage would receive upon the sale or leasing of the property. On July 23, 1998, the Seller orally informed the Brokerage that she was removing the house from the marketplace. The next day she letter sent a letter to the Brokerage confirming this decision. On July 27, 1998, the Brokerage faxed an unsigned full-price offer to the Seller. Two days later, the Seller received a signed full-price purchase agreement from the prospective buyer. The Seller rejected the buyer's offer and the Brokerage's claims for its commission because she had withdrawn the property from the market. The Brokerage brought a lawsuit, seeking payment of its commission. The trial court ruled in favor of the Seller, and the Brokerage appealed.
The Superior Court of New Jersey, Appellate Division, affirmed the trial court. The court considered whether the Brokerage could recover a commission under the two theories it alleged, breach of contract or unjust enrichment. In order to recover under either of these theories, the Brokerage would have to show that it was the procuring cause of the sale. New Jersey considers a broker the procuring cause when it produces a purchaser who is a "ready, willing, and able buyer" and whose offer conforms to the seller's criteria. The court first ruled that the Brokerage had not shown it was the procuring cause of the sale because the buyer had not made the required initial deposit or a subsequent deposit and so the buyer did not meet the Seller's criteria, despite the fact that the buyer had offered the Seller's sale price. The court also ruled that a seller retained the right to withdraw a property from the market, so long as the seller met its contractual obligation to "deal fairly and in good faith" with the broker. Since the Seller in this instance had acted in good faith, the court ruled that the Brokerage was not entitled to recover the commission set forth in the listing agreement.
The court stated that the Brokerage may have been entitled to recovery under a quantum meruit theory. Under a quantum meruit theory, the Brokerage would not be entitled to recover ordinary business expenses of a general nature, since these are the costs of doing business, but could recover compensation for "special services" performed prior to the property being withdrawn from the marketplace. However, the court ruled that Brokerage was not entitled to a quantum meruit recovery because the brokerage had not alleged this theory in its complaint and throughout the course of the proceedings in the lawsuit, the Brokerage had only sought recovery of the commission in the listing agreement. Thus, the court affirmed the trial court's ruling in favor of the Seller, denying the Brokerage a commission.
Island Realty v. Bibbo, 329 N.J. Super. 528, 748 A.2d 620 (N.J. Super. Ct. App. Div. 2000).