DESA MEDICO DEVELOPMENT, INC., et al. v. PETER T. DEMARCO

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3017-04T13017-04T1

DESA MEDICO DEVELOPMENT, INC.,

a New Jersey corporation and

successor in interest to

CHARTER DEVELOPMENT, INC.,

Plaintiff-Respondent/

Cross-Appellant,

v.

PETER T. DEMARCO, deceased,

Defendant-Appellant/

Cross-Respondent.

_________________________________________________

 

Argued February 28, 2006 - Decided June 27, 2006

Before Judges Skillman, Axelrad and Payne.

On appeal from Superior Court of New

Jersey, Chancery Division, Camden County,

C-31-03.

Michael L. Volin argued the cause for

appellant/cross-respondent (Archer & Greiner, attorneys; Mr. Volin on the brief).

David K. Cuneo argued the cause for

respondent/cross-appellant (Cuneo &

Hensler, attorneys; Mr. Cuneo on the

brief).

PER CURIAM

We address cross appeals by plaintiff Desa Medico Development, Inc. (DMD) from a judgment following a bench trial awarding it no damages on its quantum meruit claim and by defendant Dr. Peter T. DeMarco from that portion of the judgment that awarded DMD $63,751.80 as reimbursement for "expenses" incurred in connection with delineating wetlands on property in Gloucester Township and with obtaining a zoning change and approvals to permit the use of property in Moorestown Township for an assisted living facility. We affirm the court's denial of quantum meruit damages and reverse its award of expenses, finding no grounds for the award.

On July 31, 1998 an agreement of sale was entered between DeMarco and Charter Development Inc., the predecessor of DMD, for eighty-four acres of property located in Gloucester Township at a price of $2,500,000, and on April 22, 1999 an agreement of sale was entered between DeMarco and Charter for ten and one-half acres of property located in Moorestown Township. Charter lacked the funds to purchase the properties outright. It was intended by the parties that Bernard McGuigan, the President and principal of Charter, would obtain approvals for the use of the properties for stated purposes, thereby enhancing their value, and would obtain third-party purchasers for them at sale prices in excess of those set forth in the DeMarco-Charter agreements. The properties would then be sold in a "flip" sale in which DeMarco would receive the sale prices set forth in his agreements with Charter, and Charter would be entitled to any increases in value occasioned by the improvements or other factors.

In accordance with the parties' understandings, the July 31, 1998 sale contract for the Gloucester Township property specified that it was to be "rezoned to accept Senior Housing and Commercial Retail development," and the April 22, 1999 sale contract for the Moorestown Township property specified that it was to be "rezoned to accept assisted living development." Both contracts contained a provision that stated:

3. Other Terms and Conditions: Buyer shall immediately begin the process to have said property rezoned. The time period of said process is solely controlled by the Zoning Board and the [appropriate municipal governing body]. Buyer and Seller agree that Buyer shall have a period of one hundred eighty (180) days during which appropriate tests and feasibility studies will be completed by Buyer at Buyer's sole expense. Buyer may terminate this contract in the event said due diligence deems the property unsuitable for Buyer's proposed development. The costs, expenses of Buyer's efforts to have the subject property rezoned, by whatever name called are the sole responsibility of the buyer.

Both agreements also contained a "Brokerage" clause, which stated:

5. Brokerage: Buyer and Seller each agree that no real estate broker has been retained or involved in this transaction other than Bernard McGuigan who shall be paid a 10% commission at the time of settlement.

Settlements were to occur within 180 days of the receipt of all government approvals and permits necessary for construction of the proposed developments. The agreements were formally terminated in a letter from Charter's counsel dated March 13, 2002. Although it was argued at trial that the letter was drafted in contemplation of the execution of a new agreement between DeMarco and DMD, no such agreement was ever signed.

In the period intervening between the execution of the contracts of sale and their termination, McGuigan engaged in various efforts to develop the two properties. With respect to the Gloucester property, he applied for a certificate of need for an assisted living facility, and retained and utilized those persons and entities whose services were necessary to obtain the required zoning and site plan approvals for the use of the site for assisted living. In addition, on October 20, 1998, he entered into a one-year exclusive listing agreement for the property with Paul Friedman, a licensed real estate broker employed by Metro Commercial Real Estate, for the marketing of the property. With respect to the Moorestown property, McGuigan engaged in similar development activities, applying for and obtaining a certificate of need and the necessary zoning for an assisted living facility, and engaging in other site planning endeavors. However, despite his considerable efforts and expenditure of substantial amounts of money, McGuigan was not successful in attracting suitable purchasers for the properties.

During the course of his development work on the Gloucester site, McGuigan had attempted to attract WaWa as a purchaser of a portion of the property. As a consequence, WaWa was excluded from the listing agreement with Friedman for the first four months of its existence. On June 3, 2002, after the expiration of the listing agreement and the termination of the contracts of sale by Charter, a representative of WaWa contacted Friedman with an offer of one million dollars. Friedman communicated the offer to McGuigan and sought a commission agreement in connection with it. McGuigan rejected the offer as too low. Upon learning that McGuigan had no rights to the property, Friedman contacted DeMarco, eventually entering into a commission contract with him and selling the property at a price of $1,050,000.

Thereafter, on April 21, 2003, DMD filed a three-count complaint against DeMarco seeking damages on theories of breach of contract and quantum meruit and alternatively seeking specific performance of the contracts of sale. Prior to trial, summary judgment was granted on all claims except quantum meruit. There has been no appeal from the order embodying those rulings.

Following a bench trial, on November 30, 2004, the judge issued an oral decision in the matter, in which he held that the activities in which DMD engaged in its attempt to sell the properties were covered by the New Jersey Real Estate Broker's Act, N.J.S.A. 45:15-1 to -16.2, that neither DMD nor McGuigan was a real estate broker, and that compensation for services rendered was barred by the Act. The judge found, additionally, that DMD had failed to prove all of the elements necessary for recovery under a theory of quantum meruit, having failed to demonstrate the expectation of compensation for the services rendered or expenses incurred in the absence of any sale of the properties or the reasonable value of the services. While acknowledging the sale of a portion of the Gloucester site to WaWa, the court held that "[p]laintiff has demonstrated nothing to show that its efforts resulted in the WaWa deal. In fact, there was no evidence that it would have even known about the WaWa deal, but for the fact that Metro contacted plaintiff incorrectly believing that it still had rights to the . . . property."

Nonetheless, the court found that the value of the Gloucester property had been enhanced by a delineation of the location of wetlands, and that the value of the Moorestown property had been enhanced by the securing of the zoning and approvals necessary for the construction of an assisted living facility. As a matter of equity, the court ordered DeMarco to reimburse DMD for the expenses incurred in these regards, stating "fair is fair." The order of judgment reflects that those expenses were thereafter found by the court to be $63,751.80, and judgment against DeMarco was entered in that amount.

We agree with the trial judge that DMD did not establish a basis under a theory of quantum meruit for recovery by it. Quantum meruit damages, which are quasi-contractual in nature, will be recognized only in the absence of a contract establishing the rights of the parties. Starkey, Kelly, Blaney & White v. Estate of Nicolaysen, 172 N.J. 60, 67-68 (2002); Weichert C. Realtors v. Ryan, 128 N.J. 427, 437 (1992); Kopin v. Orange Products, Inc., 297 N.J. Super. 353, 366 (App. Div.), certif. denied, 149 N.J. 409 (1997). Significantly, in this case, the operative contracts of sale between DeMarco and Charter unequivocally imposed upon Charter and its successor, DMD, the costs of development efforts with respect to the Gloucester and Moorestown properties, permitting a partial contractual recoupment by means of a ten percent commission only upon the sale of the properties. The existence of those contracts precludes recovery of damages on a quasi-contractual theory during the period that the contracts were in force.

The contracts at issue were terminated on March 13, 2002. Thereafter, a portion of the Gloucester property was sold. However, as the trial judge found, that sale to WaWa did not occur through the efforts of DMD, but instead through an independent contact by representatives of WaWa with Friedman. We find no grounds to disturb that factual determination, which is fully supported by evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). As a consequence, DMD is not entitled to damages as the result of the sale on a quasi-contractual or any other basis. Further, were an entitlement to recovery to be found, it would be barred by the Real Estate Broker's Act, which precludes any action for the collection of compensation by an unlicensed real estate broker in this context. N.J.S.A. 45:15-3.

DMD argues, and the record supports its position, that certain property development efforts were undertaken by it after the termination of the two contracts for sale in March 2002. However, evidence suggests that DMD anticipated the execution of new contracts between DeMarco and it as a successor to Charter that were substantially similar to those that had previously been in force. Under these circumstances, DMD could not reasonably have anticipated reimbursement for services performed during the period after the termination of the earlier contracts. Moreover, as the court found, evidence of the reasonable value of DMD's services was totally lacking at trial. Since evidence of a reasonable expectation of compensation and of the reasonable value of services is essential to a claim for damages under a theory of quantum meruit, recovery on that basis for services provided after March 2002 was properly denied. Starkey, supra, 172 N.J. at 68; Weichert, supra, 128 N.J. at 437-38; Kopin, supra, 297 N.J. Super. at 368.

We find no basis for distinguishing those expenses incurred in delineating wetlands on the Gloucester property and in obtaining approvals and a zoning change to permit the construction of an assisted living facility on the Moorestown property from the remaining expenses for which DMD unsuccessfully sought recovery in this action on a theory of quantum meruit. As a consequence, we reverse the court's order insofar as it permits recovery of those expenses, finding them barred by the contracts entered between the parties and DMD's failure to establish a right to recovery on a quasi contractual theory.

The court's judgment denying quantum meruit damages is affirmed; the award of expenses in favor of DMD is reversed.

 

There is no challenge to the fact that DMD succeeded to the rights of Charter, and we thus treat the two entities as indistinguishable for purposes of this opinion.

The Moorestown agreement also stated in paragraph 5: "Seller acknowledges that broker is an affiliate of the Buyer."

At oral argument, counsel for DeMarco declined to rely on purported violations of the Act by DMD as a basis upon which to preclude recovery by DMD for its unsuccessful efforts to develop and market the properties, in the absence of evidence of their sale. We thus do not address this aspect of the court's decision, which provided an alternate ground to support the result that it reached.

(continued)

(continued)

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A-3017-04T1

June 27, 2006