TWILO, LLC et al. v. PATRINOS, INC., t/a NORTH BERGEN DINER

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
 
 
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-6695-03T5

TWILO, LLC and
STEVEN DEMETRIOS,

Plaintiffs-Respondents,

v.

PATRINOS, INC., t/a NORTH
BERGEN DINER,

Defendant-Appellant,

and

STAVROS HAIDOPOULOS and KONSTANTIANA
HAIDOPOULOS, unmarried,

Defendants.

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September 15, 2006
____________________________________

Argued July 12, 2006 Decided

Before Judges Fuentes and Graves.

On appeal from Superior Court of
New Jersey, Law Division, Hudson
County, Docket No. L-2728-03.

Howard A. Miller argued the cause for
appellants (Anthoney G. Rathe, attorneys;
Mr. Miller, on the brief).

Nicholas G. Sekas argued the cause for
respondents (Sekas & Associates,
attorneys; Justin J. Walker, on the
brief).

PER CURIAM

Defendants Patrinos Inc. and Stavros Haidopoulos appeal from a judgment entered against them by the Law Division after a bench trial. Plaintiff Twilo, LLC and Steven Demetrios's cause of action against defendants alleged breach of contract, violation of the implied covenants of good faith and fair dealing, common law fraud and consumer fraud. The court conducted a four-day trial in which five fact-witnesses testified. No expert testimony was presented.
After reviewing the record and applicable law, we affirm the court's findings that defendant breached his contract with plaintiff and further affirm the award of damages flowing therefrom. We reverse, however, the trebling of these damages and the award of counsel fees under the Consumer Fraud Act. We gather the following facts from the evidence presented at trial.
The parties entered into a contract in 1999 for the sale of the Berkshire Diner located on Bergenline Avenue, a main commercial strip in the Township of North Bergen. The diner was sold for $130,000, of which plaintiffs paid $65,000, with defendant taking back a purchase money promissory note for the remaining $75,000. Defendant Stavros Haidopoulos was the owner of the building where the diner is located. Under paragraph 16, subsection (f)(iv) of the asset purchase agreement:

Purchaser [plaintiff] shall have a five (5) year option to acquire the premises at a purchase price of Two Hundred Fifty Thousand ($250,000.00). Purchaser [plaintiff] shall tender the sum of Twenty-Five Thousand Dollars at the time of the execution of the Contract. Seller shall provide a purchase money mortgage in the amount of One Hundred Sixty-Seven Thousand Five Hundred Dollars ($167,500.00) for a term of five (5) years, seven percent (7%) per annum, based upon a twenty-five (25) year payment amortization schedule with a five (5) year balloon, monthly payments of One Thousand One Hundred Seventy-Seven Dollars and Ninety-Six Cents ($1,177.96.) Provided seller is not in default of its obligation to Costas Nicolaou, it shall have the option to secure an assignment of any existing obligation to Costa Nicolaou to Purchaser or its assignee and provide a second mortgage for the balance of the financing set forth above. The Second mortgage shall provide personal guaranty of the shareholders or members of the Purchaser of the property.

Contemporaneous with the purchase of the business, the parties entered into a fifteen-year lease agreement for the business premises. The lease included a rider, which specified the obligation of each party with respect to the maintenance of the demised premises. Under this rider, plaintiff was responsible for any repairs to "all systems in the premises, such as heating, air conditioning, electric and plumbing systems." Defendant, as landlord, had the responsibility of replacing "any heating, air conditioning, electrical, and plumbing system if they can not be repaired by the tenant." The landlord was also responsible for making repairs to "the foundation, roof and any other structural repairs to the exterior of the leased premises," unless the damage occurred as a result of the tenant's negligence or omissions.
The parties carried on a landlord/tenant relationship from 1999 through January of 2002, when plaintiff notified defendant of severe water leaks coming from the roof. According to plaintiff, the water problem interfered with the orderly operation of the diner. Plaintiff also complained of problems with the sewer lines in the basement of the property.
Plaintiff's attorney sent defendant a letter dated January 21, 2002 advising him of plaintiff's intention to purchase the property under the five-year option to purchase contained in the asset purchase agreement. The letter also informed defendant that plaintiff had secured the release of defendant's obligation to Costas Nicolaou, the first lien holder. Finally, the letter indicated the approximate balance outstanding on the promissory note (executed in connection with the purchase of the diner). Plaintiff had secured financing for the balance of the monies due under the option to purchase.
Defendant's counsel's response to this letter modified the original terms under the option purchase, by insisting that plaintiff pay off the loan owed to Nicolaou, rather than simply assuming the obligation. Defendant's counsel thereafter drafted a contract that required plaintiff to assume Nicolaou's obligation as a first lien mortgage. This conflicted with plaintiff's agreement with his independent lender, which required Nicolaou's mortgage to be subordinate to plaintiff's lender's mortgage. Based on this impasse, plaintiff was unable to secure the required financing.
Shortly after these events, plaintiff became delinquent in his monthly rent payment for the months of June and July of 2002. Also during this time, the problems with the leaks and sewer worsened.
The next time plaintiff attempted to exercise his option to purchase the property was in the summer of 2003. This time, the deal was connected with an individual who wanted to purchase the diner and building to convert it into a "Dunkin' Donuts." On April 23, 2003, the prospective purchaser's counsel inadvertently sent a confidential fax to defendant's counsel, disclosing the details of the proposed transaction between his client (Dunkin' Donuts) and plaintiff. The fax transmission was intended for plaintiff's counsel.
Upon discovering the error, plaintiff's counsel immediately sent a letter to defendant's attorney requesting that he "disregard the letter in its entirety and to take no action relating thereto." The letter continued warning that if defendant or the attorney "attempt to contact [prospective purchaser's counsel] I will have no alternative but to pursue remedies against you for tortious interference with contract and other remedies as may be available."
Approximately one week later, defendant transferred title to the property to his daughter. The deed purporting to transfer title was prepared by the same attorney who was the recipient of the fax transmission. Eight days thereafter, the same lawyer sent a letter to plaintiff's counsel purporting to unilaterally terminate plaintiff's option to purchase.
From this record, we are satisfied that the trial court's finding that defendant violated plaintiff's contractual option to purchase the property is supported by competent credible evidence. Rova Farms Resort, Inc., v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). We thus affirm this aspect of the judgment. The court specifically found, that the measure of damages included a $1,958 cost incurred by plaintiff in connection with replacing a sewer line, a responsibility imposed upon defendant under the rider to the lease agreement. This finding is supported by testimony from plaintiff, which the court was obviously at liberty to accept as truthful.
The balance of the damages awarded by the court involves the lost sale by plaintiff to his prospective purchaser who intended to replace the diner with a Dunkin' Donuts. Plaintiff testified that he would have netted a $200,000 profit if he had been able to acquire the property from defendant under the terms of the option to purchase, and then resale it to the Dunkin' Donuts developer.
To prove tortious interference with prospective economic advantage, a plaintiff must show "some protectable right," usually by demonstrating that it had sufficiently pursued a business opportunity to have "some 'reasonable expectation'" of securing it. Printing Mart-Morristown, Inc. v. Sharp Elecs. Corp., 116 N.J. 739, 751 (1989) (quoting Harris v. Perl, 41 N.J. 455, 462 (1964)). A Plaintiff must also show that the interference was done "intentionally and with malice," which means "that the harm was inflicted intentionally and without justification or excuse." Ibid. (internal quotation marks omitted). In addition, plaintiff must show that "the interference caused the loss of the prospective gain," so that, in the absence of the interference, there would have been "'a reasonable probability that the victim of the interference would have received the anticipated economic benefits.'" Ibid. (quoting Leslie Blau Co. v. Alfieri, 157 N.J. Super. 173, 185-86 (App. Div.), certif. denied sub nom., Leslie Blau Co. v. Reitman, 77 N.J. 510 (1978)). Finally, plaintiff must show "that the injury caused damage." Id. at 752.
Here, the court accepted plaintiff's testimony as credible and sufficiently reliable for this "lost opportunity" measure of damages. The court found that the Dunkin' Donuts sale was sufficiently certain to constitute a "protectable right," and that defendant's efforts in transferring the tile to the property to his daughter constituted sufficient evidence of malice. We discern no legal error in this analysis and the factual findings are amply supported by the record.
We are compelled, however, to reverse the court's award of treble damages and counsel fees under the Consumer Fraud Act. N.J.S.A 56:8-2 provides, in pertinent part, that:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale . . . [of] real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice. . . .

This provision "does not apply, however, to non-professional sellers of real estate." Byrne v. Weichert Realtors, 290 N.J. Super. 126, 134 (App. Div.), certif. denied, 147 N.J. 259 (1996). It is clear that the Act
was intended as a response only to the public harm resulting from "the deception, misrepresentation and unconscionable practices engaged in by professional sellers seeking mass distribution of many types of consumer goods," Kugler v. Romain, 58 N.J. 522, 536 (1971), and not to the isolated sale of a single family residence by its owner.

[Di Bernardo v. Mosley, 206 N.J. Super. 371, 376 (App. Div.), certif. denied, 103 N.J. 503 (1986).]

There is nothing in this record that indicates that defendants were at the time of these events, engaged in the business of selling real estate. Although defendant had owned a number of other diners, there is simply no evidence that he was a professional seller of real property. In fact, the trial court did not make any particular findings that address this critical element of the Consumer Fraud Act.
Conclusion
 
The court's judgment finding defendant liable for breach of contract is affirmed. The award of damages in the amount of $201,958 is affirmed. The trebling of these damages and the award of counsel fees under the Consumer Fraud Act is reversed.
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