STEVEN D'AGOSTINO v. GESHER LLC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

STEVEN D'AGOSTINO,

Plaintiff-Appellant,

v.

GESHER LLC, GENNARO PAGANO,

ANTOINETTE PAGANO, GAYLE COLAVITO,

and FEIN, SUCH, KAHN & SHEPARD, P.C.,

Defendants-Respondents.

________________________________________________

January 7, 2015

Argued October 6, 2014 Decided

Before Judges Simonelli and Guadagno.

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-522-12.

Steven D'Agostino, appellant, argued the cause pro se.

Michael R. Burns argued the cause for respondent Gesher LLC (Rothstein, Mandell, Strohm, & Halm, attorneys; Mr. Burns, on the brief).

Gary Strong argued the cause for respondents Gennaro Pagano and Antoinette Pagano (L'Abbate, Balkan, Colavita & Contini, L.L.P., attorneys; Mr. Strong, of counsel and on the brief).

Francis J. Giambalvo argued the cause for respondents Fein, Such, Kahn & Shepard, P.C. and Gayle Colavito (Fein, Such, Kahn & Shepard, P.C., attorneys; Mr. Giambalvo, on the brief).

PER CURIAM

Plaintiff Steven D'Agostino appeals from the September 14, 2012 orders of the Law Division dismissing his complaint for failure to state a claim upon which relief can be granted and denying his motion for reconsideration of that dismissal. Plaintiff filed suit over a failed attempt to purchase property, alleging that the seller-bank's brokers and attorneys interfered with the negotiation process. The motion judge determined that plaintiff's action sounded in contract and dismissed solely on the basis that there was no proof of an executed contract.

As plaintiff's complaint and accompanying proofs adequately stated a claim for, among others, tortious interference with a prospective economic advantage, dismissal was inappropriate. Summary dismissal was particularly inappropriate because genuine issues of material fact existed as to whether the seller accepted plaintiff's offer to purchase property and whether defendants tortiously interfered with plaintiff's attempt to purchase that property. In any event, plaintiff's claims of tortious conduct by defendants did not require a fully executed contract to establish liability. Therefore, we reverse.

I.

Viewing the record in a light most favorable to plaintiff, as we must, Roa v. Roa, 200 N.J. 555, 562 (2010), we glean the following facts. Plaintiff first noticed a property for sale on Brewers Bridge Road in Jackson (the Property) in July 2009. The Property consisted of a 3400 square-foot home, a two-car garage, an in-ground pool, and a separate "out building" on approximately one acre of land. It had been foreclosed, and was owned by American Home Mortgage Servicing, Inc. (AHMS).1 The asking price for the Property was lowered several times between July and September 2009, when it was offered at $184,900, and remained there until at least January 2010.

In December 2009, plaintiff told his broker, Nick Mandveno, that he was interested in the Property. The listing agent for the Property was Antoinette Pagano, but Mandveno's main contact was Antoinette's husband and co-agent, Gennaro Pagano. On January 2, 2010, Mandveno called Gennaro several times and left messages indicating that plaintiff wanted to make an offer on the Property. When he received no response, Mandveno faxed an offer to purchase the Property for $150,000. Mandveno then sent a confirming email to the Paganos that same day.

Still receiving no response from the Paganos, Mandveno attempted unsuccessfully to speak with the seller directly to confirm that plaintiff's offer was received. On January 5, 2010, Mandveno spoke with Antoinette, but she would only say that Mandveno had to speak with her husband.

Gennaro finally called Mandveno on Friday, January 8, 2010, and told him that plaintiff had until 3:00 p.m. that day to submit his offer and proof of funds. Mandveno called plaintiff, who hurriedly submitted his offer and proof of funds before the deadline.

On January 16, 2010, eight days after plaintiff had submitted an offer of $150,000, Gennaro advised Mandveno that AHMS had lowered its asking price to $129,000, and suggested that plaintiff lower his bid accordingly. Mandveno advised plaintiff not to lower his bid, suggesting that the request from Gennaro "sounded fishy." Plaintiff did not agree to lower his offer, and Mandveno told Gennaro that his buyer was "holding firm" on his offer of $150,000.

On January 21, 2010, Mandveno sent the following email to Gennaro expressing doubt as to whether Gennaro had presented plaintiff's offer to the seller

Jerry, I am still waiting for an answer on the offer we submitted to you on the above referenced property on 1-5-2010.2 Since we submitted our $150,000 cash offer we have had no proof of you presenting the offer to the seller. [In fact], the Seller has lower[ed] their price to $129,900, I [can't] believe the Seller has seen our offer. This makes no sense!! Please respond accordingly!!

On Friday, January 22, 2010, at 6:16 p.m., Gennaro sent plaintiff a contract with an addendum requiring plaintiff's acceptance by 5:00 p.m. on the following business day, Monday, January 25, 2010. In an accompanying email, Gennaro added conditions not contained in the addendum,3 including the following warning, appearing twice in the email: "Very important you or the buyer are not to make changes to addendums . . . Any changes made to Addendums. [sic] The deal will be voided." As to the Monday deadline, Gennaro's email required acceptance by 3:00 p.m. on Monday, not 5:00 p.m. as contained in the addendum: "We need this by MON 3:00 or sooner or they are killing the deal[.]"

On Monday, January 25, 2010, plaintiff spent most of the day consulting with two real estate attorneys. By 5:00 p.m. he had not accepted the contract, and Gennaro informed him that the sellers had cancelled due to his failure to meet the deadline.

Months later, plaintiff learned through the New Jersey Multiple Listing Service ("NJMLS") that the Property had been reported as being sold to defendant Gesher4 on April 30, 2010 for $102,000. Upon inspection of title, plaintiff learned that the Property was actually sold to Gesher on March 15, 2010 for $90,000, $60,000 less than plaintiff had offered.

Gesher is a company created by Keith Lindenbaum for the express purpose of purchasing the Property. Plaintiff claims that Keith Lindenbaum's brother, Scott Lindenbaum, is a member of Gesher and a friend of Gennaro's. On November 13, 2011, the Property was offered for sale by Gesher, with an asking price of $339,000.

On January 23, 2012, plaintiff filed a complaint containing eight separate causes of action: tortious interference, negligence, conspiracy, intentional fraud, fraudulent concealment, consumer fraud, unfair competition, and breach of the implied covenant of good faith and fair dealing.

On June 29, 2012, the court held a discovery conference. After questioning plaintiff, who appeared pro se, on the merits of his case, the court stated that because there was no fully executed contract between the parties, plaintiff had no standing and no cause of action. The transcript of the discovery conference suggests that the court based its decision to dismiss entirely on the fact that there was no signed contract

MR. D'AGOSTINO: [L]et's assume that I had -

THE COURT: No, No. I'm not going to assume facts that are not in evidence. I am not going to assume something that didn't happen. I will hear you on what did happen and how you were damaged on the action that happened, but I'm not going to listen to you talk to me about what if. That's not germane.

Despite that this was a discovery conference, the court then denied plaintiff's request to obtain discovery to support his claims

THE COURT: Counsel, I don't mean to cut off Mr. D'Agostino, but how about we jump in here? Can you get an affidavit from some bank representative that says that the information was transferred back to Mr. D'Agostino [as AHMS intended]?

. . . .

MR. D'AGOSTINO: Judge, that the issue before the Court today was my discovery issue[.]

THE COURT: That discovery is going to be moot if we get this affidavit. All right?

. . . .

MR. D'AGOSTINO: All right. But what discovery I would like from the Gesher defendants is what they spent on repairs of the property and what they're realizing

THE COURT: How about we see if we get this affidavit first. If there are any other motions you, Counsel, would like to file in the interim, feel free. Thank you.

All defendants filed motions to dismiss for failure to state a claim. The court heard oral argument on those motions on July 27, 2012. At the court's request, plaintiff outlined the factual basis of his claims. Plaintiff stated that representatives of the seller bank had confirmed via email and documentary records that the counteroffer plaintiff received from the Paganos and Attorney Defendants was different from the offer AHMS had intended to send to him. The court's questioning of plaintiff nonetheless focused exclusively on the lack of an executed contract. When plaintiff alleged that AHMS had, in fact, accepted his offer, the court replied

THE COURT: There is-Mr. D'Agostino, there is no deal. The only thing before the [c]ourt is one offer that you executed and presented to the bank that was never accepted.

MR. D'AGOSTINO: It was accepted by the bank.

THE COURT: You don't have that executed in writing.

MR. D'AGOSTINO: I don't need to have proof. This is not a summary judgment motion here, Your Honor. We're here for my discovery, to get the evidence . . . we're in the early stages of pre-discovery.

. . . .

THE COURT: Okay. So, then there's no contract. Even if the bank executed a piece of paper, unless you have reviewed it and executed that same piece of paper, there's no contract.

MR. D'AGOSTINO: There's no fully executed contract, you're correct, but the reason I was prevented from doing that was because of the tortuous [sic] interference of the defendants.

THE COURT: You're satisfied that the bank received your offer?

MR. D'AGOSTINO: Yes. And I'm also satisfied that the contract that was presented to me was not the same as what the bank had presented to me and, thereby, these defendants interfered with my ability to purchase the property.

The court stated that it was "satisfied that this action is based in contract. . . . As a result of the failure of [plaintiff] to indicate that there was ever an agreement between the bank and himself for the transfer of property, the [c]ourt finds that there is no cause of action against any of these defendants." The judge dismissed all claims with prejudice.

Plaintiff filed a motion for reconsideration, submitting an affidavit indicating that he had spoken with Jordan D. Dorchuck, the chief legal officer of the seller, and Robert Behrund, an officer with Power REO Asset Management Services, who was involved in marketing the Property.

An email from Behrund indicates that his records show that AHMS accepted plaintiff's offer on January 22, 2010, but for reasons he could not explain, the deal "fell through" on January 29, 2010. Dorchuck and Behrund both assured plaintiff that they did not authorize the clause voiding the contract if changes were made to the addendum or the one-day requirement for his acceptance.

Behrund's records also reflected that another prospective purchaser, Mr. Nuss,5 had submitted an offer to buy the property for $139,000 on February 4, 2010, but it similarly "fell through" for unexplained reasons on February 14, 2010. Four days later, a cash offer submitted by Lindenbaum for $102,000 was accepted. The new evidence did not change the court's decision

I've listened carefully to the arguments and the papers submitted by Mr. D'Agostino. I am unpersuaded that the decision of the [c]ourt originally was [in] error, or that I failed to consider with appropriate weight any of the facts relied on by the plaintiff. Therefore, I'm denying the application for reconsideration. Thank you for appearing this morning.

The judge entered orders denying plaintiff's motion for reconsideration and dismissing plaintiff's complaint with prejudice on September 14, 2012.

On appeal, plaintiff argues that his complaint against all defendants sounded in tort, not contract; the existence of a fully-executed contract is not a requisite for liability on defendants' tortious conduct; the court improperly required plaintiff to show proof of "a prima facie case" to survive a motion to dismiss for insufficient pleadings; the Paganos and the attorney defendants owed plaintiff a duty of care to act fairly and honestly; and there was a "meeting of the minds" between the bank and himself.

II.

When determining whether a complaint should be dismissed pursuant to Rule 4:6-2(e) for failure to state a claim upon which relief may be granted, we must assume that the allegations of the pleading are true and we afford the pleader the benefit of all reasonable factual inferences that those allegations support. Berman v. Allan, 80 N.J. 421, 426 (1979). The pleading must be searched in depth and with liberality to determine whether a cause of action can be gleaned even from an obscure statement. Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746 (1989). If a generous reading of the allegations merely suggests a cause of action, the complaint will withstand the motion. Ibid. On such motions, a trial court should grant a dismissal "in only the rarest of instances" and "without prejudice." Id. at 772.

Where matters outside the pleadings are considered, as here, Rule 4:6-2 converts the motion to dismiss into a motion for summary judgment. That is, the record evidence is reviewed for a genuine issue of material fact and whether the movant is entitled to judgment as a matter of law. R. 4:46-2(c). In either case, the appellate court applies a plenary standard of review and the facts are construed in a light most favorable to the plaintiff. Roa, supra, 200 N.J. at 562.

The gravamen of plaintiff's complaint is that defendants tortiously interfered with his efforts to purchase the Property. Under New Jersey law, the tort of interference with a prospective economic advantage (tortious interference) contains four elements: (1) a protectable interest; (2) malice-the defendant's intentional interference without justification; (3) a reasonable likelihood that the interference caused the loss of a prospective gain; and (4) resulting damages. Printing Mart, supra, 116 N.J. at 751-52; accord DiMaria Constr., Inc. v. Interarch, 351 N.J. Super. 558, 567 (App. Div. 2001), aff'd, 172 N.J. 182 (2002).

As to the first element, "[n]ot only does New Jersey law protect a party's interest in a contract already made, '[t]he law protects also a [person's] interest in reasonable expectations of economic advantage.'" Printing Mart, supra, 116 N.J. at 750 (quoting Harris v. Perl, 41 N.J. 455, 462 (1964)). The reason for protecting prospective economic interests was explained many years ago

In a civilized community which recognizes the right of private property among its institutions, the notion is intolerable that a man should be protected by the law in the enjoyment of property once it is acquired, but left unprotected by the law in his efforts to acquire it. The cup of Tantalus would be a fitting symbol for such mockery.

[Brennan v. United Hatters of N. Am. Local 17, 73 N.J.L. 729, 742-43 (E. & A. 1906).]

In Printing Mart, the corporate plaintiff had performed printing services for Sharp for several years. Printing Mart, supra, 116 N.J. at 747. When Printing Mart submitted a bid on a project, there was evidence that Sharp employees rigged the bid process to enable competitors to win the contract. Id. at 747-49. Printing Mart sued Sharp, three of its employees, and three competitors alleging intentional interference with prospective economic relations and defamation. Id. at 745. The trial court dismissed the complaint under Rule 4:6-2(e) for failure to state a claim upon which relief may be granted. Ibid. The trial court concluded that "absent an agreement that would obligate Sharp to continue doing business with Printing Mart . . . , there was no basis for an intentional-interference claim." Id. at 749.

The Supreme Court reversed, holding that although a complaint based on tortious interference must allege facts that show a protectable right such as a prospective economic or contractual relationship, "the right need not equate with that found in an enforceable contract[.]" Id. at 751.

In Harris, the Court held that a real estate broker acquires a protectable interest in his commission if negotiations ensue from his introduction of the prospective buyer to the seller. Harris, supra, 41 N.J. at 462-63. The same reasoning applies here to the plaintiff-purchaser's protectable interest.

Moreover, the Second Restatement of Torts6 expressly states that interference with "prospective contractual relations" includes "interferences with the prospect of . . . the opportunity of selling or buying land[.]" Restatement (Second) of Torts 766B cmt. c (1979).

Here, plaintiff alleged interference with his opportunity to enter into a contract to purchase property. Plaintiff's bid exceeded the asking price, so his expectation of acquiring the Property was reasonable. In short, plaintiff's claims satisfied the first element of a protectable interest in the Property.

As to the second element, an interference can be malicious, or "without justification or excuse," in either of two ways: (1) the interest pursued is illegitimate, or (2) the means used are inappropriate. Johnson & Johnson v. Guidant Corp., 525 F. Supp. 2d 336, 360 (S.D.N.Y. 2007). The inquiry's focus is on the defendant's acts. Printing Mart, supra, 116 N.J. at 756.

In Printing Mart, the Court found allegations that the defendants had submitted false bids in order to secure a particular bid winner were sufficient, if true, to infer that the defendants had intended for the plaintiff to lose the auction. Ibid. The Court found that such acts were necessarily done "intentionally and wrongfully without justification," because they were morally and commercially wrongful. Id. at 756-57.

Here, plaintiff alleges that (1) the Paganos falsely stated that AHMS was already considering another offer before allowing him to submit a bid; (2) the Paganos either failed to submit or delayed the submission of his bid to AHMS; (3) the Paganos told plaintiff that the bank had lowered their asking price by $50,000 because they had another buyer; (4) the Paganos and the Attorney Defendants added false terms to the counteroffer plaintiff received to dissuade him from accepting the contract; (5) the Paganos had arranged for Keith Lindenbaum's company, Gesher, to purchase the Property at a below-market price; (6) the Paganos and the Attorney Defendants concealed AHMS's acceptance; and (7) the Paganos made false filings with the NJMLS to fraudulently conceal their transaction.

These facts, accepted as true, are sufficient to infer that the Paganos and Gesher acted in concert to prevent plaintiff from purchasing the Property. Likewise, plaintiff's allegations constitute accusations of wrongful conduct7 that "would not be sanctioned by the rules of the game." Printing Mart, supra, 116 N.J. at 757. As such, plaintiff's complaint satisfies the second element of malice.

Finally, the complaint alleges sufficient causation and damages. A plaintiff proves causation by showing that he or she would have had a reasonable probability of economic gain in the absence of the alleged interference. Printing Mart, supra, 116 N.J. at 759. Damages must be illustrated by facts showing that the plaintiff has suffered or will suffer pecuniary damage. Id. at 760. In Printing Mart, the Supreme Court found that the plaintiff's submission of the most competitive bid was sufficient to prove causation and actual damages in the amount of the lost prospective gain. Ibid.

Plaintiff's offer of $150,000 was $20,000 above the seller's asking price and $60,000 more than Gesher eventually paid for the Property. At this pre-discovery stage, it is reasonable to infer that without the Paganos' interference, AHMS would have accepted plaintiff's bid.

Plaintiff sufficiently alleged damages by asserting that Gesher stands to make approximately $200,000 in profit by reselling the Property, and that he "lost out on huge potential profits" because of defendants' conduct. As such, plaintiff adequately stated a claim for tortious interference.

The motion judge failed to consider any of the four required elements, and dismissed because he concluded that plaintiff's action is based in contract. Because plaintiff's claim sounded in tort and not contract law, it was error for the court to dismiss this claim.

We need not analyze the dismissal of plaintiff's other claims, as sufficient evidence was presented to sustain all of them and the lack of an executed contract was not a sufficient reason to dismiss any of them. Plaintiff's allegations, accepted as true, are sufficient to proceed to discovery on each of his eight claims.

Moreover, given the representations of Behrund and his company's records, there is a question of fact as to whether AHMS accepted plaintiff's offer. At a minimum, therefore, plaintiff's allegations were sufficient to survive a Rule 4:6-2(e) motion, and he should be allowed to proceed to discovery on this claim.

The motion judge's dismissal of plaintiff's complaint with prejudice and his denial of reconsideration was arbitrary, capricious, and unreasonable in light of controlling law and the facts presented. We reverse. We further direct that, on remand, the case be assigned to a different judge. As the prior judge may find it difficult to ignore his earlier findings, we believe it is best that the case be reconsidered by a new fact-finder.

Reversed and remanded. We do not retain jurisdiction.

1 It appears from the record that AHMS is a subsidiary of Deutsche National Bank headquartered in Texas, from whom plaintiff eventually received discovery. Plaintiff advises that AHMS has recently been renamed Homeward Residential.

2 While Mandveno's email indicates that the offer was made on January 5, 2010, his affidavit and handwritten notes state that the offer and follow-up calls to the Paganos were made on January 2, 2010.

3 Gennaro's email also contained the condition that plaintiff pay a $4500 deposit to defendant law firm Fein, Such, Kahn & Shepard, P.C. (Fein Such; together with defendant Colavito, the Attorney Defendants). Fein Such's principal argument-that it was not involved in transactions with plaintiff and only later represented defendant Gesher, LLC (Gesher)-is thus unavailing.

4 AHMS's records show that the Property was sold to Keith Lindenbaum, who is defendant Gesher's signatory. There is no title in the record to determine which entity owns the Property.

5 The record does not provide Mr. Nuss's first name.

6 The Second Restatement is controlling as to tortious interference. See Restatement (Third) of Torts: Liability for Physical and Emotional Harm 5 Reporter's Note ("The torts of nuisance, injurious falsehood, invasion of privacy, and intentional interference with prospective economic advantage are all deferred until later volumes.").

7 The Paganos' argument that plaintiff failed to allege any wrongful conduct is thus unavailing. Their other argument, that they avoid liability as agents acting within the scope of their duties, must similarly fail. Specifically, "an agent is subject to liability to a third party harmed by the agent's tortious conduct . . . although the actor acts as an agent or an employee . . . or within the scope of employment." Restatement (Third) of Agency 7.01 (2006). Moreover, securing a buyer for $60,000 less than the highest offer cannot logically be in the principal's interest. Id. at 1.01 (defining agent as one who acts "on the principal's behalf") and 8.01 (defining fiduciary duty of care and loyalty).