TOWNE REALTY GROUP, LLC VS. NRK OF NEW JERSEY, INC. (L-2529-16, UNION COUNTY AND STATEWIDE)

New Jersey Superior Court Appellate Division·Decided January 5, 2021·No. A-5204-18T2·Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

DOCKET NO. A-5204-18T2

TOWNE REALTY GROUP, LLC, MARK BIGOS, KAREN EASTMAN BIGOS, and DANIEL CANNIZZO,

Plaintiffs-Appellants,

v.

NRK OF NEW JERSEY, INC., CHARLES OPPLER, RANDY LYN KETIVE, and SOTHEBY'S INTERNATIONAL REALTY,

Defendants-Respondents.

Argued November 17, 2020 – Decided January 5, 2021 Before Judges Yannotti, Haas and Mawla.

On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-2529-16.

Mark A. Berman argued the cause for appellants (Hartmann, Doherty, Rosa, Berman & Bulbulia, LLC, attorneys; Mark A. Berman and Kelly A. Zampino, on the briefs).

Michael R. Scully argued the cause for respondents (Michael R. Scully, LLC, attorneys; Michael R. Scully and Maurice Napolitano, on the brief).

PER CURIAM Plaintiffs appeal from the order of judgment dated June 17, 2019, and certain orders previously entered in this case. Plaintiffs contend the trial judge erred by dismissing their claims at trial pursuant to Rule 4:37-2(d). They also contend the trial court erred by limiting the scope of discovery. We affirm.

I.

This appeal arises from the following facts. In 2016, Towne Realty Group, LLC (TRG) was a real estate brokerage business with an office in Short Hills. Mark and Karen Bigos (the Bigoses) and Daniel Cannizzo (Cannizzo) were members of TRG (collectively, the TRG Members). The Bigoses were licensed real estate brokers, and Cannizzo had a real estate salesperson's license.

In 2016, NRK of New Jersey, Inc. (NRK), a franchisee of Sotheby's International Realty (Sotheby's), also was a licensed real estate brokerage business. NRK had thirteen offices, including an office in Short Hills. Charles Oppler was the Chief Operating Officer and a broker/owner of NRK, and he was apparently well known in the New Jersey real estate business.

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In July 2016, plaintiffs entered into an Asset Purchase Agreement (APA)

with NRK.1 Plaintiffs executed the APA on July 7, 2016. NRK executed the agreement the following day.

In the APA, plaintiffs agreed to sell, and NRK agreed to purchase, substantially all of TRG's operating assets including its inventory of contracts for the sale and purchase of real or personal property, leases of real property , executed listing agreements, sales records, customer lists, interests in social media sites, furniture, supplies, and equipment. To acquire these assets, NRK agreed to pay TRG and the TRG Members an amount equal to a minimum of $1,700,000.

The APA provided that at the closing, NRK would deliver a cash payment of $925,000 and a promissory note for $775,000 according to certain terms and conditions. The APA further provided that after the closing date, NRK would pay TRG an additional purchase price, which included amounts NRK received in connection with certain contracts and agreements between TRG and third parties that were "fully executed" prior to the closing date. The closing was to take place on July 26, 2016.

1 We note that in the APA, the TRG Members are referred to as the TRG Partners.

A-5204-18T2

The APA also stated that the TRG Members would remain as independent contractors of NRK for a two-year period , commencing on the closing date. TRG and the TRG Members agreed "to exercise reasonable efforts to cause" the sales and broker associates who were then affiliated with TRG to become independent contractors of NRK.

The TRG Members additionally agreed to "personally address" the current TRG associates at a meeting or meetings to announce the APA and recommend that they become independent contractors with NRK. The APA stated, however, that nothing in the agreement "shall be construed to obligate [NRK] to retain, after the [c]losing, any current" sales or broker associate "currently associated or affiliated with" TRG.

The APA also stated that Barbara Birkitt (Birkitt) was TRG's broker of record and she would assist in the transition. The parties agreed they would communicate with Birkitt and make "reasonable efforts to cause Birkitt to become the manager/designated realtor" of NRK's Short Hills office.

The APA further provided that NRK's obligation to proceed with the closing "shall be subject to the fulfillment of the obligations [therein] contained . . . and the fulfillment of the conditions set forth below . . . ." One of the conditions precedent, which was set forth in Section 11.07, stated that:

A-5204-18T2

[NRK] shall be satisfied, in its sole discretion, that the real estate licenses of the sales associates and broker associates currently associated or affiliated with [TRG]

will be transferred to [NRK] on substantially the same or similar terms as currently exists between the sales associates or broker associates currently associated or affiliated with [TRG].

At the time the parties signed the APA, TRG had thirty-seven licensed sales associates, which included the three TRP Principals and other persons who held real estate licenses but were not involved in the real estate business. According to plaintiffs, TRG was a stronger performer than NRK in the Short Hills real estate market.

Plaintiffs assert that the purpose of the APA was to strengthen NRK's presence in Short Hills by having the associates at TRG transfer to NRK, along with their listing agreements and books of business. NRK contends it was its understanding that the TRG associates would transfer to NRK as a group.

On July 12, 2016, the parties announced the proposed transaction to TRG's associates. Plaintiffs claim that thereafter, Oppler made little to no effort to cause TRG's associates to become affiliated with NRK. They allege Oppler alienated the TRG associates by announcing NRK had not decided who would manage the Short Hills office, even though the APA provided that NRK would make "reasonable efforts to cause" Birkitt to take that position.

A-5204-18T2

It appears that, as the scheduled closing date approached, none of the TRG associates had agreed to join NRK. Many took positions with competing firms. According to plaintiffs, NRK refused to commit to the agreed upon closing date or any other date. On July 25, 2016, plaintiffs demanded that NRK close immediately, asserting that time was of the essence.

On that same day, NRK announced Jacqueline Elliott would be manager of NRK's Short Hills office. On July 26, 2016, Oppler told Cannizzo that NRK did not intend to go forward with the APA, and he asked plaintiffs to drop the purchase price or he would cancel the agreement. Plaintiffs refused to reduce the agreed-upon price.

On August 2, 2016, plaintiffs filed a complaint in the Law Division, naming NRK, Oppler, Randy Lyn Ketive (Ketive), and Sotheby's as defendants. Among other things, plaintiffs alleged they fulfilled their obligations under the APA and defendants did not. Plaintiffs claimed defendants failed to promote the transaction, did not make timely offers to TRG's associates, and made false and misleading statements that induced them to enter the agreement.

Plaintiffs asserted claims of breach of contract, breach of the covenant of good faith and fair dealing, unfair competition, fraudulent inducement, tortious interference with prospective economic advantage and contractual relationships.

A-5204-18T2

They sought compensatory and punitive damages, equitable relief, interest, costs of suit, and attorney's fees.

On August 3, 2016, NRK notified TRG that it was cancelling the APA due to TRG's failure to fulfill the conditions precedent under the agreement, including Section 11.07. Defendants thereafter filed a motion to dismiss the complaint.

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TOWNE REALTY GROUP, LLC VS. NRK OF NEW JERSEY, INC. (L-2529-16, UNION COUNTY AND STATEWIDE), (N.J. Ct. App. 2021).

TOWNE REALTY GROUP, LLC VS. NRK OF NEW JERSEY, INC. (L-2529-16, UNION COUNTY AND STATEWIDE) (TOWNE REALTY GROUP, LLC VS. NRK OF NEW JERSEY, INC. (L-2529-16, UNION COUNTY AND STATEWIDE)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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