Opinion
Civ. No. 98-2934 (DRD).
January 19, 1999.
Stanley N. Silverman, Esq., Silverman Kost, P.C., Livingston, N.J., Attorneys for Plaintiff.
Gregory E. Galterio, Esq., Jaffe Asher, Hawthorne, N.J., Attorneys for Defendants.
OPINION
In this breach of contract action, a law firm is suing an entrepreneur, his real estate and business advisor, and his consultant company to recover a brokerage commission or a finders fee for introducing the entrepreneur to a lender willing to issue a $25 million mortgage loan which never closed. The entrepreneur, John A. Catsimatidis" (Catsimatidis"), the business and real estate advisor, Alan Talansky ("Talansky"), and the consultant, United Advisors, Inc. ("United" and together with Catsimatidis and Talansky, the "Defendants"), have moved to dismiss the plaintiff's complaint pursuant to Fed.R.Civ.P. 12(b)(6). Oral argument was heard on January 11, 1998. For the reasons set forth above, Defendants motion will be granted.
Both the Alperin and Talansky affidavits submitted in support of Defendants' motion are flagrant violations of this district's L.Civ.R. 7.2(a) in that they are replete with inadmissable hearsay statements and legal arguments and summations. Were the affidavits to be given any consideration, there would be stricken from the Alperin affidavit paragraphs 2-7 and there would be stricken from the Talansky affidavit paragraphs 2-4, 16, 18, 19, 20 (and the exhibits referred to therein), and 21-24. Defense counsel are admonished to familiarize themselves with the rules of this court and to observe them in the future.
I. BACKGROUND
The plaintiff, Silverman Kost, P.C. ("SK"), is a professional corporation incorporated under the laws of the State of New Jersey. See Complaint ¶ 1. It is engaged in the practice of law and related activities such as real estate and mortgage brokering. Id. Catsimatidis is an individual and the fee simple owner of approximately thirteen parcels of real property located in the State of Florida (the "Florida Properties"). Id. ¶ 2. Talansky is a personal real estate and business advisor and allegedly the president and chief executive officer of United. Id. ¶ 4. United is a consulting firm incorporated under the laws of the State of Florida with its principal place of business at 2665 South Bayshore Drive, Coconut Grove, Florida. Id. ¶ 3.
On or about October 1, 1996, Talansky communicated with SK regarding Catsimatidis and the Florida Properties. Id. ¶ 14. Talansky informed SK that Catsimatidis had decided to undertake a major capital expenditure program and refinancing of existing mortgages, with respect to the Florida Properties, and was looking to secure at least $25 million in mortgage financing. Id. ¶ 16. SK represented to Talansky that it was qualified and experienced in these types of real estate matters and in obtaining commercial mortgage financing at the dollar level Talansky indicated. Id. ¶ 17. SK advised Talansky that if it were retained, it would use its best efforts to diligently and expeditiously prepare and compile the required mortgage application on behalf of Catsimatidis and then market the application to potential lenders. Id. ¶ 18.
SK allegedly discussed with Talansky what its professional fee would consist of. Id. ¶ 19. SK would allegedly receive one percent of the total amount in mortgage financing that it secured, either directly or indirectly, to be offered to and accepted by Catsimatidis from any financial institution or mortgage company. Id. This commission would allegedly be earned and due to SK when SK offered Catsimatidis any amount of financing the terms and conditions of which Catsimatidis accepted. Id. Talansky, as Catsimatidis's agent, allegedly agreed to these conditions. Id. ¶ 20.
Between October 1, 1996, and November 22, 1996, SK allegedly performed under the agreement by meeting with Talansky and Catsimatidis regarding the Florida Properties. Id. ¶ 22. Additionally, SK allegedly prepared a mortgage and loan application in the principal amount of $25 million. Id. On or about November 22, 1996, SK presented Talansky and Catsimatidis with a mortgage financing offer on the Florida Properties in the principal amount of $25.5 million. Id. ¶ 23. On or about the same date, Talansky, as Catsimatidis's agent, accepted this offer. Id. ¶ 24.
On December 5, 1996, SK issued Talansky and Catsimatidis a Letter of Commitment with respect to the $25.5 million mortgage loan. Id. ¶ 25. On or about January 1, 1997, Catsimatidis, after consultations with both Talansky and SK, accepted the mortgage loan. Id. ¶ 26. As evidence of his acceptance, Catsimatidis paid to the mortgage loan company approximately $264,000 as a good faith pre-payment of certain loan expenses. Id. ¶ 27.
Between February 1, 1997, and February 1, 1998, SK and the mortgage company allegedly fixed several dates for the closing of the mortgage loan. Id. ¶ 28. After each closing date was set, Catsimatidis and Talansky requested and received a cancellation and rescheduling of the proposed closing. Id. On or about February 1, 1998, Catsimatidis informed SK that he would not close on the mortgage loan and that he was withdrawing from the transaction. Id. ¶ 29. Catsimatidis allegedly had concluded negotiations for the sale of the Florida Properties and was no longer in need of the mortgage loan. Id. ¶ 30.
SK filed this action on June 23, 1998, alleging breach of contract, breach of the implied covenant of good faith, unjust enrichment, bad faith, and common law fraud. Id. ¶¶ 35-63. SK alleges that Catsimatidis and Talansky were engaged in negotiations for the sale of the Florida Properties concurrently with SK's preparation of the mortgage application. Id. ¶ 31. SK also alleges that Catsimatidis and Talansky utilized SK's work product arising from the commission agreement and mortgage application in their negotiations to sell the Florida Properties. Id. ¶ 33. As a result of such activities, SK alleges that the Defendants breached a contract when Catsimatidis failed to pay it the one percent commission.
II. DISCUSSION
Defendants have moved to dismiss SK's complaint pursuant to Fed.R.Civ.P. 12(b)(6). Defendants argue that this case should be dismissed because an unlicensed real estate or mortgage broker cannot maintain an action to recover a brokerage commission or finder's fee. Defendants contend that although SK is a law firm, it must be separately licensed as a real estate broker if it intends to collect commissions. SK opposes the motion and argues that Defendants are barred from proceeding under Rule 12(b)(6) because their motion contained material outside of the pleadings.
When a district court receives a 12(b)(6) motion that contains materials outside of the pleadings, it has the discretion to either exclude the materials and decide the motion as a motion to dismiss or to accept the materials and convert the motion to one for summary judgment pursuant to Fed.R.Civ.P. 56 . See Biase v. Kaplan , 852 F. Supp. 268, 284 n. 13 (D.N.J. 1994). Although Defendants have submitted affidavits in support of their motion which speak to issues outside of the pleadings, those materials have not been consulted in rendering a decision on this motion. Accordingly, SK's argument that Defendants are barred from proceeding under Rule 12(b)(6) is of no consequence. Additionally, the remaining points in SK's opposition brief "proceed on the assumption that the Court will elect to accept and consider the Talansky and Alperin affidavits and convert the Rule 12(b)(6) motion to a Rule 56 summary judgment motion." See SK's Brief in Opposition, at 3. These arguments are based solely around a motion for summary judgment and do not raise any defense to SK's failure to be a licensed real estate broker. Accordingly, they are of no help in deciding this motion.
A. Dismissal Pursuant to Rule 12(b)(6)
A complaint must be dismissed pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted if the court finds "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle [the plaintiff] to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In analyzing motions to dismiss, all allegations set forth in the complaint must be accepted as true and all reasonable inferences must be drawn in the plaintiff's favor. Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir. 1991). A court should allow a plaintiff to amend the complaint instead of dismissing it where "a more carefully drafted complaint might state a claim upon which relief could be granted." Friedlander v. Nims, 755 F.2d 810, 813 (11th Cir. 1985); see Howze v. Jones Laughlin Steel Corp., 750 F.2d 1208, 1212 (3d Cir. 1984).
A motion to dismiss that presents the court with matters outside the pleading which are not excluded is to be treated as a motion for summary judgment and analyzed pursuant to Rule 56. Fed.R.Civ.P. 12. In such circumstances, "all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Id. However, an undisputedly authentic document attached to a motion to dismiss may be considered without converting it to a motion for summary judgment if plaintiff's claims are based upon that document. Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993), cert. denied, 510 U.S. 1042, 114 S.Ct. 687, 126 L.Ed.2d 655 (1994).
B. Analysis
The New Jersey Real Estate Brokers and Licensing Act, as amended, N.J.S.A. 45:15-1 et seq., (the "Act"), regulates most facets of real estate and mortgage transactions. Portions of the Act deal specifically with real estate and mortgage commission agreements and who is entitled to collect such commissions. The Act states in relevant part that
The New Jersey Real Estate Brokers and Licensing Act applies to a case "[w]henever a significant part or material '
`incident' of a transaction involving an unlicensed broker takes place in New Jersey." Tanenbaum v. Sylvan Builders, Inc . , 50 N.J. Super. 358, 142 A.2d 247, 256 (App.Div. 1958). SK obtained the letter of commitment and the mortgage from a company located in New Jersey. All of the negotiations between SK and the mortgage company took place within New Jersey. These are clearly "significant parts" or "material incidents" in a transaction involving this unlicensed broker. Accordingly, New Jersey's law applies.
[n]o person, firm, partnership, association or corporation shall bring or maintain any action in the courts of this State for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he was a duly licensed real estate broker at the time the alleged cause of action arose.
N.J.S.A. 45:15-3 (West 1995). Accordingly, in order to bring an action for the collection of a commission, the plaintiff must allege that he is a licensed real estate broker. Under no circumstance can an unlicensed person collect or sue to collect a real estate or mortgage commission. Tanenbaum v. Sylvan Builders, Inc., 29 N.J. 63, 71, 148 A.2d 176 (1959); Solomon v. Goldberg, 11 N.J. Super. 69, 78 A.2d 118 (App.Div. 1950); Kanengiser v. Kanengiser, 248 N.J. Super. 318, 330, 590 A.2d 1223, 1229 (Law Div. 1991); see also Baron Co. v. Bank of New Jersey, 504 F. Supp. 1199 (D.N.J. 1981). Failure to allege this required element is fatal to the plaintiff's case.
The Act defines a "real estate broker" as
a person, firm or corporation who, for a fee, commission or other valuable consideration . . . negotiates, or offers or attempts or agrees to negotiate a loan secured or to be secured by a mortgage or other encumbrance upon or transfer of any real estate for others.N.J.S.A. 45:15-3 (West 1995). SK was clearly acting as a "real estate broker" when it negotiated a loan secured or to be secured by a mortgage on the Florida Properties. See Corson v. Keane , 4 N.J. 221, 72 A.2d 314 (1950); 2175 Lemoine Ave. Corp. v. Finco, Inc . , 272 N.J. Super. 478, 482, 640 A.2d 346 (App.Div. 1994). Accordingly, the Act and corresponding New Jersey case law governs SK's rights to any commission.
After a thorough examination of SK's complaint, it is clear that SK has failed to allege the required element of licensure nor is there any suggestion that it could amend the complaint to make such allegation. Neither the firm nor the individual members of the firm possessed real estate broker or salesperson licenses at the time the alleged cause of action accrued. Because New Jersey law and public policy clearly states that the failure to be licensed as a real estate broker is per se fatal to any claim for a real estate or mortgage commission, SK's lawsuit fails to state a claim upon which relief can be granted. See Kanengiser, 248 N.J. Super. at 330, 590 A.2d at 1229. Accordingly, Defendants' motion to dismiss will be granted.
Attorneys admitted to practice law are exempted from the licensing requirement of the Act if their real estate and mortgage brokering is incidental and ancillary to an attorney-client relationship. Spirito v. New Jersey Real Estate Comm'n , 180 N.J. Super. 180, 186-87, 434 A.2d 623, 626 (App.Div. 1981). Because the allegations of the complaint establish that SK was acting as a broker with only incidental or no attorney functions, the attorney exemption to the Act does not apply in this case.
III. CONCLUSION
For the reasons set forth above, Defendants' motion to dismiss the complaint for failure to state a claim will be granted. An appropriate order will issue.
O R D E R
Defendants John A. Catsimatidis, Alan Talansky, and United Advisors, Inc. (the "Defendants"), having moved to dismiss plaintiff Silverman Kost's (the "Plaintiff") complaint pursuant to Fed.R.Civ.P. 12(b)(6); and the Court having heard oral argument on January 19, 1998; and in accordance with this Court's opinion of even date;
IT IS this 19th day of January, 1999, hereby
ORDERED that Defendants' motion to dismiss the complaint be and hereby is GRANTED and Plaintiff's complaint be and hereby is DISMISSED with prejudice.