Albert M. Greenfield and Co. of New Jersey, Inc. v. SSG Enterprises

• Decision Date: 02 October 1986
• Parties: ALBERT M. GREENFIELD AND CO. OF NEW JERSEY, INC., now known as Helmsley- Greenfield, Inc., Plaintiff-Appellant, v. SSG ENTERPRISES, a New Jersey Partnership, the Sullivan Group, a New Jersey Partnership, Elliott Goldberg, the Shapiro Group, a New Jersey Partnership, Barry Shapiro, Kenneth Shapiro, Donald Trump, Seashore Four Associates, Harrah's Associates, Trump Plaza Corporation, Atlantic City Seashore 2, Inc., Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 1

213 N.J.Super. 1

516 A.2d 250

ALBERT M. GREENFIELD AND CO. OF NEW JERSEY, INC., now known as Helmsley- Greenfield, Inc., Plaintiff-Appellant, v. SSG ENTERPRISES, a New Jersey Partnership, the Sullivan Group, a New Jersey Partnership, Elliott Goldberg, the Shapiro Group, a New Jersey Partnership, Barry Shapiro Kenneth Shapiro, Donald Trump, Seashore Four Associates Harrah's Associates, Trump Plaza Corporation, Atlantic City Seashore 2, Inc., Defendants-Respondents.

Superior Court of New Jersey,

Appellate Division.

Argued Sept. 10, 1986.

Decided Oct. 2, 1986.

M. Jefferson Davis, for plaintiff-appellant (Montgomery, McCracken, Walker & Rhoads, attorneys; M. Jefferson Davis, on the brief).

Gregory D. Saputelli, for defendants-respondents SSG Enterprises, The Sullivan Group and Daniel J. Sullivan (Obermayer, Rebmann, Maxwell & Hippel, attorneys; Gregory D. Saputelli, on the brief).

Joseph F. Fabian, for defendants-respondents The Goldberg Group and Elliott Goldberg (Feingold & Jehl, attorneys).

Brian Spector, for defendants-respondents Harrah's Associates and Seashore Four Associates (Ribis, McCluskey, Graham & DeCotiis, attorneys, Nicholas L. Ribis, of counsel; Brian Spector and Deborah E. Nelson, on the brief).

Howard E. Drucks, for defendants-respondents Donald Trump, Trump Plaza Corporation, Atlantic City Seashore 2, Inc. (McGahn, Friss & Miller, attorneys; Howard E. Drucks, on the brief).

Before Judges FURMAN, DREIER and STERN.

The opinion of the court was delivered by

DREIER, J.A.D.

Plaintiff has appealed from a judgment for defendants in this action for real estate commissions arising from the lease and sale of a portion of the property on which the Trump Plaza Hotel and Casino is now located. The trial judge determined that plaintiff was entitled to rental commissions only from April through October 1983, but that its claims for rental commissions thereafter and commissions upon the sale of the real estate were unwarranted. He further found that plaintiff's commission agreement was limited to a sale pursuant to the strict terms of an option to purchase granted in the original lease, but that the actual sale was by a renegotiated separate sales agreement, executed after a valid termination of the original lease in which the option to purchase had been included. We are constrained to reverse.

We need not recount here the initial services rendered by plaintiff which is acknowledged as having brought the parties together, or the negotiations among the various defendants culminating in the long-term lease dated July 1, 1980 (signed July 18, 1980) and a revised commission agreement also signed July 18, 1980 between the SSG and plaintiff. It is sufficient for the purposes of this opinion to note that defendant SSG Enterprises, a New Jersey general partnership, was the original lessor, later the grantor, and throughout the transaction was the primary entity obliged to pay the commission to plaintiff. The lessee was originally Atlantic City Seashore 2, Inc. and, after intermediate assignments to other Trump enterprises, became Harrah's Associates, a partnership equally owned by Donald J. Trump and Harrah's Atlantic City, Inc. The property in question was finally sold on November 2, 1983 to Seashore Four Associates, also a partnership equally owned by Donald J. Trump and Harrah's Atlantic City Inc. Considering the various interlocking corporations and partnerships, we will refer merely to the SSG defendants and the Trump defendants unless otherwise required by context. ¹

Plaintiff and SSG's predecessor entered into a brokerage agreement calling for a six percent rental commission, and a six percent sales commission if the tenant exercised the option to purchase to be contained in a contemplated lease. The eventual SSG-Trump lease, signed July 18, 1980, contained various cancellation provisions discussed infra, and recognized SSG's obligation to pay plaintiff's commission or commissions. The lease was for a term of 98 years and six months, with an option to purchase in Article 44, exercisable any time during the term of the lease at the price of $8,000,000 up to June 30, 1990, $8,500,000 until June 30, 1995 and $10,000,000 thereafter. There was an additional option to purchase for $5,000,000 contained in Article 52.3; but this option would arise only in the event of a disqualification of a "controlling person" by the Casino Control Commission.

The revised commission agreement between plaintiff and SSG decreased the amount of commission from the original six percent to five percent and restricted payment of the commissions to situations where there was a "fully effective" lease with Trump. The agreement also recited that a five percent commission would be payable if the lessee properly exercised its purchase option. The trial judge determined that Paul Longo, the employee of plaintiff in charge of this transaction, signed the agreement "voluntarily and understandingly," and that his attorney had received copies of the proposed lease and commission agreement before the July 18th meeting.

Plaintiff received its commissions for the first two years' rental, prepaid at the time of the execution of the lease. Thereafter additional rental commissions were paid for the period July 1, 1982 through March 31, 1983. After that date no further commissions were paid, although rent was paid through October 1983, and the court correctly awarded plaintiff commissions for that period.

After the lease was executed, Trump commenced construction and pursued his casino license application. By October 1, 1983, the tower erected on the square block including the subject premises was 95 percent completed and had a value of between $230,000,000 and $240,000,000. Approximately $72,000,000 of the construction rested on the SSG parcel. Contemporaneously, however, the Casino Control Commission had through its counsel voiced numerous objections concerning the lease. It ruled that the lessors must qualify as financial sources of the project pursuant to N.J.S.A. 5:12-84(b), and questions were raised concerning the background of Daniel J. Sullivan, a principal of SSG. Trump objected to lease modifications required by the Commission, and both he and his attorneys feared that such onerous changes could give the lessor grounds to terminate the lease for cause. The trial judge in his comprehensive opinion traced the negotiations between the parties and with the Commission which culminated when Sullivan, on behalf of SSG, ostensibly terminated the lease on October 5, 1983. SSG then filed a summary dispossess action in the Law Division. Trump responded with a Chancery action to compel SSG to accede to the Commission modifications.

At a subsequent meeting in New York in mid-October 1983, Donald Trump and Daniel Sullivan resolved their differences by permitting Trump to purchase the premises for $8,000,000 on approximately the same terms as were set forth in the lease. ² The trial judge made explicit findings that this settlement was not in any way entered into with the intention to preclude plaintiff from receiving a commission. The court found "that the parties struck the deal to sell the property in response to what they perceived as a bona fide dispute over the continued effectiveness of their lease. It was an arms length, legitimate business arrangement."

I

As to the basic facts adjudicated by the judge, we have no hesitancy in upholding his findings. There was sufficient credible evidence present in the record, considering the proof as a whole, to sustain his conclusions. Rova Farms Resort v Investors Ins. Co., 65 N.J. 474, 484, 323 A.2d 495 (1974). The trial judge relied upon Brenner & Co. v. Perl, 72 N.J.Super. 160, 165, 178 A.2d 19 (App.Div.1962), for the proposition that plaintiff's entitlement was circumscribed by the terms of his commission agreement. But compare Fry v. Doyle, 167 N.J.Super. 486, 493-94, 401 A.2d 265 (App.Div.1979), certif. den. 81 N.J. 287, 405 A.2d 831 (1979), where the agreement did not so sharply limit the entitlement to the commission. There the general proposition could be applied that a broker who procures "a purchaser, ready, willing and able to comply on terms other than or different from those originally specified, but which are satisfactory to the owner" does not lose his commission. Id. at 495, 401 A.2d 265. The commission is earned if the broker is the efficient producing cause in bringing about the sale, so long as the transaction is consummated without a substantial break in negotiations. Id. at 494, 401 A.2d 265, and the cases there cited. See also Joseph Hilton & Associates, Inc. v. Evans, 201 N.J.Super. 156, 167-170, 492 A.2d 1062 (App.Div.1985).

SSG undertook to pay plaintiff's commission under the terms of the revised commission agreement of July 18, 1980:

We hereby agree that if negotiations are successfully concluded and result in the execution and delivery by the lessor and the lessee of a lease free of escrow and as to which all conditions have been satisfied so that the lease is by its terms fully effective, then the partnership will pay to Albert M. Greenfield & Company and brokerage commission as follows:

* * *

* * *

Five (5%) percent of the purchase price for the property as provided in the Option, if the lessee properly exercises the Option, payable to you if as and when payment of such purchase price is in fact received by the partnership.

Since the agreement circumscribed plaintiff's right to a commission, if, the lease in fact had been terminated and not restored, and particularly if the parties had entered into a substantially dissimilar purchase arrangement, we might have had no cause to disturb the trial judge's ruling. ³ We need not, however, examine the status of the lease at each step in the negotiation process, nor need we compare the terms of the final transfer of title with the original lease, since the trial judge apparently overlooked several of...