Cushman & Wakefield of New Jersey, Inc. v. Alexander Summer Co.
| Decision Date | 18 November 1996 |
| Citation | 684 A.2d 975,295 N.J.Super. 173 |
| Parties | CUSHMAN & WAKEFIELD OF NEW JERSEY, INC., Plaintiff-Appellant/Cross-Respondent, v. ALEXANDER SUMMER CO. and United Jersey Bank, Defendants-Respondents/Cross-Appellants. |
| Court | New Jersey Superior Court — Appellate Division |
Paul A. Rowe, Woodbridge, for appellant/cross-respondent (Greenbaum, Rowe, Smith, Ravin & Davis, attorneys; Mr. Rowe, of counsel; Mark H. Sobel and Bruce D. Greenberg, on the brief).
Theodore W. Geiser, Roseland, for respondents/cross-appellants (Connell, Foley & Geiser, attorneys; Mr. Geiser, of counsel and on the brief; Paul T. Fader, on the brief).
Before Judges BAIME, PAUL G. LEVY, and BRAITHWAITE.
The opinion of the court was delivered by
BAIME, J.A.D.
Cushman & Wakefield (C & W) brought this action against Alexander Summer Co. (Summer Company) and United Jersey Bank (UJB) to recover brokerage commissions and punitive damages, alleging tortious interference with contract and tortious interference with prospective economic advantage. The complaint alleged that UJB utilized C & W's brokerage services to obtain leases for its new operations center and for two branch banks. C & W claimed that it introduced UJB to Hartz Mountain, the developer, negotiated the terms of the transactions and caused the procurement of the resulting leases. C & W contended that Summer Company was inserted into the transaction when the leases were imminent because Alexander Summer was a member of the board of directors of UJB and a major shareholder.
Following a protracted non-jury trial, the Law Division found that UJB and Summer Company had wrongfully interfered with C & W's reasonable expectation of economic gain. The court also found that defendants' wrongful conduct resulted in the loss of C & W's commission earned on the lease for UJB's branch banks. C & W was awarded $131,250 in compensatory damages and $400,000 in punitive damages respecting that transaction. However, the court determined that C & W was not entitled to a commission on the lease for UJB's operations center because the property C & W had introduced to UJB was rejected due to toxic contamination, and another site adjacent to it was ultimately selected.
C & W appeals, contending (1) there was a reasonable probability it would have introduced UJB to the adjacent property had there been no wrongful interference and, therefore, it was entitled to a commission on that transaction, and (2) the Law Division erred by refusing to consider its litigation expenses in the award of punitive damages. UJB and Summer Company cross-appeal, claiming (1) the Law Division committed error in finding that C & W was the efficient procuring cause of the branch banks lease, (2) punitive damages should not have been granted, and (3) prejudgment interest was improperly awarded from the filing date of the original complaint. Our examination of the voluminous record discloses clear and convincing evidence that defendants wrongfully deprived C & W of commissions due on both the operations center and branch bank leases. We also conclude that the Law Division erred by refusing to consider C & W's reasonable litigation expenses in the punitive damage award. The remaining arguments lack merit.
C & W is a commercial real estate brokerage firm. In 1983, C & W acquired Baker Merin Associates, a competitor that long served as UJB's principal broker. Andrew Merin and John McCormick, two principals in Baker Merin Associates, joined C & W and continued to assist UJB in its leasing needs following the acquisition.
In March 1984, Leonard Speakman, UJB's head of real estate, requested Merin and McCormick to search for space for an operations center to accommodate the bank's check processing, computer, and accounting functions. Initially, Speakman specified that UJB was seeking 50,000 to 65,000 square feet of space in close proximity to the bank's existing operations center in Hackensack. As time passed, however, UJB repeatedly increased its estimate of the amount of space needed. While Merin originally confined his search to existing facilities, he later expanded his survey to include undeveloped land on which a building could be constructed to suit UJB's specific needs.
Thus, at a relatively early stage, Merin suggested that UJB consider an undeveloped tract in Ridgefield known as the Overpeck Office Park. Merin considered this property attractive for several reasons. It was located in close proximity to UJB's existing facility in Hackensack, and it was owned by Hartz Mountain, one of New Jersey's largest developers of commercial property. Moreover, Agfa Gavaert, a major customer of UJB, had committed to locating its offices at Overpeck. Merin reasoned that Hartz Mountain could construct a building suitable to UJB's needs as fast as an existing building could be retrofitted.
Although other properties were included in C & W's survey of potential sites, Alan Posencheg, UJB's senior vice-president in charge of operations, centered his attention on the Overpeck property. At a series of meetings in March and April 1985, C & W and UJB representatives examined aerial photographs and proposed plans for constructing a building. Posencheg also toured the site on at least two occasions. Posencheg testified at trial that he "liked the location when [he] first saw it," and became more enthused about the property after eliminating other sites because of traffic and other related problems.
Posencheg raised questions concerning the contemplated road access to the Overpeck area. There were "considerable ... discussions" about road access from Route 46 and the New Jersey Turnpike. In its marketing brochure, Hartz Mountain represented that the site was "directly accessible from Route 46 to the south." C & W presented evidence indicating that the Hartz Mountain plan envisioned incorporation of an adjacent site known as the Iganamort property consisting of approximately fourteen acres. The plan called for access roads through the Iganamort property. Although Hartz Mountain did not own this land, it had an option to purchase, thus permitting it to incorporate the site into Overpeck.
Another point discussed by UJB, C & W, and Hartz Mountain pertained to UJB's interest in locating property for two branch banks. Eugene Heller, Hartz Mountain's president, expressed his reluctance to provide space for the branch banks unless UJB committed to leasing Hartz Mountain property for the operations center, which was to be much larger in scale and far more profitable.
Meanwhile, also in March and April 1985, Merin and Heller engaged in discussions relating to C & W's brokerage commission should UJB lease space from Hartz Mountain. They agreed that C & W would be paid a commission of five percent of the gross aggregate rental. Although drafts of a commission agreement were exchanged, none was ever executed. Heller nevertheless testified that had UJB leased the Overpeck site, Hartz Mountain would have paid C & W its commission. While it was UJB's policy not to enter into exclusive brokerage agreements, Speakman, at Merin's urging, sent a letter to C & W intended to serve as an "official request to assist [the bank] in the selection of [its] new operations center." Although UJB's interest in relocating its operations center waxed and waned as other projects were accorded priority, the record clearly indicates that by the end of 1985, Posencheg was committed to the Overpeck site.
Summer Company, however, attempted to inject itself into the transaction. Alexander Summer was a director of UJB/Hackensack, UJB's largest subsidiary bank. In February or March 1985, Stephen Palmer, Summer Company's president, met with Speakman and suggested several properties as potential sites for UJB's operations center. Overpeck was not one of the sites discussed. Palmer later described Speakman as "very cool" and unreceptive to Palmer's solicitation.
While the record is not altogether clear, it appears that at some point Speakman told Palmer that C & W was assisting UJB in selecting a site and that attention had focused upon Overpeck. Several weeks after their meeting, Palmer wrote to Speakman thanking him and noting that UJB had apparently "settled on the Hartz Mountain site." However, Summer Company subsequently renewed its solicitation to service UJB's leasing needs. In 1986, UJB hired George Reeder as vice-president of general services. One of Reeder's principal responsibilities was facilities acquisition and development. Speakman became Reeder's subordinate.
Merin testified that Reeder told him he was being "pressured" by Joseph Semrod, UJB's chairman of the board and chief executive officer, and Albert D'Augusta, UJB's executive vice-president, to grant Summer Company "an exclusive." This was corroborated by Semrod who testified that he directed his "management team" to "consider" hiring Summer Company as UJB's exclusive agent to broker the operations center transaction.
On April 30, 1986, Reeder and D'Augusta met with Alexander Summer and Stephen Palmer. Palmer gave Reeder a survey of potential sites for UJB's operations center. Included in the list was the Overpeck site. A series of meetings followed, culminating in UJB's decision in January 1987 to retain Summer Company as its exclusive broker.
Shortly after this decision was made, Posencheg telephoned Palmer and reiterated that UJB harbored a "real interest" in the Overpeck site. No other property was discussed. Palmer then contacted Heller. In February 1987, UJB retained consultants for the design and construction of the operations center. The consultants met with Palmer who provided various site selection data. The consultants prepared a report in which four "final site selections" were evaluated on the basis of a "matrix" of criteria. Not surprisingly, the consultants recommended the Overpeck site. On June 5, 1987, UJB and Summer Company executed an agreement...
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Cushman & Wakefield of New Jersey v. Alexander Summer Co.
...United Jersey Bank NOS. C-934 SEPT.TERM 1996, 43,333 Supreme Court of New Jersey Apr 29, 1997 Lower Court Citation or Number: 295 N.J.Super. 173, 684 A.2d 975 Disposition: ...