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Brauser Real Estate, LLC v. Meecorp Capital Markets, LLC

2008 WL 324402 (U.S. Dist. Ct. D. N.J. 2008) (Unpublished)

LOANS — Absent any violation of a license or requirement or a violation of law, where a loan commitment does not condition a borrower’s obligation to pay the full fee upon, but merely defers it until the time of, closing, the borrower is obligated to pay the commitment fee even if the loan does not close.

A Florida developer sought financing from a New Jersey lender and entered into a letter of intent for a proposed revolving loan. A non-refundable application fee was exchanged for a draft loan commitment. A nonrefundable commitment fee of $200,000 was also paid. It represented one percent of the potential loan amount, with the balance due at closing. The developer delayed closing for two months. Ultimately, the loan did not close and the developer demanded a refund of both the application and commitment fees. The developer filed suit in Florida for return of the money. The matter was eventually remanded to the U.S. District Court. The loan commitment contained a New Jersey forum selection clause and the Court found it to be clear and unambiguous. The Court also was satisfied that New Jersey had a substantial relationship to both the parties and the transaction, noting that the lender was a New Jersey company, the loan commitment was prepared in New Jersey, and the funds loaned would have come from New Jersey.

The Court found that, under New Jersey law, the loan commitment was a valid contract and its terms should be enforced. It contained an integration clause so as to supersede all previous documents. The Court concluded that the developer had not established a claim for rescission as it had not proven that the lender breached any material obligation of the loan commitment. The Court also found that the developer had not proven unjust enrichment on the part of the lender. It held that the collected fees were earned by the lender because the lender had performed and was prepared to close the loan. It also honored the lender’s counterclaim for the balance of the commitment fee because the borrower’s obligation to pay the full fee was not conditioned on the loan closing, but was merely deferred until the time of closing. The Court also rejected the developer’s claim under the New Jersey Consumer Fraud Act because the developer never proved that the lender violated any licensing requirement or illegally collected any advance fees on a commercial loan.

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