Cushman & Wakefield of New Jersey, Inc. v. Hoffman-LaRoche, Inc.

A-6715-97T3 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: November 8, 1999

CONTRACTS—Where a property seller agreed to pay leasing commissions on leases existing at the time of sale, it was not required to pay the commission attributable to that portion of a lease term that extended beyond a tenant’s early termination right.

A brokerage agreement required a landlord to pay commission on a lease where the tenant had the right to terminate the lease prior to its stated expiration date. The brokerage agreement provided that commissions would be payable only on the non-terminable portion of the lease and that if the lease were not terminated, additional commissions would be owed for the balance of the lease term. When the property owner sold the property and assigned the related leases to its buyer, their agreement read: “[Seller] shall pay and be responsible for, and indemnify and hold [Buyer] harmless from any claims and costs ... for leasing commissions ... payable during the terms of only those leases and pending leases listed on Exhibit B annexed hereto (specifically excluding therefrom any future renewal terms or options or rights to expand and any commissions relating to any existing leases or new lease which arose or accrued or are payable subsequent to the Closing Date)... .” The broker sued the buyer for the leasing commissions after the tenant waived its right to terminate the commissionable lease before its expiration date. Its claim was that the seller had agreed to be responsible for all of the commissions due on leases. The lower court held for the seller, saying “[i]t makes no sense to ... view it that way. If there, in fact, was a five-year lease in which the commissions were payable at the beginning of the lease, and hadn’t been paid and were due, there’s no question that [the buyer] would have the right to seek indemnification from [seller]. The point here was the commissions weren’t due. They had not been earned. They weren’t payable until they get past the third year and they did not exercise the option to terminate the lease. That’s the same thing as exercising an option to extend the lease period ... there was no money due.” The Appellate Division upheld the lower court, finding that “there were no commissions due or payable for the [balance of the lease term] until [the tenant] decided whether to exercise his options to terminate those remaining years of the leases.” Having successfully defended itself against the buyer’s claim, the seller contended it was entitled to an assessment of counsel fees and costs. The Court disagreed, holding that the language within the contract of sale only required that the buyer “indemnify and hold [the seller] harmless from such commissions [,]” and did not call for a payment of counsel fees or costs in the event of litigation concerning those commissions.