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Engel v. Jackson-Cross Company

A-1345-00T5 (N.J. Super. App. Div. 2001) (Unpublished)

BROKERS; REPRESENTATIONS—A seller that knows of the involvement of a particular broker in contract negotiations cannot rely on its buyer’s representations in a sales contract that no broker was involved in the sale.

A real estate broker, acting as a selling broker, contacted a property owner’s in-house broker that was acting as a listing broker. The selling broker identified a potential customer and requested a “sales package” for each of two properties that were about to be marketed. In addition, he sent a “registration letter” to the listing broker indicating his representation of a potential buyer. The listing broker and the property owner circumvented the selling broker and dealt directly with the identified buyer. During a critical period of time, the selling broker, appeared to have called the listing broker “close to twenty times” and was told that the sales packages had not yet been completed. Further, the listing broker never rejected the selling broker’s registration. Ultimately, the property was sold to the identified buyer. The sales agreement contained a representation from the buyer “that it had not dealt with or engaged the services of a real estate broker” and the buyer further agreed to indemnify and hold the seller harmless from claims made by any selling broker. The seller made a similar representation to the buyer. Through a law suit, the broker was awarded a real estate commission from the seller, but the crossclaim by the seller against the buyer for indemnification was rejected even before the matter went to a jury. The seller appealed, claiming it was entitled to argue, before a jury, that it had a valid claim for contribution or indemnification from the buyer. The Appellate Division disagreed. It found the evidence to be overwhelming and virtually uncontradicted that the seller “was well aware of [the selling broker’s] claim for a commission long before the agreement [of sale] was executed.” Consequently, the Court held that “[n]o reasonable fact-finder could have concluded that [the seller] was damaged as a result of the representation set forth in the agreement.”

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