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Horrow Sports Ventures, LLC v. Anschutz Entertainment Group, Inc.

A-0979-07T1 (N.J. Super. App. Div. 2008) (Unpublished)

BROKERS; COMMISSIONS — Where a consulting agreement contemplates that real property might be leased, the consulting company must be licensed as a broker in order to collect a fee based upon the project resulting in such a lease because New Jersey law requires any person who directly or indirectly engages in the business of a real estate broker be licensed.

A sports management company that provided services to professional sports teams entered into a three year contract with a soccer team. The contract was for the development of major sports and entertainment facilities. Under the agreement, the management company was to locate construction financing as well as a physical site for a soccer stadium in the New York/New Jersey area. In exchange for these services, the management company was to be compensated at a monthly rate plus approved expenses. In the third year of the contract, a preliminary proposal was formulated for a stadium in a New Jersey municipality, but negotiations collapsed by year-end. At the end of the year, the management company’s contract was not renewed. Despite the non-renewal, the management company alleged that it continued to guide the soccer team, believing that it would receive a success premium if a commitment for public financing was issued. Three years later, a commitment for financing and a stadium site was reached with the same municipality. The management company sought payment of the success premium under the theory that the decision to focus on the municipality was its work and the deal directly evolved out of the proposal under discussion in the third year of its contract. The soccer business filed for summary judgment, arguing the payment of a success premium was precluded under law because the management company unlawfully engaged in real estate practices. The lower court dismissed the management company’s suit on that ground, and found no equitable principles calling for the payment because there was no evidence that the management company’s lack of a real estate license was known to the soccer team. The management company appealed.

The Appellate Division affirmed, holding that New Jersey law requires any person who directly or indirectly engages in the business of a real estate broker be licensed. The Court found that when the management company assisted in the procuring of prospects or in negotiations, it was contemplated that real property would be leased and therefore a license was required. It also agreed that no equitable principles applied because the soccer team did not induce the sports management company to provide these services knowing that it was not licensed. No facts suggested wrongful conduct or that the soccer team was aware of the statute’s bar to a success premium when the management company’s services were first contracted for.

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