The Schuck Corporation v. Kajima International, Inc.

A-2708-98T3 (N.J. Super. App. Div. 2000) (Unpublished)
  • Opinion Date: March 3, 2000

BROKERS; COMMISSIONS; STATUTE OF FRAUDS—A broker whose commission claim was barred by the statute of frauds could not collect damages from a seller by claiming that the seller interfered with an agreement between the broker and the buyer that called for the commission to be paid by that same seller.

A real estate broker represented a property buyer in connection with the buyer’s search for new office headquarters. Ultimately the buyer purchased a property. The broker did not have a written commission agreement with the seller. It claimed, however, that it had an oral agreement with the buyer under which the buyer had agreed that, if it purchased a property, it would make sure that the contract of sale included a provision for the seller to pay a commission to the broker. According to the Court, “[f]aced with what would seem to be a Statute of Frauds bar to recovery from [the seller], [the broker], ..., has created an imaginative theory under which it claims [the seller] is liable to it for inducing [the buyer] to breach its oral contract with [the broker].” The Court recognized that it would be one thing for a broker to charge that a buyer wrongfully interfered with its ability to receive a commission from a seller. In such cases, if a buyer attempted to defend such a charge by claiming that the seller had no legal obligation to pay a commission because of the Statute of Frauds, the defense would generally be rejected. Contracts which are voidable by reason of the Statute of Frauds can still afford a basis for tort recovery when a defendant interferes with their performance. The Court would not apply the same principle here. It found that it could not assume that a seller would have complied with some moral obligation to pay a commission to the broker but for the alleged tortious action of the seller itself. “In short, when plaintiff’s syllogism is stripped to its essentials, it amounts to a claim that [the seller] interfered with performance of a contract (between [the buyer and the broker]) which was designed to have [the seller] pay a commission to [the broker]. That theory may well produce liability against [the buyer], but that claim has been settled and resolved. With respect to [the seller’s] liability, it amounts to a claim [the seller] interfered with what would have been a contract calling for [seller itself] to pay a commission to [the broker].” The Court continued by saying that the tort of interference with a contract cannot be directed against a party to the contract. It must be employed against the third party. Consequently, the Court refused to allow the broker’s construction of an elaborate theory of tort liability to convert what was essentially a contract action against a seller into a tort action, immune from the Statute of Frauds.