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Weichert Commercial Brokerage, Inc. v. Fin II Realty Holdings, L.P.

A-6093-01T1 (N.J. Super. App. Div. 2003) (Unpublished)

PARTNERSHIPS; PARTNERS; LIABILITY—A partnership’s contract creditor may sue a partnership and its partners together, but, initially any judgment against the partners is limited to secondary liability, to be converted to a sum certain only when it is shown that the partnership cannot satisfy the judgment against it.

A court easily determined that a limited partnership owed a real estate brokerage commission to a broker. It issued a judgment against the limited partnership for the commission and legal fees “to be determined subsequently.” It also issued a judgment against the limited partnership’s general partner “as to liability only, and in order to collect against this entity [the broker would have] to establish that [the limited partnership] has insufficient assets,” and against the management company “to the extent it receives funds from” the limited partnership. The lower court also denied a motion by the principal of both the general partner and of the management entity to dismiss the broker’s claims against him personally. On appeal, the Court pointed out that the limited partnership was contractually liable for the outstanding commission. It also pointed out that its corporate general partner was liable for the commission and, pursuant to case law, “a contract creditor of a partnership may in a single action sue the partnership and its general partners for the debt ... [but] [i]nitially, judgment against the partners shall be limited to liability only, and shall not be entered as a final judgment for a sum certain until there is proof that the partnership cannot satisfy the judgment.” As to the management entity, a partial commission check had been drawn on its account. Consequently, the Court did not believe that the lower court had abused its discretion “in granting a limited judgment to the extent [the management entity] was in receipt of funds on behalf of” the limited partnership. Lastly, as to personal liability, the Court pointed out that the fact that an individual is not a party to the commission agreement in its individual capacity is not dispositive of his potential liability. The broker’s claim against the individual personally was “on grounds of fraud and misrepresentation, breach of the implied covenant of good faith and fair dealing, interference with prospective economic advantage and business tort.”

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