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C.B. Snyder Realty v. BMW: Broker Claims Intentional Interference With Contract

In C.B. Snyder Realty, Inc. v. BMW, the Superior Court of New Jersey addressed allegations by a broker against a client/lessee for intentional interference with contract. The court held that the lessee did not interfere with the broker’s contract with the lessor as the lessee did not act maliciously or for financial gain when it closed the deal through another broker.

C.B. Snyder Realty (Broker) specialized in industrial office real estate. DeCarlo, a sales associate affiliated with Broker, knew Cronin, BMW’s Eastern Regional Manager. Cronin advised DeCarlo that BMW would be looking to relocate the Eastern Region office and that Sutherland would handle the real estate aspects. Thereafter, Sutherland, Cronin and DeCarlo met to discuss the requirements for the Eastern Region Headquarters and a site for the new corporate headquarters and necessary industrial space.

After the meeting, DeCarlo and Sutherland viewed several properties including the "Atrium" and "Grand Met" sites. Over the course of the next several weeks BMW's needs and specifications changed several times. Later, another viewing of the Grand Met was scheduled, but Sutherland refused to get out of the car to view the building because he knew that his boss, Hammermeuller, had an appointment with a second brokerage to visit the building that afternoon for the purpose of discussing BMW’s changed needs. The second brokerage was the exclusive broker for the Grand Met, but enlisted other agencies, including Broker, to assist in leasing it the property.

Over a year later, BMW executed a lease on the Atrium through a third brokerage, the McBride Agency. Prior to execution, BMW notified McBride that Sutherland had seen the Atrium with Broker’s sales people. As part of the lease, the lessor agreed to indemnify BMW for any claim that Broker might have for a commission. Broker sued BMW for tortious interference with contract on both the Atrium and Grand Met. The trial court held for Broker and awarded it over $200,000 for the two leases. The court also awarded Broker $2,500, on a quantum meruit basis, for its efforts regarding a third lease, although it did not find Broker to be the procuring cause of that lease. BMW appealed.

The Court noted that it has long been established that the right to pursue the real estate business is a property interest which the law protects against unlawful interference. To prove unlawful interference, a plaintiff must show: (1) unlawful, intentional interference with a plaintiff’s prospect of, or reasonable expectation of, economic advantage, and (2) a reasonable probability that plaintiff would have received the anticipated economic benefits had there been no interference.

The Court examined the relationship between Broker and BMW. It found that although BMW engaged Broker to seek suitable property, Broker understood that BMW would not be paying it a commission even if it was successful in its endeavors. Rather, any commission would be paid by the lessor or seller. Further, there was no agreement that Broker was BMW’s exclusive agent for these purposes, and BMW was free to use other brokerages for the same purpose. The court found that the two principal competitors successfully negotiated for space on behalf of BMW and thus were entitled to, and paid, a commission. The court also found no evidence that BMW realized any financial benefit in terms of reduced rentals or any other economic benefit. Because of the lack of benefit, the court found that BMW did not interfere with Broker’s contract.

The Court also examined Broker’s contention that BMW was liable for tortious interference with contract because it acted out of sheer malice. The court found no evidence of malice. The court then quoted Harris v. Perl, 41 N.J. 455, 463, 197 A.2d 359 (1964). That case stated “[o]f course a broker must accept competition from other brokers. Frequently, especially when property is listed widely, several brokers will try to interest the same prospect. In such circumstance, a dispute as to who was the procuring cause should be fought out with the owner, and the purchaser should not be burdened with the quarrel in the absence of fraudulent conduct on his part. But if the purchaser beats the broker out of his commission by buying it from the owner directly or through a front, thus appropriating to himself the value of the services of the broker, he should pay for that mischief.” The court found that the fraud exception was not present, and held that BMW did not tortiously interfere with Broker’s contract.

C.B. Snyder Realty, Inc. v. BMW, 233 N.J. Super. 65, 558 A.2d 28 (App. Div. 1989).