CENTURY 21 REAL ESTATE, LLC v. QUALITY HOMES NETWORK LLC
2:23-cv-09850
D.N.J.Jul 25, 2025Background
- Century 21 Real Estate (Plaintiff) and Quality Homes Network (Defendant) have a long-standing franchise agreement involving royalties and a "Century 21 Incentive Bonus" (CIB), historically capped at 2% of gross revenue.
- In late 2022, Defendant’s owner requested modifications to alleviate financial strain; parties agreed to reduce the brand marketing fund (BMF) contribution to 0.5% and change CIB payment frequency from annually to quarterly.
- An Addendum was drafted, but, due to a clerical copying error, it set the CIB at 4% instead of the intended 2%.
- Century 21 paid out one quarterly CIB at the 4% rate before realizing the error and informing Defendant, seeking to correct the Addendum; Defendant refused.
- Both sides moved for summary judgment: Plaintiff sought reformation of the contract based on mutual mistake, Defendant argued the agreement as written (with 4% CIB) was valid, and also sought summary judgment on its breach of contract counterclaim and attorneys’ fees.
- The court denied both motions for summary judgment, finding genuine issues of material fact regarding intent and mutual mistake.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Reformation for Mutual Mistake | Addendum’s 4% CIB was a mutual mistake, should be 2% | Defendant knowingly accepted 4% CIB; no mutual mistake | Denied summary judgment to both; factual dispute exists |
| Validity of Addendum as Written | Addendum did not represent true agreement on CIB rate | Addendum, even with error, was valid and accepted | Factual dispute, not resolvable at summary judgment |
| Breach of Contract Counterclaim | No breach; Addendum should be reformed to intended 2% CIB | Plaintiff breached by paying lower CIB than Addendum provided | Denied; issue turns on unresolved mutual mistake question |
| Attorneys’ Fees under Franchise Agreement Section 22 | Defendant not entitled; section only allows fees for Century 21 | Defendant claims entitlement as prevailing party or under Agreement terms | Denied to Defendant; contract unambiguously denies right |
Key Cases Cited
- Weichert Co. Realtors v. Ryan, 128 N.J. 427 (N.J. 1992) (sets out elements of enforceable contract under NJ law)
- St. Pius X House of Retreats, Salvatorian Fathers v. Diocese of Camden, 88 N.J. 571 (N.J. 1982) (analyzes mutual vs. unilateral mistake for contract reformation)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard on factual disputes)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burdens)
- Cummins v. Bulgin, 37 N.J. Eq. 476 (N.J. Ch. 1883) (court’s equitable power to reform contracts for mistake)
- Beachcomber Coins, Inc. v. Boskett, 166 N.J. Super. 442 (N.J. App. Div. 1979) (mutual mistake requires both parties share mistaken belief)
- Hudik-Ross Co., Inc., 164 N.J. Super. 317 (N.J. App. Div. 1978) (reformation requires clear and convincing evidence of mutual intent)