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Farese v. McGarry | 237 N.J. Super. 385 (1989)

A tenant thinks he has an option contract and spruces up the home. When his landlord doesn’t sell, the court opines about quasi-contracts in Farese versus McGarry.

James McGarry rented a house from Frank Farese. McGarry negotiated the lease with Farese’s attorney. The lease referenced an earlier oral agreement for kitchen renovations. Also, the lease gave McGarry the right of first refusal, or first chance to buy, if Farese decided to sell. But McGarry thought he had an option contract to purchase. After the lease ended, McGarry remained for over six months.

Farese sued McGarry for unpaid rent, property damage, and attorney’s fees. McGarry brought two counterclaims. First, McGarry claimed that Farese breached an option contract. Second, McGarry claimed that Farese was unjustly enriched. At trial, McGarry testified that the value of his labor to improve the property was just over $3,000. The judge instructed the jury that a quasi-, or implied, contract, can be created through actions. If one party doesn’t meet an obligation and, as a result, would be unjustly enriched, the other may recover damages.

The jury found against Farese. On McGarry’s counterclaims, the jury determined that there wasn’t an option contract, but Farese owed McGarry $13,000 for the improvements. Farese appealed and primarily argued that the court incorrectly permitted the jury to consider whether a quasi-contract existed because McGarry didn’t allege a quasi-contract in his counterclaim.

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