NRT NY, Inc. v B&G Hampton Props., LLC

[*1] NRT NY, Inc. v B&G Hampton Props., LLC 2006 NY Slip Op 52555(U) [14 Misc 3d 1224(A)] Decided on October 26, 2006 Supreme Court, New York County Stallman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through February 20, 2007; it will not be published in the printed Official Reports.

Decided on October 26, 2006
Supreme Court, New York County

NRT New York, Inc. d/b/a THE CORCORAN GROUP, Plaintiff,

against

B&G Hampton Properties, LLC, ANNE BORSCH, JAMES GRIFFO, ANDREA KRINGSTEIN, and RICHARD KRINGSTEIN, Defendants.



600380/2006

Michael D. Stallman, J.

In this action, plaintiff NRT New York, Inc. d/b/a The Corcoran Group (Corcoran) seeks to recover a real estate broker's commission allegedly due from the sale of property in the Hamptons owned by defendant B&G Hampton Properties, LLC (B&G). Defendants Anne Borsch and James Griffo are the alleged principals of B&G. Defendants Andrea and Richard Kringstein purchased the property from B&G.

It is undisputed that, in June 2005, B&G executed a six-month "Exclusive Right to Sell Agreement" with Corcoran for the sale of property located in Bridgehampton, at a gross price of $7.45 million. It is undisputed that the property was sold to defendants Andrea and Richard Kringstein for $7.75 million. Borsch allegedly informed Corcoran that the purchasers were friends of the builder, Farrell Construction Corporation, but did not inform Corcoran of their identity. Corcoran later learned that the Kringsteins had purchased the property. It is undisputed that Andrea Kringstein contacted Corcoran in August 2005, and discussed the property with Judi Desiderio, a Corcoran Broker. However, Andrea Kringstein informed Desiderio in September 2005 that she and her husband were not interested in the property. The contract of sale for the property was signed some time in November 2005. B&G offered to pay Corcoran a 1% commission on the sale, but Corcoran demands a 5% commission.

On February 7, 2006, Corcoran commenced this action for breach of contract and tortious interference with contract. B&G, Borsch, and Griffo assert cross claims against the Kringsteins for contractual indemnification. Pursuant to CPLR 3212, Corcoran moves for summary judgment in its favor against all defendants. B&G, Borsch, and Griffo cross-move for summary judgment dismissing the complaint, and for summary judgment in their favor on their cross claim for contractual indemnification against the Kringsteins. The Kringsteins cross-move for summary judgment dismissing the complaint as against them.

DISCUSSION

The standards for summary judgment are well settled. "[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Once this showing has been made, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action"

Alvarez v Prospect Hosp., 68 NY2d 320, 324 (1986)(internal citations omitted).

I.

"To recover a commission, a broker must establish that he or she is duly licensed, that he or she has a contract, express or implied, with the party charged with paying the commission, and that he or she was the procuring cause of the sale or lease." Brandenberg v Waters Place Associates, L.P., 17 AD3d 615, 615-616 (2d Dept 2005). Here, it is undisputed that Corcoran is a licensed[*2] real estate broker, and that B&G executed an "Exclusive Right to Sell Agreement" for the Bridgehampton property. Paragraph 3 of the brokerage agreement states: "The commission will be five [percent] (5%) of the actual selling price. The commission will be earned when a ready, willing, and able buyer is procured, and you have agreed to the price and terms. The commission will be due upon title closing as follows: (a) if the property is sold by [Corcoran], 100% of the commission shall be distributed to [Corcoran]; (b) if the property is sold by an agency with whom [Corcoran] has a co-broke agreement, the commission shall be distributed 50% to the selling broker and 50% to [Corcoran], (c) if the property is sold by an agency with whom [Corcoran] does not have a co-broke agreement, a commission of five [percent] (5%) shall be due and payable to [Corcoran] upon demand. If you [B&G] should sell the property through your sole efforts a one [percent] (1%) commission shall be due and payable to [Corcoran] upon demand. Should closing of title not occur for any reason whatsoever, except willful default of the Seller, there shall be no commission due. In the event that the Seller defaults willfully, the commission shall be payable upon demand." See Margolin Affirm., Ex D (emphasis in original).

To show that it was the procuring cause of the sale, Corcoran submits a hard copy of email correspondence between Andrea Kringstein and Judi Desiderio. See Complaint, Ex C. Kringstein writes that she "saw a picture of the house that they discussed on the web . . . looks like it needs a lot of landscaping. There are a lot of nice houses on the market. I guess my husband and I have to become more educated so that we could narrow down our search some." Ibid. Desiderio offers to send Andrea Kringstein a "Guide to Fine Properties," which purportedly contains listings with photos to choose from, and Andrea Kringstein gives Desiderio her mailing address. Desiderio claims that she discussed the house with Andrea Kringstein "at great length numerous times" between the initial contact on August 3, 2005, and when Desiderio mailed information to Andrea Kringstein on August 10, 2005. See Desiderio Aff. ¶¶ 8-14. Desiderio claims that she told Andrea Kringstein that the builder of the property was Joseph Farrell.

"It has long been recognized that a broker, save when he enjoys the benefit of a special[*3] agreement to the contrary, does not automatically and without more make out a case for commissions simply because he initially called the property to the attention of the ultimate purchaser." Greene v Hellman, 51 NY2d 197, 205 (1980). If genuine, the emails establish, at most, that Corcoran called the property to Andrea Kringstein's attention. The emails are, at best, equivocal as to whether Corcoran only called the property to the Kringsteins' attention, or indicate more substantial activity. Its assertion that the Kringsteins decided to purchase the Bridgehampton property based solely on the information presented in the web listing for the property is speculative. Andrea Kringstein also denies ever visiting Corcoran's web site. Andrea Kringstein Aff. ¶ 8. Corcoran's contention that it discussed the property at "great length" with the Kringsteins is insufficient, because Desiderio does not state what was discussed with Andrea Kringstein, especially given that Corcoran claims that the information on the web listing was itself enough for the Kringsteins to make a decision to buy.

Corcoran apparently contends that, because B&G cannot show that it procured the Kringsteins through its sole efforts, then Corcoran is necessarily entitled to a 5% commission. See Mem. at 2. However, the brokerage agreement does not reflect such an arrangement. As set forth above, Corcoran earns a 5% commission in three specific instances: if it procures a buyer for B&G on its own; if it procures a buyer for B&G with another broker under a co-brokerage agreement; or if another agency procures a buyer for B&G. No other instances provide for a 5% commission to Corcoran. The evidence does not show that those circumstances occurred here.

Contrary to Corcoran's contention, the evidence does not establish, as a matter of law, that Corcoran "generated a chain of circumstances that proximately led to the sale." Buck v Cimino, 243 AD2d 681 (2d Dept 1997).[*4] "[E]ven if it be said that [the broker] had introduced to each other parties who otherwise would have never met' or had created impressions which, under later and more favorable circumstances, naturally [led] to and materially [assisted] in the consummation of a sale', a picture far more favorable to the plaintiff than the one we face here, as a matter of law his claim for commissions would have had to be dismissed."

Greene, 51 NY2d at 207 (citation omitted); see Interactive Props. Corp. v Morris, 271 AD2d 339 (1st Dept 2000) (dismissing broker's claim for lease commission when broker merely escorted representatives of tenant to view the premises for a relatively short visit on one occasion, and broker knew tenant was dealing with another broker for the space). Here, Corcoran does not even claim that it mentioned to B&G that the Kringsteins inquired about the Bridgehampton property, which Anne Borsch denies. See Borsch Aff. ¶ 9. Unlike Buck v Cimino, where the closing took place in less than 10 days after the buyers were shown the property, the contract of sale for the Bridgehampton property is dated November 5, 2005, about three months after Andrea Kringstein had initially contacted Corcoran.

In reply, Desiderio states that she embarked on an extensive marketing campaign for the Bridgehampton property. However, her reply affidavit cannot be used to remedy the basic deficiencies of plaintiff's prima facie case. Batista v Santiago, 25 AD3d 326, 326 (1st Dept 2006); Migdol v City of New York, 291 AD2d 201, 201 (1st Dept 2002). Even if the Court considered the reply affidavit, Desiderio's alleged extensive marketing campaign establishes only that her efforts may have successfully called the property to the Kringsteins' attention.

In any event, B&G, Borsch and Griffo raise a triable issue of fact as to whether B&G's sole efforts resulted in a sale of the property to the Kringsteins. Borsch claims that Joseph Farrell, not Corcoran, introduced the Kringsteins to her, and that Farrell had negotiated with the Kringsteins. Borsch Aff. ¶¶ 10, 15; see also Farrell Aff. ¶ 9. Richard Kringstein states that Farrell had showed him the [*5] property, along with other homes. Richard Kringstein Aff. ¶ 12; Farrell Aff. ¶ 10. The Kringsteins claim that they never met Desiderio in person, and that she never showed them a single home. Richard Kringstein Aff. ¶ 11; Andrea Kringstein Aff. ¶ 15.

Therefore, Corcoran is denied summary judgment in its favor against B&G for breach of contract.[FN1] If, as Corcoran asserts, B&G frustrated Corcoran's efforts from becoming the procuring cause of the sale (see Margolin Reply Affirm. ¶ 11.), then Corcoran might be entitled to a commission even if it was not the procuring cause of the sale. See Williams Real Estate Co. v Viking Penguin, 228 AD2d 233 (1st Dept 1996). However, this contention is unsubstantiated and was raised for the first time in reply.[FN2]

As to Corcoran's claims for tortious interference with a contract against all the defendants, Corcoran has not met its prima facie burden. Because B&G's brokerage agreement permits B&G to procure buyers through "its sole efforts," it is not enough for Corcoran to establish on this motion that it was unaware of B&G's negotiations with the Kringsteins for the sale of the property. Corcoran does not argue that B&G had a contractual duty to disclose to Corcoran those prospective purchasers that it had procured through its sole efforts. Corcoran also does not establish that any alleged interference was intentional. Barry & Sons v Instinct Prods. LLC, 15 AD3d 62, 67 (1st Dept 2005); Rosario-Suarz v Wormuth Bros. Foundry, 233 AD2d 575, 578 n 2 (3d Dept 1996). Borsch claims that she did not know the identity of the purchasers until she[*6] received a copy of the contract of sale, executed by the Kringsteins. Borsch Aff. ¶¶ 10-11.

To the extent that a breach of the brokerage agreement is based on B&G's failure to pay Corcoran a 5% commission, Corcoran has neither shown its entitlement to a 5% commission as a matter of law, nor shown that defendants proximately caused that breach.

Therefore, Corcoran's motion for summary judgment in its favor on its second cause of tortious interference is denied.

II.

Turning to B&G, Borsch, and Griffo's cross motion for summary judgment, it is premature to determine, as a matter of law, that Corcoran's efforts are similar to limited involvement of the broker in Greene v Hellman, 51 NY2d 197, supra. At the time when this motion and the cross motions were submitted, Desiderio's and Andrea Kringstein's depositions were outstanding. Moreover, the content and extent of Desiderio's conversations with Andrea Kringstein are disputed. Desiderio claims that she told Andrea Kringstein that the Farrell was the builder of the Bridgehampton property, and that Farrell had supplied her with the material that she provided to the Kringsteins. Desiderio Reply & Opp. Aff ¶ 3. Whether, as these defendants claim, Desiderio is "stretching the truth" (see Blythe Affirm. ¶ 23 n 1) raises an issue of credibility. Therefore, the branch of these defendants' cross motion for dismissing the first cause of action against B&G is denied.

Corcoran concedes that, because B&G is a duly formed limited liability company (see Borsch Aff., Ex B), it has no basis for imposing individual liability upon Borsch and Griffo for any breach of the brokerage agreement. Reply Mem. at 7. Therefore, summary judgment is granted[*7] dismissing the first cause of action as against Borsch and Griffo. Because discovery in this action is ongoing, it is also premature to determine whether Borsch and Griffo may be liable for tortious interference with B&G's brokerage agreement.

The branch of the cross motion seeking summary judgment against the Kringsteins for contractual indemnification is denied.[FN3] The Contract of Sale provides, in relevant part: "27. BROKER. Seller and Purchaser each represents and warrants to the other that it has not dealt with any real estate broker in connection with this sale. Seller and Purchaser shall indemnify and defend each other against any costs, claims, and expenses, including reasonable attorneys' fees, arising out of the breach on their respective parts of any representation or agreement contained in this paragraph. The provisions of this paragraph shall survive Closing, or, if Closing does not occur, the termination of this contract." See Margolin Affirm., Ex E; Richard Kringstein Aff., Ex B.

To the extent that these defendants broadly interpret the scope of dealings with a real estate broker in connection with the sale to encompass the fact that Andrea Kringstein had spoken to Corcoran, both parties would have breached the provision. Such a broad interpretation would also apply to the fact that B&G had entered into a brokerage agreement with Corcoran.

In sum, B&G, Borsch, and Griffo's cross motion for summary judgment is denied.

III.

Turning to the Kringsteins' cross motion for summary judgment, the first cause of action, for breach of contract, is dismissed as against them. It is undisputed that the Kringsteins are not a party to the brokerage agreement.

Summary judgment dismissing the second cause of action, for tortious interference, is denied. [*8]Issues of fact arises as to whether the Kringsteins knew that B&G had an exclusive brokerage agreement with Corcoran. Corcoran claims that this was clearly evident on its web site listing the Bridgehampton property (Desiderio Aff. ¶ 5), but Andrea Kringstein denies that she visited the Corcoran website. Andrea Kringstein Aff. ¶ 8. She claims that she saw the Bridgehampton property on Farrell's website (ibid.), but an unauthenticated email from Andrea Kringstein to Desiderio states, "I saw [sic] picture of the house we discussed on the web" (see Complaint, Ex C), suggesting that Andrea Kringstein had visited Corcoran's web site. The Kringsteins claim that Farrell showed the property to them (Richard Kringstein Aff. ¶ 12), and Corcoran assert that a sign was posted on the property, describing it as "Corcoran Exclusive" with Desiderio's name on the sign. Desiderio Reply & Opp. Aff. ¶ 2.

The Kringsteins also argue that they did not proximately cause B&G to breach its brokerage agreement with Corcoran. Theoretically, the Kringsteins' purchase of the property does not prevent B&G from paying Corcoran a 5% commission. However, this argument does not rule out the possibility, as Corcoran claims, that the Kringsteins and Borsch agreed and carried out a plan to ensure that Corcoran would not earn a 5% commission. Because discovery is ongoing, it is premature to grant summary judgment dismissing this cause of action as against the Kringsteins.

CONCLUSION

Accordingly, it is hereby

ORDERED that plaintiff's motion for summary judgment is denied; and it is further

ORDERED that the cross motion for summary judgment by defendants B&G Hampton Properties, LLC, Anne Borsch, and James Griffo is granted only to the extent that the first cause of action is dismissed as against defendants Borsch and Griffo, and the cross motion is otherwise denied; and it is further

ORDERED that the cross motion for summary judgment by defendants Andrea Kringstein and Richard Kringstein is denied; and it is further

ORDERED that the remainder of the action shall continue.

This opinion constitutes the decision and order of the Court.

Dated: October 26, 2006

New York, New YorkENTER:

s/

J.S.C.[*9] Footnotes

Footnote 1: Corcoran states that it intends to withdraw its claims for breach of contract against defendants Borsch and Griffo, because they have offered evidence that B&G is a duly formed limited liability company. Reply Mem. at 7. Corcoran's only basis for suing these defendants was its belief that B&G was a sham company. See Complaint ¶ 8.

Footnote 2: The Court does not consider Corcoran's "Response to Kringstein and Soloway Papers in Opposition to B&G Cross-Motion for Summary Judgment against Kringstein." This is an impermissible sur-reply, submitted in further support of its own motion.

Footnote 3: B&G, Borsch and Griffo seek summary judgment on their cross claims against the Kringsteins only if plaintiff is granted summary judgment in its favor.