Steve Elliot, LLC v Foxboro Prods.

Steve Elliot, LLC v Foxboro Prods. 2010 NY Slip Op 20220 [28 Misc 3d 38] Accepted for Miscellaneous Reports Publication AT2 Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected through Wednesday, August 25, 2010

[*1] Steve Elliot, LLC, Appellant,
v
Foxboro Productions, Respondent.

Supreme Court, Appellate Term, Second Department, June 4, 2010

APPEARANCES OF COUNSEL

Steve Elliot Eluto, Brooklyn, for appellant. Kagan Lubic Lepper Lewis Gold & Colbert, LLP, New York City (Emil A. Samman of counsel), for respondent.

{**28 Misc 3d at 39} OPINION OF THE COURT

Memorandum.

Ordered that the order is reversed without costs and defendant's motion for summary judgment is denied.

Plaintiff brought this commercial claims action seeking to recover the sum of $5,000 for a commission allegedly due pursuant to an oral real estate brokerage contract. In support of defendant's motion for summary judgment dismissing the action, defendant's president, Nelle Nugent, asserted that defendant had leased certain rental space without plaintiff's assistance and denied having entered into an exclusive brokerage agreement with plaintiff. In opposition to the motion, plaintiff interposed the affidavit of its managing member, Steven Elliot Eluto, who stated that one Kenneth Peaton had represented that he was an executive of defendant and that defendant, acting through Peaton, had entered into an exclusive tenant representation agreement with plaintiff pursuant to which plaintiff would be paid for brokerage services regardless of whether plaintiff actually located the space that defendant rented. Plaintiff did not claim to have participated in locating the property that defendant ultimately rented, but asserted that this was irrelevant to its contractual right to a commission. The Civil Court granted summary judgment to defendant upon a finding that, in opposition to defendant's motion, plaintiff had not offered any evidence of an exclusive contract or any proof of having shown defendant the premises which defendant ultimately rented.

Plaintiff asserts on appeal that it was deprived of "procedural due process" because it had no pretrial disclosure, including depositions. Plaintiff also argues that the Commercial Claims Part of the Civil Court lacked jurisdiction to determine this motion because the action had been transferred out of the Commercial Claims Part. These contentions, however, are supported neither by the law nor the record of the case. Disclosure is unavailable in commercial claims procedure except by order of the court upon a showing of proper circumstances (CCA 1804-A). Here, it appears that plaintiff may have claimed damages in excess of{**28 Misc 3d at 40} $5,000 and indicated its need for discovery at a conference of the commercial claims action. On October 29, 2007, the case was ordered transferred to the regular part of the Civil Court upon payment of the applicable fee, and the matter was set down for calendar control in the Commercial Claims Part on January 31, 2008. It appears that, on the latter date, the applicable fee for transfer had not been paid. Indeed, no fee had been paid nor had any demands or motions for pretrial disclosure been filed as of August 1, 2008, when defendant served its motion for summary judgment.

Defendant premised its motion on the alleged lack of an exclusive brokerage agreement between the parties, and on defendant's having located the premises it rented without plaintiff's participation. We note that there is no requirement that a contract to pay a duly licensed real estate broker be written (see General Obligations Law § 5-701 [a] [10]; see also Strategic Alliance Partners, LLC v Dress Barn, Inc., 386 F Supp 2d 312, 316 [SD NY 2005]). Moreover, where parties have entered into an exclusive brokerage agreement, depending upon the terms of the agreement, the broker's entitlement to a commission may not be conditioned upon the efforts of the real estate broker in bringing about the specific real estate transaction (see North40RE Realty v Bishop, 2 AD3d 1184 [2003]).

Here, the contradictory assertions of the parties established a material issue of fact as to whether they had entered into an oral exclusive brokerage agreement pursuant to which plaintiff was entitled to recover a commission. The existence of this issue precluded summary judgment.

Since substantial justice was not done between the parties according to the rules and principles of substantive law (CCA 1807-A), we reverse the order of the Civil Court and deny defendant's motion for summary judgment.

Weston, J.P. (dissenting and voting to affirm the order in the following memorandum). While I agree that there is no requirement that a contract to pay a licensed real estate broker must be written, the majority incorrectly assumes that plaintiff is licensed and thus exempt from the requirement that a contract to pay must be in writing (see General Obligations Law § 5-701 [a] [10]). There is nothing in the record to support this assumption. Accordingly, I vote to affirm the order of the Civil Court, which granted defendant's motion for summary judgment.

It is incumbent on a party moving for summary judgment to{**28 Misc 3d at 41} tender sufficient admissible evidence to eliminate any material issues of fact from the case (Klein v City of New York, 89 NY2d 833, 835 [1996]; Lesocovich v 180 Madison Ave. Corp., 81 NY2d 982 [1993]; Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Once the movant's entitlement is demonstrated, "the party opposing the motion must demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action" (Zuckerman v City of New York, 49 NY2d 557, 560 [1980]).

Here, defendant demonstrated its prima facie entitlement to judgment, shifting the burden to plaintiff to demonstrate the existence of a triable issue of fact. Defendant's moving papers showed that plaintiff had not participated in locating the office space. Plaintiff did not refute defendant's factual assertion that it had not participated in locating the space but, rather, argued that it was entitled to a commission pursuant to the parties' alleged oral exclusive brokerage agreement. This was insufficient to satisfy plaintiff's burden.

In the absence of a written contract, plaintiff bore the burden of establishing, first, that [*2]there was either an expressed or implied oral exclusive tenant representation agreement, and second, that its representative was a licensed real estate broker exempt from General Obligations Law § 5-701 (a) (10). Without such proof, the Civil Court properly awarded summary judgment to defendant.

Plaintiff correctly asserts that an oral brokerage agreement is enforceable. General Obligations Law § 5-701 (a) (10) generally codifies the applicable statute of frauds. It establishes that a contract to pay for services rendered in leasing real property must be in writing. However, the same section specifically exempts duly licensed real estate brokers from its coverage, stating, "This provision shall . . . not apply to a contract to pay . . . a duly licensed real estate broker" (see also Strategic Alliance Partners, LLC v Dress Barn, Inc., 386 F Supp 2d 312, 316 [SD NY 2005]). In order to defeat the motion for summary judgment, plaintiff was thus required to demonstrate not only that the parties had an exclusive agreement but also that plaintiff was a licensed real estate broker.

Real Property Law § 442-d provides as follows: "No person . . . [or] limited liability company . . . shall bring or maintain an action in any court of this state for the recovery of compensation for services rendered, in any place in which this article is applicable, in the buying, selling, exchanging, leasing,{**28 Misc 3d at 42} renting or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed real estate broker or real estate salesman on the date when the alleged cause of action arose."

The statute is strictly construed and compliance is mandatory (see Mavco Realty Corp. v M. Slayton Real Estate, Inc., 12 AD3d 575 [2004]). The law was designed "to assure the public of services competently, skillfully and ethically rendered by real estate brokers" (M.K.D. Capital Corp. v Miller, 170 Misc 2d 1002, 1004 [Sup Ct, NY County 1996]) and "to protect the public from inept, inexperienced persons" (Eaton Assoc. v Highland Broadcasting Corp., 81 AD2d 603, 604 [1981]).

Even if plaintiff is licensed, Eluto, as the person who allegedly handled the transaction between the parties, must be shown to be a licensed real estate broker or salesperson. "An employer may not recover in an action brought for a brokerage commission if the employee, acting as broker, is an unlicensed salesperson, otherwise the statute could not be given practical effect, and the obvious purpose of the Legislature would be frustrated" (Small v Marchese, 98 Misc 2d 295, 296-297 [App Term, 1st Dept 1978]).

Plaintiff's assertion that 85% of all office leasing transactions in Manhattan involve tenant representation brokers is insufficient to establish otherwise. Plaintiff's failure to offer proof that its representative was duly licensed as required by statute was fatal to its attempt to raise a question of fact.

Golia and Steinhardt, JJ., concur; Weston, J.P., dissents in a separate memorandum.