Greendlinger v Marilyn A. Donahue Real Estate, Inc.
Annotate this CaseDecided on August 18, 2004
Civil Court, Kings County
ARLENE GREENDLINGER, Plaintiff,
against
MARILYN A. DONAHUE REAL ESTATE, INC., Defendant.
80989/03
Jack M. Battaglia, J.
Arlene Greendlinger is seeking to recover $11,250.00 from Marilyn A. Donahue Real Estate, Inc., representing one-half of a $22,500.00 commission paid to Defendant by reason of the sale of a cooperative apartment by Mary Goodson and Robert Roe ("Sellers") to Kathleen and Robert Russotti ("Buyers"). Plaintiff and Defendant have each moved for summary judgment, indicating thereby that there are no material facts in dispute, a conviction each repeated at oral argument. The facts as perceived by the respective parties are placed before the Court with affidavits by Ms. Greendlinger and Marilyn Donahue, the sole officer and shareholder of Defendant, together with attached documents. As will appear, the Court is granting Ms. Greendinger's motion and denying Defendant's.
Ms. Greendlinger is a licensed real estate broker, associated with Defendant, also a licensed real estate broker. As an "associated real estate broker", her activities are regulated as if she were a licensed real estate salesperson. (See Real Property Law §440[2]), and "salesperson" [*2]fairly describes her relationship to Defendant. Ms. Greendlinger introduced the Sellers to Defendant, but she is not seeking a "listing fee" from Defendant. (See Greendlinger Affidavit, ¶37.)
Generally, Ms. Greendlinger and Ms. Donahue orally agreed that Ms. Greendlinger would receive one-half of any commission that Defendant received, if Ms. Greendlinger was the "procuring cause" of the sale generating the commission. (See Greendlinger Affidavit, ¶29; Donahue Affidavit, ¶9.) "[A] broker is entitled to a commission if he (sic) establishes (1) that he or she is duly licensed, (2) that he or she had a contract, express or implied, with the party to be charged with paying the commission, and (3) that he or she was the procuring cause of the sale." (Friedland Realty Inc. v Piazza, 273 AD2d 351, 351 [2d Dept 2000].) By incorporating the "procuring cause" concept into their agreement, Ms. Greendlinger and Ms. Donahue clearly intended to reference the legal principles governing a broker's right to a commission from a seller or buyer, or lessor or lessee, as the case may be. Indeed, "when a contract calling for the payment of commissions to an employee contains no express provision detailing when the right to commissions vests, the courts will look to the employee's efforts and the custom in the industry," a result that is "unsurprising, because the law of agency generally awards commissions to an agent who was the 'procuring cause' of a sale." (Wakefield v Northern Telecom, Inc., 769 F2d 109, 112 [2d Cir 1985][applying New York law].)
There does not appear to have been a separate written listing agreement between the Sellers and Defendant; rather the Sellers had previously listed their apartment with another broker, The Corcoran Group Brooklyn, and a letter agreement on Corcoran letterhead dated May 20, 2002 provided for a commission to Defendant. The letter agreement was signed on behalf of Defendant by Mary Goodson, one of the Sellers, who was a licensed real estate salesperson hired by Defendant. (Donahue Affidavit, ¶15.) The letter agreement provided for a "co-exclusive" agency. If the property was "sold" by Corcoran, it would receive the full commission of 6%; if Defendant "procur[ed] the sale", it would receive the full commission. The agreement continued: "In the event another licensed broker solicited by us is involved in the transaction, we shall pay the cooperating broker a commission by separate agreement with such broker." The Sellers agreed to "conduct all negotiations with respect to the sale...of the property solely and exclusively through" Corcoran or Defendant, "whichever has introduced the purchaser." The asking price for the apartment was $799,000.
The Buyers responded to an advertisement for the apartment placed by Defendant, and they were shown the apartment by Ms. Greendlinger. Through her, the Buyers made three offers to purchase the apartment, none of which were at the asking price, and none were accepted by the Sellers. The offers were conveyed to the Sellers by Defendant; in one communication, dated June 20, 2002, Ms. Donahue referred to the Buyers as "Arlene Greendlinger's customers." Ms. Greendlinger is uncontradicted when she states that she "spoke with the Buyers on the phone many times to cultivate and maintain their interest" in the apartment. (Greendlinger Affidavit, ¶31.) During this period, Ms. Donahue and salespersons other than Ms. Greendlinger were showing the apartment, and, in addition to the offers by the Buyers, three offers were submitted to the Sellers by Defendant, none of which was accepted. (Donahue Affidavit, ¶¶ 18-20.) [*3]
In the latter part of June 2002, the Buyers apparently became disaffected with Ms. Greendlinger or Ms. Donahue, or both. (One of the Buyers expressed that disaffection in a letter that will be discussed below.) The Buyers then made another offer to the Sellers, this time through Corcoran. That offer was accepted, the sale was consummated, and Corcoran was apparently paid its commission. Before the closing, Ms. Donahue spoke to the broker in charge of Corcoran's Brooklyn office; that conversation was confirmed in an e-mail from the broker, stating that Corcoran and Defendant would "split the commission." (Greendlinger Affidavit, Exhibit E.) As Ms. Donahue explains, Defendant and Corcoran agreed to treat the transaction as a "co-broker situation" in which "the listing broker receives a portion of the sales price even if the property is sold by another brokerage firm." (Donahue Affidavit, ¶25.) Indeed, the May 20 letter agreement envisioned the possibility of such a situation.
There are, surprisingly, few reported decisions that address a real estate salesperson's right to share a commission received by the broker, and, as indicated above, the decisions often look to the "procuring cause" concept applied in direct actions by a broker for a commission. (See Parisi v Swift, 121 Misc2d 787 [Civ Ct, Kings County 1983], aff'd 128 Misc3d 388 [App Term, 2d Dept 1985]; Bendevena v Richard Fuchs Real Estate, Inc., 89 Misc2d 466, 467 [Dist Ct, Suffolk County 1976); Tongue v White, 47 Misc2d 357 [County Ct, Broome County 1965]; Borelli v Newbauer, 30 Misc2d 349, 352 [Bronx Mun Ct 1961]; Clair v Kall & Kall, Inc., 23 Misc2d 568, 571-72 [Dist Ct, Nassau County 1960]; see also Goldsmith v J.I. Sopher & Co., Inc., 249 AD2d 232, 232 [1st Dept 1998]["Plaintiff's entitlement to...commissions did not depend upon his having 'earned' the commission in the manner of brokers and salespersons generally..., but was governed by a special agreement"].)
Neither of the parties cite any of those salesperson/broker cases, but instead rely on the decisions addressing the broker's direct action. For present purposes, the most pertinent Court of Appeals authority is Greene v Hellman (51 NY2d 197 [1980]): "[A] broker, save when he enjoys the benefit of a special 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...That is not to say that, in order to qualify for a commission, the broker in all instances must have been the dominant force in the conduct of the ensuing negotiations or in the completion of the sale. But, however variable the judicial terminology employed to express the requirement that the broker must be the procuring cause, it has long been recognized that there must be a direct and proximate link, as distinguished from one that is indirect and remote, between the bare introduction and the consummation." (Id., at 205-06 [footnote omitted].)[*4]
And so, a broker will be found entitled to a commission when the broker has created "an amiable atmosphere...in which negotiations proceeded and generated a chain of circumstances that proximately led to the...deal." (See Friedland Realty Inc. v Piazza, 273 AD2d at 351; see also Getreu v Plaxall Inc., 261 AD2d 574, 575 [2d Dept 1999]; Buck v Cimino, 243 AD2d 681, 684-85 [2d Dept 1997].) But the broker will be denied a commission when the broker was "by no means responsible for a meeting of the minds between [the] parties...or for creating an amicable atmosphere for negotiations to proceed" (see Finley v Amyot, 285 AD2d 946, 948 [3d Dept 2001]); such as when "the sellers negotiated an entirely different deal with the purchasers through a different broker", so that the initial broker was not the "direct and proximate link...between the introduction of the sellers to the buyers and the consummation of the sale" (see Mollyann, Inc. v Demetriades, 206 AD2d 415, 416 [2d Dept 1994]).
It is debatable whether "proximate link" is much more helpful than "procuring cause" in deciding individual cases, and there is risk in using tort concepts or terminology in the contract context. A formulation that may be better suited to the salesperson/broker relationship, although perhaps also deficient in utility to case determination, is that articulated by a federal appellate court, i.e. whether the salesperson "has performed acts of sufficient importance to the success of the deal that he or she should be reimbursed for his or her efforts." (See Fieger v Pitney Bowes Credit Corp., 251 F3d 386, 403 [2d Cir 2001][applying New York law].)
Another formulation, particularly appropriate here, is that "when the broker becomes entitled to his share [of the commission]..., then the salesperson is entitled to her share." (See Bendevena v Richard Fuchs Real Estate, Inc., 89 Misc2d at 467-48; see also Tongue v White, 47 Misc2d at 573 ["The proof of the (salesperson's) right to recover is the fact that the defendant became entitled and did receive a commission from (the seller) when the option was exercised"].) When the broker "fortuitously obtain[s] a commission...it would not serve the interests of justice for [the broker] to reap full benefits of his good luck without sharing the reward with the person who was instrumental in bringing the deal together." (Parisi v Swift, 121 Misc2d at 790.)
Up to a point, Defendant appears to recognize the logic and fairness of such a result. Ms. Donahue says that if the Buyers "had been the successful purchaser through our firm without a doubt Arlene Greendlinger would have been entitled to one-half of the full commission earned by the firm." (Donahue Affidavit, ¶27.) Defendant maintains, however, that this case is different for two reasons. First, Ms. Donahue says that the payment of the commission was made "not on legal grounds but upon the longstanding ties which myself and my firm had with the manager of the Corcoran offices." (Id., ¶28.) Second, Defendant alleges that Ms. Greendlinger did not "do[] her job competently and professionally", and that "her own actions or inactions, real or perceived, caused the purchasers to abandon plaintiff's employer and deprived defendant from earning a full commission on the sale of the property." (Affirmation in Reply, ¶¶ 8 and 10.)
Clearly, Ms. Donahue cannot speak for Corcoran as to its reasons for agreeing to the split-commission arrangement, and no writing has been offered, in admissible form or not, that [*5]purports to explain those reasons. On this motion, Ms. Donahue maintains, "I did not then nor do I believe now that I had legal grounds to sue the sellers of the apartment, Goodson and Roe, and/or Corcoran for any commission based upon the sale to the Russottis." (Donahue Affirmation, ¶26.) But, in an e-mail communication to Ms. Greendlinger on June 23, 2002, Ms. Donahue reports that the Buyers had increased the amount of their offer; that she had "advised [one of the Sellers] to speak with his attorney before going forward with anything"; that if the Sellers took the Buyers' offer "through Corcoran there will be two claims for the commission"; and that she "reported the situation" to Corcoran, and it was understood that "both brokers would claim a commission." (Greendlinger Affidavit, Exhibit D.) (Ms. Greendlinger attaches to her Affidavit printouts of a number of e-mail communications with Ms. Donahue; Ms. Donahue has not disputed the authenticity or completeness and accurate reproduction of any of them.)
On June 28, Ms. Donahue transmitted to Ms. Greendlinger a communication she had sent to one of the Sellers, in which she reported to him the split-commission arrangement. She continued: "Corcoran was willing to turn the deal back to me, if the Russottis were willing to continue to work with me. For the sake of peace, and to move on to other things, and that I do not trust Mary's reaction or willingness to comply, I agreed to work things out with Corcoran. While I am not pleased with the situation, I was pleased that I was able to come to an agreement with Corcoran." (Greendlinger Affidavit, Affidavit F.)
Ms. Donahue told Ms. Greendlinger that she was "so relieved that we no longer have to deal with any of them", and that she confirmed to Corcoran that she "would accept a check drawn by Corcoran, so as not to put myself in future harm's way." (Id.)
It is apparent to the Court that, whether or not Ms. Donahue "believed" she had grounds for a legal claim against the Sellers or Corcoran, she conveyed a contrary belief to them. It is also apparent that Ms. Donahue's agreement with Corcoran, including her willingness to accept payment from Corcoran, rather than from the Sellers, was an expression of her own assessment of the legal and business landscape and her own best interests. Undoubtedly, the prior relationship between Ms. Donahue and Corcoran facilitated an amicable resolution to the possibility (at least) of competing claims. But that relationship, and Ms. Donahue's decision to settle for half, rather than seek more, does not supplant Ms. Greendlinger's agreement with Defendant.
Beyond these factual circumstances, however, is the assumption in Defendant's position that a salesperson's entitlement to a commission from the broker necessarily depends on the broker's entitlement to a commission from one of the parties in the underlying sale or lease transaction. That may be so in most cases, particularly those in which the agreement between the salesperson and broker does not address the question, and, as the previous discussion [*6]demonstrates, the caselaw reflects that by looking to the caselaw on direct broker actions.
But the contract between the salesperson and the broker and the contract between the broker and the principal are separate contracts, and the terms of those contracts, including the conditions for payment of a commission, are determined by the respective parties and the parties' intent. (See Feinberg Bros. Agency, Inc. v Berted Realty Co., Inc., 70 NY2d 828, 830 [1987]; Goldsmith v J.I. Sopher & Co., Inc., 249 AD2d at 232.) There is no contention that the agreement between Ms. Greendlinger and Defendant included an express term that Ms. Greendlinger would only be entitled to a commission if Defendant was legally entitled to collect it. Indeed, the Court suspects that in the course of performance it is the fact of payment of a commission to the broker that triggers payment to the salesperson.
For those reasons, a conclusion that Ms. Greendlinger is entitled to share the $22,500.00 commission paid to Defendant neither requires, nor implies, a conclusion that Defendant would have a legally enforceable claim against the Sellers. Nor does it mean that Ms. Greendlinger would be entitled to a commission from Defendant, based upon Defendant's right to collect one from a party to the underlying transaction, even if Defendant has not been paid the commission. And, therefore, it does not mean that Ms. Greendlinger is entitled to receive from Defendant more than one-half the amount Defendant has been paid.
The Court's determination that Ms. Greendlinger was the "procuring cause" of sale for purposes of her agreement with Defendant, as well as the disposition of the commission on the sale paid to Defendant, is not based solely on the fact of payment to Defendant. With the exception of the advertisement of the apartment, there is no suggestion that Ms. Donahue or any other of Defendant's salespersons played any role in bringing the Sellers and the Buyers together. To the contrary, Ms. Donahue and others were competing with Ms. Greendlinger to make the sale, and had submitted bids to the Sellers.
"[T]he time factor is a crucial element in making a determination." (Parisi v Swift, 121 Misc2d at 789.) Here, the last offer of the Buyers that was transmitted to the Sellers through Ms. Greendlinger was on June 20, and it was no more than three days later on June 23 that the Buyers increased their offer through Corcoran. (See Greendlinger Affidavit, Exhibits C and D.) The Sellers never terminated their listing agreement with Defendant (see Borelli v Newbauer, 30 Misc2d at 352), and, as has been demonstrated, communication with the Sellers continued even after they accepted the offer the Buyers made through Corcoran. The difference between the last offer made through Ms. Greendlinger ($755,000) and the offer accepted through Corcoran ($800,000) was "negligible." (See Parisi v Swift, 121 Misc2d at 790 [$425,000 and $450,000].) As far as the commission paid to Defendant is concerned, if Ms. Greendlinger is not the "procuring cause", it is difficult to see who on Defendant's behalf would be.
Ms. Greendlinger "performed acts of sufficient importance to the success of the deal that...she should be reimbursed for...her efforts. (See Fieger v Pitney Bowes Credit Corp., 251 F3d at 403.) Ms. Donahue, as sole officer and shareholder of Defendant, may well have been [*7]entitled to decide to compromise Defendant's claim to a commission from the Sellers and to accept payment from Corcoran rather than from the Sellers and those decisions may have been in Ms. Greendlinger's interest as well but they cannot serve to deprive Ms. Greendlinger of compensation for her efforts.
Defendant's allegation that Ms. Greendlinger was responsible for the dissatisfaction of the Buyers and their departure to Corcoran would, if established, affect Ms. Greendlinger's entitlement to a commission. The contract between Ms. Greendlinger and Defendant should be deemed to include a condition that Ms. Greendlinger perform competently and professionally; and, if she did not, and as a result Defendant was deprived of a full commission, any commission due her would be adjusted accordingly. (See Kirke La Shelle Co. v. Paul Armstrong Co., 263 NY 79, 87 [1933].) The only "evidence" in support of Defendant's allegation, however, is a June 21, 2002 letter from one of the Buyers to Corcoran, a copy of which is shown to have been mailed to Defendant. (Donahue Affidavit, Exhibit G.) In additional to constituting inadmissible hearsay, the letter speaks of both Ms. Greendlinger's and Ms. Donahue's "rude handling" of the matter and of "manipulation and self dealing by Marilyn Donahue and her firm." Moreover, Ms. Donahue continued to communicate with Ms. Greendlinger, reporting the possibility of "two claims for the commission" (Greendlinger Affidavit, Exhibit D) and the agreement with Corcoran (id., Exhibit E), without expressing any concerns about Ms. Greendlinger's performance.
Plaintiff may enter judgment for $11,250.00, together with interest from November 15, 2002, the date of the commission check to Defendant (Greendlinger Affidavit, Exhibit G), plus costs.
Plaintiff shall serve a copy of this order with Notice of Entry upon Defendant and the appropriate clerk within 20 days after entry.
August 18, 2004__________________________
Judge, Civil Court
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