Call-Us-Realty, Inc. v Gangemi

[*1] Call-Us-Realty, Inc. v Gangemi 2004 NY Slip Op 51506(U) Decided on September 24, 2004 Supreme Court, Kings County Bunyan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 24, 2004
Supreme Court, Kings County

Call-Us-Realty, Inc., Plaintiff,

against

John M. Gangemi, et al., Defendants.



44608/03

Bert A. Bunyan, J.

Upon the foregoing papers in this action to recover a real estate brokerage commission, Call-Us-Realty, Inc. (Call-Us) moves, by order to show cause, for an order prohibiting defendants John M. Gangemi (Gangemi), J & P 1870 Realty Corp. (J&P), and Constance Gangemi Slampiak (Slampiak) (collectively, defendants), pursuant to CPLR 6201 (3), from receiving from the proceeds of the foreclosure sale in the action entitled Bennardo v Del Monte Caterers, Inc. (Sup Ct, Kings County, Index No. 11229/92) (the Bennardo action) any proceeds which would leave the account without sufficient funds to pay such judgment as may be obtained by Call-Us herein, and maintaining in an account under the control of this court, pending final determination of this action by Call-Us, sufficient funds to pay any such judgment in favor of Call-Us.

On March 25, 1996, Gangemi, Del Monte Caterers, and their successors or assigns, as landlord, entered into a brokerage agreement with Call-Us and its then principal, Tony Safonte. The agreement covered the rental of and option to purchase 1870 Bath Avenue, in Brooklyn, New York, [*2]which was granted to Zack Kerzner, his successors, or assigns, as tenant. The agreement was executed by Gangemi, as landlord. Said agreement provided, inter alia, that the landlord would pay a commission of "seven percent (7%) of the price of [the] option or any future agreed price for the full term of the lease. . . [t]o be paid at closing or transfer of title."

On March 26, 1996, a lease was executed for the rental of the property. The landlord was J&P, which executed the lease by its president, Gangemi, and the tenant was Astoria Caterers, Inc. (Astoria), which executed the lease by its president, Zach Kerzner. Paragraph 65 of the lease agreement granted Astoria the right to purchase the leased building within 30 months from the commencement date of the lease at the price of $750,000. Under such agreement, the security deposit under the lease was to be deemed as the down payment, with the balance due at closing, at which time, J&P was required to deliver the deed to Astoria. The closing of the sale was to take place within 90 days. The lease, in paragraph 52, also contained the following provision: "52. Landlord and Tenant agree that [Call-Us] is the sole broker who negotiated this lease and is the sole entity entitled to a brokerage commission thereon [w]hich commission shall be paid by [the] landlord."

On February 5, 1998, Astoria, in accordance with the terms of paragraph 65 of the lease, exercised its option to purchase the subject real property for $750,000, but J&P failed to timely close title. Consequently, on November 15, 1999, Astoria commenced an action against J&P entitled Astoria Caterers, Inc. v J&P 1870 Realty Corp. (Sup Ct, Kings County, Index No. 44717/99) (the Astoria action), seeking, inter alia, specific performance of the option agreement and damages. By decision and order dated May 2, 2002, Justice Nicholas A. Clemente held that J&P breached the lease agreement containing the option to purchase the property by failing to transfer title to the property to Astoria, and granted Astoria summary judgment on the issue of liability on its breach of contract claim as against J&P. Said decision and order denied specific performance of Astoria's option to purchase the property because such remedy was unavailable to Astoria due to a paramount right by John Bennardo, Sandra Bennardo, and Lillian Bennardo (the Bennardos), who held a first mortgage upon the property, to foreclose upon the property in the Bennardo action, and since the amount of the mortgage then due was greater than the option purchase price.

On February 28, 2003, a judgment of foreclosure and sale was granted in the Bennardo action. On August 14, 2003, Klara Kerzhner, a relative of Zach Kerzner, as the highest bidder, purchased the real property at public auction for the sum of $1.5 million, and, on the same date, she assigned the rights, title, and interests in the property, over to Running on Ice, LLC (Running on Ice), a corporation related to and whose principal is a principal of Astoria. Referee Trevor Headley, Esq. (the Referee), the referee appointed in the Bennardo action, executed and delivered a deed conveying title to the property to Running on Ice.

The Referee's Report of Sale, filed on October 2, 2003, states that following payment of the amount due on the lien as per the judgment and certain expenses of the sale, interest, and other costs, there remained surplus monies in the amount of $322,209.16. These surplus monies were paid into court by the Referee pursuant to RPAPL 1354 (4). In addition, Receiver Armando DeMarino (the Receiver), who was appointed for the real property by court order dated March 25, 1997, pursuant to RPAPL 1325, has, in the Receiver's account, according to his final accounting dated November [*3]24, 2003, a net checking account balance as of August 31, 2003 of $505,094.07, plus interest since September 1, 2003, which will be deposited by him with the Clerk of the court, to be held together with the surplus monies, pending a surplus monies hearing by a referee, pursuant to RPAPL 1361 (2).

In November 2003, Call-Us commenced this action against Gangemi, J&P, and Slampiak, seeking to recover its broker's commission. It alleges that it is entitled to receive its broker's commission since it produced a buyer, i.e., Astoria, ready, willing, and able to close, and that the only reason the purchase of the property did not close is that, as held in Justice Clemente's May 2, 2002 decision and order, J&P breached the contract. Call-Us asserts that as a result of J&P's wilful breach of the contract and J&P's allowance of the property to be foreclosed upon, the acquisition of the building was substantially delayed and the value of the building significantly increased. It states that instead of obtaining the building at the option price, Klara Kerzhner and/or Running on Ice (which, as noted above, are related to Astoria) paid a total of $2,010,829.96 for the building, which it calculates by adding the successful auction bid price of $1.5 million with the monies it alleges are in the Receiver's account. It also points out that the subject property has been appraised at $1.8 million. Call-Us, in its first cause of action, seeks a brokerage commission of $140,758.09 based upon a sales price of $2,010,829.96 and, in its second cause of action, seeks a commission of $52,500, which is the amount of the commission which it would have received if J&P had transferred title to Astoria pursuant to the option in the March 26, 1996 lease agreement.

Call-Us, by the instant motion, now seeks, pursuant to CPLR 6201 (3), an order of attachment on the surplus monies from the proceeds of the foreclosure sale and the proceeds held by the Receiver. Call-Us asserts that if the surplus monies are actually paid to defendants, they will assign, dispose of, encumber, secrete, or remove them, so that in the event that it obtains a judgment herein, it will be unable to collect it.

Defendants, in opposition to Call-Us' motion, argue that since Call-Us only possesses a claim against them as a creditor, based upon breach of contract, it cannot have a claim to the surplus monies. It is true that a mere claim based upon breach of contract does not attach to the property (see Davison v MacDonald, 124 Misc 726, 730 [1925], affd 216 App Div 759 [1976]) and Call-Us has not yet obtained a judgment in this action which could become a valid claim to the surplus (see Warwick Sav. Bank v Long Is. Chapter K.C. Social Serv., 253 App Div 276, 277 [1938]; Sadow v Poskin Realty Corp., 63 Misc 2d 499, 503 [1970]). However, Call-Us has not filed a notice of claim, pursuant to RPAPL 1361 (1), in the Bennardo action. Rather, the relief sought by it is an order of attachment, pursuant to CPLR 6201 (3).

CPLR 6201 (3) provides, in pertinent part, that: "An order of attachment may be granted in any action . . . where the plaintiff has demanded and would be entitled, in whole or in part, or in the alternative, to a money judgment against one or more defendants, when: * * *3. the defendant, with intent to defraud [its] creditors or frustrate the enforcement of a judgment that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts." [*4]

In order to obtain an order of attachment, the moving party has the burden of demonstrating, through affidavit or other written evidence, that a valid cause of action for a money judgment exists, that it will probably succeed on the merits, that it has satisfied one of the statutorily-enumerated grounds of CPLR 6201, and the need for such an order (see CPLR 6212 [a]; Bank of China, New York Branch v NBM L.L.C., 192 F Supp 2d 183, 187 [SD NY 2002]; Trafalgar Power v Aetna Life Ins. Co., 131 F Supp 2d 341, 346 [ND NY 2001]; A & M Exports v Meridien Intl. Bank, 207 AD2d 741, 742 [1994]; Computer Strategies v Commodore Bus. Machs., 105 AD2d 167, 172-173 [1984]; Glotzer v Glotzer, 111 Misc 2d 171, 173 [1981]). Where the plaintiff seeks an order of attachment pursuant to CPLR 6201 (3), it is incumbent upon the plaintiff to demonstrate that the defendant is acting with intent to defraud, and fraud is not lightly inferred; the moving papers must contain evidentiary facts, as opposed to conclusions, proving the fraud (Benedict v Brown, 289 AD2d 433, 433 [2001]; Mineola Ford Sales Ltd. v Rapp, 242 AD2d 371, 371 [1997]; Societe Generale Alsacienne De Banque, Zurich v Flemingdon Dev. Corp., 118 AD2d 769, 772 [1986]).

Defendants argue that Call-Us does not have a valid cause of action as against them because the March 25, 1996 brokerage commission agreement is based solely upon the option to purchase, and the property was sold at the foreclosure sale rather than pursuant to the option. Defendants' argument is rejected. It is well settled that "[t]o recover a real estate broker's commission on an unclosed transaction, the plaintiff must establish that he or she procured a prospect[ive purchaser] who was ready, willing and able to purchase on the seller's terms" (Brenhouse v Shah Realty Corp., 271 AD2d 468, 468 [2000]; see also Blackman De Stefano Real Estate v Smith, 157 AD2d 932, 934 [1990]). "'At the juncture that the broker produces an acceptable buyer, he [or she] has fully performed his [or her] part of the agreement with the vendor and his [or her] right to [a] commission becomes enforceable'" (Mecox Realty Corp. v Rose, 202 AD2d 404, 404 [1994], quoting Hecht v Meller, 23 NY2d 301, 305 [1968]). "'The broker's right to this commission is not dependent upon performance of the real estate contract unless there is an agreement to the contrary'" (Kling Real Estate v DePalma, 306 AD2d 445, 445 [2003], quoting Mecox Realty Corp., 202 AD2d at 404; see also Coughlin v Neefus, 153 AD2d 78, 80 [1990]). Here, it is undisputed that Astoria was ready, willing, and able to purchase on J&P's terms, and paragraph 52 of the lease agreement acknowledges that Call-Us was the broker which negotiated the agreement (see Blackman De Stefano Real Estate, 157 AD2d at 934).

It is noted that the March 25, 1996 brokerage agreement provided that the seven percent brokerage commission was "[t]o be paid at closing or transfer of title." While this language provides for when Call-Us' commission would be paid, it does not expressly condition payment of the commission on if, as, and when title passes so as to bar Call-Us' recovery of its commission (see Lane Real Estate Dept. Store v Lawlet Corp., 28 NY2d 36, 42-43 [1971]; Hecht, 23 NY2d at 305; Sopher v Martin, 243 AD2d 459, 461 [1997]; French v Ahlstrom, 204 AD2d 861, 863 n 2 [1994]; Coughlin, 153 AD2d at 80).

In any event, there was an executed sales contract in existence between J&P and Astoria, the prospective purchaser produced by Call-Us, i.e., the March 26, 1996 lease agreement containing the option to purchase, which, in paragraph 52 thereof, referred to Call-Us' brokerage commission, and, as discussed above, Justice Clemente's May 2, 2002 decision and order held that J&P breached this [*5]contract by its failure to transfer title to the property to Astoria (see Graff v Billet, 64 NY2d 899, 901-902 [1985]).

Although Call-Us' first cause of action improperly seeks payment of its commission based upon the amount paid at the foreclosure sale, which cannot be obtained by it since the property was purchased at such sale by a party other than Astoria and a brokerage commission must be calculated as earned when the prospective purchaser is procured (see Finnegan & Di Zerega, Inc. v Bank of New York and Fifth Ave. Bank, 277 App Div 562, 564 [1950], affd 302 NY 876 [1951]), the complaint alternatively asserts, in its second cause of action, a claim for the commission based upon the amount Call-Us would have received if J&P had transferred title to Astoria pursuant to the option in the March 26, 1996 lease agreement.

Defendants also argue that the commission agreement is not valid because it is not signed by Call-Us. Such argument is without merit. The commission agreement, which is on Call-Us' letterhead, is executed by Gangemi, as landlord, on behalf of J&P, the party to be charged. The fact that Call-Us did not sign its own copy of the agreement, which evidences J&P's acceptance of Call-Us' offer and terms, is irrelevant. Additionally, as noted above, the March 26, 1996 lease executed by the parties, although dated after the March 25,1996 brokerage commission agreement, was contemplated by and, in paragraph 52 thereof, refers to the commission agreement. Defendants also allege that Tony Safonte was not a licensed broker at the time of J&P's entry into the lease with Astoria. Call-Us denies this allegation and points out that Call-Us, in any event, is licensed (see Real Property Law §§ 440 [1], 441, 441-b [2] ). Thus, contrary to defendants' contentions, Call-Us has established that a valid cause of action exists (see Bank of China, New York Branch, 192 F Supp 2d at 187; Glotzer, 111 Misc 2d at 173).

In its attempt to demonstrate that defendants are acting with an intent to defraud so as to justify an order of attachment, pursuant to CPLR 6201 (3), Call-Us asserts that defendants have a reputation for dishonest behavior and particular animosity towards it. It has submitted an article dated August 4, 2003 from the Brooklyn Papers, which refers to the fact that Frank Gangemi and Slampiak (who are brother and sister) pleaded guilty to multiple counts of defrauding clients, and that there is a federal lawsuit against the law firm of Gangemi & Gangemi and its former partners, Frank Gangemi, John Gangemi, Sr. (the father of Gangemi, Slampiak, Frank Gangemi, and Ursula Gangemi), and Ursula Gangemi (the sister of Gangemi, Slampiak, and Frank Gangemi). It also refers to a divorce action between Ursula Gangemi and her estranged husband.

This article, along with the general, conclusory, and speculative allegations by Call-Us that defendants will secrete the monies with intent to defraud it or frustrate the enforcement of a judgment that might be rendered in its favor, do not constitute evidentiary facts sufficient to meet the standard to justify prejudgment attachment pursuant to CPLR 6201 (3) (see Benedict, 289 AD2d at 433-434; Rothman v Rogers, 221 AD2d 330, 330 [1995]; Societe Generale Alsacienne De Banque, Zurich, 118 AD2d at 773; Computer Strategies, 105 AD2d at 173). Call-Us has not demonstrated that J&P engaged in fraudulent conduct so as to warrant imposition of the remedy of attachment (see Benedict, 289 AD2d at 434; Michaels Elec. Supply Corp. v Trott Elec., 231 AD2d 695, 695 [1996]).

Call-Us further claims that if defendants receive the funds and are given the opportunity to secrete them, it would likely suffer irreparable injury because it would be unable to collect any judgment that it might obtain in this action. Call-Us asserts that it needs an attachment order so that [*6]sufficient funds will remain in court to ensure that any judgment it obtains can be paid. However, due to the fact that the surplus monies will remain deposited with the Clerk of the court, pending disposition of the surplus money proceeding in the Bennardo action, to be held pursuant to RPAPL 1361 (2), there is no immediate danger that these monies will be disposed of or secreted.

Additionally, it is noted that the issue of the attachment of the surplus monies, pursuant to CPLR 6201(3), was raised and litigated in the Astoria action and decided against Astoria. Justice Michael J. Garson, by decision and order dated March 18, 2004 and entered on June 7, 2004, denied a motion by Astoria insofar as it sought an order of attachment. In so ruling, Justice Garson found that affidavits submitted by Astoria from Peter Gangemi (the cousin of Gangemi), which was executed in conjunction with an unrelated action brought against his family members, and from Frank Gangemi, an allegedly disbarred attorney, which asserted that there was fraudulent conduct on the part of the J&P defendants towards each other, did not establish beyond mere surmise that property was transferred with the intent, on the part of J&P, to defraud creditors. Here, the proof submitted by Call-Us does not constitute proof which is any better than that submitted by Astoria in the Astoria action. Furthermore, while Call-Us argues that the equities favor it so as to justify granting it an order of attachment, it, as the broker, can be in no better position than Astoria, the party whose option to purchase was held to have been breached, in seeking an order of attachment.

Accordingly, Call-Us' motion for an order of attachment, pursuant to CPLR 6201 (3), of the subject proceeds of the foreclosure sale in the Bennardo action, pending final determination of this action by it, is denied.

This constitutes the decision and order of the court.

E N T E R,

J. S. C.