Kaplon-Belo Assoc., Inc. v Beach 20th Pac. Realty LLC
Annotate this CaseDecided on July 31, 2007
Civil Court of the City of New York, Queens County
Kaplon-Belo Associates, Inc., Plaintiff,
against
Beach 20th Pacific Realty LLC, Beach 19th Pacific Realty LLC, Yuri Nussbaum, Yehuda Backer, Harry Freifeld, Barry Knobel, Matthew Knobel, and Beach 20th Realty, LLC, Defendants,
301208QTS/2006
Thomas D. Raffaele, J.
In an action to recover damages for breach of a commercial real-estate brokerage commission agreement, the defendants, the buyer and seller in the underlying transaction, move for summary judgment dismissing the plaintiff's complaint as against them, and the plaintiff real-estate broker cross-moves for summary judgment awarding it monetary damages due it under the agreement. For the reasons which follow, the defendants' motion is denied in its entirety, and the plaintiff's motion is granted in part and denied in part.
Defendant Harry Freifeld, a member of Beach 20th Pacific Realty LLC and Beach 19th Pacific Realty LLC (hereafter collectively "Beach Pacific LLCs"), the record owners of the commercial premises at issue, entered into a written brokerage commission agreement with the plaintiff Kaplon-Belo Associates, Inc. dated January 27, 2003, whereby it was agreed that Kaplon-Belo would receive a commission of $48,500 if the premises were purchased by [*2]defendant Barry Knobel, Unlimited Expert Inc., or 1224 Brunswick Realty Corp., "or any of their assigns, nominees or affiliates" for a purchase price of $1,150,000. Plaintiff, through its broker Bob Goodman, then showed the premises to defendant Barry Knobel on at least two occasions and provided him with information regarding the property. Thereafter, for an approximate three-week period in January 2003, plaintiff, as broker, through their broker Goodman, negotiated the terms of a sale of the premises between Barry Knobel and Harry Freifeld. A contract of sale was then prepared and executed, providing that the purchaser would have a 45-day due diligence period to conduct environmental and engineering tests. This contract also acknowledged that plaintiff was a broker for the transaction. Thereafter, Knobel exercised his option to cancel the initial contract of sale because the appropriate re-zoning of the Premises had not taken place. However, within a few months' time, on July 7, 2003, a new contract of sale was entered into between the Beach Pacific LLCs, as seller, and 1224 Brunswick Realty Corp., as purchaser. The price in the second contract remained the $1,150,000 that had been previously agreed upon. In addition, the second contract of sale acknowledged that Kaplon-Belo was a broker for the transaction. Under the second contract of sale, the Premises were sold and transferred to an assignee of 1224 Brunswick Realty Corp., for the purchase price of $1,150,000.
At the closing of the sale of the Premises, $73,333 of the net purchase price was paid directly to defendants Yuri Nussbaum, Yehuda Backer, and Harry Freifeld, who were the members of the Beach Pacific LLCs, as reflected in the closing memorandum. A real-estate brokerage commission of $35,000.00 was paid to Matt Probkevitz of Equishares Real Estate Co. No commission was paid to the plaintiff.
The Court begins its analysis with the explicit terms of the agreements between the parties. The brokerage commission agreement at issue was a letter-agreement, executed by the seller and the broker, which stated, verbatim, as follows:
For arranging the sale of the property located at 714 Beach 20th Street (Block 15564 Lot 25) and 710 Beach19th Street (Block 15564 Lot 55) to Mr. Barry Knobel, Unlimited Expert Inc., 1224 Brunswick Realty Corp., or any of their assigns, nominees or affiliates ('Buyer'), a commission is due and payable to Kaplon-Belo Associates, Inc. (' Broker') in the amount of $48,500.00 at time of closing. The purchase price is $1,150,000. No commission shall be due and payable if title fails to close.
Paragraph 10 of the initial sales contract, dated January 28, 2003, stated:
10. Brokerage
Purchaser represents and warrants that Purchaser has not dealt with any broker in connection with this sale, other than BOB GOODMAN of KAPLAN-BELO ASSOCIATES, INC. whose commission Seller agrees to pay pursuant to a separate agreement and Equishares Real Estate Co., whose commission Purchaser agrees to pay pursuant to a separate agreement. Purchaser agrees to indemnify and hold Seller harmless from and against any and all liability, claim, loss, damage or expense, including reasonable attorneys' fees, with respect to any other broker with whom Purchaser has dealt. This Article shall survive the closing. [Emphasis as in original.] [*3]
The corresponding provision of the subsequent July 7, 2003 contract of sale provided:
10. Brokerage
Purchaser represents and warrants that Purchaser has not dealt with any broker in connection with this sale, other than possibly BOB GOODMAN of KAPLON-BELO ASSOCIATES, INC. and MATT PROBKEVITZ of EQUISHARES REAL ESTATE CO, (718-868-1490). Seller acknowledges that Purchaser shall not be obligated to pay any commissions to the above named broker and Seller agrees to indemnify and hold harmless Purchaser from any and all liability, claim, loss, damage or expense, including reasonable attorneys' fees, with respect to any claims by said Brokers for a commission. Purchaser agrees to indemnify and hold Seller harmless from and against any other broker with whom Purchaser has dealt. This Article shall survive the closing. [Emphasis as in original.]
Generally, a broker is entitled to a real estate commission when he produces a buyer who is ready, willing, and able to purchase the property on terms acceptable to the seller (see LaneReal Estate Dept. Store v Lawlet Corp., 28 NY2d 36 [1971]; see also, Rusciano Realty Servs. v Griffler, 62 NY2d 696 [1984]). However, the parties to a commission agreement may provide for a commission to be payable contingent upon the closing of title (see Srour v Dwelling Quest Corp., 5 NY3d 874 [2005]; Welch Real Estate v Heritage Broadcasting Co., 192 AD2d 891 [3d Dept. 1993]; Cook/Pony Farm Real Estate v Spartan Enters., 157 AD2d 766 [2d Dept. 1990]; Battery Park Realty, Inc. v RKO Del., Inc., 18 AD3d 680, 681 [2d Dept. 2005]; Sopher v Martin, 243 AD2d 459, 461 [2d Dept. 1997]; Dawn's Gold Realty v Dagnese, 304 AD2d 519 [2d Dept. 2003]).
Plaintiff's right to its real estate brokerage commission was defined in its entirety by the terms of the January 27, 2003 brokerage agreement (see Tankers Intl. Nav. Corp. v National Shipping & Trading Corp., 116 AD2d 40, 43 [1st Dept. 1986]; see also, Schlesinger & Co. v Delson & Gordon, 184 AD2d 393 [1st Dept. 1992], leave denied 80 NY2d 761 [1992]; Friedland Realty v Modern Cabinets Corp., 194 AD2d 657 [2d Dept. 1993]; Graff v Billet, 64 NY2d 899 [1985]; Levy v Friedman, 216 AD2d 18 [1st Dept. 1995]). The obligation to pay a broker's commission upon consummation of sale requires a formal act of closing (see Corcoran Group v Morris, 107 AD2d 622 [1st Dept. 1985], affirmed 64 NY2d 1034 [1985]; White & Sons v La Touraine-Bickford's Foods, 50 AD2d 547 [1st Dept. 1975], affirmed 40 NY2d 1039 [1976]). The conditions precedent to plaintiff earning its commission under this agreement were that (a) title actually closed, (b) that the property was sold to Mr. Barry Knobel, Unlimited Expert Inc., 1224 Brunswick Realty Corp., or any of their assigns, nominees or affiliates, and (c) that the purchase price was $1,150,000. No other conditions were specified in the parties' agreement, and the Court declines to alter the clear intent of the parties by reading in any other terms.No provision limited the plaintiff's entitlement to a commission to any particular financial structure of the business transaction, nor was there any time limitation contained in the agreement. Only a few months transpired between the two agreements, in any event. Accordingly, plaintiff's right to obtain the commission occurred when title closed under the second contract under which the property was conveyed to 1224 Brunswick Realty Corp. for the sum of $1,150,000.00.This outcome is buttressed by the brokerage provision in paragraph [*4]ten of the second contract, which recognizes that the plaintiff is entitled to a broker's commission. Accordingly, plaintiff's motion for summary judgment awarding it the amount of the brokerage commission agreed to on January 27, 2003 in the sum of $48,500.00 is granted in its entirety, and the clerk of the court is directed to enter judgment thereon with statutory interest from the date of closing of the transaction.
"Tortious interference with contract requires the existence of a valid contract between the plaintiff and a third party, defendant's knowledge of that contract, defendant's intentional procurement of the third-party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom" (Lama Holding Co. v Smith Barney, 88 NY2d 413, 424 [1996]; Beecher v Feldstein, 8 AD3d 597, 598 [2d Dept. 2004). There is sufficient evidence in the record as to whether any action of the defendants-buyers induced the decision of the parties to the underlying transaction, specifically the sellers, not to pay the plaintiff any brokerage commission, in abrogation of the January 27, 2003 agreement, to warrant a trial on the issue. (See ALD Holding Corp. v F & O Port Corp., 15 AD3d 508, 509 [2d Dept. Div. 2005]). Accordingly, that branch of the motion and cross-motion seeking summary judgment on this cause of action are denied.
As to the plaintiff's request to hold the defendants jointly and severally liable to pay its commission, NY Bus. Corp. Law §1505 provides that a shareholder of a professional corporation may not be held personally liable for an ordinary business debt of the corporation (see 210 E. 86th St. Corp. v Grasso, 305 AD2d 156 [1st Dept. 2003]). One exception to this rule would occur when the corporate veil is pierced (see Glockhurst Corp v Schechter, 144 Misc 2d 204, 206-207 [Sup Ct. NY Co. 1988]). Generally, "piercing the corporate veil requires a showing that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury" (Old Republic Nat'l Title Ins. Co. v Moskowitz, 297 AD2d 724, 725 [2d Dept. 2002]); Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141 [1993]; Mistrulli v McFinnigan, Inc., 39 AD3d 606[2d Dept. 2007] ). To justify piercing the corporate veil, it is not enough to show that the individual owned a majority interest in the corporation, either directly or indirectly. There must also be proof that the individual completely dominated the corporation, such that it was a mere device to further his personal business, and that such domination was used to commit a fraud or a wrong against the party seeking to pierce the veil ( Matter of Morris v New York State Dept. of Taxation & Fin., supra at 141); Sharon Towers, Inc. v Bank Leumi Trust Co., 250 AD2d 509, 512 [1st Dept. 1998]).One factor courts have looked at in determining whether to traverse corporate formalities is evidence of the lack of a distinction between corporate funds and the defendant's personal funds (see eg, Pae v Chul Yoon, 2007 NY Slip Op 5484, 2 [2d Dept. June 19, 2007]). In addition, where evidence of co-mingling is combined with proof that a party is misusing the corporate form for his/her personal ends so as to commit a wrong against the other party, warranting equitable intervention, courts have been willing to pierce the corporate veil (see Matter of Morris v New York State Dept. of Taxation & Fin., supra at 143; 210 E. 86th St. Corp. v Grasso, supra).
The Court finds, on the record before it, that there is undisputed proof in the form of the closing memorandum for the transaction in question that the members of the subject corporation [*5]personally received proceeds from the sale of the corporate asset. In addition, there is at least an inference that this was done in order to circumvent the plaintiff's ability to receive a commission on the subject transaction. However, while sufficient to raise an issue of fact at trial, this level of proof is not dispositive enough in the Court's view to warrant imposing personal liability upon the individual corporate officers as a matter of law on a motion for summary judgment. A greater record must be developed at trial as to whether the owners exercised complete domination of the corporation in respect to the transaction attacked. Accordingly, this branch of plaintiff's application is denied at this time.
This constitutes the Decision and Order of the Court.
JAMAICA, NEW YORK
DATED:
____________________________________
HON. THOMAS D. RAFFAELE
Judge, Civil Court
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