Park Place Realty Group, LLC v AFI USA
Annotate this CaseDecided on May 21, 2012
Supreme Court, Suffolk County
Park Place Realty Group, LLC, Plaintiff,
against
AFI USA; 4 HARBOR COURT, LLC., and MASSEY KNAKAL REALTY SERVICE INC., Defendants.
11028-2010
Attorney for Plaintiff
Ruskin Moscou Faltischek PC
By: R. Christopher Murray, Esq.
East Tower, 15th Floor
1425 RXR Plaza
Uniondale, New York 11556
Steven Landy & Associates, PLLC
270 Madison Avenue, Suite 1400
New York, New York 10016
Emily Pines, J.
In this action to recover a real estate broker's commission, the defendants, AFI USA ("AFI"), 4 Harbor Court, LLC ("Seller"), and Massey Knakal Realty Service, Inc. (Massey Knakal"), move for summary judgment dismissing the complaint and the plaintiff cross-moves for leave to amend the complaint.
FACTUAL AND PROCEDURAL BACKGROUND[*2]
On June 23, 2008, non-party Africa-Israel, U.S.A. ("Africa-Israel") entered into an Exclusive Right to Sell Listing Agreement ("Listing Agreement") with "Massey Knakal Realty Services" ("MKRS") pursuant to which MKRS was granted the exclusive right to sell property owned by Seller located at 4 Tri Harbor Court, Port Washington, New York ("Property"). The Listing Agreement provides, in relevant part, as follows:
3. MKRS is authorized, if it deems necessary, to solicit the cooperation of other real estate brokers and to work with them on a cooperating basis for the sale of the property.
***
5. MKRS' commission to be paid by you in connection with a sale or other disposition of the Property, will be computed based upon five and 73/100 percent (5.73%) of the gross sales price, whether such sale is effected by MKRS, by Seller or by another broker. Commissions will be earned, due and payable as, if, and when title passes. No commissions will be deemed earned, due or payable except as, if, and when title actually passes.
6. In the event that a sale of the Property shall be effected by another licensed real estate broker, then Seller shall pay to MKRS one full commission as provided for herein, out of which MKRS shall compensate the outside broker(s) with 50% of the commission as, if, and when actually received by MKRS, and MKRS shall and hereby does indemnify and hold Seller harmless from and against any and all claims for commissions and/or finders fees that may be asserted by any such other third party broker and/or finder . . . in connection with such sale transaction with whom MKRS has a co-brokerage arrangement or has otherwise dealt with in connection with the sale of the Property . . .
In 2010, the plaintiff, Park Place Realty Group, LLC ("Park Place" or "Plaintiff") commenced this action against AFI, Seller, and Massey Knakal. Plaintiff alleges that AFI is a corporation that wholly owns the Seller and that Massey Knakal, a corporation and licensed real estate broker, was the listing broker for the Property. Park Place claims that it showed the Property to a potential purchaser, Computech International, Inc. ("Computech"), with the knowledge and consent of AFI and Seller, and that thereafter Computech agreed to the terms specified by the Seller, i.e. purchase price of $3,500,000.00, no mortgage contingency, and sale of the Property "as is." Park Place further alleges that AFI, Seller, and Massey Knakal entered into an agreement that Park Place would be paid a five percent (5%) commission to be evenly split between Park Place and Massey Knakal. It is undisputed that Park Place never had any direct communications with AFI or Seller.
According to Park Place, Computech undertook its due diligence and was ready, willing and able to proceed upon the terms set by AFI and Seller. It is undisputed that a proposed contract was prepared by the Seller's attorneys and sent to Computech's attorneys, at which time the Seller's attorneys expressly stated that the proposed contract did not constitute an offer and that no proposal would be binding unless and until the Seller returned two fully executed contracts to Computech. [*3]The proposed contract of sale contained a term reducing the rent of the tenant in the Property for the balance of the term of its lease, which Park Place claims was never previously agreed to by Computech. Park Place alleges that it was prepared to go forward upon mutually agreeable terms for the lease-back but that Massey Knakal showed the Property to a different buyer so that it would receive the full commission and would not have to split the commission with Park Place. It is further alleged that AFI/Seller entered into a contract of sale with the new buyer and refused to proceed with the sale to Computech.
Park Place asserts three causes of action. The first is asserted against AFI and Seller and seeks recovery of a broker's commission of $87,500. The second cause of action is asserted against AFI and Seller for unjust enrichment in accepting services from Park Place in obtaining a contract for the sale of the Property. The third cause of action is asserted against Massey Knakal for tortious interference with Park Place's business relationship and contract with AFI and Seller.
Defendants now move for summary judgment. In support of the motion the Defendants submit, among other things, an affidavit of Shimon Shkury, who signed the Listing Agreement on behalf of Massey Knakal as "Managing Director, Partner." Shkury states, among other things, that he was the broker for Massey Knakal primarily responsible for marketing and promoting the sale of the Property. He notes that the Listing Agreement was also signed by Jona Rechnitz on behalf of non-party Africa-Israel, U.S.A., the corporate parent of both AFI and the Seller. Shkury states that AFI had no connection to the sale of the Property and that it did not own the Property or enter into a contract with Park Place, Massey Knakal or any prospective purchaser. According to Shkury, when Computech made its offer, Massey Knakal and Park Place agreed that if Computech purchased the Property and Massey Knakal received a commission from the Seller, Massey Knakal would pay Park Place 50% of the commission if and when received. This agreement is documented by an e-mail exchange between Park Place's President/CEO, David Chinitz ("Chinitz")and Shkury. Shkury further states that the proposed Computech contract contained a term amending the existing lease on the Property, which Park Place advised was unacceptable in an e-mail from Chinitz Shkury. Massey Knakal and the Seller then discontinued negotiations with Park Place. Shkury claims that although Computech and the Seller had an initial understanding on the sale price, they never reached agreement on any of the other material terms customarily contained in a contract of sale. Thereafter, the Seller sold the Property to a third-party and, at the closing, the Seller paid Massey Knakal a broker's commission in the amount of $200,550. Park Place was not the buyer's broker in that transaction. Shkury states that Massey Knakal never received a commission as a result of Computech's offer. Defendants also cite to Chinitz's deposition testimony that Massey Knakal would not have to split the commission with Park Place if the Property was sold to anyone other than Computech. Chinitz testified that the agreement between Park Place and Massey Knakal was limited to splitting the commission if Computech purchased the Property. Chinitz also admitted that Park Place did not have an agreement with either AFI or the Seller nor was promise ever made directly by AFI or the Seller to pay Park Place a commission. Chinitz also admitted that neither AFI nor Seller received any money from Computech.
Defendants contend, among other things, that summary judgment dismissing the first cause [*4]of action for breach of contract asserted against AFI and Seller should be granted because the evidence demonstrates that Park Place did not have any agreement with either AFI or Seller and that Park Place was not the procuring cause of the sale of the Property. They rely on Chinitz's admission at his deposition that park Place did not have any agreement with either AFI or Seller. Defendants further argue that summary judgment dismissing the second cause of action for unjust enrichment asserted against AFI and Seller should be granted because the existence of the agreement between Park Place and Massey Knakal precludes recovery in quasi contract and because Park Place acknowledged that it performed brokerage services for Computech, not AFI or Seller. Finally, Defendants contend that summary judgment dismissing the third cause of action asserted against Massey Knakal for tortious interference with Park Place's business relationship and contract with AFI and Seller should be granted because there was no contract between Park Place and AFI or Seller, and Park Place cannot evade the unambiguous terms of its agreement with Massey Knakal by seeking recovery in tort rather than contract.
In opposition to Defendants' motion, Park Place submits affidavits from Chinitz and Eyal Shachi, President of Computech. In his affidavit, Chinitz states, among other things, that during a conference call on November 11, 2009, terms of a purchase were agreed to by Computech and Massey Knakal on behalf of the Seller. He claims that since Computech was a ready, willing and able buyer on terms agreed to by Seller, Park Place earned its commission. Chinitz further alleges that Massey Knakal acted in bad faith by intentionally scuttling the sale to Computech and proceeding with the sale to a third-party in order to keep the entire commission. Therefore, Chinitz claims that Park Place can recover a commission directly from AFI and Seller. Chinitz contends that a broker earns its commission when it reaches an agreement as to material terms with a buyer whether or not the deal closes. Chinitz further states that Computech agreed to the provision in the proposed contract amending and modifying the tenant's lease by reducing the tenant's rent. Notably, Mr. Shachi does not corroborate this assertion in his affidavit. Chinitz also states that he never agreed to condition his right to a commission upon the closing of title.
Park Place contends, among other things, that as an express agent of the Seller, Massey Knakal's actions of enlisting Park Place as co-broker and agreeing to the terms of the sale to Computech, are binding on AFI and Seller, thereby entitling Park Place to a commission. Park Place further contends that the provision in the Listing Agreement between the Seller and Massey Knakal stating that "[n]o commissions will be deemed earned, due or payable except as, if, and when title actually passes" is not applicable because it did not agree to such a condition. With regard to its claim for unjust enrichment/quantum meruit, Plaintiff contends that the evidence demonstrates that it performed brokerage services in good faith, which were accepted by the Defendants when they agreed to sell the Property to Computech. With regard to its claim against Massey Knakal for tortiously interfering with the sale to Computech, Plaintiff contends that the evidence demonstrates that Massey Knakal sought to kill the sale to Computech by including a new term in the contract of sale reducing the existing tenant's rent and that by doing so, Massey Knakal interfered with Plaintiff's right to receive a commission.
Additionally, Plaintiff cross-moves for leave to file and serve a supplemental summons and [*5]amended complaint to reflect that defendant Massey Knakal Realty Service, Inc. is actually a d/b/a for Massey Knakal Realty of Queens, LLC and to add African Israel Company, the parent company of AFI and the Seller and actual entity that entered into the Listing Agreement with Massey Knakal, as a defendant. Defendants oppose Plaintiff's cross-motion to add what they contend are new parties after the completion of discovery on the ground that there is no merit to the proposed amended complaint for the same reasons as articulated in Defendants' motion for summary judgment.
DISCUSSION
For a broker to be entitled to a commission from the seller, the broker must prove that it had a contract, either express or implied, with the seller (RWSP Realty, LLC v. Agusta, 42 AD3d 490, 491 [2d Dept. 2007]; Fischer v. RWSP Realty, LLC, 19 AD3d 540, 541 [2d Dept. 2005]; Schuckman Realty, Inc. v. Marine Midland Bank, N.A., 244 AD2d 400 [2d Dept. 1997]). Here, the evidence demonstrates, as a matter of law, that the Plaintiff did not have a contract, express or implied, with either the Seller or AFI. Rather, the only contract entered into by the Seller/AFI was the Listing Agreement with Massey Knakal. Therefore, the Plaintiff does not have a valid claim for a brokerage commission against the Seller or AFI and summary judgment dismissing the first cause of action is granted (see RWSP Realty, LLC v. Agusta, supra; Fischer v. RWSP Realty, LLC, supra; Schuckman Realty, Inc. v. Marine Midland Bank, N.A., supra; Geoffrey S. Matherson & Assocs., Ltd. v. Calderone, 190 Misc 2d 775 [App. Term, 2d Dept 2001]). Notably, although Plaintiff entered into a co-brokerage agreement with Massey Knakal, it does not assert a cause of action for breach of contract against Massey Knakal.
Additionally, even if Park Place could assert a valid breach of contract claim against AFI/Seller pursuant to the terms of the Listing Agreement, the Listing Agreement specifically provides that a commission will be due only "if, as, and when title actually closes," making the broker's entitlement to a commission is contingent upon the actual closing (Corcoran Group, Inc. v. Morris, 107 AD2d 622, 623 [1st Dept. 1985], aff'd, 64 NY2d 1034). Although a broker is generally entitled to a commission when it produces a buyer who is ready, willing, and able to purchase on the seller's terms, the broker's right to a commission may be varied by agreement (Liggett Realtors, Inc. v. Gresham, 38 AD3d 214 [1st Dept. 2007]; Pantiago Realty, Inc. v. Estate of Schrenko, 249 AD2d 525 [2d Dept. 1998]). Paragraph 6 of the Listing Agreement also specifically addresses payment of a commission to a co-broker and makes such payment contingent upon receipt of the commission by Massey Knakal, as provided for in the Listing Agreement. Because title never passed to Computech, Massey Knakal was not entitled to a brokerage commission on that transaction pursuant to the Listing Agreement and, therefore, Plaintiff, as co-broker for a sale to Computech, was not entitled to a co-brokerage commission.
"To make out a claim in quantum meruit, a claimant must establish (1) the performance of the services in good faith, (2) the acceptance of the services by the person to whom they were rendered, (3) an expectation of compensation therefor, and (4) the reasonable value of the services" (Miranco Contracting, Inc. v. Perel, 57 AD3d 956, 957 [2nd Dept. 2008]). An action based on unjust [*6]enrichment requires a showing that (1) the defendant received money, property or services belonging to or provided by the plaintiff, (2) the defendant benefitted therefrom, and (3) under principles of equity the defendant should not be permitted to retain the money or property or should be required to pay for the services (see, Matter of Estate of Witbeck, 245 AD2d 848 [3rd Dept. 1997]).
Here, the existence of the co-brokerage agreement between Park Place and Massey Knakal to split the commission on a sale to Computech precludes recovery in quasi contract from the Seller/AFI for events arising out of the same subject matter (see Schuckman Realty, Inc. v. Marine Midland Bank, N.A., supra [existence of brokerage agreement between plaintiffs and parties other than defendant governing broker's commission precludes recovery in quasi contract for event arising out of same subject matter]).
Finally, summary judgment dismissing the third cause of action asserted against Massey Knakal is also granted. The tort of interference with contract requires the existence of a valid contract between the plaintiff and a third party (Lama Holding Co. v. Smith Barney Inc., 88 NY2d 413, 424 [1996]). Here, in the third cause of action Park Place alleges that Massey Knakal tortiously interfered with its business relationship and contract with AFI/Seller. However, as stated above, the evidence demonstrates, as a matter of law, that the Plaintiff did not have a contract, express or implied, with either the Seller or AFI. Rather, the only contract entered into by the Seller/AFI was the Listing Agreement with Massey Knakal. There is no evidence of a contract between Plaintiff and a third-party with which Massey Knakal allegedly tortiously interfered. In any event, Park's Place's allegation that Massey Knakal intentionally scuttled the sale to Computech is vague and conclusory (see Schuckman Realty, Inc. v. Marine Midland Bank, N.A., supra). Accordingly, summary judgment dismissing the third cause of action is granted.
In light of the foregoing, Park's Place's cross-motion for leave to amend the complaint is denied as the proposed amended complaint is patently devoid of merit for the reasons stated above (see Lucido v. Mancuso, 49 AD3d 220, 229 [2d Dept. 2008][motion for leave to amend should be denied where proposed amended pleading is palpably insufficient or patently devoid of merit]).
This constitutes the DECISION and ORDER of the Court.
Dated: May 21, 2012
Riverhead, New York
EMILY PINES
J. S. C.
[ x ] FINAL
[] NON FINAL
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