Summary
applying the rule to a limited liability company
Summary of this case from Hansen v. Fields Co.Opinion
2013-01-16
JCL PROPERTIES, LLC, appellant, v. EQUITY LAND DEVELOPERS, LLC, respondent.
Rattet Pasternak, LLP, Harrison, N.Y. (Richard J. Rubin of counsel), for appellant. Canfield, Madden & Ruggerio, LLP, Garden City, N.Y. (Liliya Abramchayeva of counsel), for respondent.
Rattet Pasternak, LLP, Harrison, N.Y. (Richard J. Rubin of counsel), for appellant. Canfield, Madden & Ruggerio, LLP, Garden City, N.Y. (Liliya Abramchayeva of counsel), for respondent.
DANIEL D. ANGIOLILLO, J.P., JOHN M. LEVENTHAL, PLUMMER E. LOTT, and LEONARD B. AUSTIN, JJ.
In an action to recover damages for breach of contract, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Westchester County (O. Bellantoni, J.), entered January 5, 2012, as granted that branch of the defendant's motion which was for summary judgment dismissing the complaint and denied, as academic, its cross motion to amend the complaint.
ORDERED that the order is affirmed insofar as appealed from, with costs.
In 2010 the defendant sought to obtain mortgage financing for a proposed 30–unit condominium to be developed on certain real property that it owned. The defendant subsequently discussed with the plaintiff, JCL Properties, LLC, the prospect of its assisting in the procurement of a mortgage loan. In May 2010, the defendant and nonparty “JCL Properties Holdings, LLC,” entered into a mutual confidentiality agreement (hereinafter the confidentiality agreement) with respect to the subject loan. Also in May 2010, the defendant and the plaintiff entered into a Master Fee Agreement (hereinafter the MFA), which set forth the fees to be provided to the plaintiff were the plaintiff to secure a loan commitment for the defendant.
Thereafter, the plaintiff commenced this action against the defendant to recover damages for breach of the MFA and the confidentiality agreement. The complaint alleged that, in January 2011, due to the plaintiff's efforts, the defendant obtained a loan commitment for the development, but the defendant refused to pay the plaintiff the fees that it had earned. The defendant moved, inter alia, for summary judgment dismissing the complaint. In support of its motion, the defendant submitted evidence demonstrating, inter alia, that the plaintiff was not yet incorporated at the time when the MFA and the confidentiality agreement were executed. In the order appealed from, the Supreme Court, inter alia, granted that branch of the defendant's motion which was for summary judgment dismissing the complaint on the ground that the plaintiff lacked the capacity to sue. In addition, the Supreme Court denied, as academic, the plaintiff's cross motion to amend the complaint. The plaintiff appeals. We affirm, albeit on a different ground.
“Since a nonexistent entity cannot acquire rights or assume liabilities, a corporation which has not yet been formed normally lacks capacity to enter into a contract” ( Rubenstein v. Mayor, 41 A.D.3d 826, 828, 839 N.Y.S.2d 170;see 442 Decatur St., LLC v. Spheres Realty, Inc., 14 A.D.3d 535, 536, 787 N.Y.S.2d 669). However, as the plaintiff correctly contends, the doctrine of incorporation by estoppel precludes the defendant from using the plaintiff's lack of incorporation as a sword to escape liability after it allegedly benefitted from its agreements with the plaintiff ( see Boslow Family Ltd. Partnership v. Glickenhaus & Co., 7 N.Y.3d 664, 668–669, 827 N.Y.S.2d 94, 860 N.E.2d 711;Rubenstein v. Mayor, 41 A.D.3d at 828–829, 839 N.Y.S.2d 170).
Nevertheless, the defendant established its prima facie entitlement to judgment as a matter of law dismissing the complaint on the ground that, during the relevant time period, the plaintiff was not a licensed real estate broker pursuant to Real Property Law § 442–d. Real Property Law § 442–d bars unlicensed persons and corporate entities from recovering fees or commissions for the performance of services rendered, inter alia, in “negotiating a loan upon any real estate” (Real Property Law § 442–d; seeReal Property Law § 442–e; Kavian v. Vernah Homes Co., 19 A.D.3d 649, 650, 799 N.Y.S.2d 75). The defendant also established that the negotiation of the loan was the dominant feature of the parties' agreements ( seeReal Property Law § 440 [1], § 442–d; see also Ling's Props., LLC v. Bode, 94 A.D.3d 951, 952, 942 N.Y.S.2d 194). Although the plaintiff's principal was a licensed real estate broker, the plaintiff, an unlicensed limited liability corporation, was barred from receiving a commission or fee for services relating to the procurement of the loan ( seeReal Property Law § 442–d; Ling's Props., LLC v. Bode, 94 A.D.3d at 952, 942 N.Y.S.2d 194;Sharon Ava & Co. v. Olympic Tower Assoc., 259 A.D.2d 315, 316, 686 N.Y.S.2d 422).
In opposition to the defendant's prima facie showing, the plaintiff failed to raise a triable issue of fact ( see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595, 404 N.E.2d 718).
Accordingly, the Supreme Court properly granted that branch of the defendant's motion which was for summary judgment dismissing the complaint, and properly denied, as academic, the plaintiff's cross motion to amend the complaint.