Opinion
No. 21420/08.
2010-09-21
NRT NEW YORK LLC, d/b/a The Corcoran Group Brooklyn, Plaintiff, v. Barbara SIDBURY, Defendant.
Errol F. Margolin, Esq., Margolin and Pierce, LLP, for Plaintiff. Morris E. Barenbaum, Esq., for Defendant.
Errol F. Margolin, Esq., Margolin and Pierce, LLP, for Plaintiff. Morris E. Barenbaum, Esq., for Defendant.
JACK M. BATTAGLIA, J.
In this action, plaintiff NRT New York LLC. d/b/a the Corcoran Group Brooklyn, a real estate broker, alleges that defendant Barbara Sidbury breached an Exclusive Right to Sell Contract, dated September 6, 2006, by failing to pay a commission of $53,400 upon the sale of her property at 81 Bainbridge Street in Brooklyn.
In support of its motion for summary judgment pursuant to CPLR 3212, Plaintiff submits a copy of the fully-executed Exclusive Right to Sell Contract (“Brokerage Agreement”), which provides, in pertinent part, as follows:
“We have already discussed the various steps I will be taking to bring you as many well qualified customers as possible and I assure you that I am committed to getting you the best possible price in the shortest possible time.
...
You have employed The Corcoran Group Brooklyn as a real estate broker with exclusive right to sell the above captioned property. You represent that you are the owner of the property.
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This agreement shall be effective as of 09/06/06. It shall continue in full force and effect until 1/30/06 [ sic ].
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If the property is sold pursuant to this agreement, The Corcoran Group Brooklyn's commission to be paid by you shall be six (6%) percent of the total sale price of the property, or $7,000, whichever is greater ... The commission shall be due and payable at closing except in the case of willful default by the seller; wherein such case the commission shall be due and payable upon such willful default.
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During the term of this exclusive right, you agree to refer to The Corcoran Group Brooklyn all inquiries, proposals and offers received by you regarding the property, including, but not limited to those from principals and other brokers. You agree to conduct all negotiations with respect to the sale or other disposition of the property solely and exclusively through The Corcoran Group Brooklyn. The property will be offered only for sale during the term of this agreement unless otherwise agreed by you and The Corcoran Group Brooklyn.
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Within Three (3) business days after the expiration of this listing term, we shall deliver to you in writing a list of no more than Six (6) names of persons who inspected the premises during the listing term. If within Ninety (90) days after the expiration of the listing term a contract is signed to sell the premises to a person on said list, we shall be entitled to a commission of Six (6%) percent of the purchase price.”
It should be noted that, although the Brokerage Agreement indicates that it is effective from “9/6/06” until “1/30/06,” it is clear that the parties must have meant that it was effective until “1/30/07,” and the Court will assume as much in this decision.
Plaintiff also submits the affidavit of Lois Thompson, who signed the Brokerage Agreement for Plaintiff, and who avers that she is a licensed real estate broker for Plaintiff; that during the term of the Agreement, Plaintiff “found and procured a purchaser, namely Margo McKenzie (the Buyer'), who was ready, willing, and able to, and did purchase the Premises for $890,000 on July 5, 2007”; that “[u]nder the terms of the contract of sale the Buyer was to obtain financing. When the Buyer failed to obtain financing, we were told that the contract had been canceled. However, we thereafter learned that the Buyer had in fact closed the transaction, with financing from the defendant Seller”; and that Defendant has refused to pay the commission pursuant to the Agreement.
Plaintiff also submits a copy of a fully executed Contract of Sale with an attached Amendment dated December 21, 2006, which provides, in pertinent part, that the purchase price is $890,000; that the down payment is $20,000; that the balance at closing is $870,000; and that “the contract is conditional upon the purchaser obtaining a commitment for a conventional mortgage loan in the sum of $870,000.” Plaintiff points to Paragraph Eight of the Contract of Sale, which provides that “Purchaser hereby states that Purchaser has not dealt with any broker in connection with this sale other than Corcoran Group and Seller agrees to pay the broker the commission earned hereby (pursuant to separate agreement).” Plaintiff submits a copy of a Bargain and Sale Deed indicating that, on July 5, 2007, the property was transferred from defendant Barbara Sidbury to Margo McKenzie.
Plaintiff also proffers a copy of defendant Barbara Sidbury's Affidavit in Opposition (which was submitted in opposition to Plaintiff's prior motion for summary judgment, marked off the calendar due to Plaintiff's nonappearance on the return date), in which Ms. Sidbury avers, in pertinent part, that “Plaintiff was retained to obtain a purchaser who would buy my property and pay the full purchase price (i.e. all cash) thereof at closing”; that “[t]he buyer produced by plaintiff could not qualify and did not get a mortgage, and plaintiff informed me that the deal was dead”; that “[t]hereafter, since plaintiff said it could not find or produce any other buyers, the only way to get the deal to work, was for me to hold paper”; that “[o]n a $890,000 ... purchase price, I took back paper of $740,000.00”; that “[o]f the gross closing proceeds, the total net sum available to me after payment of liens and title charges and closing costs was $6,627.69”; that the paper is still overdue and she has not been “paid back” by the purchaser; that “while plaintiff is entitled some commission, plaintiff has not earned it yet as its customer produced by it has not paid the purchase price”; that “[w]hen I receive the monies from the buyer, I will forward to plaintiff the share that it is entitled to; this was proposed by plaintiff and agreed to by me”; and that “otherwise I would never have closed the deal as there was insufficient funds for me to pay the commission.”
Initially, it should be noted that, absent defendant Barbara Sidbury's averments that Plaintiff “is entitled to some commission, [but that it] has not earned it yet”, and that there was an agreement between her and Plaintiff regarding payment of the commission after Defendant has received monies from the buyer, Plaintiff would fail, for reasons that will follow, to demonstrate prima facie that it was entitled to any commission at all. Nonetheless, in light of Ms. Sidbury's averments, Plaintiff establishes prima facie that it is entitled to a commission; however, it fails to demonstrate prima facie the terms of the agreement that entitles it to a commission, as well as outstanding commissions, if any, due based upon the closing on July 5, 2007.
Plaintiff contends that it is entitled to summary judgment because it has, in accordance with “black letter law”, procured a “ready, willing, and able” buyer who, in fact, purchased the property. ( See Sauerhoff–Kessler Corp. v. Roma Shopping Plaza, Inc., 201 A.D.2d 477, 478 [2d Dept 1994].) Nonetheless, “parties to a brokerage agreement are free to add whatever conditions they may wish to their agreement.” ( See Feinberg Bros. Agency, Inc. v. Berted Realty Co., Inc., 70 N.Y.2d 828, 830 [1987].) As such, in determining whether Plaintiff is entitled to a commission, the Court must first consider the terms of the Brokerage Agreement itself. ( See e.g. Graff v. Billet, 64 N.Y.2d 899, 901–02 [1984].)
Plaintiff fails to make any showing as to how the terms of the Brokerage Agreement would entitle it to a commission under facts and circumstances here. The Brokerage Agreement does not expressly address a situation where, as described by both Lois Thompson and Barbara Sidbury, the proposed buyer is unable to obtain conventional financing from a bank in order to close title pursuant to the terms of a contract of sale that was executed within the listing period of the Brokerage Agreement, but then, at some later time, the buyer and seller enter into another agreement whereby the seller provides the necessary financing to the buyer to purchase the property. Plaintiff does not demonstrate prima facie that the Brokerage Agreement would require Defendant to pay a broker's commission where, as here, a Contract of Sale dated December 21, 2006, executed within the listing term of the Brokerage Agreement, did not form the basis of the sale and closing of title that occurred on July 5, 2007.
To the extent that Plaintiff relies on the terms of the Brokerage Agreement, the first paragraph indicates that the broker will take steps to bring Defendant “as many well qualified customers as possible.” Plaintiff does not point to any evidence demonstrating that Margo McKenzie was a “well qualified customer” as contemplated by the parties under the Brokerage Agreement.
Even assuming that the “general rule” entitling the broker to a commission for having procured a “ready, willing, and able” buyer applies here, Plaintiff must establish prima facie that the buyer was financially able to purchase the property. (See Rusciano Realty Services, Ltd. v. Irving Griffler, 62 N.Y.2d 696, 697–98 [1984] [“The prospective buyer's financial ability is indeed an essential element, and one which plaintiff was required to establish in order to recover”]; Insignia Douglas Elliman LLC Retail Group v. Merrell, 11 AD3d 252, 252 [1st Dept 2004][“It is well settled that to assert a claim to recover a brokerage commission, a broker must establish through admissible evidence that the prospective tenant was not only ready and willing, but also financially able to complete the transaction”]; see also Central City Brokerage Corp. v. Elyachar, 40 AD3d 452, 453 [1st Dept 2007] .)
“The mere signing of a contract does not establish that the buyer is financially able to complete the transaction and meet the purchase price.” (F. Richard Wolff and Son, Inc. v. Tutora, 50 AD3d 950, 951 [2d Dept 2008].) However, “assuming the purchaser is financially able to complete the transaction at the time the contract is entered into, a subsequent default by the purchaser will not deprive the broker of his [or her] commissions.” (Trenga Realty v. Wedgewood Homes, Inc., 138 A.D.2d 875, 875–76 [3d Dept 1988].)
Plaintiff does not submit any evidence demonstrating that Ms. McKenzie was financially able to purchase Defendant's property at the time of execution of the December 21, 2006 Contract of Sale. ( See e.g. Trenga Realty v. Wedgewood Homes, Inc., 138 A.D.2d at 876 [noting that determination of financial ability of buyer is as of the “time the contract is entered into”]; see also Ladd v. Coldwell Banker, 167 A.D.2d 676, 678 [3d Dept 1990].) Indeed, the only evidence that Plaintiff submits relating to this issue indicates that the buyer was not financially able to purchase the property at the time she executed the Contract of Sale. It is undisputed that Ms. McKenzie was unable to qualify for a mortgage, which was a condition of the Contract of Sale. Ms. Sidbury's affidavit indicates that Ms. McKenzie only paid $150,000 of the total purchase price of $890,000; and that her loan to Ms. McKenzie of the remaining $740,000 remains “overdue.” By the terms of the Contract of Sale, which was executed within the listing term of the Brokerage Agreement, Ms. Sidbury would have been paid the full purchase price of $890,000 in cash at the closing.
Contrary to Plaintiff's further contention, the fact that the buyer and seller eventually entered into some type of transaction for the purchase of the seller's property does not alone establish that Plaintiff would be entitled to a commission under a brokerage agreement. For example, in F. Richard Wolff and Son, Inc. v. Tutora (50 AD3d 950), the defendant seller and plaintiff broker entered into a brokerage agreement whereby the seller gave the broker the “exclusive right to sell, as a package, both [the seller's] business and the [seller's] real estate.” ( See id. at 950.) The agreement was set to expire on June 30, 2000, and provided that the seller would pay the commission “if the property is sold or transferred or is the subject of a contract of sale within 3 months after the expiration date of this agreement.” ( See id.) Thereafter, within the term of the agreement, the broker procured a prospective buyer, and on September 1, 2000, the defendant seller and buyer entered into “an asset purchase agreement, which provided for the sale of the business and the real property as a package for a price of $1,300,000.” ( See id. at 951.) The agreement conditioned the sale on the buyer's ability to obtain financing from a bank in an amount no less than $1,170,000. ( See id.) The buyer could not obtain the financing, and, in September 2000, the asset purchase was cancelled. ( See id.) Thereafter, the buyer and seller continued discussions, and on April 23, 2001, after the expiration of the brokerage agreement, the buyer and seller entered into another agreement whereby the buyer purchased only the business at the price of $500,000, and agreed to lease the property with an option to purchase for the sum of $800,000. ( See id.)
The broker contended that it was entitled to a commission based upon the signing of the September 1, 2000 agreement. ( See id.) The court rejected the broker's position, holding that the broker was not entitled to a commission because it could not demonstrate that the buyer was financially able to purchase at the seller's terms, which included that the sale of both the business and property was contingent upon the buyer's ability to obtain financing. ( See id. at 951–52.)
Similarly, here, the Contract of Sale contained a mortgage continency provision, and the buyer Ms. McKenzie was not able to obtain a mortgage, but the buyer and seller later negotiated a different agreement whereby the buyer took possession of the seller's property. Here, however, the seller provided financing to the buyer; whereas in F. Richard Wolff and Son, Inc. v. Tutora, the seller leased the property to the prospective buyer with an option to purchase. As in F. Richard Wolff and Son, Inc. v. Tutora, the fact that Ms. McKenzie signed the Contract of Sale within the listing term of the Brokerage Agreement and later closed on a renegotiated transaction does not establish that she was “financially able to complete the transaction and meet the purchase price” at the time she signed the Contract of Sale. ( See id. at 951.)
Plaintiff also fails to demonstrate prima facie that it is entitled to a commission pursuant to the 90–day provision of the Brokerage Agreement. The Brokerage Agreement provides that Defendant would be obligated to pay the broker's commission “[i]f within Ninety (90) days after the expiration of the listing term a contract is signed to sell the premises” to a person procured by Plaintiff. The Brokerage Agreement further provides that “[t]he commission shall be due and payable at closing except in the case of willful default by the seller; wherein such case the commission shall be due and payable upon such willful default.”
To support its contention that it procured a buyer who signed a contract within the 90 days after the expiration of the listing term, Plaintiff points to the copy of the fully-executed contract dated December 21, 2006. However, it is undisputed that the property did not close under the terms of that contract since that agreement was “conditional upon the purchaser obtaining a commitment for a conventional mortgage loan in the sum of $870,000”, and Ms. McKenzie was unable to obtain the loan. ( See e.g. F. Richard Wolff and Son, Inc. v. Tutora, 50 AD3d at 951.) Plaintiff cannot rely solely on the timing of the execution of the Contract of Sale to demonstrate that it is entitled to a commission. ( See id.)
Moreover, Plaintiff's agent Lois Thompson avers that “we were told that the contract had been canceled” when the buyer, Ms. McKenzie, was unable to obtain financing. In this regard, Ms. Thompson does not identify who told her that the deal was cancelled. Plaintiff neither contends that it demanded a commission upon being informed of the cancellation of the deal, nor that it would have even been entitled to a commission upon cancellation of the deal. Plaintiff only sought payment of its commission after it “learned that the Buyer had in fact closed the transaction, with financing from the defendant seller.” In her affidavit, Defendant avers that Plaintiff advised her that the deal was “dead” when Ms. McKenzie was unable to obtain a mortgage. Ms. Sidbury's affidavit does not address whether Plaintiff ever sought a commission at that time. In light of the averments of both Ms. Thompson and Ms. Sidbury, the conduct of the parties indicates that they understood that no commission was due upon the cancellation of the deal due to the buyer's inability to obtain financing, a condition of the Contract of Sale.
Plaintiff fails to submit a copy of any correspondence, contract, addendum, or other communication between or among Plaintiff, Defendant and Ms. McKenzie from the time that the deal was understood to have been cancelled by reason of the buyer's inability to obtain a mortgage until the time that Ms. Sidbury transferred the premises to Ms. McKenzie with a Bargain and Sale Deed on July 5, 2007. Plaintiff provides no evidence as to whether the July 5, 2007 transfer of the property was the consummation of an oral or a written agreement between Defendant and Ms. McKenzie; or on whether the agreement took the form of, or was understood by the parties as, a modification of the December 21, 2006 Contract of Sale or as a new agreement; or, most importantly for present purposes, whether the agreement was made within 90 days after January 30, 2007.
Plaintiff does not contend, nor does it point to any contractual provision or legal authority to support the proposition, that any subsequent agreement between Ms. Sidbury and Ms. McKenzie whereby Ms. Sidbury agreed to provide financing to Ms. McKenzie relates back to the December 21, 2006 Contract of Sale, which was understood to have been cancelled, such that it must be deemed to have been executed within the term of the Brokerage Agreement, nor does Plaintiff contend or demonstrate that such agreement, if any, was a part of the December 21, 2006 Contract of Sale.
As such, Plaintiff fails to demonstrate prima facie that the December 21, 2006 Contract of Sale formed the basis of the closing on July 5, 2007, and, as such, fails to demonstrate that the Brokerage Agreement's provision that within 90 days “after the expiration of the listing term a contract is signed to sell the premises,” or the provision that the “property is sold pursuant to this [brokerage] agreement” were met, which would entitle it to a commission.
Even so, as stated earlier in this Decision and Order, Ms. Sidbury's admission that Plaintiff is entitled to “some commission”, and her averment that there was an agreement that she would pay the commission upon receipt of “monies from the buyer”, are sufficient to establish prima facie that Plaintiff is entitled to a commission. Again, however, Plaintiff fails to submit any further evidence of any communication between or among Plaintiff, Defendant, or Ms. McKenzie from the time it was determined that Ms. McKenzie could not close pursuant to the Contract of Sale dated December 21, 2006 until the property was sold on July 5, 2007. Plaintiff does not submit any sworn statement by Ms. Thompson, or anyone else, rebutting Ms. Sidbury's averment that there was an agreement between Ms. Thompson and Ms. Sidbury whereby Plaintiff agreed to be paid its commission as Ms. Sidbury received payments from the buyer. Plaintiff does not submit any evidence establishing the terms of this subsequent agreement, or denying that such an agreement was ever made. As such, Plaintiff fails to sufficiently establish prima facie the terms of any subsequent brokerage agreement that would entitle it to a commission at any time before Ms. Sidbury receives full payment from the buyer.
Plaintiff makes no showing that the brokerage provision in the December 21, 2006 Contract of Sale provides a basis for its claim to a commission independent of the Brokerage Agreement. The Court will only note that the Seller's agreement in that provision to pay “the commission earned hereby” is expressly qualified “(pursuant to separate agreement).”
Accordingly, Plaintiff fails to demonstrate prima facie entitlement to summary judgment.
Moreover, in opposition, defendant Barbara Sidbury proffers another affidavit, improperly designated as “Additional Affirmation”, in which she avers, among other things, that Plaintiff's agent Ms. Thompson tried to “revive the deal” after the Brokerage Agreement expired; that Ms. Thompson “recommended that I hold paper for several months, while she, Lois [Thompson], would help [the buyer] get refinanced”; “Lois said that she would wait for the commission to be paid upon said refinance”; “I relied upon Lois in deciding to go ahead with the deal, as she had no other potential customers, and I liked and trusted her”; that the “refinance has not occurred as of this date”; that Ms. Thompson did “not even come to the closing but rather told me that I should notify her when the purchaser completed his [ sic ] refinance”; that “I was specifically told by Lois, the broker on the deal, that I would not have to pay the commission until her customer paid the purchase price in full, i.e. after the purchase money mortgage was satisfied.”
Defendant, therefore, demonstrates the existence of issues of fact as to the terms of any brokerage agreement entered into between Ms. Sidbury and Ms. Thompson after the buyer could not obtain a mortgage to close on the first deal, and as to the amount, if any, Plaintiff is entitled to as a commission.
Accordingly, Plaintiff's motion is denied.