Opinion
No. 501003/12.
2013-04-10
PINNACLE REALTY OF NEW YORK, LLC, Plaintiff, v. 255 BUTLER LLC, Idea Nuova Inc., Solmi Accad, Nathan Accad, Benjamin Accad, and Ariel Akkad,, Defendants.
Berg Law PLLC, Brooklyn, for Plaintiff. Jeffrey H. Miller, Esq., Miller Law Offices, PLLC, Lawrence, for Defendant.
Berg Law PLLC, Brooklyn, for Plaintiff. Jeffrey H. Miller, Esq., Miller Law Offices, PLLC, Lawrence, for Defendant.
DAVID I. SCHMIDT, J.
The following papers numbered 1 to 11 read herein:
+-----------------------------------------------------------------------------+ ¦Papers ¦Numbered¦ +--------------------------------------------------------------------+--------¦ ¦Notice of Motion/Order to Show Cause/Petition/Cross Motion and ¦9 ¦ ¦Affidavits (Affirmations) Annexed1 ¦ ¦ +--------------------------------------------------------------------+--------¦ ¦Opposing Affidavits (Affirmations) ¦6–10 ¦ +--------------------------------------------------------------------+--------¦ ¦Reply Affidavits (Affirmations) ¦10 ¦ +--------------------------------------------------------------------+--------¦ ¦Affidavit (Affirmation) ¦ ¦ +--------------------------------------------------------------------+--------¦ ¦Other Papers Transcript of 11/29/12 Oral Argument ¦11 ¦ +-----------------------------------------------------------------------------+
Upon the foregoing papers, 255 Butler LLC (255 Butler), Idea Nuova Inc., Solmi Accad, Nathan Accad, Benjamin Akkad and Ariel Akkad (collectively, defendants) move, pursuant to CPLR 3211(a)(1) and (7), for an order dismissing this action, by Pinnacle Realty of New York, LLC (plaintiff), to recover a real estate broker's commission allegedly owed for the attempted sale of real property located at 255 Butler Street and 488 Baltic Street in Brooklyn (the Property). Alternatively, defendants seek dismissal for all non-Property-owning defendants, namely Idea Nuova Inc., Solmi Accad, Nathan Accad, Benjamin Akkad and Ariel Akkad (the Non-owner Defendants). Plaintiff cross-moves, pursuant to CPLR 3212, for summary judgment.
Background
(1)
Solmi Accad asked plaintiff in September 2010 to locate potential purchasers for the Property, which 255 Butler
owned at all times herein mentioned. Plaintiff discussed and visited the Property with a potential purchaser, Douglas Steiner (Steiner), between May and December 2011, and facilitated negotiations between Steiner and defendants in December 2011 and January 2012. Steiner and defendants met on February 2, 2012 and ultimately settled on a price ($16,250,000) and other terms for the sale.
Nathan Accad and Benjamin Akkad (who, defendants note, is incorrectly captioned as Benjamin Accad) own 255 Butler, a limited liability company. Solmi Accad and Ariel Akkad are employees of the company.
Plaintiff sent a document titled “Terms and Conditions for the Sale of 255 Butler St/488 Baltic St. (Block: 405 Lot: 27)” to Steiner and defendants, dated February 2, 2012, which reflected the terms of the proposed transaction (the First Term Sheet). The First Term Sheet indicated the “Sellers” of the Property as:
“255 Butler LLC c/o Idea Nuova Global, Inc.
302 5th Avenue N.Y. N.Y. 10001
Solmi Accad
Nathan Accad
Ariel Akkad
Phone No. (212) 643 0680
Email: Solmi@ideanuova.com
Ariel@ideanuova.com”
It then listed various aspects of the proposed transaction, including: contact information for Steiner and his attorney; the sale price; the “Terms” as “All Cash”; the contract deposit amount; the time for closing after execution of a contract; an agreement that the Property would be delivered completely vacant; and the brokers' names. The First Term Sheet contained a clause titled “Due Diligence,” which stated, “Any and all due Diligence the purchaser wishes to conduct shall be completed prior to contract execution. Seller shall provide the most recent Environmental reports as well as surveys [,] building plans and any other materials requested by purchaser that seller has available.” The First Term Sheet also included a “Commission” clause, which stated “Seven–Hundred Fifty–Thousand Dollars ($750,000.00) shall be due Pinnacle Realty of N.Y. LLC at the closing paid from the proceeds of the purchase price.”
Plaintiff asserted, in the complaint, that it informed defendants when it agreed to list the Property that it would charge a commission of five percent of the sale price, which would in this case have totaled $812,500. It is unclear how the $750,000 commission in the First Term Sheet resulted, but the issue is immaterial at this juncture.
Defendants contacted plaintiff shortly thereafter to renegotiate the commission. Plaintiff agreed to reduce the commission to $562,500 and distributed a new term sheet, dated February 8, 2012 (the Second Term Sheet). The Second Term Sheet mirrored the First, except for the modified commission amount, the addition of “Benjamin Accad” to the “Sellers” clause and the inclusion of defendants' attorney's name and contact information.
(2)
Plaintiff claims that between February 8 and February 22, 2012 it reminded defendants multiple times about their commitment to provide Steiner with due diligence materials. Defendants' attorney sent a draft sale contract to Steiner and his attorney on February 26, 2012. Plaintiff asserts that it and Steiner continued to request due diligence materials in the ensuing period, but that defendants failed to ever provide them.
Steiner's attorney returned the draft contract on March 5, 2012 with a number of proposed revisions, including: addition of a stipulation that defendants' representations should survive the closing for three years; addition of a credit to Steiner for certain code violations; modification of the time to commence an action based on defendants' representations; and increasing defendants' maximum obligation to cure code violations and title defects from $10,000 each to $100,000 and $81,250, respectively. The proposed revisions also included a clause extending the due diligence period until 45 days after either the execution and delivery of the contract or Steiner's receipt of the due diligence materials (whichever occurred later) and allowing Steiner to terminate the contract for any reason during that time. Plaintiff contacted Solmi Accad on March 12, 2012 to inquire when Steiner would receive a response to his proposed revisions, and Solmi Accad communicated to plaintiff the following day that defendants would probably not proceed with the sale to Steiner as there were “options which are impossible for us to ignore.” Plaintiff claims it informed defendants that they would still owe the commission even if they did not sell the Property to Steiner. That transaction never occurred.
(3)
Plaintiff commenced this action on May 2, 2012 and alleged causes of action sounding in breach of contract, quantum meruit and unjust enrichment. Each cause of action alleged that defendants owed plaintiff the specified commission of $562,500 plus interest since March 23, 2012.
Defendants, instead of serving an answer, now move, pursuant to CPLR 3211(a)(1) and (a)(7), to dismiss each cause of action upon the documentary evidence and for failure to state a cause of action. Defendants first argue for dismissal as to the Non-owning Defendants because only 255 Butler owns the Property and members and agents of a corporate entity generally are not held personally liable for that entity's actions. Any commission agreement, assert defendants, existed only between 255 Butler and plaintiff.
Defendants then argue for dismissing the action in its entirety as plaintiff has demonstrated neither Steiner's readiness, willingness and ability to purchase nor that a meeting of minds occurred concerning essential terms of the proposed transaction. Defendants assert that the discrepancies in the draft sale contracts exchanged between defendants' and Steiner's attorneys indicate an insufficient meeting of the minds, and emphasize that the due diligence provision Steiner's attorney added contradicted the term sheets. Neither the First nor Second Term Sheet demonstrates a meeting of the minds, allege defendants, because the term sheets do not contain all the essential terms of the transaction. Defendants stress that the parties never agreed upon a sale contract and that Steiner never tendered a contract deposit. Finally, defendants argue that the term sheets' commission clause rendered closing a condition precedent for the commission and therefore payment never became due as a sale to Steiner never occurred.
(4)
Plaintiff cross-moves, pursuant to CPLR 3212, for summary judgment. It argues that a person need not directly own a property to retain a broker to sell it and asserts that Solmi Accad, Nathan Accad, Benjamin Akkad and Ariel Akkad had each individually encouraged plaintiff to find a buyer for the Property. Plaintiff argues that a commission is not contingent upon execution of a contract of sale and that Steiner qualified as a ready, willing and able purchaser. It further argues that the First and Second Term Sheets indicate a meeting of the minds between Steiner and defendants and that Steiner's attorney proposed altering the previously accepted due diligence timing only because defendants failed to provide due diligence materials. The commission clause, urges plaintiff, leaves unaltered the common law right to commission upon producing a ready, willing and able purchaser.
Defendants argue in opposition that plaintiff's motion impermissibly seeks summary judgment before joinder of issue and that triable factual questions exist about the brokerage agreement's nature and Steiner's readiness, willingness and ability to purchase. Defendants argue that plaintiff has introduced insufficient evidence regarding Steiner's financial ability to consummate the purchase, and also urge a ruling finding that closing constituted a condition precedent for the commission. Defendants contend, in this regard, that ambiguities in the term sheets must be construed against plaintiff as the drafting party.
Discussion
Defendants' Motion To Dismiss
(1)
A movant seeking dismissal under CPLR 3211(a)(1) must show that “the documentary evidence resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim” (Cives Corp. v. George A. Fuller Co., Inc., 97 AD3d 713, 714 [2012];see also Galvan v. 9519 Third Ave. Rest. Corp., 74 AD3d 743, 743–44 [2010] ). To be “documentary,” evidence “must be unambiguous and of undisputed authenticity” ‘ (Rabos v. R & R Bagels & Bakery, Inc., 100 AD3d 849, 851 [2012], quoting Fontanetta v. John Doe 1, 73 AD3d 78, 86 [2010] ).
A defendant's dismissal motion under CPLR 3211(a)(7) requires determining whether the plaintiff has stated a cause of action, but “[i]f the court considers evidentiary material, the criterion then becomes whether the proponent of the pleading has a cause of action” (Sokol v. Leader, 74 AD3d 1180, 1181–82 [2010] [emphasis added], quoting Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 [1977] ). Dismissal results only if the movant demonstrates conclusively that the plaintiff has no cause of action, or that “a material fact as claimed by the pleader to be one is not a fact at all” (Sokol, 74 AD3d at 1182, quoting Guggenheimer, 43 N.Y.2d at 275;see also Lawrence v. Graubard Miller, 11 NY3d 588, 595 [2008] ). A court considering a dismissal motion on the basis of failing to state a claim generally must accept the facts alleged in the complaint as true and make any possible favorable inferences for the plaintiff (Sokol, 74 AD3d at 1181).
(2)
A brokerage agreement creates a contractual relationship, and liability for its breach thus depends on a defendant's privity under the agreement, not on whether that defendant owned the underlying property ( see Kalmon Dolgin Affiliates v. Estate of Nutman, 172 A.D.2d 917, 918 [1991];Batchis v. Dlugasch, 128 Misc. 148 [Sup Ct 1926] ). Ambiguity whether a person was acting in an individual or a representative capacity at the contract's formation presents an issue for the trier of fact ( see Lane—Real Estate Dept. Store v. Lawlet Corp., 28 N.Y.2d 36, 45 [1971] ).
Here, no documentary evidence establishes 255 Butler as the only defendant in privity with plaintiff, nor have defendants shown plaintiff's allegations against the Non-owning Defendants to be without potential merit. Thus, no basis exists for dismissing this action as to the Non-owning Defendants.
(3)
A real estate broker has earned a commission under common law when the broker's efforts have “produced a ready, willing, and able purchaser who came to a meeting of the minds with the seller as to all of the material terms of the sale” (Heelan Realty & Dev. Corp. v. Ocskasy, 27 AD3d 620, 621 [2006],lv denied7 NY3d 708 [2006];see also Lane, 28 N.Y.2d at 42). Establishing a meeting of the minds requires at least an oral agreement concerning the essential terms of the transaction, though not as to “every item and condition which might later appear in the written contract,” (Concordant Assoc. v. Slutsky, 104 A.D.2d 920, 921 [1984] ).
A seller and broker may condition the commission on closing of the sale, but language alleged to create such a condition precedent must clearly intend that result ( see Levy v. Lacey, 22 N.Y.2d 271, 274 [1968] ). Additionally, if a seller causes the failure of a condition precedent to a commission, the seller accordingly becomes liable for the commission (Lane, 28 N.Y.2d at 43;Dagar Group, Ltd. v. South Hills Mall, LLC, 12 AD3d 552, 554–55 [2004];see also Trylon Realty Corp. v. Di Martini, 34 N.Y.2d 899, 900 [1974] [“the seller may not avoid payment of the commission when the transaction is terminated by his failure to perform a condition, express or implied, necessary for completion”] ).
Here, plaintiff alleges that it produced Steiner, a ready, willing and able purchaser, and that a meeting of the minds occurred between Steiner and defendants, which the First and Second Term Sheets recorded. The documentary evidence does not conclusively establish otherwise, and defendants fail to introduce evidence showing these allegations sufficiently meritless to justify dismissal. Whether the clause in the term sheets that makes payment of the commission “due ... at the closing” constitutes a condition precedent to payment is presently immaterial, as plaintiff alleges defendants' actions prevented that occurrence, and thus even a commission contingent on closing may be due.
Therefore, defendants have failed to conclusively establish a defense as a matter of law with documentary evidence or to show that plaintiff fails to state a proper cause of action. Hence, defendants' dismissal motion must be denied.
Plaintiff's Summary Judgment Cross Motion
CPLR 3212(a) prohibits seeking summary judgment before joinder of issue. Nevertheless, the Appellate Division, Second Department, has approved, in some instances, granting a summary judgment cross motion that responds to a pre-answer dismissal motion as a de facto exercise of the court's power under CPLR 3211(c) to convert a dismissal motion into a summary judgment motion ( see e.g. TST/Impreso, Inc. v. Cosmos Forms, 202 A.D.2d 493, 494 [1994];Rotunno v. Rotunno, 193 A.D.2d 592, 593 [1993] ).
This interpretation, however, resulted in an earlier Court of Appeals reversal ( see Mihlovan v. Grozavu, 72 N.Y.2d 506, 508 and n.[1988] ) and, in fact, it appears that recent Second Department cases have further abrogated it ( see Hendrickson v. Philbor Motors, Inc., 102 AD3d 251, 258 [2012] [“CPLR 3211(c) requires that if a court intends to treat a CPLR 3211 motion as one for summary judgment under CPLR 3212, it must give the parties notice of its intention to do so” (emphasis added) ]; Jones v. Rochdale Vil., Inc., 96 AD3d 1014, 1016 [2012] [“the unilateral actions of a party in seeking summary judgment on a CPLR 3211(a)(7) motion cannot constitute “adequate notice” to the other party in compliance with the requirement of CPLR 3211(c)' “, quoting Mihlovan, 72 N.Y.2d at 508 n] ).
Hence, this case law, coupled with the discretionary nature of converting a dismissal motion to a summary judgment motion (Sokol, 74 AD3d at 1183), justifies denying plaintiff's summary judgment cross motion. Accordingly, it is
ORDERED that defendants' motion to dismiss all causes of action is denied in its entirety; and it is further
ORDERED that plaintiff's summary judgment cross motion is denied in its entirety.