Opinion
00107632/00.
Decided December 18, 2004.
This breach of contract action was commenced by plaintiff Eastern Consolidated Properties, Inc. ("Eastern Consolidated'), a New York licensed real estate broker, to recover a brokerage commission in the sum of $90,000 for services it allegedly performed in procuring a purchaser for the building known as 981 Second Avenue, New York, New York ("the Property"). Defendants are a bank, S.I. Bank Trust (sued herein as Staten Island Savings Bank) ("the Bank") and three siblings, as trustees of the trust of Phyllis Lucas (sued herein as the trust of Sidney Lucas) ("the Trust"); one of the siblings, Peter B. Lucas, was also sued in his individual capacity.
It is undisputed that the subject Trust (sued herein as trust of Sidney Lucas) is actually the trust of Phyllis Lucas. As such, the caption of this case was amended in a separate order dated December 9, 2004 to reflect such. Further, it is also undisputed that the Bank's correct name is S.I. Bank Trust, and the caption was also amended to reflect such proper name.
The Court notes that some defendants were separately represented; Peter B. Lucas, individually, and the Bank, Peter B. Lucas and Lucille C. Lucas as trustees of the Trust appeared by the law firm Sargente McGinn; defendant Robert Michael Lucas appeared by separate counsel — the firm of Kantor, Davidoff, Wolfe, Mandelker Kass, P.C.
After a bench trial in which Ety Lee and Michael Lavian testified for plaintiff, and Catherine Paulo ("Paulo") and Robert Michael Lucas testified for defendants, the Court makes the following findings of fact and conclusions of law. Findings of Fact The Court credits the testimony of plaintiff's witness, real estate broker Ety Lee ("Lee"), in its entirety as she testified clearly and consistently on the relevant facts and with a sincere demeanor. Michael Lavian, a real estate investor, also testified for plaintiff. The Court credits his testimony based on his consistent testimony, demeanor, and that he was not an interested witness, nor party. This is in contrast to the testimony of defendants' main witness Paulo, agent for the Bank.
Both sides submitted post-trial submissions.
Paulo, an attorney, employed as a first vice president and senior trust officer of the Bank, testified that she had "no knowledge of commercial real estate"; that while she was aware that sellers customarily pay brokerage commission "only in a house closing", she did not know who customarily paid the commission in a commercial transaction. Yet, in her conversations with the real estate broker, at no time did she seek to clarify this issue, notwithstanding her claimed ignorance. The Court finds such testimony to be simply beyond belief given Paolo's senior position with the bank, her legal education and work experience. Paulo was placed by defendant Bank in charge of a substantial trust which owned real property and given responsibility for the sale; placement of a person (in such a position) who, according to Paulo, had "no knowledge of commercial real estate", is in incredible. As such, based upon the principle of "falsus in uno" — wherein a fact-finder is entitled to disregard the entire testimony of a witness based upon the theory that one who testifies falsely about one material fact is likely to testify falsely about everything — this Court discounts Paulo's testimony to the extent that it is inconsistent with plaintiff's testimony. See PJI3d 1:22; Deering v. Metcalf, 74 NY 501 (1878). Even if Paulo was truly ignorant on such issue, despite her status as an attorney and an officer of the Bank, it was incumbent on her, acting for the trust and her employer, the Bank, to inquire and/or research such issue, rather than accepting the real estate broker's considerable services on a misconstrued gratuitous basis.
Furthermore, the Court considers defendants' failure to call defendant Peter Lucas as a witness to testify on his own behalf warrants an unfavorable inference to be drawn. See Matter of Commissioner of Social Services v. DeG., 59 NY2d 137 (1983); Ferro v. Bersani, 59 NY2d 899 (1983); Turner Press, Inc. v. Gould, 76 AD2d 906 (2nd Dept 1980). As a named party and a person having a significant role in the facts surrounding this case, Peter Lucas' unexplained failure to testify warrants an inference that his testimony would not support defendants' position. Thus, plaintiff's version of what transpired with respect to Peter Lucas and any representations plaintiff claims he made are unrefuted.
At all relevant times, Plaintiff Eastern Consolidated was a real estate broker licensed by the New York Department of State and Lee was a licensed real estate salesperson associated with the Plaintiff.
On or about September 27, 1999, Lee placed an unsolicited telephone call to defendant Robert Michael Lucas ("Robert Lucas") concerning the sale of the property. Lee learned of the property through cold calls that she made from listings in a directory book for professionals in real estate. Lee informed Robert Lucas that she was a real estate broker with plaintiff and asked him if he had any interest in selling the property. Robert Lucas confirmed to Lee that the property was for sale and indicated that Lee should speak to Paulo of the Bank, since she was in charge of the Trust that owned the property and in charge of the sale. Robert Lucas gave Lee the telephone number for Paulo so that she could contact Paulo about the sale of the property. At trial, Robert Lucas never explicitly refuted that he referred Lee to Paulo, since she was in charge of the sale of the property.
Lee contacted Paulo and advised her that she was a real estate broker associated with Eastern Consolidated. Paulo requested background information on Eastern Consolidated, and Lee faxed her a one-page description of the company.
Paulo told Lee that she was in charge of the Trust, confirmed that the property was for sale, and stated that she was in charge of such sale. Paulo furnished Lee with information about the property over the telephone and also sent Lee information concerning the property, including financials, by facsimile. Paulo advised Lee that she should speak to defendant Peter Lucas for her to inspect the property.
Although it was not disputed that Lee was advised that there were three trusts that owned the property, Lee was never advised as to the number of trustees involved and, nevertheless, was specifically told that Paulo was "in charge" of the sale of the property.
It was not disputed that the three separate trusts which comprise the Lucas trust own approximately 89 percent of the property and that Peter Lucas owns approximately 11 percent of the property in his individual capacity. Robert Michael Lucas, Peter Lucas and Lucille Lucas each serve as income beneficiaries and co-trustees with SISB in one of each of the three separate trusts.
In late September 1999, Lee met with Peter Lucas and inspected the property. During the inspection they spoke about the value of the property which was appraised at $1.5 million and the price that defendants would accept for the property, which he indicated would be $1.7 million. She indicated that one of her customers, Michael Lavian ("Lavian"), would be interested in buying the property because she had sold him and his brother similar properties in the past. Lavian and his family, through various affiliates, own and manage approximately 24 buildings in New York City.
On or about September 28, 1999, Lavian and Lee inspected the property with Peter Lucas. Lavian was interested in the property and Armin Lalehzari ("Lalehzari"), a potential investor, also inspected the property.
Lavian authorized Lee to offer $1,600,000 for the purchase of the property. On or about September 28, 1999, Lee conveyed Lavian's offer to Paulo, the person she was told was "in charge".
On October 5, 1999 Lee followed up with Paulo who advised her that she was expecting an offer from another potential investor which would net the trust 1.9 million dollars. Lee specifically asked Paulo that if Lavian offered 1.9 million dollars, plus the amount of plaintiff's 5% commission, whether there would be a deal, to which Paulo responded affirmatively. Lee communicated these terms to Lavian who agreed to them.
Paulo admitted during her testimony that she discussed with Peter Lucas the Lavian offer and the selling price of 1.99 million dollars and they both agreed that it was a good price for the property.
Thereafter, Lee telephoned Paulo and told her of Lavian's acceptance. In this conversation, Paulo confirmed that they "have a deal", that the property was off the market, and that Paulo would not show the property to other potential purchasers. Paulo informed Lee that Richard Kuhn was the attorney appointed by SISB to handle the sale of the property for the Trust.
Lee prepared a deal memorandum setting forth the terms of the parties' agreement (Exhibit 6). On October 6, 1999, Lee faxed the deal memorandum to Paulo and the attorneys for the parties (Kuhn O'Toole for the seller and Larry Drath for Lavian).
The deal memorandum states in part that: "[t]he following shall summarize the deal that you have accepted for the sale of the above referenced property [981 Second Avenue, New York, New York] . . .". It provides for a purchase price of $1,990,000 and indicates that the seller was responsible for paying plaintiff's commission in the amount of $90,000.
The deal memorandum was not objected to by defendants in any way. In fact, upon receipt of the deal memorandum, Paulo testified that she referred the information to her attorneys and instructed them to prepare a contract of sale containing the terms set forth in the deal memorandum.
Paulo requested financial information on the purchaser. Lee faxed her financial data on Lavian, including information on properties which he controlled. Paulo, nor any of the defendants, expressed dissatisfaction with the supplied financials.
The contract of sale was prepared by the sellers' attorney. Lavian reviewed the contract of sale with his attorney, found all terms acceptable, and was prepared to sign the contract which was to occur at a meeting with the sellers.
Although the deal memorandum and the contract of sale each listed Lalehzari (Lavian's nephew) as the purchaser, all parties were aware that the purchaser was to be an entity controlled by Lavian. There was no indication by any of the parties that the sale of the property would not go forward due to the identity of the purchaser named in the contract, nor the financial ability of the buyer.
Lavian testified that it was his custom never to purchase property in his own individual name and that he always purchased property either under an LLC or in a corporate name. Lavian further testified that Lalehzari would be a shareholder with a 10 to 20% interest in the Property. On or about October 1999, Lavian had approximately $5,000,000 in equity in his properties. Additionally, during early 2000, Lavian purchased two other properties, at prices of over $2 million dollars. Lavian testified that in purchasing the Property he would have received 70-75 percent of the purchase price from North Fork Bank or Dime of Williamsburg and that the remainder of the purchase price would come from money that he had on deposit at Doral Bank and Merrill Lynch. Lavian testified that such was the method he used when he purchased a similar building at 1413 Second Avenue. None of these assets were controverted by defendants.
In mid-October, Lee was advised by Paulo that the contract of sale was acceptable and they agreed that a sit-down contract signing would be scheduled for October 20, 1999. Paulo gave every indication that there was complete agreement to the sale by the sellers. Lee was never told, at that time or on any other occassion, that any further approvals were needed on the sellers' side in order to finalize the sale of the property. On October 19, 1999, Paulo informed Lee that the date of the contract signing needed to be changed to October 22, 1999. Again, no explanation or indication that the other sellers needed to consent, was offered.
Thereafter, on October 21, 1999, Lee spoke to Peter Lucas who advised her that the sellers had recently received an offer for $70,000 more than Lavian's offer. Peter Lucas, however, indicated that they would honor the deal with Lavian and sign the contract on October 25, 1999. Peter Lucas informed Lee that he and Paulo were the decision-makers of the trust, and that the Lavian deal would be honored until "hell freezes over" and that the higher offer would not accepted. At no time did he indicate that the consent of other sellers was required.
Lee spoke to Peter Lucas again on October 22, 1999. At that time, he told Lee that their deal was "off" because of the higher offer. No mention was made as to the lack of consent of the other sellers or the financial ability of Lavian being insufficient. Thereafter, Lee made numerous telephone calls and sent faxes to Paulo regarding the sale, but she received no further communication from defendants.
On November 16, 1999, Lee sent an invoice to Paulo for $90,000 for the brokerage services rendered in connection with the sale of the subject property, which was not paid. In Paulo's testimony, there was nothing to indicate that defendants' failure to proceed with the Lavian sale had anything to do with Lavian's financial ability.
Conclusions of Law
It is well established that a seller becomes liable to a broker that it has employed when the broker procures a ready, willing and able buyer on terms acceptable to the seller, even prior to a written contract of sale. See Eastern Consolidated Properties v. Lucas, 285 AD2d 421 (1st Dept 2001); Prime City Real Estate Co., Inc. v. Hardy, 256 AD2d 80, 81(1st Dept 1998) (where sellers were held obligated to pay a real estate broker's commission when the sellers and purchaser had agreed on the essential terms of the transaction, notwithstanding the refusal of the vendors to negotiate the remaining details of the sale because of receipt of a higher offer). "The broker's ultimate right to compensation has never been held to be dependent upon the performance of the realty contract or the receipt by the seller of the selling price . . .". Hecht v. Meller, 23 NY2d 301, 305 (1968).
Accordingly, applying the below legal principles and based upon the evidence adduced at trial, the Court finds that the parties had an agreement for the payment of plaintiff's services upon the finding of a ready, willing and able buyer on the sellers' terms, which Lee produced, and that the sellers were responsible for the failure of the sale to be completed. Thus, as detailed below, a commission was earned by plaintiff and is owed by defendants Peter Lucas, Robert Lucas and the Bank.
Was there real estate brokerage agreement, express or implied?
There is no requirement that a real estate brokerage agreement be in writing. See Tanenbaum v. Boehm, 202 NY 293 (1911); Lane-The Real Estate Department Store, Inc. v. Lawlet Corp., 28 NY2d 36 (1971); Feinberg Bros. Agency Inc. v. Berted Realty Co., Inc., 70 NY2d 828, 830 (1987); Salahuddin v. Benjamin, 42 AD2d 522 (1st Dept 1973). A broker may prove employment by a seller by producing an express agreement or demonstrating the existence of an implied contract of employment. See Sibbald v. The Bethlehem Iron Co., 83 NY 378 (1881); Joseph P. Day Rlty. Corp. v. Chera, 308 AD2d 148 (1st Dept 2003). As stated by the Court of Appeals in Sibbald, supra:
"[a]contract of employment may be established either by proof of an express and original agreement that the services should be rendered, or by facts showing, in the absence of such express agreement, a conscious appropriation of the labors of the broker. Indeed, . . . the contract may be established in some cases `by the mere acceptance of the labors of the broker '". Sibbald, supra at 380 (emphasis supplied).
"If plaintiff is regularly engaged in the business of real estate brokerage, conscious acceptance of [its] services in this capacity might raise an implied contract to pay . . .". Hevia v. Wheelock, 155 AD 387 (2nd Dept 1913).
The existence of an implied agreement between the parties is determined relative to their objective intent, as evidenced by their words and deeds. Traver v. Betts, 83 AD2d 653 (3rd Dept 1981). An implied contract of employment may be based on the seller's acceptance of the broker's services, which occurs when the seller and buyer have agreed upon the terms of the sale. See Gronich Co., Inc. v. 649 Broadway Equities Co., 169 AD2d 600 (1st Dept 1991). Those who accept the results of a broker's services are not entitled to assume that the broker works gratuitously. See Gronich Co., Inc., supra at 602. Additionally, although the assent of a person to be charged under an implied contract is necessary, a person may conduct himself in such a manner that his assent may fairly be inferred. Miller v. Schloss, 218 NY 400 (1916).
Here, it is clear from the evidence produced at trial that there was an agreement between plaintiff and defendants Peter Lucas, Robert Lucas and the Bank, for the employ of plaintiff's services. The evidence relating to the issue of whether there was an agreement specifically showed that: (a) Lee, identifying herself as a real estate broker, called Robert Lucas who told her that the property was for sale; (b) Robert Lucas, instead of rejecting Lee's call, told Lee to call the Bank's agent, Paulo, indicating that she was in charge of the trust and in charge of the sale of the property; (c) instead of rejecting Lee's overtures, Paulo confirmed that the property was on the market and that she was in charge of the trust and the sale; (d) Lee faxed information to Paulo regarding the qualifications of Eastern Consolidated Properties, Inc.; (e) Paulo faxed Lee income and expense information on the property; (f) Paulo gave Lee the phone number for Peter Lucas which would permit Lee to inspect the property; (g) Lee called Peter Lucas and inspected the property with him; (h) Peter Lucas and Lee discussed the appraised value of the property and that defendants would sell the property for 1.7 million dollars; (i) access to the property was provided to the potential buyers (Lavian and Lalehzari) that Lee found for the sellers; (j) Paulo and Lee agreed on the terms of the sale with a purchase price of $1,990,000 with a 5% commission to be paid to plaintiff of 5%, leading Paulo to state that "they have a deal"; (k) a deal memorandum was prepared by Lee and sent to Paulo without any objection; (l) Paulo then engaged counsel the Bank's counsel to prepare a contract of sale in accordance with the terms set forth in Lee's deal memorandum; (m) a contract of sale was prepared and approved by the buyer; (n) a date was scheduled by the parties to sign the contract of sale; and (o) Lee made telephone calls, gathered and disseminated information and provided other services customarily performed by a real estate broker procuring a purchaser.
Thus, it is clear from evidence exhibited at trial that there was an agreement in that defendants Peter Lucas, Robert Lucas and the Bank readily accepted and availed themselves of plaintiff's services knowing that plaintiff expected to be compensated for its efforts and agreed to pay for such services.
Did plaintiff produce a ready, willing and able buyer?
A broker only earns its commission when it procures a buyer ready, willing and able to purchase on terms agreed to by the seller. Eastern Consolidated Properties v. Lucas, 285 AD2d 421 (1st Dept. 2001); Prime City Real Estate Co., Inc. v. Hardy, 256 AD2d 80, 81 (1st Dept 1998). However, where a contract of sale has been signed by the seller and the purchaser "or when the owner has otherwise accepted the purchaser," the broker need not prove the purchaser's financial ability where the seller refuses to complete the transaction for reasons that are not related to financial ability. Rosenblatt v. Bergen, 237 NY 88 (1923); Roberts v. H. Gin Realty Corp., 185 AD2d 209 (1st Dept 1992). Nevertheless, a broker satisfies the requirement of demonstrating its purchaser's financial ability by offering evidence of assets, either oral or written, which is not controverted. Korin Group v. Emar Bldg. Corp., 291 AD2d 270 (1st Dept 2002); Fogel v. Fred Rob Realty Inc., 204 AD2d 135 (1st Dept 1994); Geraci v. Creative Leasing Concepts, Inc., 248 AD2d 214 (1st Dept 1998).
Further, defendants are barred from raising the issue of financial ability for the first time during trial. See Rosenblatt v. Bergen, 237 NY 88. In Rosenblatt, the seller prepared a contract of sale but decided to sell the property to another buyer for a higher price and raised issue of the procured buyer's financial ability for the first time at trial, as the basis for his refusal to go forward with the transaction. In holding the seller liable for the commission, the Court of Appeals in Rosenblatt stated that:
Having thus accepted the corporation as the purchaser, and never having made objection thereto, or to the solvency of the corporation, or even suggested to the plaintiff any criticism of the corporation, defendant . . . ought not now be heard to complain for the first time upon the trial of the action for commissions that the financial capacity of the corporation was inadequate. Id. at 91.
Here, plaintiff produced a ready, willing and able purchaser on defendants' terms, yet defendants failed to complete the sale. In fact, even after plaintiff found a ready, willing and able purchaser (Lavian) at the initial price, and defendants reneged indicating that they had a higher offer, Lee continued to assist defendants to obtain a deal from that same ready, willing and able purchaser for an even higher price of $1.99 million.
No evidence was presented that the sellers objected to the sale of the property based upon the financial ability of the purchaser; nor was there any proof that defendants questioned the financial ability of the buyer in any way, at any time. On the contrary, Lee sent Paulo, at Paulo's request, a detailed listing of properties owned by Lavian to demonstrate his ability to complete the sale. Upon receipt, instead of rejecting the buyer's financial ability, Paulo continued to proceed with taking steps towards the actual contract signing. Further, upon receipt of the deal memo which set forth the buyer, as well as other terms of the sale of the property, defendants did not raise any objections whatsoever. Additionally, Paulo testified that Lavian's financial ability had nothing to do with defendants' failure to close.
Even if the Court were to reach the issue of Lavian's financial ability, not necessitated by defendants' failure to object, Lavian was clearly, at all relevant times, ready, willing and able to purchase the Property. On or about October 1999, Lavian had approximately $5,000,000 in equity in his properties. During early 2000, he purchased two other properties, each of which cost over two million dollars. Lavian testified that in purchasing the Property he would have received 70-75 percent of the purchase price from North Fork Bank or Dime of Williamsburg and that the remainder of the purchase price would come from money that he had on deposit at Doral Bank and Merrill Lynch. Lavian testified that this was the method he used when he purchased a similar property at 1413 Second Avenue. None of these assets were controverted by defendants. Thus, plaintiff produced a ready, willing and able purchaser.
The Court notes that, although not advised by the parties, the Court, sua sponte, became aware that, subsequent to the filing of the within action, another case was commenced under index number 119517/2000 (the "Lucas lawsuit"), by Peter Lucas, individually, Staten Island Savings Bank, as co-trustee, Peter B. Lucas as co-trustee, Lucille C. Lucas, as co-trustee and Gregory Neil Lucas, as remainderman, against Robert Michael Lucas, as co-trustee. In that lawsuit the instant purchaser Michael Lavian was again considered by defendants as a potential purchaser. Such lawsuit was for injunctive relief with respect to the sale of the building which is the subject of the within case, and involved a dispute amongst the trustees as to who to sell the property to; Robert Michael Lucas wanted to purchase the building from the trust for himself, and the other trustees wanted to sell the building on the open market. The Court further notes that on or about November 2003, during the course of events surrounding the Lucas lawsuit, Michael Lavian, again made an offer to the sellers to purchase the Property and such offer was found by the Honorable Marilyn Shafer (in a decision/order dated February 18, 2004) to be a "more favorable" offer than an offer the sellers had previously received. Justice Shafer, further found that Michael Lavian was considered to be "one of the `contemplated purchasers,' all along"; Indeed, Michael Lavian was a ready willing and able purchaser, even in the eyes of the sellers. See Lucas v. Lucas, Sup Ct, NY County, Feb. 18, 2004, Shafer, J., Index No. 119517/00. Even in the absence of the findings in Justice Shafer's decision, which has not been considered in rendering this Court's decision, there is enough for this Court to find that Lavian was a ready, willing and able buyer in the instant case.
Further, a broker may not be denied a commission "merely because the actual purchaser takes title in another's name." Konner v. Anderson, 32 Misc 511 (App Term, 1900) ("The gist of the action is, was the plaintiff the procuring cause of the sale? The details of the closing are but incidents of the transaction, which confer or destroy no rights"); Samuel Baum Sons, Inc. v. Educational Alliance, Inc., 12 Misc2d 270 (Sup Court, Kings County 1958). Thus, the fact that the contract may have listed Lavian's nephew, Lalehzari, as the purchaser, does not bear on plaintiff's ability to recover its commission; especially in light of the fact that no objection to such listing was ever made by defendants during the course of the subject events.
Is a commission owed, even though there was no signed contract for the sale of the property, no closing and no sale of the property?/Was there a meeting of the minds?
In order to be entitled to a commission, it is not necessary that a contract of sale be finalized, merely that there has been a meeting of the minds between the parties on all of the essential terms. See Trylon Rlty Corp. v. Di Martini, 34 NY2d 899 (1974); Linda M. Kirk Associates, Ltd. v. McDonald Equities, Inc., 155 AD2d 281 (1st Dept 1989), lv denied 75 NY2d 706 (1990); Prime City Real Estate Co., Inc. v. Hardy, 256 AD2d 80, 81 (1st Dept 1998); Sanders A. Kahn Assoc., Inc. v. Maidman, 69 Misc2d 90 (Sup Ct, New York County 1971). Thus, the "fact that all of the legal and other details respecting the contract, customarily worked out between attorneys, had not yet been resolved could not defeat the broker's right to commission." Sanders A. Kahn Assoc., Inc. v. Maidman, 69 Misc2d at 92 (citing Mengel v. Lawrence, 276 AD 180 (1st Dept 1949)).
The failure to pass title to a buyer will not defeat a broker's entitlement to a commission where the seller frustrates or prevents the consummation of the transaction. Lane-Real Estate Dept. Store v. Lawlet Corp., 28 NY2d at 42; Eastern Consolidated Properties, Inc. v. Lucas, 285 AD2d 421 (1st Dept 2001); Linda M. Kirk Associates, Ltd., v. McDonald Equities, Inc., 155 AD2d at 282. As the Court of Appeals stated, in Sibbald v. Bethlehem Iron Co., 83 NY at 384, "[i]f the efforts of the broker are rendered a failure by the fault of the employer; if capriciously he changes his mind after the purchaser, ready and willing, and consenting to the prescribed terms, is produced;. . . . then the broker does not lose his commissions". See also Tanenbaum v. Boehm, at 299; Linda M. Kirk, Assoc., Ltd. v. McDonald Equities, Inc., 155 AD2d at 282; Mengel v. Lawrence, 276 AD at 182. "[B]ad faith is not necessarily an essential ingredient to [a] finding of wrongful prevention". Tyrlon Rlty. Corp. v. DiMartini, 34 NY2d at 900. The law is clear, when a broker procures an acceptable buyer, the broker has fully performed its part of the agreement and its right to a commission becomes enforceable. Lane-Real Estate Dept. Store v. Lawlet Corp., 28 NY2d at 42; see also Gilder v. Davis, 137 NY 504 (1893).
Here, it is clear from the proof exhibited at trial that there was an agreement for the sale of the property as to all of the essential terms set forth by defendants and that the contract of sale was not signed, and the property not sold, solely because defendants chose not to proceed. It is well settled that a seller may not avoid payment of a broker's commission when the seller has frustrated the completion of the sale, which was clearly the case herein. See Eastern Consolidated Properties, Inc. v. Lucas, 285 AD2d at 422; Linda M. Kirk Assoc., Ltd. v. McDonald Equities, Inc., 155 AD2d at 282; Sibbald v. Bethlehem Iron Co., 83 NY at 383-84.
Although, not considered in rendering this Court's decision, the fact that the defendants are involved in a lawsuit in which it is alleged that Robert Michael Lucas was interested in purchasing the subject property for his own use, indicates that there were undoubtedly other reasons for not going forward on the sale with Lavian, rather than Lavian's claimed "financial ability".
Who owes the commission?
Where there are multiple owners of a property, a broker is owed a commission when a ready, willing and able purchaser is produced, provided that the broker is either advised that the co-owners will join in the sale, or is unaware that there are co-owners. See U-Buy Realty, Inc., v. Aliota, 151 Misc2d 485 (Civ Court, Kings County 1991); Greiner-Maltz Co., Inc. v. Stevens, 66 Misc2d 79 (Sup Ct, Nassau County 1971). However, in determining who actually owes the commission as between co-owners, where not all of the co-owners were party to the broker's agreement, generally, one co-tenant's sole contract cannot bind another co-tenant. Greiner-Maltz Co. Inc. v. Stevens, 66 Misc2d at 82. Nor may one co-owner act, in the absence of authority, for another co-owner. Jonap v. Norwick, 44 NYS2d 870 (2nd Dept 1981). Similarly, an agency relationship is not created by a relationship of co-ownership. See Albert v. Schrank, 203 AD 149 (1st Dept 1922); Greiner-Maltz Co., Inc. v. Stevens, 66 Misc2d at 82.
Here, the proof adduced shows that although Lee was told that there were additional owners of the property in the form of trustees, Lee was specifically told by Robert Lucas, Peter Lucas and Paulo that Paulo was in charge of the trust and in charge of the sale of the property. Thus, any concerns that Lee may have had with respect to approvals needed by other co-owners was eliminated when she was specifically told that Paulo was in charge of the sale. Additionally, no indication was ever given throughout the parties' dealings that any other members of the trust needed to approve the sale for it to occur or that the sellers were not in agreement as to the sale of the property. The determinative factor is the knowledge of the broker. U-Buy Rlty., Inc., v. Aliota, 151 Misc2d at 490. This is not a situation in which the broker was retained to sell the property by only a few of the owners but actually knew that there were other owners who might not acquiesce to the sale, thereby acting at her own peril. See id. Throughout the course of the events in dealing with Peter Lucas, Robert Lucas and Paulo, plaintiff was consistently led to believe that there was complete approval for the sale of the property. There was no reason for her to question Paulo's authority or such representation of approval. Id. Indeed, the preparation of the contract of sale by the attorney for defendants is indicative of such control and complete approval by the trustees.
Thus, Paulo's actions, as the Bank's agent, were sufficient to hold the Bank responsible for the payment of plaintiff's commission. Additionally, the acts of Robert Lucas and Peter Lucas in their personal dealings with Lee and in their conveyance of authority to Paulo to act on their behalf, which was communicated to Lee by each of them, were sufficient to hold them responsible for the payment of plaintiff's commission. However, with respect to defendant Lucille Lucas, there was no evidence to suggest that Lucille Lucas knew or consented to the employment of plaintiff for the sale of the property, unlike the evidence with respect to the other defendants. Additionally, there was no testimony or proof to reveal that Peter Lucas, Robert Lucas or Paulo had the authority to enter into a binding agreement on behalf of Lucille Lucas, or that Lucille Lucas acquiesced to or ratified the employment agreement with Lee. Thus, Lucille Lucas cannot be held liable for plaintiff's commission. See Fanning v. Maggi, 27 NYS2d 152, affd 282 AD 1067 (2nd Dept 1953).
In accordance with the above, it is ORDERED that judgment is awarded in favor of plaintiff and against all defendants except for defendant Lucille C. Lucas, in the amount of $90,000.00, with interest from November 16, 1999; it is further
ORDERED that, upon proof of service of a copy of this decision/order with notice of entry, the Clerk of this Court shall enter judgment as indicated above; it is further
ORDERED that within 30 days of entry, plaintiff shall serve a copy upon defendants with notice of entry.
This constitutes the decision and order of this Court.