Opinion
No. 3535–07.
2008-04-11
ROBERT COHN ASSOCIATES, INC. d/b/a CB Richard Ellis–Albany, Plaintiffs, v. Martin KOSICH, 855 Central Ave. LLC and West Mall Office Center, LLC, Defendants.
Ganz Wolkenbreit & Friedman, LLP, (Robert E. Ganz, of counsel), Albany, for Plaintiff. Galvin and Morgan (James E. Morgan, of counsel), Delmar, for Defendants.
Ganz Wolkenbreit & Friedman, LLP, (Robert E. Ganz, of counsel), Albany, for Plaintiff. Galvin and Morgan (James E. Morgan, of counsel), Delmar, for Defendants.
RICHARD M. PLATKIN, J.
Plaintiff Robert Cohn Associates, Inc. d/b/a CB Richard Ellis–Albany (“CBRE”) moves for summary judgment in this action seeking to recover a commercial real-estate commission allegedly due. Defendants Martin Kosich and 855 Central Ave. LLC (“855 LLC”) oppose the motion.
BACKGROUND
Defendants Kosich and 855 LLC (“defendants”) were the owners of a multi-building, multi-tenant commercial property known as West Mall Office Plaza (“West Mall”) in Albany, New York. By written agreement dated April 17, 2006, plaintiff, a licensed real estate broker, and defendant Kosich entered into two brokerage agreements with respect to West Mall, both captioned “Agreement for the Exclusive Right to Lease/Sell/Exchange”. The first agreement reflected terms applicable in the event of a sale of West Mall (hereinafter “Sales Agreement”); the second applied to a lease of the subject property (hereinafter “Leasing Agreement”). Both agreements were based on a standard form brokerage contract, customized with specific terms applicable to the parties' transactions.
This action is based on the Sales Agreement, which granted to plaintiff, “irrevocably, the sole and exclusive right to sell, lease or exchange [West Mall] for a period from April 17, 2006 until and including April 16, 2007. Paragraph 8 of the Sale Agreement provides that “[i]f, during the period of th [e] agreement ..., a transfer, sale or exchange of said property is made or effected or agreed upon with anyone, whomsoever, the Owner(s) agrees to pay the Broker as commission 4% based upon the selling or exchange price, as commission for services.”
The Sales Agreement further provides that the broker agrees to pay 1.75% of the sale or exchange price to any other broker participating in the transaction, thus reducing plaintiff's effective commission to 2.25% unless it is the only broker involved in the sales transaction. In the event that a purchaser is procured directly by plaintiff, the Agreement further provides that defendant Kosich would pay a 3% commission to plaintiff. However, this commission would increase to 6% through the period ending on July 31, 2006, provided that a closing on the sale occurred on or before August 31, 2006.
With respect to exclusions, the Sales Agreement provided the following term: “CBRE Albany shall grant seller exclusions based on the following fee structure. For the first 30 days, CBRE shall be due a fee of .5% of the selling price. For the second 30 days, CBRE shall be due a fee of 1% of the selling. No exclusions past 60 days .” Further, in the event of legal action to enforce the terms of the agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and related expenses.
Plaintiff contends that it gathered information, prepared marketing materials, showed the premises and took other actions to fulfill its obligations under the Sales Agreement and Leasing Agreement. However, by letter dated September 13, 2006, defendant's counsel advised plaintiff that the brokerage agreements are “hereby cancelled immediately”. The letter cited the following reasons for the termination: (1) plaintiff's failure to produce prospective purchasers and to “show” the property thereto; (2) plaintiff's unwillingness to communicate by defendant by means other than certified letter; (3) plaintiff's claim for a commission pursuant to the leasing agreement for the relocation of an existing tenant; and (4) factual errors in the multiple listing database description of the property. Further, the letter recited that these were simply examples of the “irreconcilable differences existing between and among the parties, clearly establishing that there never was, nor could there by any meeting of the minds' required as a prerequisite to formation of any binding contract.”
On December 26, 2006, defendants entered into a contract to sell the property for $5,250,000 to a purchaser procured through the services of another real estate broker, Charles Carrow. No commissions were paid to plaintiff from the sale, though defendants aver that a commission was paid to Carrow.
Thereafter, plaintiff commenced this action to recover the 4% commission alleged to be due under the Sales Agreement. Following some, but not all pre-trial discovery, plaintiff filed the instant motion. This Decision & Order follows.
DISCUSSION
Summary judgment is a drastic remedy and should only be granted if there are no material issues of disputed fact (Sillman v. Twentieth Century Fox Film Corp., 3 N.Y.2d 395 [1957] ). In evaluating a motion for summary judgment, a court should simply determine whether material issues of disputed fact preclude the grant of judgment as a matter of law (S.J. Capelin Assoc. v. Globe Manufacturing Corp., 34 N.Y.2d 338 [1974] ). The party moving for summary judgment has the initial burden of coming forward with admissible evidence to support the motion, so as to warrant the Court directing judgment in movant's favor; the burden then shifts to the opposing party to demonstrate, by admissible evidence, the existence of any factual issue requiring a trial of the action ( see Zuckerman v. City of New York, 49 N.Y.2d 557 [1980] ).
A. “Meeting of the Minds”
As an initial matter, the Court rejects defendants' contention that “there never was, nor could there by any meeting of the minds' required as a prerequisite to formation of any binding contract.” “To create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms” (Matter of Express Indus. & Term. Corp. v. New York State Dept. of Transp., 93 N.Y.2d 584, 589 [1999] ). “[T]he existence of a binding contract is not dependent on the subjective intent of [the parties]. In determining whether the parties entered into a contractual agreement and what were its terms, it is necessary to look, rather, to the objective manifestations of the intent of the parties as gathered by their expressed words and deeds” (Brown Bros. Elec. Contrs. v. Beam Const. Corp., 41 N.Y.2d 397, 399–400 [1977] ).
Here, the parties executed a written contract setting forth all of the terms material to a real estate brokerage agreement, including: the circumstances under which a commission would be payable to the broker; the amount of the commission to be paid; and the duration of the agreement. This signed and integrated writing provides objective evidence of the parties' meetings of the minds regarding essential contract terms and, therefore, represents a binding and enforceable contract ( see Arnav Indus., Inc. Retirement Trust v. Brown, Raysman, Millstein, Felder & Steiner, LLP, 96 N.Y.2d 300, 304 [2001] ). Contrary to defendants' suggestion, the mere fact that the parties now disagree about the nature and extent of the obligations set forth therein or the manner in which such obligations were performed does not negate the mutual intention to be bound evinced by the Sales Agreement.
B. Termination of Sales Agreement
Next, in order to establish an entitlement to a commission, plaintiff must establish, as a matter of law, that defendants' September 13, 2007 “cancellation” of the Sales Agreement did not constitute a valid termination. If the Sales Agreement remained in effect through its scheduled one-year duration, plaintiff is entitled to payment of a sales commission. The Court bases this conclusion on the following: the Agreement provided plaintiff with the exclusive right to sell West Mall and required payment of a commission to plaintiff upon a sale of the property during the period from April 17, 2006 until and including April 16, 2007; the property was in fact sold during this period; and while defendants take issue with the manner in which plaintiff performed its obligations, they do not-and cannot-contend that plaintiff failed entirely to undertake marketing efforts pursuant to the Agreement. ( See Krystal Investigations & Sec. Bur., Inc. v. United Parcel Serv., Inc., 35 AD3d 817, 818 [3d Dept 2006] [interpretation of unambiguous contract question of law for court]; Van Wagner Adv. Corp. v. S & M Enters., 67 N.Y.2d 186, 191 [1986] [whether an agreement is ambiguous also is a question of law] ).
The issue then becomes whether there was a material breach of the contract by plaintiff, so as to excuse defendants' non-performance and bar plaintiff's enforcement action ( see Grace v. Nappa, 46 N.Y.2d 560, 567 [1979] ). “Under New York law, for a breach of a contract to be material, it must go to the root of the agreement between the parties.... A party's obligation to perform under a contract is only excused where the other party's breach of the contract is so substantial that it defeats the object of the parties in making the contract” (Frank Felix Assocs. v. Austin Drugs, 111 F3d 284, 289 [2d Cir.1997] [internal quotations omitted] ). Whether a given set of facts constitute a material breach of a contract is question of law to be decided by the Court ( id.).
Even accepting defendants' factual averments regarding the termination of the contract as true, the Court concludes that none of the alleged breaches can be considered material. Defendants' dissatisfaction with the plaintiff's failure to produce prospective purchasers as quickly as he desired cannot operate to divest plaintiff of the exclusive right to sell the property conferred by the Sales Agreement, particularly where plaintiff did in fact undertake efforts to market the property.
Several of the other grounds for termination offered by defendants, including plaintiff's alleged unwillingness to communicate by means other than certified letter and factual errors in the multiple listing database for the property (which plaintiff corrected when he learned of the mistakes), are contradicted by defendants' deposition testimony or simply too insubstantial to constitute a material breach. In reaching this conclusion, the Court agrees with plaintiff that the testimony of Kosich establishes that Dan Kemp, the on-site property manager for West Mall, acted as defendants' agent in connection with their efforts to sell and lease the subject property and, therefore, defendants are bound by Kemp's statements and actions in connection therewith. Finally, the fact that defendants may have disputed plaintiff's entitlement to a commission on an unrelated lease transaction involving the property did not give defendants an extra-contractual right to terminate the Sales Agreement.
C. Payment of Commission to Carrow
Defendants assert that since a full commission was paid to broker Carrow, who produced the purchaser, plaintiff is not entitled to recover pursuant to the Sales Agreement. The Court disagrees. The terms of the exclusive listing agreement oblige defendants to pay plaintiff a 4% commission under the circumstances presented herein, with plaintiff then obliged to share a 1.75% commission with the other participating broker.
However, for purposes of this motion, plaintiff has agreed to receive a 2.25% commission, reflecting the commission called for in the contract less what plaintiff would have paid Carrow had the Sales Agreement been performed in accordance with its terms. (Of course, this sum is not subject to future claims by cooperating brokers.) Thus, defendants are obliged to pay plaintiff a commission of $118,125, representing 2.25% of the $5,250,000 sale price
D. Other Defenses
Defendants offer several technical defenses to summary judgment, none of which are availing. First, defendants suggest that summary judgment is premature, since pre-trial discovery is not yet complete. However, defendants have failed to demonstrate that additional discovery would provide factual evidence essential to oppose the motion ( seeCPLR 3212[f] ).
Finally, while defendants suggest that service of the Summons and Complaint was inadequate, defendants have waived any such objective by failing to move to dismiss the complaint prior to service of a responsive pleading or by including the defense of lack of personal jurisdiction in their answer (see CPLR 3211 [e] ).
CONCLUSION
Based on the foregoing, the Court concludes that plaintiff has demonstrated an entitlement to judgment as a matter of law to an award of $118,125 based on defendants' breach of the Sales Agreement. At bottom, defendants' mere dissatisfaction with their decision to retain plaintiff and the manner in which plaintiff performed its duties pursuant to the contract does not provide a meritorious defense to this action. Plaintiff is further entitled to reasonable attorney's fees, costs and related expenses, pursuant to the terms of the Agreement.
Accordingly, it is
ORDERED that plaintiff's motion for summary judgment is granted; and it is further
ORDERED that plaintiff is entitled to recover a commission from defendants Kosich and 855 Central Ave. LLC in the amount of $118,125; and it is further
ORDERED that plaintiff is to submit a supplemental affidavit with respect to attorney's fees, costs and related expenses on notice to defendants within thirty (30) days of the date of this Decision and Order. Such affidavit shall provide a sufficient evidentiary basis for the court to evaluate the value of the legal services rendered. Defendants shall have fifteen (15) days from service of such supplemental submission in which to be heard in writing thereon.
This constitutes the Decision and Order of the Court. All papers including this Decision and Order are returned to counsel for plaintiff. The signing of this Decision and Order shall not constitute entry or filing under CPLR Rule 2220. Counsel is not relieved from the applicable provisions of that Rule respecting filing, entry and Notice of Entry.
Papers Considered:
Motion for Summary Judgment, filed December 12, 2007;
Affidavit of Robert E. Ganz, sworn to December 11, 2007, with attached exhibits 1–15;
Affidavit of Jonathan Elkind, sworn to December 11, 2007, with attached exhibits 16–18;
Affidavit of Martin Kosich, sworn to January 11, 2008, with attached exhibits A–B;
Reply Affidavit of Robert E. Ganz, Esq., sworn to January 18, 2008, with attached exhibits 19–20.