112 F.3d 54 (2nd Cir. 1997), 788, R.B. Ventures, Ltd. v. Shane

Docket Nº:788, Docket No. 96-7669.
Citation:112 F.3d 54
Party Name:R.B. VENTURES, LTD., Plaintiff-Appellant, v. Simon R. SHANE, Defendant-Cross-Defendant-Cross-Claimant-Appellee, Gerald M. Ronson, Defendant-Cross-Defendant, Heron International, PLC, Heron Financial Corporation, Defendant-Cross-Claimant-Cross-Defendant.
Case Date:April 21, 1997
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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112 F.3d 54 (2nd Cir. 1997)

R.B. VENTURES, LTD., Plaintiff-Appellant,


Simon R. SHANE, Defendant-Cross-Defendant-Cross-Claimant-Appellee,

Gerald M. Ronson, Defendant-Cross-Defendant,

Heron International, PLC, Heron Financial Corporation,


No. 788, Docket No. 96-7669.

United States Court of Appeals, Second Circuit

April 21, 1997

Argued Dec. 19, 1996.

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James R. Kahn, Bondy & Schloss, LLP, New York City (Joel S. Forman, New York City) for Plaintiff-Appellant R.B. Ventures, Ltd.

Robert N. Chan, Ferber, Greilsheimer, Chan, & Esnner, New York City, for Defendant-Appellee Simon R. Shane

Before KEARSE and CABRANES, Circuit Judges, and KELLEHER, District Judge. [*]

KELLEHER, District Judge:

Plaintiff R.B. Ventures, Inc. ("RBV") appeals from a judgment of the United States District Court for the Southern District of New York (Charles S. Haight, Jr., Judge ) granting defendants' motion for summary judgment on all counts. We have jurisdiction in this diversity action pursuant to 28 U.S.C. § 1332(a)(1) and 28 U.S.C. § 1291. The district court erred, RBV contends, by improperly applying a "heightened" evidentiary standard after concluding that RBV's claimed oral contract was "implausible." We

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agree, and now vacate the judgment and remand for trial.


RBV brought suit seeking the payment of approximately $2 million in real estate brokerage fees allegedly owed by Defendant Simon Shane ("Shane") pursuant to an oral contract. RBV also alleged that it was entitled to recover under theories of quantum meruit or unjust enrichment, as the "procuring cause" of the real estate transaction, and as a third-party beneficiary to an indemnification contract. Initially, RBV named Shane's joint venture partner, Gerald Ronson ("Ronson") and his affiliated companies, Heron International, PLC and Heron Financial Corporation (collectively, "the Heron Group") as co-defendants. RBV's claims against Ronson and the Heron Group were subsequently dismissed, but they both remain in this action as third-party defendants to Shane's cross-claim for indemnification and contribution.

In 1980 and 1981, Equitable Debenture Corporation Manhattan, Inc. ("Equitable Debenture-Manhattan"), a corporation wholly owned by Defendant Shane through a complicated web of corporate entities, purchased property located at 66 and 70 East 55th Street in Manhattan. At some point thereafter, Shane became acquainted with a real estate broker named Richard Blitz ("Blitz"), who later formed the plaintiff corporation, RBV. Blitz told Shane that he knew of customers who might be interested in leasing the two properties. Ultimately, nothing came of this contact.

In 1982, Shane formulated a plan to acquire the entire south side of 55th Street between Madison and Park Avenues, the block on which numbers 66 and 70 are located, in order, ultimately, to construct an office tower on that site. Shane created corporations of various names to acquire rights to purchase the properties in the future. Because Shane lacked the capital to complete the project himself, these future purchases hinged on his ability to find a purchaser for the entire site or a co-venturer to develop the site with him.

  1. The "Letter Agreement"

    In 1983, Blitz re-entered the scene. Before Shane allowed Blitz to assist in the search for a prospective purchaser, however, Shane required him to sign a confidentiality letter (the "letter agreement") with Equitable Debenture Corporation ("Equitable Debenture"), another of Shane's several corporate vehicles. The terms of that letter, dated October 10, 1983, prohibit Blitz from releasing any confidential information pertaining to the proposed project to third parties without the consent of Equitable Debenture. The letter also provides:

    You [Blitz] agree to look only to the purchaser for your commission in connection with any transaction that may materialize and, [sic ] under no circumstances shall [Equitable Debenture] be liable to you for a brokerage commission, any other compensation or reimbursement of your expenses.

    The letter agreement further provides:

    The provision of information concerning the properties and our discussions in relation thereto with you or any other persons shall not constitute an offer to anyone but only an invitation to others to make offers. Any agreements regarding the properties must be in writing and executed by both parties. The properties may be withdrawn or terms amended at any time and are subject to prior sale.

    In 1984, at some point after signing the letter agreement, Blitz began operating his brokerage business through the plaintiff corporation, RBV.

    In searching for a potential joint venture partner for Shane, Blitz contacted Weatherall, Green & Smith ("WGS"), a real estate consulting firm based in the United Kingdom. WGS in turn introduced Shane to Ronson, who, together with his affiliated companies, the Heron Group, expressed an interest in the venture. Subsequent negotiations between Shane and Ronson successfully culminated in two joint-venture contracts signed in August 1984 and May 1985.

    Under the first of these two agreements, the joint venture purchased a cluster of four parcels on the east half of 55th Street, including

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    the two parcels already owned by Equitable Debenture. Under the second agreement, the joint venture acquired the remaining parcels on the south side of 55th Street as well as air rights accompanying the properties. Each acquisition under the two joint venture agreements was accomplished through a separate corporation formed by the joint venture.

  2. The June 28, 1984 letters

    In connection with the first joint venture purchase, Equitable Debenture agreed, per two separate letters signed by Blitz and dated June 28, 1984, to pay RBV $182,500 "as full compensation for [RBV's] services in connection with the sale of the Premises." The amount represented a commission of two-and-one-half percent, according to the letters.

    There is no dispute that this money was actually paid by Shane to RBV. What is disputed, however, are the circumstances surrounding this agreement.

    Shane maintains that the full extent of the agreement between Shane and RBV was memorialized in the two letters Blitz signed, dated June 28, 1984.

    RBV, on the other hand, contends that the two-and-one-half...

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