Dubbs v. Stribling & Assocs.
| Decision Date | 12 June 2001 |
| Citation | 752 N.E.2d 850,728 N.Y.S.2d 413,96 N.Y.2d 337 |
| Parties | ELIZABETH M.R. DUBBS et al., Appellants, v. STRIBLING & ASSOCIATES et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
Edward J. Guardaro, Jr., White Plains, for appellants. Law Offices of Steven M. Nachman, New York City (Steven M. Nachman of counsel), for respondents.
At issue is whether a real estate broker breached a fiduciary duty owed a principal. For the reasons that follow, we conclude that the Appellate Division properly dismissed plaintiffs' breach of fiduciary duty claim.
Because the complaint was dismissed on a motion for summary judgment, the facts are viewed in the light most favorable to the plaintiffs. Plaintiffs placed their Manhattan cooperative apartment on the market in 1994 as an "open listing." Under this arrangement, any real estate broker who located a purchaser for the property would be entitled to a commission from plaintiffs. Defendant Stribling & Associates, a real estate brokerage firm, through its agents, defendant Avery Chappel-Smith (a licensed salesperson) and defendant Judith Durham (a licensed broker), showed plaintiffs' apartment to several prospective purchasers. Plaintiffs confided to Chappel-Smith and Durham that they would have preferred to retain their apartment and purchase the adjacent apartment, combining the two into one residence. Because the owner of the adjacent apartment was unwilling to sell, plaintiffs had decided to sell their apartment and purchase a larger property.
After showing plaintiffs' apartment on several occasions to potential purchasers, Chappel-Smith and her husband decided to submit an offer to purchase the apartment themselves. Durham presented the proposal to plaintiffs, indicating that the brokerage commission to which defendants would have been entitled had they located a third-party purchaser would be waived because Chappel-Smith was an agent of the brokerage firm. Durham cautioned plaintiffs to contact their neighbor one more time to make certain purchase of the adjacent apartment was not a viable option before they accepted Chappel-Smith's offer. Plaintiffs maintained that they advised their neighbor to "name her price" but she again declined to sell.
Accordingly, in December 1994 plaintiffs entered into a written contract with Chappel-Smith and her husband for the sale of their apartment. In the section of the standard form contract which identifies the broker involved in the transaction, the parties inserted the word "none." Paragraph 12.2 of the contract, a provision referencing the seller's obligation to pay the broker the commission owed under a separate agreement between the seller and the broker, was crossed-out in its entirety. Indeed, because the apartment was an "open listing," plaintiffs had not entered into a separate agreement with defendants when the apartment was placed on the market and, the commission having been waived, no written brokerage agreement was created when plaintiffs contracted to sell to Chappel-Smith. The purchase contract also provided for delay of the closing for several months to allow plaintiffs time to find a new home. In the months that followed, Durham and Chappel-Smith showed plaintiffs several properties but plaintiffs eventually located an apartment through another brokerage firm, entering into a written purchase contract for that property in March 1995. The closing on the sale of plaintiffs' apartment to Chappel-Smith and her husband occurred on May 30, 1995. Plaintiffs then acquired title to their new apartment.
Approximately three weeks prior to the May 30 closing, Chappel-Smith had reached an oral agreement with plaintiffs' neighbor to purchase the apartment adjacent to plaintiffs, with the same desire to combine the two apartments. Plaintiffs were not advised that the neighboring apartment had been placed on the market or that Chappel-Smith intended to purchase it and they remained unaware of this turn of events when they consummated the sale of their apartment to Chappel-Smith. On June 5, 1995, Chappel-Smith and her husband entered into a written contract to purchase the adjacent apartment.
When plaintiffs discovered the arrangement between Chappel-Smith and their former neighbor, they commenced this action alleging, among other claims, that defendants breached a fiduciary duty when they failed to inform plaintiffs that the adjacent apartment had been placed on the market. On defendants' motion for summary judgment made after extensive discovery, Supreme Court dismissed the complaint. The Appellate Division affirmed and plaintiffs appeal as of right on a two-Justice dissent. We now affirm.
In New York, it is well settled that a real estate broker is a fiduciary with a duty of loyalty and an obligation to act in the best interests of the principal (see, Northeast Gen. Corp. v...
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