Bonin v. Chestnut Hill Towers Realty Co.

• Decision Date: 22 June 1982
• Citation: 436 N.E.2d 970,14 Mass.App.Ct. 63
• Parties: Angela BONIN et al. 1 v. CHESTNUT HILL TOWERS REALTY COMPANY et al. 2
• Court: Appeals Court of Massachusetts

Page 970

436 N.E.2d 970

14 Mass.App.Ct. 63

Angela BONIN et al. ¹ v. CHESTNUT HILL TOWERS REALTY COMPANY et al. ²

Appeals Court of Massachusetts, Suffolk.

Argued Dec. 9, 1981.

Decided June 22, 1982.

Richard W. Renehan, Boston (Michael S. Greco & Lizbeth Lyons, Boston, with him), for Chestnut Hill Towers Realty Co. et al.

David G. Hanrahan, Boston, for First Star Realty Corp.

Lawrence H. Adler, Boston (Richard D. Bickelman, Boston, with him), for Angela Bonin.

Before ARMSTRONG, PERRETTA and KASS, JJ.

KASS, Justice.

With a fine touch for understatement the Supreme Judicial Court has observed on two occasions that the relationship and obligations running between real estate owners and brokers have been "the subject of frequent litigation." Henderson & Beal, Inc. v. Glen, 329 Mass. 748, 751, 110 N.E.2d 373 (1953). Tristam's Landing, Inc. v. Wait, 367 Mass. 622, 628, 327 N.E.2d 727 (1975). A significant share of the cases raise the question: who made the deal, or, in the language of the law, who was the efficient cause of the sale? See, e.g., Gleason v. Nelson, 162 Mass. 245, 38 N.E. 497 (1894); Carnes v. Finigan, 198 Mass. 128, 84 N.E. 324 (1908); Nichols v. Atherton, 250 Mass. 215, 145 N.E. 277 (1924); Palmer v. Cherney, 270 Mass. 551, 170 N.E. 459 (1930); Pacheco v. Medeiros, 292 Mass. 416, 198 N.E. 506 (1935); Chisholm v. McCarthy, 325 Mass. 72, 74, 88 N.E.2d 903 (1949); Turner v. Minasian, 358 Mass. 425, 265 N.E.2d 371 (1970).

This old and much asked question receives a contemporary twist in the case before us. May real estate brokers be entitled to a commission for sale of property if a person whom they introduced to the owner is subsequently employed by the owner to arrange a "syndication," i.e., a sale of limited partnership interests in the real estate venture?

The claim for a commission was tried to a jury which returned a verdict of $600,000 for the plaintiffs, upon which judgment entered. The trial judge denied the defendants' motion for judgment notwithstanding the verdict. Mass.R.Civ.P. 50(b), 365 Mass. 814-815 (1974). ³ In motions for judgments notwithstanding the verdict, as in motions for a directed verdict, courts are limited to inquiring whether, when all the evidence is considered most favorably to the plaintiff, "the evidence is such that, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable men could have reached." Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970). O'Shaughnessy v. Besse, 7 Mass.App. 727, 728-729, 389 N.E.2d 1049 (1979). See Kenny v. DiCenso, --- Mass.App. ---, Mass.App.Ct.Adv.Sh. (1980) 1023, 404 N.E.2d 691.

Here the evidence, as might be expected, was conflicting. Taking the evidence most favorably to the plaintiffs, the jury could have found the following: Upon the initiative of Angela Bonin, whom it had recently hired, First Star Realty Corp. (Star) obtained permission from Joseph Carabetta (Carabetta), to list for sale real estate owned in Newton by a limited partnership called Chestnut Hill Towers Realty Company (the Partnership). Carabetta had authority to make decisions for the Partnership. ⁴ Star specialized in acting as a broker for the sale of property for investment purposes.

At the time these events occurred early in January, 1977, the property in question was in the early stages of construction. Called Chestnut Hill Towers, the development consisted of 428 apartments in two buildings located on an eighteen acre site, together with certain amenities such as an outdoor swimming pool, tennis courts and some covered parking. ⁵ This substantial project was financed through a mortgage insured by the United States Department of Housing and Urban Development. ⁶

Star's principal officer, Leonard Abramson, arranged to have Carabetta's accountant, Michael Fiondella, meet with a prospective customer, Paul Slater, for the purpose of exploring Slater's interest in buying the project. That meeting occurred on January 27, 1977, in Slater's office and was a fateful event so far as this litigation is concerned. Slater had invited three business associates to the meeting, including a George Katz whom Slater brought to the meeting because of "tax ramifications."

The meeting was not fruitful. It had been a condition of the Partnership's engagement of Star that it produce a buyer, i.e., someone who would purchase the property in the conventional sense of taking delivery of a deed in exchange for the price to be paid. Introduction to "syndicators," by which the parties meant persons who would solicit investment in the Partnership by high-bracket taxpayers, was expressly precluded because Carabetta and Fiondella were already dealing with several syndicators. Star had communicated that limitation to Slater. Nonetheless, Katz, after a quick review of figures made available by Star, said that the project was of no interest to the Slater group as an outright purchase, but had considerable romance as an object of a syndication. Fiondella bridled; he grumbled to Bonin that he had been brought to the meeting under false pretenses. Bonin reminded Katz that the subject of the meeting was acquisition, not a syndication. The meeting broke up with an exchange of business cards, should anyone have further interest.

Notwithstanding Fiondella's rebuff, Katz's interest in the project was much excited. The very night of the meeting with Slater, Katz called Bonin while she was at a dinner party to express his enthusiasm. During that conversation, Bonin berated Katz for talking up syndication at the meeting, that this had caused her to lose credibility and had made her feel foolish. Some telephone conversations between Bonin and Katz followed. She put them at eight or ten in number; he said there were three. At all events, the last call was in May, 1977, when Katz said he had lost interest in Chestnut Hill Towers.

Meanwhile Bonin and others at Star sought to interest other buyers. The engagement of Star as a broker and the "sale only" limitation had been oral. So as to enable Star to cultivate a customer named Finard, Fiondella on March 9, 1977, sent partnership tax projections (i.e., a summary of tax losses available from the project) accompanied by a transmittal letter which contained the sentence: "It is our understanding that any sale by CEI (Carabetta Enterprises, Inc.) will be a 100% sale with no guarantees by CEI." Five weeks later, on April 16, 1977, Fiondella, in writing, asked that Bonin return the tax projections and instructed her that the property was no longer for sale "unless authorized in writing" by Carabetta. Fiondella's efforts to keep things in writing had short-lived success; Bonin went to see Carabetta and received at least tacit authority to bring propositions to him. She wrote to Fiondella that she had "spoken to Joe Carabetta at length about the status of his project and will certainly comply with his guidelines."

Although those guidelines were that Star was limited to procuring a customer who would buy the property, ⁷ it was open to the jury to conclude that the guidelines were expanded to allow Star to deal with persons who would buy the property for the purpose of thereafter syndicating it, i.e., selling limited partnership interests in the new owner. This could be inferred from negotiations carried on in July with one Franklin Simon and a real estate firm called Equity Management Group, Inc. Those negotiations ended in rejection of the propositions made.

After its suspension in May, Katz's interest in the Chestnut Hill project was rekindled. Katz said this came about because he was consulted by an accountant named Kostin, who was working with one Robert Tracy to construct an attractive proposal for the sale of limited partner interests. On the assumption that the Tracy proposal would not be successful Katz injected himself into the picture by sending a mailgram to Carabetta on August 16, 1977, proposing his firm, Private Investment Placements, "can give you $3 million as investment in Chestnut Hill." There was evidence, albeit oblique, from which the jury could have concluded that Katz had been dealing with Fiondella as early as April. Both at trial disavowed contact between each other from January 27, 1977, to the following August.

Events then moved in Katz's favor. On November 16, 1977, his firm, Private Investment Placements ("PIP"), concluded a letter agreement with Carabetta and Carabetta Enterprises, Inc., whereby PIP was appointed an exclusive agent to "use (its) best efforts to sell limited partnership interests" in the Partnership. Under the agreement the net proceeds from investing limited partners were not to be less than $2,950,012. By the end of the year twenty-six investing limited partners had subscribed to an amended limited partnership agreement on terms which did not vary materially from the November 16th agreement. A private placement memorandum prepared for PIP conformably with Rule 146 of the Securities and Exchange Commission of the United States disclosed that gross fees of $299,988 would be paid to PIP should the offering of securities be successful.

Bonin had begun to sense that something was afoot in connection with the Chestnut Hill Towers and soon learned it was a syndication by Katz. On December 1, 1977, she wrote to Katz: "I'm very pleased at the progress you are making in your activity re: the purchase of Chestnut Hill Gardens (sic) which we brought to your attention during our meeting with Paul Slater ...." Katz was not in the least pleased to hear from Bonin. His response, dated December 7, 1977, was cold and ungenerous, e.g., "(W)e require nothing from you and consider you as a total stranger to this transaction." Carabetta followed up on December 22, 1977, with a letter to Bonin which also brushed her off. Once more, on December 30, 1977, Bonin wrote to Katz, restating that she had introduced him...