Curtis Properties Corp. v. Greif Companies

• Decision Date: 13 June 1995
• Citation: 628 N.Y.S.2d 628,212 A.D.2d 259
• Parties: CURTIS PROPERTIES CORPORATION, Plaintiff-Appellant, v. The GREIF COMPANIES, The Joseph & Feiss Company and Pincus Brothers-Maxwell, Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 628

628 N.Y.S.2d 628

212 A.D.2d 259

CURTIS PROPERTIES CORPORATION, Plaintiff-Appellant, v. The GREIF COMPANIES, The Joseph & Feiss Company and Pincus

Brothers-Maxwell, Defendants-Respondents.

Supreme Court, Appellate Division,

First Department.

June 13, 1995.

Kenneth R. Fields, New York City, for plaintiff-appellant.

John H. Wilkinson, of counsel, New York City (Donovan Leisure Newton & Irvine), for defendants-respondents The Greif Companies.

M. William Scherer, of counsel, New York City (Carb, Luria, Glassner, Cook & Kufeld), for defendants-respondents Joseph & Feiss and Pincus Brothers-Maxwell.

Before MURPHY, P.J., and ROSENBERGER, RUBIN, TOM and MAZZARELLI, JJ.

RUBIN, Justice.

In this matter, the Court is asked to enforce against defendants, tenants of premises owned by Olympia & York, a brokerage agreement providing that plaintiff will seek compensation only from defendants' landlord, which is not a party to this litigation. The contract drafted by plaintiff includes no remedy in the event of defendants' breach and fails to specify whether an exclusive agency or the exclusive right to deal with potential lessors is granted to the broker. Plaintiff appeals from an order which granted defendants' motion for summary judgment dismissing the complaint against them and which denied plaintiff's cross-motion for partial summary judgment on the issue of liability and from the judgment entered thereon. Despite the shortcomings in the terms of the contract, this Court defers to fundamental principles of contract law to hold that the broker is entitled to maintain this action.

Defendants are apparel companies with showrooms and offices located at 1290 Avenue of the Americas, a location notable for housing the operations of "almost the entire industry comprising the men's tailored clothing business", as plaintiff notes in its brief. The alleged purpose of the brokerage agreement between the parties was the negotiation of favorable lease renewals for each defendant with Olympia & York. The brokerage agreement provides, in material part:

This letter confirms your granting to us the exclusive right to find, negotiate for and secure space or property to be occupied or used by you, your affiliate, subsidiary or designee. Of course, all terms and conditions of any proposed lease will be subject to your approval and will in no event be binding upon you until executed. In return for you giving us this exclusive right, we will thoroughly analyze your space requirements and assist you in choosing a new location for your corporate offices at 1290 Avenue of the Americas. We will negotiate on your behalf with landlords and owners of property, including the owners of 1290 Avenue of the Americas, for such spaces of buildings as you may desire to lease or purchase and will analyze each transaction from a practical and financial standpoint. Our sole compensation shall be that paid by the seller or leasor [sic] on the consummation of a transaction.

The duration of the agreement extended to December 31, 1987, with a continuance "in the event that as of the aforesaid date negotiations are pending for new space for your company."

Plaintiff served separate complaints against the three defendants, which are identical in all relevant aspects, and the actions were subsequently consolidated. The complaints state that defendants' present leases with Olympia & York were to expire on April 30, 1990. Plaintiff found an acceptable alternative location and, on November 23, 1987, the respective defendants executed letters of intent to lease space in premises located at 1500 Broadway. "In order to force the LANDLORD to reduce its terms" plaintiff then "gave copies of said letter of intent to certain other individuals with the knowledge that those individuals would exhibit said letter of intent to the LANDLORD." In December of 1987, however, defendants commenced their own lease negotiations with Olympia & York, culminating in leases on terms comparable to those set forth in the letter of intent circulated by plaintiff. The complaints charge that defendants prevented plaintiff from becoming the procuring cause of renewal leases for defendants' current space, thereby depriving it of a commission.

In its first cause of action, plaintiff seeks damages for breach of the brokerage agreement in the total amount of $402,000 ($172,000 from defendant Greif Companies, $130,000 from defendant Joseph & Feiss Company, and $100,000 from defendant Pincus Brothers-Maxwell). The second cause of action seeks recovery in quantum meruit for the same amounts, based upon the reasonable value of plaintiff's services in locating and analyzing other space and in negotiating with Olympia & York for renewal leases.

Side agreements were executed contemporaneously with the basic brokerage agreement, stating the terms of Olympia & York's initial renewal offer ($40 per square foot for first 5 years, $45 for next 5 years, plus $10 per square foot allowance for renovations) and waiving any commission from Olympia & York should plaintiff fail to secure leases on better terms than originally proposed. The pertinent language states, "In the event that we are unsuccessful in negotiating a transaction in some other building satisfactory to you in all respects, or a transaction at 1290 Avenue of the Americas, more favorable to you than the one described above, we agree that, at your election, we shall have no right to represent you with the owners of 1290 Avenue of the Americas, notwithstanding that negotiations may be continuing from prior to December 31, 1987." These side agreements provide that defendants' sole obligation with respect to this waiver of commission is not to disclose to Olympia & York the existence of the letter of intent for space at 1500 Broadway, "so as not to prejudice any pending negotiations."

In their joint answer, defendants do not deny plaintiff's efforts on their behalf. The gravamen of their defense is that, as a matter of law, they are under no obligation to compensate plaintiff. Defendants rely on the express terms of their agreement, which provides that plaintiff's "sole compensation shall be that paid by the seller or leasor [sic]". Defendants' answer further maintains that negotiations for renewal leases were initiated by Olympia & York, that defendants renewed their leases after the brokerage agreements had expired, and that plaintiff was not the procuring cause of the renewal leases ultimately obtained from Olympia & York.

Upon defendants' joint motion to dismiss the complaints, the parties raise several other material issues of fact. They dispute whether plaintiff advised Olympia & York of its representation of defendants in negotiations for renewal of their leases at 1290 Avenue of the Americas and, if so, whether Olympia & York maintained a policy of refusing to deal with a broker in negotiating renewal leases with its tenants. Defendants question the viability of the alternative space located by plaintiff. Finally, defendants assert that they were compelled to deal directly with the landlord out of necessity because their leases imposed steep penalties for holding over after the expiration of their tenancies.

In granting defendants' motion, Supreme Court determined that Olympia & York had "absolutely refused" to negotiate with plaintiff. The court noted that the letter agreement contains no language expressly prohibiting the principals from dealing directly with the landlord and imposes no contractual liability upon defendants for the broker's commission.

Factual disputes are not amenable to resolution on a motion for summary judgment dismissing the complaint (Harris v. City of New York, 147 A.D.2d 186, 191, 542 N.Y.S.2d 550; see also, IBM Credit Fin. Corp. v. Mazda Motor Mfg. [USA] Corp., 152 A.D.2d 451, 542 N.Y.S.2d 649). The credibility of the parties is not an appropriate consideration for the court (S.J. Capelin Assocs. v. Globe Mfg. Corp., 34 N.Y.2d 338, 357 N.Y.S.2d 478, 313 N.E.2d 776), and statements made in opposition to the motion must be accepted as true (Patrolmen's Benevolent Assn. v. City of New York, 27 N.Y.2d 410, 415, 318 N.Y.S.2d 477, 267 N.E.2d 259; Cohn v. Lionel Corp., 21 N.Y.2d 559, 289 N.Y.S.2d 404, 236 N.E.2d 634). However, this matter presents questions of law regarding the interpretation and even application of the brokerage agreement. On this appeal, plaintiff contends that it entered into an exclusive dealing contract, entitling it to payment of a fee upon the signing of a renewal lease, even if that lease was procured entirely through the efforts of one of its principals. Defendants insist that, in the absence of express language to the contrary, the brokerage agreement grants plaintiff only an exclusive agency, reserving the principals' right to deal directly with their landlord.

Irrespective of how the relationship of the parties might be characterized in the brokerage agreement, under the peculiar circumstances of this case, it is clear that plaintiff entered into a contract with defendants under which its right to represent them could not be abrogated unilaterally by defendants. The relationship between plaintiff and defendants is unlike the normal relationship of broker and client (Sibbald v. Bethlehem Iron Co., 83 N.Y. 378, 380-381) in which the client implicitly promises to pay the broker's commission if he is successful in finding a party (normally a buyer) who is willing to deal on the terms stated by his client (normally the seller). Therefore, in the usual case, the consideration for the broker's efforts on behalf of his client is the client's implied promise to pay the broker a commission.

The case under review is unusual because the parties' written agreement provides that plaintiff broker will look only to the seller or lessor of property ultimately obtained for defendants' use in their apparel business. By the express terms of the brokerage agreement, the consideration for...