Jones Lang Lasalle Brokerage, Inc. v. Epix Entm't LLC

Decision Date03 December 2018
Docket Number650917/2018
Parties JONES LANG LASALLE BROKERAGE, INC., Plaintiff, v. EPIX ENTERTAINMENT LLC f/k/a Studio 3 Partners LLC and Metro-Goldwyn-Mayer Studios Inc., Defendants.
CourtNew York Supreme Court

61 Misc.3d 1226 (A)
111 N.Y.S.3d 806 (Table)

JONES LANG LASALLE BROKERAGE, INC., Plaintiff,
v.
EPIX ENTERTAINMENT LLC f/k/a Studio 3 Partners LLC and Metro-Goldwyn-Mayer Studios Inc., Defendants.

650917/2018

Supreme Court, New York County, New York.

Decided on December 3, 2018


FOR plaintiff: Menachem J Kastner & Ally Hack, COZEN O'CONNOR, Cozen O'Connor, 45 Broadway, 16th Floor, New York, NY 10006

FOR defendants:Robert E Malchman, Allegaert Berger & Vogel LLP, 111 Broadway, 20th Floor, New York, NY 10006

Carmen Victoria St. George, J.

In this action, plaintiff, a real estate brokerage firm, sues Epix Entertainment LLC f/k/a Studio 3 Partners LLC (Epix) and its parent company Metro-Goldwyn-Mayer Studios Inc. (MGM) to recover the commission defendants purportedly owe to plaintiff under an exclusive services agreement. Plaintiff argues that Epix improperly wrote that the contract was effective from May 1, 2016 to May 1, 2017, when the contract should have stated it was in effect from May 1, 2017 to May 1, 2018. According to plaintiff, its representative signed the agreement without realizing the error, and the Court should construe the document in conformance with plaintiff's intent. Plaintiff stresses that the agreement states that is "dated as of May 1, 2016" instead of "May 1, 2017," and it argues this supports its position that the year on the contract is incorrect.

In addition, plaintiff states that the May 2017 expiration date clearly is wrong because the negotiations for the contract continued beyond that date. The verified amended complaint (VAC) points out that plaintiff forwarded the service agreement to Epix on December 12, 2016, but Epix did not provide its red-line copy of the agreement to plaintiff until April 28, 2017, only a few days before Epix alleges that the contract expired. The final version, including the May 1, 2017 expiration date, was executed by Epix on June 2, 2017 and by plaintiff on June 5, 2017. Plaintiff also points to other negotiations, relating to a partial rebate of the broker fee, which took place after the purported expiration date, and it argues that in this and other respects defendants treated plaintiff as its broker.

Plaintiff contends that it continued to communicate with both defendants with respect to the contract terms and with respect to office space located at 902 Broadway until around July 11, 2017, and that defendants did not indicate that the exclusive services agreement had expired. On July 11, however, MGM representative Bill Lopatto bypassed plaintiff and sent an email directly to the building's landlord; the email broke off negotiations for the office space. In addition, defendants began pursuing other options without plaintiff's assistance. Instead, plaintiff states, defendants used Colliers International, another brokerage house, to show them these other properties, including space located in 260 Madison Avenue. Plaintiff emailed employees of Colliers and Epix on July 14, 2017, reminding these individuals of its exclusive services agreement and stating that it would take over the negotiations for 260 Madison Avenue and it would seek its commission.

In response, plaintiff states, defendants sent a letter to plaintiff, which is dated July 21, 2017 and was signed by Daniel M. Flores, who identified himself as the in-house attorney at MGM "and its affiliated companies (‘MGM’), including Epix Entertainment LLC (‘Epix’)" (Flores letter, NYSCEF Doc. No. 99). The letter further declared that "[t]he May 1, 2016 Services Agreement ... expired on May 1, 2017" and that, therefore, "MGM or Epix" had no further obligation to use plaintiff as broker or to pay a broker's fee to plaintiff (id. ). Plaintiff states that this was the first time that defendants claimed that the agreement had expired. The letter added, "[i]ndeed, MGM was not shown the 260 Madison space until June 2017. Accordingly, MGM has no obligation to negotiate through [plaintiff]" (id. ). The letter concluded that it was not "a complete statement of MGM's position regarding this matter. Nothing contained herein shall be deemed a waiver of any of MGM's rights, claims, defenses or remedies...." (id. ).

Due to the failure of the parties to resolve their dispute through subsequent communications, plaintiff commenced this action for the recovery of its commission.1 The VAC sets forth causes of action against MGM for declaratory relief, stating the contract was in effect from May 1, 2017 to May 1, 2018; for reformation of the contract to include the purportedly proper dates; for breach of contract; and, for tortious interference with contract against MGM, on the ground that it directed that the negotiations for Epix's office space at 260 Madison be conducted without plaintiff and that there was no justification for its conduct. The fifth cause of action, which seeks documents from Epix enabling plaintiff to determine the appropriate commission, is against Epix only and is not part of this motion.

The VAC asserts that MGM is a proper party to this action because MGM exercised total dominion and control over Epix in all ways that are relevant to this matter, and thus plaintiff can pierce the corporate veil. According to plaintiff, this occurred when "MGM came onto the scene" in April 20172 (VAC, ¶ 32), prior to the effective date of the agreement but while plaintiff already was scouting possible locations for Epix's offices. Around April 24, 2017, according to the VAC, Epix told plaintiff that MGM's consent was required for the services agreement (see, e.g., id. , ¶ 40 [citing email annexed as exhibit T, NYSCEF Doc. No. 106). The VAC also states that Bill Lopatto, the contact person who negotiated the lease on behalf of Epix, is MGM's vice president of administrative services and head of real estate; that MGM required Epix to include its "preferred outside leasing counsel" in the negotiations (VAC, ¶ 3) and to consult with MGM's senior leadership as well; and that MGM was the ultimate decisionmaker and the party which argued that the exclusive services agreement had expired. The VAC states that MGM directed Epix to convert the commission rebate agreement so that Epix would receive a rent credit instead of a direct rebate and that these negotiations continued until "at least July 7, 2017" (id. , ¶ 35). The VAC notes that MGM sent plaintiff emails relating to the negotiations for the 902 Broadway lease, and annexed are several emails supporting this contention (see id. , ¶¶ 42, 43, 45, 49, among others). It asserts that MGM representatives participated in conference calls and meetings, visited office spaces, and in other ways inserted itself into the process.

In addition, the VAC suggests that after MGM assumed full ownership of Epix, the negotiations for 902 Broadway began to stall. The VAC indicates that these delays were at the behest of Epix and MGM, and states that "Epix was powerless to sign-off on its own sublease for its own space unless and until MGM approved it" (id. , ¶ 60). The VAC stresses that throughout their communications to plaintiff following the execution of the exclusive services agreement, MGM and Epix treated the agreement as if it were in effect and they did not tell plaintiff that the agreement had expired. The perception that plaintiff was defendants' representative was shared by the landlord of 902 Broadway and others connected to the building and the lease negotiations.

According to the VAC, there was something nefarious about these goings-on. "Unbeknownst to Plaintiff, MGM and Epix were, behind Plaintiff's back, secretly touring the space at 260 Madison and discussing a potential leasing transaction with [Colliers]" (id. , ¶ 69). The VAC states that MGM's July 11 email to the 902 Broadway landlord, in which plaintiff was not included, was another deceptive action. Furthermore, the VAC says, "given the course of Plaintiff's communications with Epix over the duration of the negotiations and the subsequent silence of Epix with respect to 260 Madison in late June 2017 ..., it is clear that MGM did not want Plaintiff to know that it and Epix were covertly reviewing other options with a different broker and, on information and belief, because no other conclusion can be drawn, instructed its and Epix's personnel to avoid disclosing that fact to Plaintiff" (id. , ¶ 71). The VAC accuses defendants of breaching the services agreement when it commenced "clandestine negotiations" to lease 260 Madison, and of "stringing Plaintiff along while it concluded the 260 Madison Avenue negotiations and ultimate execution of a sublease" (id. , ¶ 81). The failure to pay plaintiff a commission, the VAC states, is another breach.

Currently, MGM brings a pre-answer for dismissal of the VAC under CPLR § 3211 (a) (7).3 According to MGM, the VAC does not sufficiently plead the causes of action against them (see Grasshoff v. Etra , 114 AD3d 429, 429 [1st Dept 2014] [affirming denial of motion to dismiss]; Cangro v. Reitano , 92 AD3d 483, 483 [1st Dept 2012] [affirming order which granted motion] ). As this is an amended complaint and therefore plaintiff has had two opportunities to articulate valid bases for its claims against MGM, MGM states that the dismissal of the VAC as against it should be with prejudice.

First, MGM argues that plaintiff has not set forth the legal elements necessary to justify piercing the corporate veil. It cites to East Hampton Union Free School Dist. v. Sandpebble Builders, Inc. (16 NY3d 775 [2011] [East Hampton].) and Walnut Housing Assoc. 2003 L.P. v. MCAP Walnut Housing LLC...

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