Joseph Sternberg, Inc. v. Walber 36th Street Associates

• Decision Date: 25 February 1993
• Citation: 594 N.Y.S.2d 144,187 A.D.2d 225
• Court: New York Supreme Court — Appellate Division
• Parties: JOSEPH STERNBERG, INC., Plaintiff-Appellant, v. WALBER 36TH STREET ASSOCIATES, Walter & Samuels, Inc., David I. Berley, Lawrence Friedland, Warren Light and John Does 1-5, Defendants-Respondents.

Page 144

594 N.Y.S.2d 144

187 A.D.2d 225

JOSEPH STERNBERG, INC., Plaintiff-Appellant, v. WALBER 36TH STREET ASSOCIATES, Walter & Samuels, Inc., David I. Berley, Lawrence Friedland, Warren Light and John Does 1-5, Defendants-Respondents.

Supreme Court, Appellate Division First Department.

Feb. 25, 1993.

Richard G. Menaker, of counsel (Menaker & Herrmann, and Curtis, Mallet-Prevost, Colt & Mosle, New York City, attorneys) for plaintiff-appellant.

Robert L. Beerman, of counsel (Carol M. Sanginario, with him on the brief, Beerman & Wadler, New York City, attorneys) for defendants-respondents.

Before CARRO, J.P., and ELLERIN, KUPFERMAN and KASSAL, JJ.

KUPFERMAN, Justice.

Plaintiff, a licensed real estate brokerage, had a long standing relationship with third-party defendant Leon H. Charney, a sophisticated real estate investor who had previously purchased buildings brokered by plaintiff. When plaintiff discovered that a commercial office building located at 11 East 36th Street was for sale, Joseph Sternberg, plaintiff's eponymous principal, investigated the feasibility of a purchase of the building on Charney's behalf, concluding that $11.5 million was a reasonable price. According to plaintiff's principal, he succeeded in negotiating an agreement whereby Charney would purchase the premises for $11.5 million with his $450,000 commission to be paid by the owner of the premises, defendant Walber 36th Street Associates.

In a letter agreement dated December 4, 1984, plaintiff and Walter & Samuels, Inc., the owner's managing agent, by its president defendant David I. Berley who was also a general partner of the owner, agreed that plaintiff was presently negotiating on a non-exclusive basis for the sale of the building and that should it effect such sale for a price of no less than $11.5 million, its commission would be $450,000 payable on closing.

It is plaintiff's contention that although it performed all necessary steps to effectuate a sale of the premises, it relied upon Charney to negotiate the ultimate terms of sale as this was Charney's preferred way of doing business.

As Mr. Sternberg testified at trial, he was excluded from further negotiations by Charney to his detriment in that the transaction ultimately closed at a reduced purchase price of $10.6 million with plaintiff being paid no commission whatsoever. Instead, brokerage commissions totalling $482,500 were paid, with $295,000 going to Walter & Samuels, Inc. and $187,500 to Lawland Corp., which is owned by defendant Lawrence Friedland, who is also a general partner of the owner.

Plaintiff brought this action alleging three causes of action based upon breach of contract, quantum meruit and fraud. The cause of action for fraud was dismissed by the court at the beginning of the trial since such claim was merely the alleged failure to pay the agreed commission. After plaintiff's principal and its expert witness testified, the court granted the renewed motions to dismiss the remaining causes.

The court found the agreement unambiguous and dismissed the cause of action for breach of contract against defendant Walber 36th Street Associates inasmuch as the sale price of the building was less than $11.5 million, the court construing the agreement as meaning that plaintiff was entitled to a commission only if the sale closed at $11.5 million. It then dismissed the quantum meruit claim against the other defendants finding that plaintiff had made an election of remedies and could not proceed on both theories, citing Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 521 N.Y.S.2d 653, 516 N.E.2d 190 and Julien J. Studley, Inc. v. New York News, 70 N.Y.2d 628, 518 N.Y.S.2d 779, 512 N.E.2d 300. Finally, it reluctantly denied plaintiff's motion to amend its pleadings to proceed against all defendants on a theory of "procuring broker doctrine", finding that this was simply a means to recast plaintiff's contract claim under another guise and that any change of theory at that stage of the trial would be prejudicial to defendants.

The trial court erred in holding that the contract barred recovery of a commission on a theory of quantum meruit and that plaintiff was required to elect its remedy.

Unlike Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 388-89, 521 N.Y.S.2d 653, 516 N.E.2d 190, where plaintiff's cause of action sounding in quasi contract was dismissed inasmuch as there was a written contract fully detailing all applicable terms and conditions of the agreement between the parties, the contract at issue here is silent as to plaintiff's entitlement to a commission in the event a sale of the building occurred for a lesser price. Moreover, that case does not hold that a claim in contract and one in quasi contract are mutually exclusive in all events and under all circumstances. Indeed,...