Metro Realty Services, LLC v. Old Country Realty Corp., 2009 NY Slip Op 30462(U) (N.Y. Sup. Ct. 2/23/2009)

• Decision Date: 23 February 2009
• Docket Number: Motion Sequence # 005.,No. 019549/05.,019549/05.
• Citation: Metro Realty Services, LLC v. Old Country Realty Corp., 2009 NY Slip Op 30462(U) (N.Y. Sup. Ct. 2/23/2009), 2009 NY Slip Op 30462, Motion Sequence # 005., No. 019549/05. (N.Y. Sup. Ct. Feb 23, 2009)
• Parties: METRO REALTY SERVICES, LLC and AIRECO REAL ESTATE CORP., Plaintiffs, v. OLD COUNTRY REALTY CORP, and DAVID ZHANG, Defendants.
• Court: New York Supreme Court

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2009 NY Slip Op 30462(U)

METRO REALTY SERVICES, LLC and AIRECO REAL ESTATE CORP., Plaintiffs, v. OLD COUNTRY REALTY CORP, and DAVID ZHANG, Defendants.

No. 019549/05.

Motion Sequence # 005.

Supreme Court of the State of New York, Nassau County.

February 23, 2009.

Motion Date: December 12, 2008.

STEPHEN A. BUCARIA, Judge.

This motion, by defendants, for an order pursuant to CPLR 3212 for summary judgment dismissing the complaint as against the moving defendants, and granting such other and further relief as this Court deems just and proper, is determined as hereinafter set forth.

FACTS

This action involves a claim for a broker commission pertaining to sale of commercial property. On June 6, 2005, the plaintiff, Aireco Real Estate Corp. (hereinafter "Aireco"), and the defendants, Old Country Realty Corp., (hereinafter "Old Country") and its sole shareholder David Zhang (hereinafter "Zhang"), entered into an Exclusive Real Estate Agreement for the sale of the commercial property owned by Old Country. In said agreement Old Country granted Aireco an exclusive right to sell its property from the date of execution until October 5, 2005, and in return Aireco would receive a commission based upon a specified schedule.

Plaintiffs' complaint alleges that the defendants failed to pay plaintiffs Aireco and co-broker Metro Realty Services, LLC (hereinafter as "Metro"), the sales commission owed to them for their procurement of a purchaser, A. Joseph Realty Corp., whom the plaintiffs assert was a ready, able and willing buyer for defendants' property. However, the property was not sold to the aforementioned purchaser. In the interim, the Exclusive Real Estate Agreement expired. Plaintiffs claim that defendants breached their contract by failing to pay the commission, and breached the implied contract for good faith dealing by refusing to cooperate and attempting to "buy-off" the plaintiff Aireco. The property was later sold to another buyer allegedly procured by another broker.

DEFENDANTS' CONTENTIONS

The defendants assert that plaintiffs failed to prove a prima facie claim for a brokerage commission, because they failed to establish that the subject purchaser (A. Joseph Realty Corp.) was ready, willing and able to buy defendants' property on the terms set forth by the defendants prior to the expiration of the exclusive agency; and that plaintiffs failed to show that there exists an agreement, a "meeting of minds," between the said purchaser and defendants either prior to or after the expiration of the agency agreement.

The defendants argue that the plaintiffs failed to state a cause of action for breach of contract against Zhang; and that the parties to the brokerage agreement was between Old Country and Aireco, and not Zhang as individual in his own capacity.

PLAINTIFFS' CONTENTIONS

The plaintiffs argue that the motion for summary judgment should be denied as premature, pursuant to CPLR 3212(f), that defendants are trying to prevent plaintiffs from conducting discovery, and, thereby preclude the Court from considering same; and that further discovery will clearly and unequivocally prove defendants'"bad faith" and establish the only reason for failing to execute the contract of sale — avoiding to pay the brokerage commission.

Further, the plaintiffs assert that there are substantial issues of fact which remain to be resolved: whether Zhang acted in bad faith and committed fraud when Zhang requested that Mr. Alan J. Light (the principal of A. Joseph Realty Corp.) wait until the subject "brokerage agreement" expired, and when Zhang attempted to "buy-off Aireco with $10,000. In support, the plaintiffs submitted affidavits of Frank Posillico (listing broker), Andrew Blumenthal (procuring broker), and Mr. Light. The plaintiffs further argue that the defendants did not address the above facts, therefore; they must be deemed to have admitted the facts as a matter of law, and the plaintiffs are entitled to summary judgment.

Finally, the plaintiffs argue that there are sufficient facts to pierce the corporate veil as a matter of law as against Zhang, and that there are sufficient assertions of fraud.

DEFENDANTS' REPLY

Defendant Zhang denies making the settlement offer, and that the evidence of a settlement offer or settlement negotiation is not admissible, as against the public policy, and cannot be used to defeat defendant's summary judgment.

The defendants also argue that the allegation of fraud is not material to the claim for a brokerage commission because the property was not sold to the prospective buyer introduced by plaintiffs; and with respect to the claim that Zhang should be held liable under the doctrine of piercing corporate veil is not contained in the pleadings, plaintiffs did not come forward with any evidence to substantiate such a claim; and an action for piercing a corporate veil is a derivative suit, only permitted when the plaintiff prevails in the action in chief.

DECISION

The rule in motions for summary judgment has been succinctly re-stated by the Appellate Division, Second Dept., in (Stewart Title Insurance Company, Inc. v Equitable Land Services, Inc., 207 AD2d 880, 616 NYS2d 650, 651, 1994):

"It is well established that a party moving for summary judgment must make a prima facie showing of entitlement as a matter of law, offering sufficient evidence to demonstrate the absence of any material issues of fact (Winegrad v New York Univ. Med. Center. 64 NY2d 851, 853, 487 NYS2d 316, 476 NE2d 642: Zuckerman v City of New York. 49 NY2d 557, 562, 427 NYS2d 595, 404 NE2d 718). Of course, summary judgment is a drastic remedy and should not be granted where there is any doubt as to the existence of a triable issue (State Bank of Albany v McAuliffe, 97 AD2d 607, 467 NYS2d 944), but once a prima facie showing has been made, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish material issues of fact which require a trial of the action (Alvarez v Prospect Hosp., 68 NY2d 320, 324, 508 NYS2d 923, 501 NE2d 572; Zuckerman v City of New York, supra, 49 NY2d at 562, 427 NYS2d 595, 404 NE2d 718)".

"The general rule is that a broker who `produces a person ready and willing to enter into a contract upon his employer's terms... has earned his commission.'" (Holiday Management Associates. Inc. v. Albanese. 173 A.D.2d 775, 775, 570 N.Y.S.2d 643, 2^nd Dept., 1991) (citations omitted). "... [T]he broker's right to compensation is not dependent upon the performance of the realty contract." (Smith v. Walsh, 209 A.D.2d 398, 399, 619 N.Y.S.2d 578, 2^nd Dept., 1994). Furthermore, if parties reached an agreement on all of the essential terms of the contract, then the broker is entitled to a commission. (See Holzer v. Robbins. 141 A.D.2d 505, 529 N.Y.S.2d 130, 2^nd Dept., 1988). However, "[m]ere agreement as to price on a proposed sale of real property does not constitute a meeting of the minds of buyer and seller so as to entitle the real estate broker to a commission." (M.A. Salazar, Inc. v. Levy, 237 A.D.2d 583, 584, 655 N.Y.S.2d 612, 2^nd Dept., 1997) (citations omitted). If the parties fail to agree on terms customarily encountered in real estate sales transactions, including the date for contract or closing of title and price, and in the absence of agreement on essential terms, the broker did not earn any commission. (See Blaufeux v. Paznik, 162 A.D.2d 573; 556 N.Y.S.2d 762, 2^nd Dept., 1990). "Failure to agree on a closing date is not fatal, as the law will presume the closing will take place within a reasonable time. A broker may recover a commission where a seller capriciously refuses to discuss missing terms of a sale and thwarts its natural progress by wrongfully refusing to proceed." (Linda M. Kirk Associates, LTD., v. McDonald Equities, Inc., 155 A.D.2d 281, 282, 547 N.Y.S.2d 44, 1^st Dept., 1989) (citations omitted). Therefore, there is an exception from the general rule. If the employer "capriciously... changes his mind after the purchaser, ready and willing, and consenting to the prescribed terms, is produced, then the broker does not lose his commissions." (Sibbald v. Bethlehem Iron Co., 83 N.Y. 378. 383-84).

In the case at bar, the defendants' argument that A. Joseph Realty Corp. was not ready, willing and able to purchase defendant's property on the terms of the Seller prior to the expiration of the Agency Agreement is based on the showing that the Purchaser rejected the terms in the Proposed Contract, and made his own proposal based on the Purchaser's terms, which the Seller did not agree to; and that the Purchaser withdrew his purchase offer on October 25, 2005. The terms that the Seller did not agree to are the following: a clause indicating that the Seller had to provide a Phase I report at no charge to the Purchaser; and that the Purchaser would be given thirty days after execution of the Contract to cancel it for any or no reason; and that the Seller had to deliver Phase I and II reports no later than 5 days from the date of the contract, and not older than 120 days. These terms are material, and would require Seller to make legal and financial concessions to Purchaser. Moreover, even though the parties agreed on the purchase price, they did not agree on the date for contract and essential terms; and, therefore, there was no meeting of the minds between the parties. Thus, the defendants sustained their burden of establishing its prima facie entitlement to summary judgment dismissing plaintiffs complaint for breach of contract through the submission of evidentiary proof including Zhang's affidavit and other documentary evidence.

However, the evidence submitted by the defendant in opposition to the motion, which included detailed affidavits from Frank Posillico, Andrew Blumenthal and Alan Light raised triable issues of fact as to whether Mr. Zhang capriciously refused to cooperate with Mr. Light and...