NFS Services, Inc. v. West 73rd Street Associates
| Decision Date | 28 June 1984 |
| Citation | 102 A.D.2d 388,477 N.Y.S.2d 135 |
| Parties | NFS SERVICES, INC., Plaintiff-Respondent, v. WEST 73RD STREET ASSOCIATES, Filip M. DiSanza and Robert I. Postel, Defendants-Appellants. |
| Court | New York Supreme Court — Appellate Division |
Norman L. Rosenthal, Great Neck, for defendants-appellants.
Robert J. Poulson, Jr., New York City, of counsel (Poulson & Desmond, New York City, attorneys), for plaintiff-respondent.
Melvyn R. Leventhal, Richard G. Liskov and John M. Farrar, Asst. Attys. Gen., of counsel (Robert Abrams, Atty. Gen., attorney), for the Department of State of the State of New York as amicus curiae.
Before SANDLER, J.P., and ASCH, LYNCH and KASSAL, JJ.
The issue on this appeal is whether a real estate broker, licensed in the State of New Jersey but not in New York, may recover for brokerage services rendered in this state.
On February 28, 1979, West 73rd Street Associates ("Associates"), the owner of 11 Riverside Drive in Manhattan, entered into a letter agreement whereby Associates agreed to pay M.L. Schultz Co. 10% of the profits derived "when, as and if earned by Associates from and upon conversion or sale of the premises if Associates makes a deal concerning these Premises with your client." The agreement also provided that if Schultz' client produced financing acceptable to Associates, the latter would pay $200,000 as an advance against the 10% profit-sharing. The same day, Schultz assigned to NFS Services, Inc. ("NFS") "all rights, title and interest in and to a certain real estate listing between Robert I. Postel as General Partner of West 73rd Street Associates and M.L. Schultz Co. dated February 28, 1979 * * * ".
NFS is a Delaware Corporation, qualified to do business in this state, and with offices here. Both NFS and Schultz were licensed as real estate brokers in New Jersey but neither was licensed as a broker by the State of New York.
The client, referred to in the agreement with Schultz, was Terratec Corp., a large engineering firm which, in March of 1979, withdrew from the deal because of other commitments. The real estate was not converted to cooperative ownership but, on June 6, 1979, Associates sold the property to Allen & Company, which was also a client of Schultz, and its joint venturer, American Continental Properties, Inc. Subsequently, by letter dated July 10, 1979, NFS, claiming entitlement to a fee under the terms of the February 28, 1979 agreement and the assignment, demanded an accounting. At the time, NFS had asserted that its vice president, Steven Klein, arranged meetings between Phil Scaturo of Allen & Company and Postel on behalf of Associates.
When the NFS demand for a commission was refused, this action was commended on September 7, 1982 to recover for the brokerage commissions alleged to be due because of the sale the complaint, in eight causes of action, alleging that NFS was the procuring agent in introducing defendants to Allen & Company. Prior to service of an answer, defendants moved to dismiss, contending, inter alia, that the complaint failed to state a cause of action in that neither NFS nor Schultz was a duly licensed real estate broker in this state and, therefore, no action could be brought (Real Property Law § 442-d). Plaintiffs cross-moved for summary judgment on their fourth, fifth and sixth causes to recover, respectively, for breach of contract, quantum meruit and unjust enrichment.
Special Term denied the cross-motion as premature since no responsive pleading had been served, but granted the motion to dismiss as against Schultz in that the assignor, having assigned its right, title and interest to NFS, could not pursue any remedy. The court also dismissed the complaint by NFS, except for the fourth and fifth causes of action for breach of contract and quantum meruit, directing plaintiff to serve an amended pleading. In rejecting the contention that plaintiff could not recover any commission since it had no real estate broker's license in New York, although it was duly licensed in New Jersey, the court found that the statute was designed to ensure the trustworthiness and competence of the broker and not to impose "a mere technical barrier to doing business." Thus, it held that a real estate broker, licensed in another state and who could become licensed in New York merely by the ministerial act of filing, should not be thereby precluded from recovering a commission for brokerage services performed in this state.
Following service of an amended complaint, defendants again moved to dismiss, arguing that maintenance of the action would conflict with the proscription contained in Real Property Law § 442-d and that the first cause of action in the amended complaint for quantum meruit was barred by statute of frauds (General Obligations Law § 5-701). The motion was denied, Special Term treating it essentially as a motion to reargue and finding that the issue had been disposed of on the prior motion to dismiss. The statute of frauds defense was also rejected, the court holding that the New Jersey license acted to confer the same status and standing upon the broker as if a New York license had been obtained and, therefore, the statute of frauds was inapplicable with respect to licensed real estate brokers.
Real Property Law § 442-d provides as follows:
"No person, copartnership or corporation shall bring or maintain an action in any court of this state for the recovery of compensation for services rendered, in any place in which this article is applicable, in the buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed real estate broker or real estate salesman on the date when the alleged cause of action arose."
The statute, in our view, is clear and specific. Real Property Law § 440(1) defines "real estate broker" as one "who, for another and for a fee, commission or other valuable consideration, lists for sale, sells * * * exchanges, buys or rents, or offers or attempts to negotiate a sale * * * exchange, purchase or rental of an estate or interest in real estate * * * " Section 442-d bars any action to recover compensation except upon allegation and proof that the person was a duly licensed real estate broker on the date the cause of action accrued (Reed v. Watson, 244 App.Div. 522, 279 N.Y.S. 863; Gartrell v. Jennings, 283 App.Div. 879, 129 N.Y.S.2d 583; J.I. Kislak, Inc. v. Carol Management, 7 A.D.2d 428, 184 N.Y.S.2d 315).
It is undisputed that neither NFS nor its assignor,...
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