Rivkin v. Century 21 Teran Realty LLC

• Decision Date: 24 April 2008
• Docket Number: No. 68.,68.
• Parties: Oleg RIVKIN, Appellant, v. CENTURY 21 TERAN REALTY LLC et al., Respondents, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

887 N.E.2d 1113

10 N.Y.3d 344

Oleg RIVKIN, Appellant, v. CENTURY 21 TERAN REALTY LLC et al., Respondents, et al., Defendants.

No. 68.

Court of Appeals of New York.

April 24, 2008.

Robert J. Tolchin, New York City, for appellant.

Hiscock & Barclay, LLP, Albany, for respondents.

Law Offices of Michael T. Wallender, Albany, for New York State Association of REALTORS, Inc., amicus curiae.

OPINION OF THE COURT

READ, J.

The United States Court of Appeals for the Second Circuit has certified a question that calls upon us to explore the scope of the fiduciary duty owed by buyer's agents affiliated with a real estate brokerage firm when their principals bid on the same property. We begin with the facts, which are substantially undisputed.

I.

On May 24 or 25, 2004, Oleg Rivkin, a New Jersey resident who was in the market for a summer home on Ulster Heights Lake in Ulster County, contacted Century 21 Teran Realty LLC, a real estate brokerage firm located in Woodstock, New York. Teran is co-owned by Andrew Peck and Chloe Dresser, who are both licensed real estate brokers (see Real Property Law § 440[1]). Teran also possesses a broker's license, which allows it to receive commissions in connection with the purchase and sale of real estate (see id.; Real Property Law § 440-a). At the time, 16 salespersons and four associate brokers worked under Teran's aegis (see Real Property Law § 440[2], [3]; § 440-a).

Rivkin spoke with Joshua Luborsky, one of Teran's associate brokers, who told him about lakeside property at 103 Camp Road in Ellenville, which was listed for sale by another Century 21 franchise for $100,000. Details and pictures of the property posted by the local multiple listing service were forwarded to Rivkin by e-mail. The listing indicated that "all reasonable offers" for this modest cottage on one acre, which "[sat] right on the lake," should be presented.

On May 25, 2004, Rivkin directed Luborsky to convey a verbal offer to the listing broker (the seller's agent) to purchase the Camp Road property for $75,000, and Luborsky promptly did so. According to Rivkin, until he actually saw the property, he "couldn't commit to ... a contract[,] but at the same time [he] was very concerned that somebody was going to beat [him] out of [the property]." He authorized the verbal offer "to keep [his] spot" so that he would not find himself "out of the loop." Luborsky and Rivkin also arranged to meet at the site on May 28, 2004, the Friday before the impending Memorial Day holiday weekend, so that Rivkin might look at the property, with the expectation that he would make a written offer if it proved to be as suitable as he believed it to be.

Upon actually viewing the Camp Road property, Rivkin formed the opinion that "[t]he building ... was fairly worthless" and "dilapidated [and] needed to be knocked down"; and that the "value was entirely in the land [which was] fantastic." As he later put it, this property "seemed to fit [his] requirements in every respect."

Rivkin knew that the Camp Road property "had only been on the market ... a couple of weeks," but he quizzed Luborsky about "whether there had been other offers on the property." According to Rivkin, Luborsky replied that there had been other offers and, although he was "not aware of the amounts[,] ... they were low enough not to have resulted in any counteroffers by the sellers." Rivkin asked Luborsky if he considered $75,000 to be "a fair offer," and Luborsky indicated that it was, and that a counteroffer was likely. Rivkin agreed with Luborsky's assessment because "[i]n [his] experience there [was] always an offer and counteroffer process." Further, he claims to have told Luborsky that he "was willing to go up to the asking price without any doubt," because "[a]s far as [he] was concerned[,] the land was worth it."

Rivkin then signed a written binder, offering to purchase the Camp Road property for $75,000, which Luborsky forwarded to the listing broker that same day, May 28, 2004. Rivkin also wrote a check to Teran for $1,500 as a deposit, and signed an acknowledgment that he had received, read and understood a form document entitled "Disclosure Regarding Real Estate Agency Relationships" provided to him by Luborsky. This document, mandated by and conforming to the requirements of article 12-A of the Real Property Law, states that the "buyer's agent acts solely on behalf of the buyer" and has "without limitation, the following fiduciary duties to the buyer: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and a duty to account" (see also former Real Property Law § 443[4]).

As it turns out, on May 20, 2004, a few days before Rivkin first talked to Luborsky, Susanne and Robert Martin, who were looking to buy vacation or retirement property in Ulster County, had contacted Dresser, the co-owner of Teran. She told them about the Camp Road property, and they scheduled an appointment to meet at the site for an inspection. When Dresser called the listing broker on May 28, 2004 to arrange for this viewing, the listing broker let her know that there was an offer pending (presumably, Rivkin's), and that there might be several other showings over the holiday weekend. Upon seeing the Camp Road property, the Martins decided to offer $100,000, the listing price. On Sunday, May 30, 2004, they signed a written binder for that amount. Dresser promptly called the listing broker to advise her of this offer, and forwarded the written binder.

Luborsky contacted the listing broker on Saturday, May 29, 2004 to make sure that she had received Rivkin's written binder faxed the previous day. The listing broker confirmed that she had, but "would likely have trouble reaching" the sellers because they were traveling over the holiday weekend. As a result, she told Luborsky not to expect a response to Rivkin's offer any sooner than the following Tuesday, June 1, 2004, and that the property "might be shown to others over the weekend."

Rivkin says that he called Luborsky on Sunday, May 30 and Monday, May 31 (Memorial Day), 2004 to inquire about the status of his offer. Luborsky claims to have told him everything that he had learned in his Saturday conversation with the listing broker, and Rivkin acknowledges at least that "at some point ... [Luborsky] told [him] that the property had been shown over the weekend."

According to Rivkin, on June 1, 2004 Luborsky told him that he had learned from the listing broker that offers had been received for the Camp Road property over the weekend, but that he did not know the particulars. Rivkin maintains that he reminded Luborsky that he wanted the opportunity to raise his $75,000 offer, and was prepared to do so; and that Luborsky assured him that he would try to find out from the listing broker whether the sellers were prepared to make a counteroffer, or wanted to receive "highest and best" final offers from all prospective purchasers.

At 4:57 P.M. on June 1, 2004, Rivkin sent Luborsky the following e-mail:

"What have you heard from the sellers' agent? Anything? I don't quite understand why it is taking so long to get a response from them. If they have changed their mind or don't want to entertain the offer, I would like to know now, so that I could make an offer on another property."

Sometime late in the afternoon or early evening, Luborsky picked up a voice-mail message from the listing broker, who informed him that the sellers had accepted another offer, and so his client was "out of the running." When Luborsky reported this to Rivkin, they commiserated about the loss and wondered why the sellers had not solicited a "highest and best" offer. According to Rivkin, Luborsky expressed the notion that the listing broker had "acted inappropriately" by steering the sale to one of its own clients.

At about 11:00 p.m. on June 1, 2004, Rivkin telephoned Carol Botnick, one of the sellers, to make sure that the listing broker had conveyed his $75,000 offer. Botnick, who co-owned the Camp Road property with her brother-in-law, Seymour Kraver, confirmed that she had received Rivkin's offer. When he asked her why there was no counteroffer, she replied that she "had a better offer" and that Rivkin's offer "was too low," but she would not tell him what the better offer was. When he asked "what [it] would ... take" for him to acquire the property, she told him to deal with the listing broker, and not to call her again. Despite this rebuff, Rivkin next telephoned Kraver at about 11:15 p.m., telling him that he "really like[d] the property, ... how much the property meant to [him], how much the lake meant to [him]." Kraver shrugged Rivkin off, telling him that the decision was "basically" Botnick's to make.

Rivkin claims to have talked to the listing broker at some point on June 2, 2004, and to have learned from her that the sellers had received a full-price offer, which they had accepted orally. According to Rivkin, she made the following statement: "I don't know if I should be telling you this, but ... the full-price offer came from your own broker's office." Rivkin also says that he confronted Luborsky with this information on June 2, 2004, before instructing him to present an offer of $101,000 to the sellers, contingent only upon a water well inspection. He sent Luborsky an e-mail confirming this offer at 2:13 P.M. That same day, the listing broker informed Dresser that the sellers had verbally accepted the Martins' $100,000 offer, and let Luborsky know that the sellers had rejected Rivkin's $101,000 offer.

After Luborsky informed Rivkin that his $101,000 offer had been turned down and — "for the first time" — that the offer with which he was competing was contingency-free, Rivkin responded by e-mail at 7:32 P.M., instructing Luborsky to make an offer of $105,000, with no contingencies. Immediately thereafter, Rivkin telephoned Kraver to make the $105,000 offer personally. Kraver told Rivkin that he would consider...