TPL Associates v. Helmsley-Spear, Inc.

• Decision Date: 10 January 1989
• Docket Number: HELMSLEY-SPEA,INC
• Citation: 146 A.D.2d 468,536 N.Y.S.2d 754
• Parties: TPL ASSOCIATES, Plaintiff-Appellant, v., et al., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 754

536 N.Y.S.2d 754

146 A.D.2d 468

TPL ASSOCIATES, Plaintiff-Appellant, v. HELMSLEY-SPEAR, INC., et al., Defendants-Respondents.

Supreme Court, Appellate Division First Department.

Jan. 10, 1989.

M.J. Kopcsak, New York City, for plaintiff-appellant.

H.N. Cogan, New York City, for defendants-respondents.

Before MURPHY, P.J., and ASCH, KASSAL and ROSENBERGER, JJ.

MEMORANDUM DECISION.

Order and judgment, Supreme Court, New York County (Bruce McM. Wright, J.), entered on or about July 23, 1987, and August 5, 1987, respectively, which granted defendants-respondents' motion for summary judgment dismissing the complaint and awarded them judgment on their counterclaim, and which adjudged plaintiff-appellant liable for the sum of $43,000 with interest thereon, unanimously reversed, on the law, the motion denied, the judgment vacated and the complaint reinstated, without costs.

Supreme Court erred in granting summary judgment because a triable issue of fact existed as to whether defendants-respondents had met their fiduciary obligation of disclosing their conflict of interest "without ambiguity or reservation, in all its stark significance" (Wendt v. Fischer, 243 N.Y. 439, 443, 154 N.E. 303 ). Respondents undertook to act as broker for plaintiff-appellant, a general partnership, which owned commercial property located at 610-620 West 132nd Street in Manhattan. Appellant's asking price for the property was "$3,000,000 all cash". In June 1984, respondent informed appellant's general partners, Theodore Sofia, Jr., and Paul Greenberg, that there was a prospective purchaser willing to pay $2.7 million for the property. The partners were told that Lal Sani would take title, together with members of his family, through an entity to be formed for that purpose. Respondent Earle F. Altman, a Senior Vice-President of Helmsley-Spear, Inc., successfully negotiated an agreement between the parties, and it was also agreed that appellant would pay a brokerage commission of $96,000.

Shortly before the contract of sale was to be signed on June 18, 1984, Jerome Gellman, appellant's attorney, learned that Altman might have an interest in the purchasing entity to be formed by Sani. When confronted with this, Altman claimed that he and other Helmsley-Spear brokers had agreed to acquire "nominal" interests in the purchasing entity in order to assure Sani that they would be aggressive in seeking tenants for the property after the sale. According to appellant, Altman assured Gellman that the Helmsley-Spear brokers would acquire no more than a one or two percent interest each and that their aggregate interest would not exceed ten percent of the purchasing entity. Appellant also claims Altman was told that if, in fact, Helmsley-Spear brokers were the purchasers of the property, appellant would not pay any brokerage commission at all. Altman assured Gellman that this was not the case and he agreed to a $10,000 reduction in the brokerage commission. A paragraph was inserted into the contract of sale, acknowledging that certain members of Helmsley-Spear "may be principals" of the purchasing entity in addition to acting as brokers for the sale. Appellant then executed both the contract of sale and the brokerage agreement.

In February 1985, a limited partnership was formed to acquire title to the property. At the closing on February 11, the limited partnership certificate was provided to Gellman as proof that the persons signing on behalf of the partnership were authorized to do so. The certificate named Sani and Altman as general partners and Alan Helman, who, unbeknownst to Gellman, was a Helmsley-Spear broker, was listed as the sole limited partner with a 22.5 percent interest in the partnership profits.

The...