Two Million Dollar Verdict Awarding Real Estate Broker's Fees Reversed as a Matter of Law


This appeal comes as a result of an over two-million dollar jury verdict; an award of broker's fees to the Plaintiff. Douglas Elliman. The sale here concerned a property known as the Huntington Town House. Important for this decision is that "[t]he plaintiff acknowledged that there was no written broker's agreement and it was not involved in the final negotiations leading to the ultimate sale of the property. It contended, however, that it had an oral agreement with the defendant Rhona Silver in which a commission was implied." Pp. 2. The Court here reverses the jury award as contrary to the law:

In this action to recover a real estate broker's commission, the plaintiff, a real estate brokerage firm, alleged that it was entitled to a commission for the sale of certain real property known as the Huntington Town House by the defendants to Lowe's Home Centers, Inc. (hereinafter Lowe's). The plaintiff acknowledged that there was no written broker's agreement and it was not involved in the final negotiations leading to the ultimate sale of the property. It contended, however, that it had an oral agreement with the defendant Rhona Silver in which a commission was implied. According to the plaintiff, it was the procuring cause of the sale because it generated a chain of circumstances that proximately led to the sale, but Silver intentionally excluded it from the negotiations in order to avoid the payment of a broker's commission. Following a trial, the jury returned a verdict in favor of the plaintiff.

To prevail on a cause of action to recover a commission, the broker must establish (1) that it is duly licensed, (2) that it had a contract, express or implied, with the party to be charged with paying the commission, and (3) that it was the procuring cause of the sale (see Stanzoni Realty Corp. v. Landmark Props. of Suffolk, Ltd., 19 AD3d 582, 583; Steven Fine Assocs. v. Serota, 273 AD2d 375; Friedland Realty v. Piazza, 273 AD2d 351; Ormond Park Realty v. Round Hill Dev. Corp., 266 AD2d 523, 524). "[T]he duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his right to commissions does not accrue" (Sibbald v. Bethlehem Iron Co., 83 NY 378, 382). To establish that a broker was the procuring cause of a transaction, the broker must establish that there was "a direct and proximate link, as distinguished from one that is indirect and remote, between the bare introduction and the consummation" (Greene v. Hellman, 51 NY2d 197, 206; see Hentze-Dor Real Estate, Inc. v. D'Allessio, 40 AD3d 813, 815-816). Where, as here, the broker is not involved in the negotiations leading up to the completion of the deal, the broker must establish that it " created an amicable atmosphere in which negotiations proceeded or that [it] generated a chain of circumstances that proximately led to the sale'" (Buck v. Cimino, 243 AD2d 681, 684 quoting 2 Warren's Weed, New York Real Property, Brokers, §6.01[4][a] [4th ed 1998]; see Talk of the Town Realty v. Geneve, 109 AD3d 981, 982; Zere Real Estate Servs., Inc. v. Parr Gen. Contr. Co., Inc., 102 AD3d 770, 773; Hentze-Dor Real Estate, Inc. v. D'Allessio, 40 AD3d at 816; Dagar Group v. Hannaford Bros. Co., 295 AD2d 554, 555; Friedland Realty v. Piazza, 273 AD2d 351).

Pp. 2-3 (extenal quotation marks omitted and internal citations preserved).

Contrary to the assertions otherwise, Plaintiff was not the procuring reason for the sale. "In order to grant judgment as a matter of law, the court must conclude that there is no valid line of reasoning or permissible inferences which could possibly lead rational persons to the conclusion reached by the jury on the basis of the evidence presented at trial." Pp. 4 (citing Szczerbiak v. Pilat, 90 NY2d at 556; Cohen v. Hallmark Cards, 45 NY2d at 499; Tapia v. Dattco, Inc., 32 AD3d 842, 844; Velez v. Goldenberg, 29 AD3d 780, 781)).

Although viewed in a light most favorable to the Plaintiff, the Court finds that (a lengthy one at that) the chain of events could not have possibly permitted an inference that the Plaintiff's actions led to the sale. While there were series of negotiations, assurances and an alleged oral agreement, there was (contrary to the Plaintiff's assertions) no sale or meeting of the minds when it came to the sale of the property. Although "approaching success," there must be success, or a sale, to earn a broker's fee. The Court finds that the Plaintiff came up with several offers all of which were lower than what would be considered and what, ultimately, was accepted.

The case is Douglas Elliman v. Silver, 21471/07, NYLJ 1202749093551, at *1 (App. Div., 2nd, Decided February 3, 2016).

#RealEstateBroker #RealEstateLaw #BrokerFee #RealEstateBrokerFee #Contract #NewYorkRealEstateLaw #HuntingtonTownHouse #OralAgreement #DouglasElliman

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