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GUARANTY MORTG. CO. v. Z.I.D. ASSOCS.

July 18, 1980

GUARANTY MORTGAGE COMPANY, Division of First American National Bank, Plaintiff,
v.
Z.I.D. ASSOCIATES, INC. and Irving Decter, Defendants



The opinion of the court was delivered by: BRODERICK

MEMORANDUM ORDER

I.

 Plaintiff Guaranty Mortgage Company ("Guaranty") brings this diversity action against defendants Z.I.D. Associates, Inc. ("Z.I.D.") and Irving Decter, Z.I.D.'s president, seeking brokerage fees with respect to certain loans it brokered on behalf of Z.I.D.

 Guaranty is a division of First American National Bank, a banking corporation organized and existing under the laws of the United States and having its principal place of business in Nashville, Tennessee. *fn1" Z.I.D. is a corporation which was formed for the purpose of developing and building a hotel near the Nassau Coliseum in Uniondale, New York. Its principal place of business is in New York, and it was incorporated in a state other than Tennessee. Jurisdiction is predicated upon diversity of citizenship (28 U.S.C. § 1332).

 Plaintiff and defendant Z.I.D. executed a written agreement on May 10, 1978. By its terms plaintiff undertook to seek, on behalf of Z.I.D., construction and permanent financing loans for the hotel project in Uniondale. The plaintiff's complaint alleges that it procured commitments for the loans sought, and it claims brokerage commissions under the written agreement, or on principles of quantum meruit, in the principal amount of $ 230,000.

 This case is now before me on plaintiff's motion for an order of attachment and defendants' motion to dismiss.

 A temporary restraining order was issued at the outset of the litigation, enjoining Z.I.D., pending hearing, from transferring assets in such amount as to leave Z.I.D. with assets in an amount less than the principal amount sought. After several extensions of the temporary restraining order on consent of the parties, a hearing was held on plaintiff's motion for an order of attachment under section 6201(3) of New York's Civil Practice Law and Rules ("CPLR").

 At the close of the plaintiff's evidence, the defendants orally moved to dismiss the complaint and the application for an order of attachment on the ground of plaintiff's failure to make out a prima facie case. I denied that motion. The defendants also orally moved to dismiss the complaint on the ground of plaintiff's failure to allege that it is licensed in New York as a real estate broker, as required by section 442-d of New York's Real Property Law ("RPL"). I reserved decision on this motion. At the conclusion of the hearing it was agreed that the temporary restraining order would continue in effect until my disposition of the matter before me.

 II.

 For the reasons set forth below, the defendants' motion to dismiss the complaint based upon failure to comply with RPL § 442-d is granted, and plaintiff's motion for an order of attachment is denied as moot. The temporary restraining order is vacated. The complaint is dismissed.

 III.

 On the evidence received at the hearing and the pleadings herein, I find the following facts for the purposes of consideration of the matters before me.

 On May 10, 1978, Guaranty and Z.I.D. entered into a written agreement under which Guaranty, in behalf of Z.I.D. and for an agreed consideration, undertook to obtain a construction loan and a permanent financing loan with respect to Z.I.D.'s Long Island hotel project.

 Paragraph 19 provided that the agreement "shall be governed by and construed under the laws of the State of Tennessee ...."

 Pursuant to the agreement, commencing June 23, 1978 Guaranty submitted "loan packages" to at least twenty-three potential lenders, sixteen of whom were located in states other than New York. As a result of Guaranty's efforts, on January 29, 1979 the Bank of New York ("BONY") issued and delivered to defendants its commitment for a construction loan for $ 17 million, and on March 16, 1979 the Equitable Life Assurance Society of the United States ("Equitable") advised defendants that it had approved a mortgage loan for permanent financing in the amount of $ 14.5 million.

 The BONY and Equitable commitments were made as a result of Guaranty's efforts, and commissions became payable under the agreement with respect to those loans in the amount of $ 230,000.

 By agreement dated November 28, 1979, Z.I.D. has agreed to sell to Nassau Associates ("Nassau"), a Washington, D.C. partnership, its interest in the hotel project, which consists mainly of a ground lease from Nassau County *fn2" and the two financing commitments from Equitable and BONY. Essentially, this agreement provides for the transfer of Z.I.D.'s interest in return for Nassau's cash payment to Z.I.D. upon closing of $ 150,000, followed by a second cash payment of $ 200,000, to be paid in four equal annual installments beginning with the second full year of the hotel's operation, which is now expected to begin between June and September 1982. Nassau is also to assume $ 480,000 of Z.I.D.'s obligations on certain promissory notes.

 Plaintiff has not alleged that it was duly licensed in New York as a real estate broker on the date when the ...


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