The opinion of the court was delivered by: CARTER
Herbert Hutner ("Hutner") brings this action against David Greene ("D. Greene"), David Greene & Co. ("Greene & Co.") and Jerome Greene ("J. Greene"), to recover a finder's fee allegedly due him under an oral contract with D. Greene. D. Greene is a New York resident and a general partner in Greene & Co., a New York limited partnership. J. Greene, who is not related to D. Greene, is an attorney practicing law in New York City. Hutner is a California resident who acts as a finder for individuals and/or corporations interested in the sale or purchase of securities. He is also an attorney licensed to practice law in New York.
On January 5, 1979, Hutner met with D. Greene and David Brown ("Brown"), the General Counsel to City Investing Corporation ("City Investing"), in Palm Springs, California to discuss a possible sale of C.I. Realty Investors ("C.I. Realty") stock from D. Greene and Greene & Co. to City Investing. D. Greene and Greene & Co.'s Statement Under Local Rule 3(g) at para. 14.
D. Greene and Greene & Co. have conceded for the purpose of this motion only, that a possible sale of C.I. Realty shares to D. Greene and/or to Greene & Co. was also discussed. Id.
During the meeting, Hutner contends that he informed D. Greene that he would expect to receive a normal finder's fee in the event that a sale or purchase was consummated with D. Greene and City Investing or anyone that D. Greene represented. To that D. Greene allegedly replied; "We will take care of you." Hutner's Deposition at 152. Defendants have conceded Hutner's version of the facts for the purpose of this motion only. D. Greene and Greene & Co.'s Statement Under Local Rule 3(g) at para. 15.
Ultimately, the meeting proved fruitless, with neither side making an acceptable offer. No further communication ensued between Brown and D. Greene; however, Hutner continued to relay offers, counter-offers and rejections between the parties. Affidavit of Hutner at para. 4. Brown and D. Greene never reached any agreement for the sale or purchase of C.I. Realty shares. Brief of D. Greene and Greene & Co. at 12.
Later that month, J. Greene called George Scharffenberger ("Scharffenberger"), the Chief Executive Officer of City Investing, to inquire if the latter was interested in selling the C.I. Realty shares of City Investing. Affidavit of J. Greene at para. 6. Scharffenberger replied that he was not interested. Id. The parties dispute whether, at that time, J. Greene was aware of the status of the negotiations between D. Greene and Brown. Id. at P 4. Eventually, Scharffenberger changed his mind and on June 3, 1979, J. Greene told D. Greene that he was engaged in negotiations with Scharffenberger for the purchase of City Investor's C.I. Realty stock. D. Greene and Greene & Co.'s Statement Under Local Rule 3(g) at para. 33. At that point, D. Greene volunteered to obtain Scharffenberger's weekend number from Hutner. Id.
Subsequently, Scharffenberger and J. Greene agreed that City Investing would sell its 533,870 C.I. Realty Shares for $24.50 a share. Id. at P 34. J. Greene then proceeded to search for buyers for the stock, id. at P 35, and approached D. Greene and Alan Greene, the managing partner of Greene & Co., to inquire if either D. Greene or Greene & Co. wished to acquire some of the C.I. Realty stock. Id. at P 36. Both declined, citing in part their belief that the price was too high and that an impending proxy contest would succeed. Id. Ultimately, J. Greene sold 325,000 of the shares to Great American Insurance Company, and 85,000 shares to the Studebaker-Worthington Pension Fund. Id. at P 37. Most of the remaining stock was sold to Frederick Stein, Simon Scheuer, Peter Sharp and Hambros Bank, Ltd. What these parties did not buy, Greene kept for himself. Id.
Hutner admits that other than introducing D. Greene to Brown and furnishing the former with Scharffenberger's home number, he was not involved in the negotiations which ultimately culminated in the sale of the stock. Affidavit of Hutner at para. 4. He nonetheless seeks a finder's fee from D. Greene and J. Greene pursuant to the alleged oral agreement with D. Greene because he claims that:
As a result of [his] introduction of D. Greene to officers of City Investing and with the information regarding the status and the specific terms of the negotiations that J. Greene obtained through his [Hutner's] frequent communications with D. Greene and Alan Greene, J. Greene found several institutions and individuals that were willing to, and did in fact, purchase City Investing's 533,870 shares of C.I. Realty for $24.50 a share. Hutner's Statement Under Local Rule 3(g) at para. 11.
Hutner thus contends that by introducing D. Greene to Brown and by giving D. Greene Scharffenberger's telephone number, he was the procuring cause of the eventual sale by City Investing of its shares of C.I. Realty to J. Greene and others. Id. at P 12. Hutner argues, moreover, that D. Greene was acting on behalf of the eventual buying group when he met with Brown in Palm Springs. Affidavit of J. Greene, Exhibit A.
have filed separate motions for summary judgment pursuant to Rule 56, F.R.Civ.P. D. Greene and Greene & Co. concede the existence of the oral contract between D. Greene and Hutner for the purpose of this motion only, but they contend nevertheless that: (1) Hutner's claims are barred by the New York Statute of Frauds; (2) even if California law were to be applied, as plaintiff urges, the claims are precluded by that state's licensing laws; (3) the supposed oral contract is unenforceable because of the vagueness of the price terms, because Hutner was not the procuring cause of the sale of the C.I. Realty stock, and because the contract by its terms did not include J. Greene or any of the purchasing group. J. Greene has moved for summary judgment on the grounds that he did not authorize D. Greene to negotiate a contract for a finder's fee with Hutner and that Hutner was not in any way responsible for his or the other parties' purchase of the C.I. Realty shares.
The action is based on diversity jurisdiction, accordingly, the threshold question to be determined is which state's law will be applied. Erie v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938). To decide that question we are bound by the choice of law rules of the forum state. Loebig v. Larucci, 572 F.2d 81, 84 (2d Cir. 1978), citing, Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). On issues of substantive law, New York courts employ the "paramount interest" test which gives "controlling effect to the law of the jurisdiction which has the greatest concern with, or interest in, the specific issue raised in the litigation . . ." Neumeier v. Kuehner, 31 N.Y.2d 121, 335 N.Y.S.2d 64, 69, 286 N.E.2d 454 (1972); see also, Intercontinental Planning v. Daystrom, 24 N.Y.2d 372, 383, 300 N.Y.S.2d 817, 825, 248 N.E.2d 576 (1969).
The task of the court is first to ascertain what the relevant legal issues are and then to determine, if more than one state is involved, which state's legitimate interests are most crucially implicated. Neumeier, supra, 335 N.Y.S.2d at 69; Intercontinental, supra, 300 N.Y.S.2d at 825; R. Leflar, American Conflicts Law, 221 (3rd ed.).
Defendants have identified two issues, the so called statute of frauds issue, that is whether the oral contract is barred by the New York Statute of Frauds, and the licensing issue, i.e., whether Hutner's activities in negotiating with the parties, and relaying offers and counter-offers, were prohibited under California law because he is an unlicensed broker. They contend that New York law should control the first point because New York has the greater interest in protecting its residents against unfounded claims for broker's fees. They also argue that California law should control the licensing issue since California has the most cogent interest in regulating the activities of its citizens. Hutner asserts that ...