1994). Reiss also accompanied Grimaldi and Powers to Paris in
September 1995, at defendants' request and as UIS'
representative, to review documents related to a potential
acquisition by GECC of a portfolio of property and loans owned by
Barclays Bank. See id. at ¶ 117. In the fall of 1995, Reiss, in
conjunction with Rosio, also aided GECC in the preparation of a
study of the French real estate market. See id. at ¶ 118.
Reiss also continued to speak frequently with Grimaldi,
attempting to maintain GECC's interest in the UIS and UIC
transactions, and to speak regularly with Juliard and Rosio. See
id. at ¶¶ 123, 129-30, 132. According to Reiss, from 1993 to
February 1997, he "devoted a substantial portion of his time to
promoting defendants' interests and represented no other
clients." Id. at ¶ 131.
In mid-1996, as it appeared increasingly likely to Reiss and
Juliard that GEEC would acquire an interest in UIS and/or UIC,
Reiss arranged for Juliard and Rosio to meet with legal counsel
in New York. See id. at ¶¶ 124-25. On or about July 25, 1996,
while Juliard and Rosio were in New York, "Rosio acknowledged
that Reiss would be entitled to his fee when the deal was
accomplished." See id. at ¶ 126.
In February 1997, GAN publicly announced a restructuring plan
that included selling its interest in UIS and UIC; this plan was
approved in July 1997. See id. at ¶¶ 133-34. Pursuant to the
requirements of French law, GAN retained Lazard Freres as a
financial advisor to make information relating to UIS and UIC
available for inspection and to solicit bids for the sale of the
companies. See id.
Starting in July 1997, at Juliard's request, Reiss contacted
other potential investors, and was successful in generating
interest in the Blackstone Group, an investment firm. See id.
at ¶ 136. Blackstone sought reassurance from Reiss that any fee
arising from the transaction would be paid by defendants. Thus,
on September 17, 1997, Reiss wrote to Juliard and Rosio to
confirm that Reiss would be entitled to his fee of 1% if UIS
entered into a deal with Blackstone. See id. "Although Rosio
initially attempted to shift responsibility for payment of
Reiss's 1% fee to Blackstone, at no time did Juliard or Rosio
ever object to the amount of the fee or Reiss's entitlement
thereto. Shortly thereafter, Rosio and Juliard agreed that
because, as Reiss noted, he had `always represented UIS for the
past 4 years,' defendants, not Blackstone, were responsible for
Reiss's fee." Id. at ¶ 137.
In late 1997, Grimaldi informed Reiss that GECC had agreed to
acquire UIS. "In an attempt to be paid expeditiously and without
an adversarial process," Reiss sent an invoice, dated January 7,
1998, addressed to Juliard, Rosio, Powers, and Ronald Pressman,
President of Commercial Real Estate at GECC, for $1 million, a
"substantially discounted amount." At that time, Reiss was not
aware of the amount of the UIS transaction or the fact that GECC
was acquiring an interest in UIC in addition to UIS. See id. at
¶ 141. In response to the invoice, Juliard conceded that Reiss
had introduced him and Rosio to Powers in 1993 and that out of
courtesy, they had kept Reiss informed of their relationship with
GECC. He asserted, however, that Reiss' involvement was
"essentially limited just to that introduction" and denied that
Reiss was owed any fee in connection with the GECC/UIS
transaction. See id. at ¶ 143; Ex. 60 (letter from Juliard to
Reiss dated January 20, 1998).
On or about May 29, 1998, GECC acquired GAN's shares in UIS for
approximately $750 million. On or about June 15, 1998, GEEC, in a
joint venture with Goldman Sachs/Whitehall Partners, acquired UIC
in a deal valued at approximately $350 million. See id. at ¶
145. Reiss has received no fee in connection with either of these
A. Statute of Frauds
Defendants argue that because Reiss has no written contract,
the Statute of
Frauds bars all of his claims. The New York Statute of Frauds
(a) Every agreement, promise or undertaking is void,
unless it or some note or memorandum thereof be in
writing, and subscribed by the party to be charged
therewith, or by his lawful agent, if such agreement,
promise or undertaking: . . .
10. Is a contract to pay compensation for services
rendered in negotiating a loan, or in negotiating the
purchase, sale, exchange, renting or leasing of any
real estate or interest therein, or of a business
opportunity, business, its good will, inventory,
fixtures or an interest therein, including a majority
of the voting stock interest in a corporation and
including the creating of a partnership interest.
"Negotiating" includes procuring an introduction to a
party to the transaction or assisting in the
negotiation or consummation of the transaction. This
provision shall apply to a contract implied in fact
or in law to pay reasonable compensation but shall
not apply to a contract to pay compensation to an
auctioneer, an attorney at law or a duly licensed
real estate broker or real estate salesman.
N Y Gen. Oblig. Law ("GOL") § 5-701(a) (emphasis added).
This statute is based upon the concern that business finders
and brokers can easily assert false or exaggerated claims for
entitlement to commissions in connection with the sale of a
business or the brokering of a business opportunity. See
Freedman v. Chemical Const. Corp., 43 N.Y.2d 260, 401 N.Y.S.2d 176,
181, 372 N.E.2d 12 (1977).
The nature of the transactions is such that, in the
absence of a requirement of a writing, unfounded and
multiple claims for commissions are frequently
asserted, and employers often seek to escape
liability by denying the fact of employment. These
controversies are commonly resolved by juries on
conflicting testimony, with the consequent danger of
Intercontinental Planning, Ltd. v. Daystrom, Inc., 24 N.Y.2d 372,
300 N.Y.S.2d 817, 826, 248 N.E.2d 576 (1969).
Reiss does not dispute that the alleged contract at issue falls
within the scope of the Statute of Frauds. The parties disagree,
however, as to whether Reiss qualifies for one of the statute's
enumerated exceptions. Reiss argues that because he is a real
estate broker duly licensed by the State of New York, he has a
complete exemption from the statute's requirements. Defendants,
by contrast, argue that the exemption for licensed real estate
brokers only applies when the broker is engaged in a real estate
transaction. Because the transaction at issue in this case was
the sale of an entire business (which is engaged in the real
estate market), the exemption does not apply and a writing
evidencing the contract is required.