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Optimal Spaces, Inc. v. 5 Hanover LLC

Supreme Court of New York, New York County

July 12, 2013

OPTIMAL SPACES, INC., Plaintiff,
v.
5 HANOVER LLC, Defendant. No. 109784/09.

Editorial Note:

This decision has been referenced in a table in the New York Supplement.

Ian L. Blant, Esq., Law Offices of Ian L. Blant, New York, for plaintiff.

Eugene A. Gaer, Esq., New York, for defendant.

BARBARA JAFFE, J.

By notice of motion dated August 2, 2012, defendant moves pursuant to CPLR 3212 for an order summarily dismissing the complaint against it. Plaintiff opposes.

I. PERTINENT BACKGROUND

The following facts are undisputed:

In or about January 2009, plaintiff's principal, Stephen P. Sunderland, introduced Children's Place West, LLC (tenant) to 5 Hanover LLC. (Affidavit of Stephen P. Sunderland, dated Oct. 12, 2013 [Sunderland Aff.] ). Through plaintiff, tenant and defendant corresponded regarding tenant's interest in defendant's commercial space. ( Id., Exh. B).

On February 3, 2009, plaintiff sent defendant's broker Cushman & Wakefield, Inc. (C & W) a lease counteroffer which provided that as to the broker's fee, " one full commission [would be] payable to [plaintiff] per the attached rate sheet." ( Id., Exh. A).

On February 26, 2009, C & W sent plaintiff a counterproposal that provided that it would " not be binding until a lease agreement [was] mutually executed and exchanged by [defendant] and Tenant," and that defendant would " pay [plaintiff] one full commission pursuant to a separate agreement." (Affidavit of Todd Korren, dated Aug. 2, 2012, Exh. F). A separate commission agreement was never executed by the parties. ( Id. ).

Thereafter, tenant and defendant drafted and exchanged numerous lease agreements. (Sunderland Aff.). On May 9, 2009, tenant sent defendant a letter stating that defendant's inability to have " the premises ready for a September or October opening" and other economic concerns led Tenant to reconsider the agreed base rent. (Affirmation of Eugene A. Gaer, Esq., dated Aug. 2, 2012, Exh. G). Tenant proposed a modified arrangement, but negotiations unraveled between the parties shortly thereafter, and no lease agreement was ever finalized and/or executed. ( Id. ).

II. ANALYSIS

Under New York common law, a broker earns his commission when he procures a tenant ready, willing, and able to lease the property on the owner's terms. ( Tanenbaum v. Boehm, 202 N.Y. 293, 299 [1911]; Eastern Consol. Props. v. Lucas, 285 A.D.2d 421, 422 [1st Dept 2001] ). If the broker's efforts are rendered futile by the landlord's actions, the " broker does not lose his commission." ( Tanenbaum, 202 N.Y. at 300).

Despite the common law rule permitting a broker to recover its fee even if an underlying agreement is not consummated, unambiguous agreements that provide for the denial of a commission if the underlying transaction does not close are enforced. ( See eg Graff v. Billet, 64 N.Y.2d 899, 901-02 [1985] [commission agreement entitled broker to " earn a commission for selling the parcel as, if and when title passes, except for willful default on the part of the seller' " ]; Liggett Realtors, Inc. v. Gresham, 38 A.D.3d 214 [1st Dept 2007] [" the brokerage agreement unambiguously provided for payment of the commission [at] the closing of sale of the apartment' " ]; Corcoran Group, Inc. v. Morris, 107 A.D.2d 622 [1st Dept 1985], affd 64 N.Y.2d 1034 [brokerage agreement provided that commission amount " shall be payable only if, as, and when title actually closes" ]; Wm. A. White & Sons v. La ...


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