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Georgia Malone & Co., Inc. v. E&M Associates

Supreme Court of New York, First Department

July 26, 2018

Georgia Malone & Company, Inc., Plaintiff-Appellant,
E & M Associates, et al., Defendants-Respondents.

          Davidoff Hutcher & Citron LLP, New York (Frank L. Perrone, Jr. of counsel), and Claude Castro & Associates PLLC, New York (Claude Castro of counsel), for appellant.

          Sadis & Goldberg, LLP, New York (Douglas R. Hirsch and Jennifer Rossan of counsel), for respondents.

          Sallie Manzanet-Daniels, J.P., Peter Tom, Richard T. Andrias, Troy K. Webber, JJ.

          TOM, J.

         Plaintiff appeals from the order of the Supreme Court, New York County (Kelly O'Neill Levy, J.), entered June 27, 2017, which denied plaintiff's motion for partial summary judgment on the causes of action for breach of contract and attorneys' fees, and granted defendants' motion for summary judgment dismissing the causes of action for breach of contract, breach of implied contract, quantum meruit, unjust enrichment, and attorneys' fees.

         In this action for recovery of a brokerage commission, plaintiff broker argues that it is entitled to the agreed-upon commission because defendants E & M Associates, Michael Langer, Irving Langer, Leibel Lederman, Aryeh Ginzberg, Scott Katz, and the LLC defendants were bound by the commission agreement and breached the agreement when they purchased the properties (using newly formed entities) and failed to pay the commission. We find that the language in the agreement is ambiguous, and thus that there is a triable issue of fact as to whether the parties intended to bind all the defendants to the agreement. Accordingly, defendants are not entitled to summary judgment dismissing the causes of action for breach of contract and attorneys' fees as against any of them.

         The properties at issue consist of 85 multifamily homes containing 90 buildings and 1.4 million square feet in upper Manhattan (the properties), which were ultimately purchased by limited liability companies formed for that purpose.

         Plaintiff is a real estate brokerage firm, run by its president, Georgia Malone, a broker and attorney. Defendant E & M Associates LLC (E & M) is a real estate acquisition and management firm whose members consist of defendant Irving Langer and his wife Miriam Langer. Irving Langer, along with defendants Aryeh Ginzberg and Leibel Lederman, are partners in the firm. Defendant Michael Langer, Irving's son, is an E & M employee. Defendant Scott Katz is employed by nonparty Galil Management LLC, a successor to E & M, but was previously listed on E & M's website as E & M's CFO.

         Separately, Ginzberg and Lederman are in the real estate syndication business and have bought and sold real estate by themselves and through entities they wholly own, and have negotiated and concluded deals with other individuals and entities.

         According to Ginzberg and Lederman, in November 2011, they met with nonparty Baruch Singer, owner of the properties, to discuss the purchase of the properties, but they could not agree on a value for the properties, and the discussions ended.

         In fact, plaintiff had performed substantial due diligence and review of the properties in connection with an earlier "Unwind Transaction" in which Singer negotiated to modify his lender's right to purchase. This included a review of all rent rolls, condition of apartments, status of rent regulation of each apartment, air rights, J-51 issues, potential upside of the rent rolls, and numerous other analyses of the properties. Notably, the work plaintiff performed was confidential and for use only by the owner for the Unwind Transaction, and for the potential sale of the properties.

         In the summer of 2012, plaintiff received the listing of the properties from Singer. In August 2012, nonparty Oren Richland, a principal of a real estate investment firm, contacted Malone and explained that he was working with investors from E & M who were interested in purchasing a multifamily portfolio. Malone advised that she was involved with the properties, and that she had prepared and was in possession of substantial confidential documentation about the properties. She said that she could arrange for an inspection of the properties, if E & M, as buyer, would first sign a "Confidentiality/Noncircumvent/Commission Agreement" (the agreement) confirming that all marketing and valuation analyses would be kept confidential and that the buyer would be obligated to pay a brokerage fee upon the purchase of the properties.

         On August 29, 2012, Richland emailed Malone to ask her to send Michael Langer a copy of the agreement; the email copied Langer and provided Langer's contact details at E & M. Langer was forwarded the agreement on August 30, 2012. Within two hours, he forwarded the email, with confidential attachments, to Leibel Lederman. On August 30, 2012, the agreement was executed.

         The agreement provides that it is made and agreed between plaintiff as broker and Michael Langer of E & M as "Buyer." The agreement was signed by Malone on behalf of plaintiff and by Langer on behalf of "E & M Associates," and notably contains a footnote providing that [s]ignatories each have apparent and actual authority to bind all employees, officers, successors, assigns and agents of all their related entities and affiliates to this letter agreement."

         The agreement's preamble provides that plaintiff has certain information in its possession regarding the properties that will be disclosed to the buyer upon execution of the agreement, and that the buyer is considering purchasing the properties. The preamble stresses that the buyer will be permitted to review certain confidential information and that the buyer and its representatives are required to treat such information as confidential and must not reveal or disclose the information. "Representatives" is defined to mean "the Buyer's directors, officers, employees, managers, members, partners, affiliates, potential joint venturers, representatives and advisors, including, without limitation, attorneys, accountants, but excluding all brokers, agents, and consultants."

         The agreement provides that plaintiff's "Marketing and Valuation Analyses" for the properties is to be kept confidential, and can be viewed only by the parties bound to the agreement and by the parties' representatives "who agree

         in writing to be bound by the terms" of the agreement. The agreement further provides that the buyer agrees to take strict precautions to safeguard and protect the confidentiality of the Marketing and Valuation Analyses provided thereunder. Under the agreement, plaintiff would exclusively handle all communication with the seller of the properties until the buyer had "entered into a fully accepted and executed letter of intent to acquire the [Properties]."

         Pursuant to the agreement, the buyer acknowledged that it was introduced to the seller and the properties and agreed to pay the broker a commission upon contract closing. The Brokerage Agreement clause also provided that if the buyer were found to have breached the clause or any other provision, it ...

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