SUPREME COURT - STATE OF NEW YORK IAS TERM PART 18 NASSAU COUNTY. Justice

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1 SUPREME COURT - STATE OF NEW YORK IAS TERM PART 18 NASSAU COUNTY INDEX NO PRESENT: HONORABLE HENTZE-DOR REAL ESTATE, INC. - against - Justice LEONARD B. AUSTIN Motion RID: Submission Date: Motion Sequence No. : MOTD Plaintiff COUNSEL FOR PLAINTIFF Reisman, Peirez & Reisman, LLP 1305 Franklin Avenue O. Box 119 Garden City, New York ALAN D' ALLESSIO, ECON DEVELOPMENT CORP., MIDARIAL ASSOCIATES, INC., BEAUTY PLUS TRADING CO. INC., U.S. HAIR & BEAUTY, INC., CHANG MOO LEE and HONG MOO LEE Defendants, COUNSEL FOR DEFENDANT (for Beauty Plus, U.S. Hair & Beauty, Chang Moo Lee and Hong Moo Lee) Morrit, Hock, Hamroff & Horowitz, LLP 400 Garden City Plaza, Suite 202 Garden City, New York (for D' Allessio & Econ Development) Morrone & Associates, P. 325 Maple Avenue Westbury, New York ORDER The following papers were read on Defendants' motions for summary judgment: Motion Seauence # Notice of Motion dated June 1, 2005; Affidavit of Alan D'Aliessio sworn to on May ; Affirmation of Joseph A. Marrone, Jr., Esq. dated June 1, 2005; Defendant' s Memorandum of Law;

2 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO et al. Motion Seauence # 2 Notice of Motion dated July 14, 2005; Affidavit of Alan D'Aliessio sworn to on July 12, 2005; Affirmation of Joseph A. Marrone, Jr., Esq. dated July 14, 2005; Motion Sequence # 3 Notice of Motion dated July 11, 2005; Affirmation of Terese L. Arenth, Esq. dated July ; Affidavit of Chang Moo Lee sworn to on July 6, 2005; Affidavit of Lisa Adamo sworn to on July 11, 2005; Defendant's Memorandum of Law; Other Papers Affirmation of Justin M. Vogel, Esq. dated July 19, 2005; Plaintiff' s Memorandum of Law; Affidavit of Joshua Kleinberg sworn to on July 14, 2005; Affidavit of Robert Gargiulo sworn to on July 18, 2005; Affirmation of Joseph A. Marrone, Jr., Esq. dated July 19, 2005; Affidavit of Alan D'Aliessio sworn to on July 19, 2005; Affirmation of Terese L. Arenth, Esq. dated July 12, 2005; Reply Memorandum of Law of Defendants Beauty Plus, et al. In Motion Sequence No., Defendant, Alan D'Aliessio moves for an order pursuant to CPLR 3212 granting him summary judgment dismissing the complaint and all cross-claims against him. In Motion Sequence No., Defendants, Alan D'Aliessio and Econ Development Corp., cross-move for an order pursuant to CPLR 3212 granting them summary judgment dismissing the complaint against them. In Motion Sequence No. 3, Defendants, Beauty Plus Trading Co., Inc., U.S. Hair & Beauty, Inc., Chang Moo Lee, Hong Moo Lee, Chris & Johnny Inc. and Chris Mark

3 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO et al. Corp., cross-move for an order pursuant to CPLR 3212 granting them summary judgment dismissing the complaint against them. firm. BACKGROUND Plaintiff, Hentze- Dor Real Estate, Inc. ("Hentze-Dor ), is a real estate brokerage Defendant, Econ Development Corp. (" Econ ) was the owner of Street, College Point, New York (" Property ). Defendant, Alan D'Aliessio (" Aliessio is the principal and sole officer, shareholder and director of Econ. Hentze-Dor claims that, in September 2003, D'Aliessio contacted Joshua Kleinberg (" Kleinberg ), a broker associated with Hentze-Dor, regarding the marketing of the Property for sale. Kleinberg prepared two written broker s commission agreements dated November 3 and November 12, 2003 and forwarded them to Aliessio. The proposed broker s agreement granted Hentze- Dor a six month exclusive right to sell or lease the Property. The formal written brokerage agreement was never signed. Even though D'Aliessio did not sign the agreement, Hentze- Dor began marketing the property for sale. The initial asking price was $3, Defendants, Hong Moo Lee ("Hong ) and Chang Moo Lee ("Chang ), are brothers who are principals in separate and distinct businesses. Hong is the principal of Defendant U. S. Hair & Beauty, Inc. (" S. Hair ). Chang is the principal of Defendants The amended complaint alleges five causes of action. The fifth cause of action against Midarial Associates, Inc. has been settled. It is not the subject of these motions.

4 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO et al. Beauty Plus Trading Co., Inc., Chris & Johnny, Inc. ("Chris & Johnny ) and Chris Mark Corp. ("Chris Mark" ). Chris & Johnny and Chris Mark are real estate holding corporations. In April 2003, Lisa Adamo ("Adamo ), an employee of U.S. Hair was shown the Property by a representative of Hentze-Dor. She discussed the Property with Hong. Thereafter, she advised Robert Gargiulo ("Gargiulo ) of Hentze-Dor that the Property was too expensive and that Hong and U. S. Hair were not interested in the Property. Adamo asserts that the next time she was shown the Property was on February At that time, she advised Gargiulo that she had previously seen the Property and that her employer was not interested in purchasing it. Kleinberg asserts that he showed the property to Adamo in September 2003 and that after seeing the property, he entered into negotiations with Adamo which resulted in his receiving an offer on January 5, That offer was accepted by Econ and Aliessio. Kleinberg asserts that he obtained three separate offers from Adamo on behalf of Beauty Plus Trading Co., Inc., U.S. Hair & Beauty Inc., Chang Moo Lee and Hong Moo Lee (collectively "Lee Brothers ). He transmitted these offers to D'Aliessio by Offer Sheets dated September 30, 2003, October 15, 2003 and January 5, 2004 (collectively "Offer Sheets ). The only difference among the Offer Sheets was the proposed purchase price. Hentze-Dor claims that the January 5, 2004 Offer Sheet contained an offer from the Lee Brothers to purchase the Property for $2, 750,000. On

5 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO, et al. such offer, which was allegedly was accepted by Econ and D' Aliessio, Hentze-Dor was to receive a commission of $137, 500. Aliessio by fax Hentze-Dor claims that the Offer Sheets were transmitted to D' and/or mail. D'Aliessio denies receipt of any of the Offer Sheets or acceptance of the offer contained in the January 5, 2004 Offer Sheet. In fact, Hentze-Dor s telephone logs and bills for its office fax machine establish that Hentze-Dor did not send any faxes to D'Aliessio or Econ on January 5, The only faxes sent by Hentze-Dor to D'Aliessio or Econ which were sent during Janaury 2004 were sent on January 13 and January 21, Hentze,.Dor alleges that it confirmed transmittal of the Offer Sheets to D' Allessio by letter to Adamo. Adamo and the Lee Brothers deny receipt of the confirmations. Hentze-Dor has not produced any documentation confirming that the Offer Sheets were either mailed or faxed to D'Allessio or Econ. Nor is there any documentary evidence that the Offer Sheets were mailed or faxed to Adamo, the Lee Brothers or their business entities. While Hentze-Dor claims that it was involved in actively marketing the Property from September 2003 through Janaury 2004, the Property was actually under contract. with another purchaser at that time. In May 2003, Econ entered into a contract to sell the Property. The sale of the contract was contingent upon the purchaser obtaining financing by January 1, The proposed purchaser did not obtain financing and the contract was subsequently cancelled.

6 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO, et al. In January 2004, after the May 2003 contract had been cancelled, Econ retained Hentze-Dor and Piling Real Estate on a non-exclusive basis to market the Property for sale. Chang asserts that he first learned about the Property when he saw an advertisement in a Korean language newspaper, placed by Piling, listing the Property for sale for $ Chang contacted Pilling, was shown the property by a representative of Pilling and made an offer to purchase the property to Pillng. Piling conveyed the offer to Econ. After rather brief negotiations, Econ and Chris Mark reached an agreement regarding the price and terms of the deal and the parties entered into the contract. Between the date the contract was executed and the closing, Chris Mark transferred its rights under the contract to Chris & Johnny. The closing took place in July Chris & Johnny leases the Property to U. S. Hair. Chang denies that he ever had any contact with any representative of Hentze- Dor regarding the purchase of the Property. Hentze-Dor concedes that it never negotiated directly with Chang. Chang asserts that the first time he learned about Adamo having been shown the property was when Hong and he did a pre-closing walk through in July Hentze-Dor seeks to recover from all Defendants, except Midarial Associates, Inc., the sum of $ ; the commission it claims would be due on the sale of the property in accordance with the offer contained on the January 5, 2004 Offer Sheet.

7 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO, et al., DISCUSSION To recover a commission, a real estate broker must establish that: (1) he/she is duly licensed; (2) the broker had an express or implied contract with the party obligated to pay the commission; and (3) the broker was the procuring cause of the sale. Brandenberg v. Water Place Assocs., L.P., 17 AD.3d 615 (2 Dept. 2005); and Ormond.Ek Realty. Inc. v. Round Hil Development Corp., 266 A. 2d 523 (2 Dept. 1999). A broker does not earn a commission until the buyer and seller have reached a Trylon Realty Corp. v. meeting of the minds on the essential terms of the sale. DiMartini, 34 N. 2d 899 (1974); and Heelan Realty & Development Corp. v. Skyview Meadows Development Corp., 204 AD.2d 601 (2 agreed upon the sales price for there to have been a meeting of minds. See, Dept. 1994). The parties must have Pentony v. Saxe, 2 AD.3d 1076 (3 Dept. 2003); Garcete v. Lazar, 294 A.D. 2d 118 (2 Dept. 2002); Natuzzi v. Rabady, 177 AD.2d 620 (2 Dept. 1991); and Central Federal Savings. F. B. v. National Westminster Bank. U., 176 AD. 2d 131 (1 Dept. 1991). Adamo denies having made the offer contained in the January 5, 2004 Offer Sheet. D'Aliessio denies receipt of that Offer Sheet or acceptance of the offer contained therein. Hentze-Dor has not produced any evidence indicating the Econ accepted or even received the offer contained in the January 5, 2004 Offer Sheet. The January 5, 2004 Offer Sheet and the subsequent contract negotiated by Pilling indicate that the parties had not agreed on the most basic term of any contract - - the price.

8 ... HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO et al. The Offer Sheet reflects an offer of $ while the contract reflects a purchase price of $2 800,000. The letter allegedly sent by Kleinberg to Adamo on January 5, 2004 does not indicate a meeting of the minds. The letter states " we feel this offer will be accepted. by the owner ; not that the offer had been accepted by the owner. This language clearly establishes that the offer contained in the January 5, 2004 Offer Sheet was subject to Econ s acceptance, which was never obtained. Hentze-Dor s position that it had obtained a firm deal with the Lee Brothers is contradicted by an Offer Sheet transmitted by Hentze-Dor to Econ dated February wherein it provides that it had obtained an offer to purchase the Property from Minerva Cleaners for $2 850,000. That Offer Sheet indicates that Hentze-Dor would receive a commission of $ The offer was accepted by Econ. The Court must question why, a month after the offer from the Lee Brothers had purportedly been accepted, would Hentze-Dor would be soliciting and transmitting offers to Econ for a higher purchase price upon which it would earn a lesser commission. Since the buyer and seller did not reach a meeting of the minds as a result of Hentze-Dor s efforts, Hentze- Dor has not earned a commission. See, Central Federal Savings Bank. F. B. v. National Westminster Bank. U. supra. Hentze-Dor asserts that it is entitled to a commission since a broker earns a commission if it brought the parties together even though the broker did not negotiate the final terms of the agreement and was not present at the closing. Sholom &

9 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO, et al. Zuckerbrot Realty Corp. v. Citbank. N. 205 AD.2d 336 (1 Dept. 1994); and Salzano v. Pellillo, 4 AD. 2d 789 (2 Dept. 1957). To earn a commission, the broker must do more than simply advise a potential buyer of the availability of property. Dagar GrouP. Ltd. v. Hannaford Bros. Co., 295 AD.2d 554 (2 Dept. 2002). If the broker does not participate in the negotiations, to earn a commission, the broker must have created the atmosphere or generated the circumstances which led to the sale of the property. Buck v. Cimino, 243 AD.2d 681 (2 Dept. 1997), Iv. den. 91 N. 2d 807 (1998). A broker does not lose its commission when the owner terminates the broker in bad faith or merely as an artifice to avoid paying commissions. Werner v. Katal Country Club, 234 AD.2d 659 (3 Dept. 1996); and Quantum Realty Serivces. Inc. v. ISE America. Inc., 214 AD.2d 420 (1 Dept. 1995). Hentze-Dor s theory of recovery can only be sustained if the Court treats the Lee Brothers as a single entity. Such an approach on this record is implausible. The Lee Brothers and their businesses are, and must be viewed as, separate entities. Hong is the principal of U. S. Hair. Chang is the principal of Beauty Plus Trading, Chris & Johnny and Chris Mark. There is no evidence in the record that would establish that the Lee Brothers had any interest in or authority to act on behalf of each other or their respective, separate business entities. It is undisputed that Hentze- Dor never engaged in any negotiations with or obtained any offers from Chang or any of his business entities.

10 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO et al. All of the offers that Hentze-Dor allegedly received on the Property and all of the negotiations were with Adamo, who is an employee of U.S. Hair. Thus, to the extent that Hentze-Dor received offers from and negotiated with Adamo, those offers were received on behalf of and the negotiations conducted with Hong or U. S. Hair, which did not purchase the Property. There is no evidence in the record that Hong or Adamo advised Chang of the availabiliy of the Property. Nor did Hong or Adamo indicate that any of the negotiations they may have had with Hentze-Dor were on behalf of Chang or his business entities. There is no evidence in the record that Adamo had authority to negotiate, or was negotiating, on behalf of Chang or his businesses. Chang avers that the first time he learned about the Propert was through advertisement that appeared in a Korean language newspaper on January 26, The first time Chang learned that Hong had been shown the Property by Hentze-Dor was at the pre-closing walk through. Since the party with whom Hentze-Dor was conducting negotiations did not purchase the Property, Hentze-Dor did not produce a buyer who was teady, willing and able to purchase the Property. Nor did Hentze-Dor create an atmosphere or generate the circumstances which led to the sale. Thus, it did not earn a commission. See Lanstar International Realty. Inc. v. New York News. Inc. 206 AD.2d 411 (2 Dept. 1994). Hentze-Dor s reliance upon Gronich & Karr. Inc. v. 649 Broadway Equities Co. 169 AD. 2d 600 (1 Dept. 1991) is misplaced. In Gronich Karr, the undisputed facts at trial established that the broker had negotiated the essential terms of the lease. The

11 HENTZE-DOR REAL ESTATE, INC. v. D' ALLESSIO, et al. issue in Gronich Karr was whether the lessee as well as the lessor could be held liable for payment of the broker s commission. In the case at bar, the Court does not need to reach the issue of who is obligated to pay the commission since Hentze- Dor has failed to establish its right to a commission. In order to defeat Defendants' motions for summary judgment, Hentze-Dor was required to establish the existence of material issues of facts. Those facts should establish Hentze-Dor s entitlement to a commission on the sale of the Property. See, Barclay s Bank of New York. N.A. v. Sokol, 128 AD.2d 492 (2 Dept. 1987). While there are disputed facts, even if the disputed facts are resolved in favor of Hentze-Dor, it would not be entitled to a commission. Since the Defendants have established a prima facie entitlement to judgment as a matter of law and Plaintiff has failed to establish the existence of any triable issues of fact, Defendants' motions for summary judgment must be granted. Alvarez v. Prospect Hosp., 68 N. 2d 320(1986); and Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). Accordingly, it is, ORDERED, that the motion of Defendant Alan D'Aliesio for summary judgment dismissing the complaint and all cross-claims against him is granted; and it is further ORDERED, that the cross-motion of Defendants Alan D' Alessio and Econ it is Development Corp. for summary judgment dismissing the complaint is granted; and further,

12 HENTZE-DOR REAL ESTATE, INC. v. D'ALLESSIO, et al. ORDERED that the cross-motion of Defendants Beauty Plus Trading, Inc., U. Hair & Beauty, Inc., Chang Moo Lee, Hong Moo Lee, Chris & Johnny Inc. and Chris Mark Corp. for summary judgment dismissing the complaint is granted; and it is further ORDERED, that the complaint is hereby dismissed. This constitutes the decision and Order of the Co Dated: Mineola, NY September 27, 2005 Hon. LEONAR ENTERED OC f\' NASSA COUNn' Cl: U COUN'T'f ERK' S OFF\C