Adam Leitman Bailey, P.C., prevailed for its client in defense of a broker’s action for a commission, obtaining the broker’s agreement to withdraw its case with prejudice, and without the client being required to pay even a dime.
The seller, a family-owned trust, placed a 12-room, 5000-square foot Park Avenue condominium apartment on the market in 2014 at an asking price over $19 million. Working with two of New York City’s top real estate brokers, the marketing effort continued for more than 12 months and required multiple price drops until the client reached a deal to sell the apartment for a price over $17 million. The problem resulted from the seller’s allowing Broker #1 to show the apartment to a prospective buyer – ultimately, the purchaser – after the client had entered into an exclusive listing agreement with Broker #2. After the seller’s exclusive listing agreement with Broker #2 expired, the purchaser made the winning offer, and at the closing Broker #1 earned a commission of several hundred thousand dollars.
Broker #2 then sued in State Supreme Court, New York County, alleging that it was due a commission of well over $700,000 under its exclusive listing agreement. Broker #2 alleged that the seller had entered into the exclusive listing agreement in bad faith, in furtherance of a negotiation strategy to obtain a higher purchase price from another broker’s client. The claim was weak because Broker #2’s listing agreement had expired before a contract was signed, and Broker #2 admitted that the purchaser was not one of its own prospects. In addition, the buyer was listed on Broker #1’s original list of prospects. No case has perfect facts, however, and this one was no exception. In discovery, the evidence revealed that Broker #1’s efforts to show and market the apartment to the purchaser continued after Broker #1’s exclusive listing agreement had expired and Broker #2’s exclusive listing agreement came into effect.
The breakthrough in the case resulted from our client’s retention of a voicemail, left on a cell phone by the manager of Broker #2, one of the top names in real estate in New York and beyond. In the voicemail, the manager expressed knowledge of the contemplated sale and his consent to the transaction. While the message was not without ambiguity and could be spun in court, the existence and discoverability of the voicemail enabled Adam Leitman Bailey, P.C., to subpoena the manager for a deposition. Adam Leitman Bailey, P.C., knew that the manager of a major real estate brokerage would resist sitting for hours and being pelted with tough questions.
Adam Leitman Bailey, P.C.’s plan worked like a charm. Within days of serving the manager with a subpoena, Broker #2’s attorneys contacted the Firm to say that it was prepared to drop its case against the seller with prejudice and instead pursue its rights directly against Broker #1 in arbitration before the Real Estate Board of New York. No money changed hands – a complete victory for Adam Leitman Bailey, P.C.’s client.
Adam Leitman Bailey and Colin E. Kaufman represented the condominium apartment seller on behalf of Adam Leitman Bailey, P.C.