January 28, 2018
In November 2017, lawyers from Adam Leitman Bailey, P.C. (ALBPC) secured a $1.2 million judgment on behalf of a real estate brokerage firm that was defrauded of its commission by commercial property buyers in a scheme dating back nearly a decade.
ALBPC’s Real Estate Litigation Practice Group Partner and Chair John M. Desiderio and a Litigation Group trial lawyer represented the plaintiff, which was marketing a large commercial building in midtown Manhattan in 2009. The plaintiff had been hired by a hotelier whose first offer was rejected by the seller. Confidential information had been relayed to the first buyer, who seemed uninterested following the rejection.
Later in 2009, a second potential buyer entered into a confidentiality agreement with the plaintiff and was shown the property via a binding contract requiring the second buyer to pay the plaintiff $750,000 upon the purchase of the property. Unbeknownst to the plaintiff, the second buyer conspired with his girlfriend to create an entirely new company in her name (not a party to the contract for the $750,000 commission), so that he could submit offers on her behalf and avoid paying the brokerage commission. The second potential buyer claimed that it would be the developer on this “new” deal, not the purchaser.
Months later, the first potential buyer later entered into a partnership with the second buyer whereby they paid a brokerage commission that was $550,000 less than what was owed to ALBPC’s client under the terms of the confidentiality agreement. Upon learning this, ALBPC commenced a lawsuit against both sets of buyers asking for $750,000 in damages plus interest.
Despite years of drama, delays and the defendants’ attempts at dragging the case out, a judge ruled that the plaintiff was entitled to $750,000, plus interest from the date of the closing. The total amount was $1,235,651 – seven times what was originally offered by the defendants to settle. After the defendants’ last-ditch effort to appeal from the two prior orders, the Appellate Division First Department agreed with ALBPC’s motion and dismissed the appeals. Instead of facing the sale of this now very successful hotel, the defendants paid the amount of the judgment almost immediately.