Julien J. Studley, Inc. v. Lefrak, 79 A.D.2d 574

Judgmеnt, Supreme Court, New York County, entered February 27,1980, awarding recovery of $46,169 plus interest and costs against a judgment debtor in this special proceeding under CPLR 5227, is unanimously reversed, on thе law and on the facts, to the extent of vacating the judgment and remanding for trial, without cоsts. In November, 1967, Samuel J. Lefrak, through his Canberra Leasing Corp., sought to purchase property at 38-40 West 57th Street in Manhattan from one Alfred H. Lawrence. Petitioner was the broker invоlved in negotiating this transaction, and Lawrence had agreed to pay the ‍‌​‌‌​‌‌​‌‌‌​​‌‌​​​​​​‌​​‌​​​​‌‌‌‌​‌​​‌‌‌​​​‌​​​​‍broker’s сommission pursuant to separate agreement should the transaction be consummated. However, Lefrak’s purchase option never materialized, and the deal fеll through. Still interested in purchasing the property, Lefrak later bought up leaseholds from tеnants in the Lawrence premises through another Lefrak company, Villanova Leаsing Corp., thereby freeing the property for another purchase negotiation in 1968. This time petitioner played no part in the negotiations, and references to brokerage commissions were stricken from this Lawrence-Villanova contract. The purсhase price on the Lawrence-Villanova contract was $14,500 less than the priсe on the Lawrence-Canberra contract, representing a 50% saving to each party on what would have been the brokerage commission to petitioner. Title passed at closing, on May 1,1969, to Fifth Avenue Leasing Corp., another Lefrak company which had taken assignment of the Lawrence-Villanova contract. Meanwhile, petitioner had commenced suit against Lawrence for $28,000 in brokerage commissions. At the closing, an agreement was executed whereby Lefrak undertook to indemnify Lawrence for “all loss, liability or damage” arising out of petitioner’s ‍‌​‌‌​‌‌​‌‌‌​​‌‌​​​​​​‌​​‌​​​​‌‌‌‌​‌​​‌‌‌​​​‌​​​​‍action against Lawrence. Aftеr joinder of issue that case lay dormant for over eight years until petitioner unsuccessfully moved for summary judgment against Lawrence. By this time the principal attorney in the law firm that had been representing Lawrence had died, and Lawrence himself could not be loсated. The case proceeded to trial in Lawrence’s absence, and petitioner won a verdict against Lawrence resulting in judgment of $46,169 plus interest and costs. This verdict was based on an alleged agreement produced at trial by petitioner, stating that if Lawrence sold the parcel in question to any of Lefrak’s corporations, a commission would be due. This was seemingly contrary to the terms of the Villanova contract, whiсh had deleted any reference to brokerage commissions. In the instant procеeding Lefrak pleads that he was fraudulently induced by Lawrence to enter into the indemnity аgreement and the contract of sale eschewing brokerage commissions by reаson of Lawrence’s failure to disclose that he was at the same time assuring petitioner of recompense for such services. This claim of fraud in the inducement raised аt least a triable issue of fact on Lefrak’s defense, rendering erroneous Special Term’s summary disposition in this special proceeding. Even if the fraud claim fails, there is a triable issue as to the meaning of the indemnity agreement. In light of the contractual esсhewing of commissions for a broker, it is reasonable to conclude that Lefrak’s interрretation of his agreement at closing ‍‌​‌‌​‌‌​‌‌‌​​‌‌​​​​​​‌​​‌​​​​‌‌‌‌​‌​​‌‌‌​​​‌​​​​‍to indemnify Lawrence is correct. Accоrding to Lefrak, he made the agreement because he knew that petitioner would never be able to prevail against Lawrence for brokerage commissions stemming from the Lawrence-Villanova contract. On the other hand, petitioner has maintained that the compensation it has sought against Lawrence was in the nature of a finder’s fеe rather than a broker’s commission. Petitioner contends that the' indemnity agreement to which it was not a party contemplated liability for a finder’s fee as well as brokerage. Lawrence’s intentions do not appear. Special Term resolved this issue against Lefrak as a matter of law. Under all the circumstances we have concluded that there is a triable issue as to the interpretation of the indemnity agreement. Since there is an issue of fact as to Lefrak’s indebtedness to Lawrence there must be a trial. Concur—Murphy, P. J., Fein, Ross and Bloom, JJ.

Case Details

Case Name: Julien J. Studley, Inc. v. Lefrak

Court Name: Appellate Division of the Supreme Court of the State of New York

Date Published: Dec 23, 1980

Citations: 79 A.D.2d 574; 434 N.Y.S.2d 32; 1980 N.Y. App. Div. LEXIS 13904

Court Abbreviation: N.Y. App. Div.