Azad Property Group, LLC v. Willspring LLC, Supreme Court, New York County, Index No. 656626/2013
Commercial Division Justice Marcy Freidman has allowed a broker’s claim for breach of an implied-in-fact contract to pay a commission to survive a motion to dismiss. In this case, the plaintiff alleged that although it did not have a written agreement with the owner, it produced a buyer, Vornado Realty Trust, that accepted all of the material terms that the owner claimed were necessary for it to agree to a sale. The plaintiff broker alleged that after Vornado accepted the owner’s terms, but before a contract was signed, the owner received a better offer that it ultimately accepted.
While agreement on price alone does not constitute a meeting of the minds, where the prospective purchaser agrees to all the essential terms set forth by the seller, the seller’s obligation to pay a commission will not be excused because the seller chooses not to proceed in finalizing the contract.
Justice Friedman wrote that “While agreement on price alone does not constitute a meeting of the minds, where the prospective purchaser agrees to all the essential terms set forth by the seller, the seller’s obligation to pay a commission will not be excused because the seller chooses not to proceed in finalizing the contract.” Justice Freidman further ruled that the complaint adequately alleged that the owner “availed itself of the plaintiff’s services to procure a prospective purchaser, knowing [the broker] expected payment for acting on the seller’s behalf to extract concessions [from the prospective purchaser] on price and mortgage defeasance terms.” Accordingly, Justice Freidman ruled that the plaintiff-broker stated a cause of action for breach of an implied in fact contract.
The lesson of Azad Property Group is that a signature and a completed deal are not necessary elements to a broker’s claim for a commission. Rather what is essential is that a broker set forth evidence that it produced a prospective buyer that is ready, willing, and able to close on the seller’s clearly articulated essential terms.