DOUGLAS ELLIMAN LLC v. 21 45 DRIVE LLC (2014)

Order, Supreme Court, New York County (Debra A. James, J.), entered May 2, 2013, which denied defendants' motion for summary judgment, and declared that pursuant to the agreement between plaintiff and defendant 21–45 44th Drive LLC, defendants are entitled to reimbursement for the subject advances at a rate of 20% of the commissions payable to plaintiff but are not entitled to otherwise withhold commissions due under the agreement, unanimously affirmed, with costs.

The provision of the agreement at issue states, “[A]dvances shall be fully reimbursed by [plaintiff] from the Commissions paid by [defendant] ․ at a rate of twenty percent ․ of [plaintiff]'s portion ․ of each Commission ․ until [defendant] is fully reimbursed.” The motion court properly found that the requirement that defendants be “fully reimbursed” was qualified by the clause “from the Commissions ․ at a rate of twenty percent ․ of [plaintiff]'s portion of each Commission” (see Goldstein v. Frances Emblems, Inc., 269 App.Div. 345, 347 [1st Dept 1945] ). Although 20% of plaintiff's commissions may be insufficient to fully reimburse defendants for the advances made, defendants could have been protected by negotiating a clause addressing what would happen if 20% of plaintiff's commissions was insufficient to fully reimburse defendants (see Rowe v. Great Atl. & Pac. Tea Co., 46 N.Y.2d 62, 72 [1978]; see also Reiss v. Financial Performance Corp., 97 N.Y.2d 195, 199 [2001] ).