GEORGIA MALONE COMPANY INC v. ASSOCIATES (2022)

Order, Supreme Court, New York County (Kelly O'Neill Levy, J.), entered on or about October 4, 2021, which, insofar as appealed from, denied plaintiff's motion for summary judgment dismissing defendants’ first, second, and third counterclaims, and thirteenth affirmative defense, and directed that plaintiff is judicially estopped from raising certain arguments about the relevant agreements and transaction, and denied defendants’ motion for partial summary judgment on their first, second, and third counterclaims, and for sanctions, unanimously modified, on the law, to grant dismissal of the third counterclaim, for fraud upon the court, and otherwise affirmed, without costs.

Nonparty Baruch Singer, owner of 87 buildings in Upper Manhattan, who was facing foreclosure on those properties upon the maturation of certain senior mortgages, engaged plaintiff Malone, pursuant to a series of agreements entered into May 2013, to broker a termination/unwind of a purchase option held by one of Singer's lenders.  On November 14, 2013, the unwind transaction was completed following, and as a result of, the closing of a sale of the properties to defendant real estate syndicate, and, in connection with that, Singer paid plaintiff a $2.45 million broker's commission.

In this action, plaintiff Malone, who in August 2012 entered into an agreement with defendant E & M Associates pursuant to which E & M would pay a broker's commission in connection with its purchase of the Singer properties, seeks to collect a commission in the amount of $3.5 million.  Defendants have asserted a first counterclaim alleging that the $2.45 million commission Singer paid plaintiff constituted, in part, a broker's commission for Malone's brokerage work on behalf of Singer in selling the properties, and by acting as a dual agent representing both defendants as buyers and Singer as seller in connection with the sale of the properties, Malone breached its fiduciary duty to defendants and forfeited its right to be paid the commission the buyers had agreed to pay.  Defendants’ second counterclaim alleged that plaintiff fraudulently induced defendants to enter into the E & M commission agreement by failing to disclose that it was working as broker for the owner on the sale of the properties.  Furthermore, defendants’ third counterclaim, for fraud upon the court, alleged that contrary to statements Malone's principal made in a separate action (Galanter v. Georgia Malone, et al., Index No 650734/2014), the $2.45 million commission Singer paid plaintiff was exclusively for its work negotiating the unwind transaction and not based in any part on work performed as Singer's broker on the sale of the properties, which Malone denies performing.

Plaintiff argues it is entitled to summary judgment dismissing the counterclaims because the plain language of the relevant agreements, as confirmed by the record evidence, establishes that plaintiff was paid a commission by Singer for work negotiating the unwind transaction and that it did not act as Singer's broker on the related sale of the properties and was not paid any commission as such.  Defendants argue that the agreements are ambiguous and that the record, including the relevant statements previously made by Malone that she is judicially estopped from contradicting, establishes, as a matter of law, that she acted as Singer's broker and was paid a commission as such.  We find that even if plaintiff is judicially estopped from contradicting Malone's prior statement that the unwind and the sale were a single transaction, her prior statements, including that one, did not, in fact, constitute a clear admission that the commission paid by Singer was based, in any part, on work plaintiff performed as his broker on the sale of the properties.  Unresolved issues of fact exist with respect to whether plaintiff, in connection with the property sale that allowed for the completion of the unwind transaction, was ever retained by Singer to act, or otherwise performed actions that resulted in acting, as broker on the sale, and as to whether the commission paid to plaintiff by Singer was paid exclusively for plaintiff's work in negotiating the unwind agreements and not based on any brokerage work performed in connection with the related sale.

Accordingly, the court properly declined to dismiss or grant summary judgment on the first and second counterclaims, and its judicial estoppel ruling does not preclude plaintiff from arguing that the commission agreement with Singer and the commission paid by Singer was specific to plaintiff's negotiating the unwind agreements and transactions, and not based on any brokerage work performed in connection with the sale that completed the unwind.  However, defendants’ third counterclaim, for fraud upon the court, should have been dismissed, as the statements made by plaintiff in this action that defendants allege are in complete contradiction with sworn testimony in the Galanter action are not perjurious, intentionally false, or completely contradictory, and do not provide a prima facie basis for this counterclaim (see CDR Creances S.A.S. v. Cohen, 23 N.Y.3d 307, 991 N.Y.S.2d 519, 15 N.E.3d 274 [2014]).

We have considered the remaining contentions and find them unavailing.