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Saunders Ventures Inc. v. Morrow

Supreme Court, Suffolk County

February 21, 2018

Saunders Ventures Inc. d/b/a SAUNDERS AND ASSOCIATES, Plaintiff,

          ANTHONY T. CONFORTI, ESQ. Attorney for Plaintiff.

          LIEB AT LAW Attorneys for Defendants By: Dennis Valet, Esq.

          JAMES HUDSON, J.

         The matter sub judice is an action sounding in breach of contract arising from a dispute over claimed commissions between two real estate agencies. To resolve the competing positions of the Plaintiff Saunders Ventures Inc. (hereinafter referred to as Saunders) and the Defendant B & H Associates of NY, LLC d/b/a Prudential Douglas Elliman Real Estate (hereinafter referred to as B & H/Douglas Elliman) on questions of law and fact, the parties submitted to a non-jury trial before the Court.

         Prior to the receipt of testimony, the parties stipulated to the following: (1) that both the Plaintiff and Defendant are licensed real estate brokers; and (2) the contract for sale of the real property that is the basis of this dispute and the co-brokerage agreement signed by the parties was entered into evidence.

         Initially, the Court would be remiss if it did not commend Counsel, Messrs. Conforti and Valet, for the able manner in which they represented their clients at trial and the scholarship in their respective post trial briefs. Such advocates honor the profession of law.

         Plaintiff called Daniel Casey Shedrick as its first witness. Mr. Shedrick is the managing partner of "And So It Goes, LLC., " the entity that purchased 98 Day Lily Lane, Bridgehampton, NY ("the property"). Mr. Shedrick testified as to his professional relationship with Ms. Brennan-Hagen, an officer at Saunders, and the circumstances surrounding the purchase of the locus in quo. He explained that he asked Ms. Brennan-Hagen to find information on the property including the comps, covenants, and restrictions so that he could better evaluate the overall value of the property. He also noted on multiple occasions that his business protocol is to deal principal to principal. In this matter however, he could not do so because the principals were unavailable. Instead, he dealt with their attorney, Mr. Tom Osborne.

         Mr. Shedrick also discussed the Residential Contract for Sale (Plaintiff's Exhibit 1). The Contract (as originally drafted) only had Prudential Douglas Elliman inserted as the Seller's agent at paragraph 27. Mr. Shedrick, after a discussion with his attorney Wayne Bruyn, added Saunders and Associates to the paragraph. After adding Saunders, Mr. Shedrick signed the Contract and tendered a down payment. He also testified that he had conversations with Melissa Osborne and Jeanine Edington about Ms. Brennan-Hagen's compensation. According to Mr. Shedrick, the closing date was originally set for July 31st, 2011. The failure to go forward on that date was because no one provided a compensation provision for Ms. Brennan-Hagen. The closing eventually did occur on August 4th, 2011, but Mr. Shedrick did not believe that Saunders was compensated for the closing. Most importantly, Mr. Shedrick added that if not for Ms. Brennan-Hagen's services, he would not have purchased the property.

         On cross-examination, Mr. Shedrick testified that he had not conducted due diligence on the property himself and could not get the due diligence from B & H. Mr. Shedrick next noted that he tried to obtain information from the Defendant in 2011, when he was first interested in acquiring the property. B & H, however, was unable to define what the covenants, restrictions, and the closing costs were. Mr. Shedrick understood that B & H represented the Sellers but stated that he did not understand that Ms. Brennan Hagen represented the interests of the Sellers. In an affidavit prepared prior to trial, however, Mr. Shedrick averred that Ms. Brennan-Hagen actively represented the interest of the Sellers. Mr. Shedrick further testified that he expected Ms. Brennan-Hagen to earn her commission from the Seller. He also indicated that he never negotiated a commission in any of his property acquisitions. Moreover, Mr. Shedrick did not ask Ms. Brennan-Hagen to negotiate on his behalf, reiterating his practice of negotiating principal to principal. He testified, however, that he inserted Saunders into the contract because there was a written agreement between himself and Jeanine Edington, the Douglas Elliman representative, to split the commission.

         Dawn Brennan-Hagen also testified for the Plaintiff. Ms. Brennan-Hagen testified that she had a professional relationship with Mr. Shedrick for twenty-one years and corroborated his method of dealing directly with owners or listing brokers. In regards to the property, she testified that Mr. Shedrick discussed the property with her in the Spring of 2011. Ms. Brennan-Hagen explained that she dealt with Ms. Edington of B & H who was only able to provide her with limited information. This obliged Ms. Brennan-Hagen to gather more information on her own to determine the property's value. To achieve this, she testified that she performed investigations as to the surrounding properties for Mr. Shedrick and notified him of certain restrictions and surrounding property values.

         Regarding her discussions with Mr. Shedrick, Ms. Brennan-Hagen testified that she provided him with a legally required disclosure and told him that Saunders was a seller's agent. She also discussed compensation with Mr. Shedrick and told him that she would be compensated through the Seller even though it was exclusive with Elliman. The rationale for this statement was the status of the proposed sale being a "co-broke." In an e-mail to Melissa Osborne, Jeanine Edington, and Wayne Bruyn, Mr. Shedrick told Ms. Brennan-Hagen that he executed a contract to sign the property. She agreed to split half of the selling agent's commission with Melissa Osborne, from which Ms. Brennan-Hagen expected to make $54, 000.00. She made this clear to some people at B & H and sent a commission statement to Mr. Osborne.

         At the first attempted closing on July 31st, 2011, Ms. Brennan-Hagen testified that she sensed a problem after Mr. Osborne handed her the commission checks. Ms. Brennan-Hagen realized that both checks were made to Douglas Elliman, and none to Saunders. She attempted to contact the involved parties, but was ultimately unsuccessful, leading to calling off the closing. At the second closing, Mr. Osborne did not accept Ms. Brennan-Hagen's commission statement and ultimately completing the closing without any payment to Saunders.

         On cross-examination, Mr. Valet initially inquired about the qualifications of a real estate sales person and responsibilities of representing a seller. Ms. Brennan-Hagen testified that it revolved around acting in the seller's interest and providing and gathering any information needed to make a transaction on the seller's behalf. Ms. Brennan-Hagen testified that she never negotiated how the property would be paid for or the quality of the title, and she did not negotiate with Mr. Shedrick. Instead, she only gave him information pertaining to property values. She testified that she was not involved in the negotiation for the final price. Mr. Bruyn and Mr. Osborne negotiated those details.

         With respect to splitting the commission, Ms. Brennan-Hagen expressed frustration with having to split it with Melissa Osborne, who was also a selling agent. Ms. Brennan-Hagen only decided to do so because Mr. Shedrick requested that she split the commission with Ms. Osborne. Ms. Brennan-Hagen then testified that Douglas Elliman was supposed to split the commission with the "co-broke" agency, meaning the payment structure was between the two agencies. She concluded her testimony by noting that she would be entitled to the commission upon the transfer of Title.

         The Defendant called Jeanine Edington on its behalf. Ms. Edington is involved in real estate sales at Douglas Elliman and entered into a listing agreement with the owners of the property. Ms. Edington recalled that Mr. Shedrick contacted her to express interest in the property. Ms. Edington also testified that Ms. Brennan-Hagen contacted her to obtain information about the property the same day Mr. Shedrick contacted her expressing his interest. Ms. Edington provided Ms. Brennan-Hagen with the listing, surveys, and restrictions but did not engage in negotiations with her and was surprised by Saunders' claim for a commission. Finally, Ms. Edington noted that she knew Melissa Osborne from her employment at Douglas Elliman and that she did not object to Ms. Osborne's submission of an invoice for commission because Ms. Osborne registered Mr. Shedrick as a client at the time.

         Upon cross examination, Ms. Edington testified that the first time she heard Saunders' claim for a commission was immediately before the closing. Ms. Edington believed Plaintiff did not share in the commission because of a dispute, but noted that B & H received its remuneration while the rest was held up.

         After the conclusion of Ms. Edington's testimony, Mr. Conforti called Ms. Brennan-Hagen as a rebuttal witness. She testified that she provided Mr. Shedrick with Ms. Edington's contact information after speaking with Edington. In that conversation, Ms. Brennan-Hagen testified that she indicated Mr. Shedrick was interested in the property and wanted to contact Ms. Edington directly. Ms. Brennan-Hagen thought she understood that she was expecting compensation by asking Ms. Edington for the Orex information and that Orex works on a "co-broke". She thought it was something that did not need to be discussed. This concluded Ms. Brennan-Hagen's testimony.

         In a non-jury trial, it falls to the Court to determine the veracity of the proof. We begin with a review of the testimony. This is a sobering responsibility in that, traditionally, determination of the credibility of witnesses is viewed as the province of the Trial Judge (Morales v. Inzerra, 98 A.D.3d 484, 485, 949 N.Y.S.2d 433, 436 [2nd Dept. 2012]; Tornheim v. Blue & White Food Prod. Corp., 88 A.D.3d 867, 868, 931 N.Y.S.2d 340, 341[2nd Dept. 2011]).

         The Court's powers of discernment are presumed but must be exercised with caution, not conceit. As the Bard observed: "There's no art to find the mind's construction in the face." [1] Justice Ralph Gazzillo best summed up this aspect of the non-jury trial when he stated:

"As to the quality of any given witness, the flavor of the testimony, its quirks, the witness' bearing, mannerisms, tone and overall deportment cannot be fully captured by the cold record; the fact-finder, of course, enjoys a unique perspective for all of this, and the ability to absorb any such subtleties and nuances" (J & K Parris Const., Inc. v. Roe Ave., Assoc., Ltd., 47 Misc.3d 1227 [A], 18 N.Y.S.3d 579');">18 N.Y.S.3d 579 [NY Sup. Ct. 2015]).

         After reviewing all the testimony and observing the demeanor of the witnesses, the Court finds Mr. Daniel Shedrick and Ms. Hagen-Brennan to be more credible than ...

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