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NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
-----------------------------------------X
PAMELA GOLDSTEIN,
ELLYN & TONY BERK, MEMORANDUM OF LAW
and PAUL BENJAMIN, on behalf of themselves
and allothers similarly situated, Index No. 60767/2018
Plaintiffs, Hon. Linda S. Jamieson
-against-
HOULIHAN/LAWRENCE INC.,
Defendant.
-- ----- ----------------------------------X
MEMORANDUM OF LAW IN SUPPORT OF
DEFENDANT'S MOTION TO DISMI_SS
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TABLE OF CONTENTS
PRELIMINARY STATEMENT....................................................................................................
1
ALLEGED FACTS.........................................................................................................................
2
ARGUMENT..................................................................................................................................
7
I.
THE BURDEN OF PROOF .......................................................................................................
7
II.
Plaintiffs'
A. Breach of Fiduciary Duty Claim Should Be Dismissed Because
Plaintiffs Consented to Houlihan Lawrence's Dual Agency with Designated Sales
8
Agents.....................................................................................................................
1. Goldstein's Advance Consent Reflected Her Consent to Dual Agency with
Designated Sales Agents, and Goldstein Had Actual Knowledge that
Houlihan Lawrence Agents Represented Both the Buyer and the Seller. ..8
2. The Berks Executed Both an Advance Consent and a Subsequent Form
Consenting to Dual Agency with Designated Sales Agents.....................
12
3. Paul Benjamin Consented to Houlihan Lawrence's Role in the Transaction
by Executing the Statutory Disclosure Form............................................
13
Plaintiffs'
B. Second Cause of Action, Alleging Violation of Section 443, Should Be
Dismissed Because Section 443 Cannot Be Enforced Through Private Rights of
Action....................................................................................................................
14
Plaintiffs'
C. Third Cause of Action Fails Because They Have Not Alleged
Deceptive Acts That Caused Them Injury............................................................
16
Plaintiffs' - -
D. Fourth Cause of Action Unjust Enrichment Fails Because (1) the
Buyer Plaintiffs Did Not Confer Any Benefit On Houlihan Lawrence and, (2) the
Seller Plaintiffs Executed Contracts Concerning the Same Subject.....................
19
Plaintiffs'
1. The Buyer Unjust Enrichment Claims Fail Because They Did
Not Confer a Benefit on Houlihan Lawrence...........................................
20
2. The Seller Plaintiffs Cannot Recover in Unjust Enrichment Because They
Executed a Contract on the Same Subject. 22
...............................................
E. The Berks Lack Standing to Assert Claims in Their Individual Capacity............ 22
23
CONCLUSION.............................................................................................................................
i
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TABLE OF AUTHORITIES
Cases Page(s)
1455 Washington Ave. Assocs. v. Rose & Kiernan Inc.,
260 A.D.2d 770, 687 N.Y.S.2d 791 (3d Dep't 1999)................................................................7
2 Park Ave. Assocs. v. Cross & Brown Co.,
36 N.Y.2d 286 15
(1975)........................................................................................................14,
Abdale v. N. Shore Long Island Jewish Health Sys., Inc.,
49 Misc. 3d 1027, 19 N.Y.S.3d 850 (N.Y. Sup. Ct. 2015)......................................................16
Canario v. Gunn,
300 A.D.2d 332, 751 N.Y.S.2d 310 (2d Dep't 2002)..............................................................17
Cives Corp. v. George A. Fuller Co., Inc.,
97 A.D.3d 713, 948 N.Y.S.2d 658 (2d Dep't 2012)..................................................................7
Gaidon v. Guardian Life Ins. Co. of Am.,
96 N.Y.2d 201, 750 N.E.2d 1078 (2001).................................................................................19
Goldman v. Simon Prop. Grp. Inc.,
58 A.D.3d 208, 869 N.Y.S.2d 125 (2d Dep't 2008)................................................................15
Guggenheimer v. Ginzburg,
43 N.Y.2d 268, 372 N.E.2d 17 (1977).......................................................................................7
Hammer v. Am. Kennel Club,
1 N.Y.3d 294, 771 N.Y.S.2d 493 14
(2003)...........................................................................13,
Hodgins v. Zabel,
7 Misc.2d 484, 166 N.Y.S.2d 135 (N.Y. Sup. Ct. 1957).........................................................23
JP Morgan Chase Bank v. Orleans,
No. 650006/2004, 2007 WL 6882391 (N.Y. Sup. Ct. 2007)...................................................22
Lebovits v. Bassman,
120 A.D.3d 1198, 992 N.Y.S.2d 316 (2d Dep't 2014)............................................................21
Mayer v. Sanders,
264 A.D.2d 827, 695 N.Y.S.2d 593 (2d Dep't 1999)................................................................7
Mazzaro de Abreu v. Bank of Am. Corp.,
525 F. Supp. 2d 381 (S.D.N.Y. 22
2007)..........................................................................20,
21,
Meyer v. Guinta,
262 A.D.2d 463, 692 N.Y.S.2d 159 (2d Dep't 1999)................................................................8
ii
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Norcast S.ar.l. v. Castle Harlan, Inc.,
147 A.D.3d 666, 48 N.Y.S.3d 95 (1st Dep't 21
2017)...........................................................20,
People v. Kupprat,
6 N.Y.2d 88, 160 N.E.2d 38 (1959).........................................................................................10
Philips Int'l Invs., LLC v. Pektor,
117 A.D.3d 1, 982 N.Y.S.2d 98 (1st Dep't 2014)...................................................................20
Rabos v. R & R Bagels & Bakery, Inc.,
100 A.D.3d 849, 955 N.Y.S.2d 109 (2d Dep't 2012)................................................................7
Rallis v. Brannigan,
No. 6738-03, 2008 WL 227009 (N.Y. Sup. Ct. 2008).............................................................15
Sambrotto v. Bond New York Props. Brokerage, LLC,
No. 109889/2011, 2013 WL 685223 (N.Y. Sup. Ct. 2013).....................................................15
Sheehy v. New Century Mortg. Corp.,
690 F. Supp. 2d 51 (E.D.N.Y. 2010).......................................................................................17
Silverman v. Household Fin. Realty Corp. of New York,
979 F. Supp. 2d 313 (E.D.N.Y. 19
2013)...............................................................................17,
Estate of Sonnelitter v. Estate of White,
115 A.D.3d 1160, 983 N.Y.S.2d 149 (4th Dep't 2014)...........................................................22
Stallsworth v. Stallsworth,
138 A.D.3d 1102, 30 N.Y.S.3d 661 (2d Dep't 23
2016)........................................................22,
Steiner v. Lazzaro & Gregory, P.C.,
271 A.D.2d 596, 706 N.Y.S.2d 157 (2d Dep't 2000)................................................................8
Teller v. Bill Hayes, Ltd.,
213 A.D.2d 141, 630 N.Y.S.2d 769 (2d Dep't 18, 19
1995)..................................................17,
Waverly Props., LLC v.KMG Waverly, LLC,
824 F. Supp. 2d 547 (S.D.N.Y. 2011)......................................................................................18
WFB Telecomms., Inc. v. NYNEX Corp.,
188 A.D.2d 257, 590 N.Y.S.2d 460 (1st Dep't 1992)...............................................................7
Yellow Book Sales and Distribution Co., Inc. v. Hillside Van Lines, Inc.,
98 A.D.3d 663, 950 N.Y.S.2d 151 (2d Dep't 2012)................................................................17
Statutes
General Business Law § 19
349..........................................................................................6,
16, 17,
iii
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PRELIMINARY STATEMENT
The unambiguous documents from each Plaintiff's transaction show they each consented
Plaintiffs'
to Houlihan Lawrence's dual agency with designated sales agents, contrary to breach
of fiduciary duty claim. According to the New York legislature, a customer's advance written
consent to a broker's dual agency with designated sales agents affirmatively establishes that
consent.1
Here, all four named Plaintiffs executed and returned the statutory disclosure form,
to Houlihan Lawrence's dual with designated sales agents -
consenting agency i.e.,they
consented to Houlihan Lawrence agents representing both the seller and the buyer in their
ultimate real estate transactions - thus their breach of claims based on
precluding fiduciary duty
the absence of such consent as a matter of law, just as the New York legislature contemplated.
Plaintiffs' - -
second cause of action alleging violation of Section 443 should be
dismissed for the additional, independent reason that Section 443 does not provide a private right
of action for its enforcement and in relation to the the cause of action is time-
because, Berks,
barred.
Plaintiffs' act"
third cause of action fails because Plaintiffs have not pleaded a "deceptive
that injured them and because the real estate transactions described in their Complaint are not
"consumer-oriented."
It isalso time-barred as to the Berks.
Plaintiffs'
unjust enrichment claim, the fourth cause of action of their Complaint, should
also be dismissed. The buyer Plaintiffs did not pay the commission they seek to recoup and thus
did not confer a benefit on Houlihan Lawrence. seek a windfall - to recover
they Rather, they
1
Advance written consent is sufficient proof of the customer's consent, but it is not the only
potential proof. That consent could have been communicated orally. Or, the customer may not
have communicated anything but knew all relevant facts and consented to a dual agency
transaction. The fact of customer consent is case and individual specific. That is one reason
Plaintiffs'
why breach of fiduciary claim cannot be maintained on a class basis. Common proof
of consent is impossible and requires individual inquiries and individual trials.
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commissions others paid to Houlihan Lawrence. That fact is fatal to their claim. The seller
Plaintiffs signed a contract covering the same subject matter as their unjust enrichment claim,
which bars their cause of action as a matter of law.
In addition to the foregoing arguments, which apply to each of the named Plaintiffs, the
Berks'
claims separately fail under CPLR § 3211(a)(3) because they do not have standing to
bring suit in their individual capacity.
Plaintiffs'
For each reason, Complaint should be dismissed with prejudice.
FACTS2
ALLEGED
L Buyer Plaintiff #1: Pamela Goldstein.
On March 23, 2017, a home located at 6 Wellington Terrace, White Plains, New York
("6 Wellington Terrace") went on the market. See Philip Halpern Aff., Ex. A, Compl. ¶ 239.
Gino Bello, with Houlihan Lawrence, was the listing agent. Id. ¶ 241.
On March 25, Goldstein called Bello and left a message expressing interest in the 6
Wellington Terrace property. Id. Later that morning, Daniel Cezimbra, a different Houlihan
Lawrence agent from Bello's office, called Goldstein in response to her voice message. Id. ¶
242. Cezimbra told Goldstein that he worked with Bello, the listing agent. Id. Goldstein
reiterated her interest in 6 Wellington Terrace and asked Cezimbra if she could "see itas soon as
possible."
Id. ¶ 243.
Houlihan Lawrence recites the facts alleged in the Complaint as if true for purposes of this
Motion only and reserves all rights to contest the Complaint's allegations. Because this Motion
Plaintiffs'
is directed at the allegations in Complaint, it does not address certification issues,
including that absent putative class members signed arbitration agreements that preclude their
participation in the alleged class. Houlihan Lawrence is separately negotiating a stipulation on
Plaintiffs'
that issue with counsel. Houlihan Lawrence reserves all rights to raise arguments
concerning arbitration, class certification and the purported claims of the putative class, which
are not yet properly before the Court, at a later time.
2
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On March 26, Goldstein viewed 6 Wellington Terrace with Cezimbra. Id. ¶ 244. That
evening, around 8 p.m., Goldstein advised Cezimbra that "she was prepared to make an offer to
Terrace."
purchase 6 Wellington Id. ¶ 245. The following day, Cezimbra forwarded Goldstein
offers"
an e-mail from Bello explaining that the seller had received "multiple to purchase 6
Wellington Terrace and "would be going to highest and best Wednesday, March 29th no later
5PM."
than Id. ¶ 246. Cezimbra's email to Goldstein identified Cezimbra as from Houlihan
Lawrence. Id, Ex. 106. The forwarded email from Bello identified Bello as from Houlihan
Lawrence and the listing agent. Id.
At 4:20 p.m. on March 29, Goldstein emailed Cezimbra her decision to offer to purchase
6 Wellington Terrace for $635,000, with a 25% down payment, "contingent on an inspection and
financing."
Id. at 247. Cezimbra acknowledged receipt and confirmed he would present her
offer to the seller. Id. Cezimbra's email again identified him as an agent with Houlihan
Lawrence. Id, Ex. 107.
Shortly thereafter, on March 29, Nicole Corrado from Bello's team provided Goldstein
with, among other things, the disclosure form required by Section 443. Id., Ex. 108. The cover
page to the provided disclosure documents identified Corrado as "Executive Assistant to The
Team" Homes."
Gino Bello Homes Sales and included a logo for "Gino Bello Id.
The statutory disclosure form that Goldstein received identified Cezimbra as affiliated
agent."
with Houlihan Lawrence and indicated that he was representing Goldstein as "Buyer's
Id. The disclosure form also requested Goldstein's advance informed consent to Houlihan
Lawrence's dual agency with designated sales agents. Id
Goldstein executed and faxed the Section 443 disclosure form back to Bello's office on
March 29, which included her consent to Houlihan Lawrence's dual agency with designated
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sales agents. Id, Ex. 112. Corrado filled in Bello's and Cezimbra's names on the executed form
to reflect their designations as buyer and seller representatives, respectively. Id ¶ 250.
Due to competition for 6 Wellington Terrace, Goldstein "authorized Cezimbra to make
behalf[.]"
an improved offer on her Id. ¶ 253. On March 30, 2017, Cezimbra informed
Goldstein by email that "[t]he sellers on 6 Wellington Terrace have accepted our offer of
down!"
$637,000 with 30% Id, Ex. 107. That email again identified Cezimbra as from
Houlihan Lawrence. Id
258.3
On May 22, 2017, Goldstein closed on her purchase of 6 Wellington Terrace. Id ¶
The Purchase Agreement Goldstein executed identified both Bello and Cezimbra as affiliated
with Houlihan Lawrence. See Nicole Corrado Aff. ¶ 5, Ex. 2. The sellers, not Goldstein, paid
Houlihan Lawrence's commission. See id. ¶ 6, Ex. 3 ¶ 3.
Goldstein contends that Cezimbra did not inform her that Houlihan Lawrence agents
represented both her and the seller and did not obtain her consent to that fact or explain to her the
rights, limitations, obligations or consequences of Houlihan Lawrence agents representing both
the seller and the buyer in her transaction. Halpern Aff., Ex. A, Compl. ¶¶ 275-76.
IL Seller Plaintiffs: Tony and Ellyn Berk.
Tony and Ellyn Berk's parents owned 190 Davis Avenue in the Highlands area of White
Berks'
Plains. Id. ¶ 283. In September 2013, the mother passed away. Id The property at 190
Davis Avenue became part of her estate. Id ¶ 285. Tony and Ellyn (collectively, the "Berks"),
in their role as administrators of Winifred's estate, listed the property with Gino Bello at
Houlihan Lawrence. Id
3
Plaintiffs did not include Goldstein's executed Purchase Agreement in the Complaint's 143
exhibits, despite its centrality to Goldstein's claims.
4
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The estate's undated listing agreement provided for a $469,900 sale price and that Bello
was to submit the listing "to the Hudson Gateway Multiple Listing Service, Inc. ('HGMLS'), for
Participants."
dissemination to its Id ¶ 285, Ex. 116. The estate was to pay a 5% commission
with 2% offered to the buyer's agent. Id In the two-page listing agreement, the estate consented
in advance to Houlihan Lawrence's dual agency. Id In addition to the Exclusive Right to Sell
agreement, the Berks signed the New York statutory disclosure form, evidencing their advance
consent to Houlihan Lawrence's dual agency and dual agency with designated sales agents. Id. ¶
302; Geoff Berry Aff., ¶ 5, Ex. C.
Bello allegedly marketed the property only through his personal network. Halpern Aff.,
Ex. A, Compl. ¶ 287. Through that marketing, he secured two buyers for the property. Id ¶¶
financing."
288-89. The first buyer was "unable to obtain Id ¶ 288. Bello then found a second
buyer at $479,000 - $10,000 more than the price. Id Ellyn claims to have "asked Bello
listing
if they should put the house on the MLS to see what others would be willing to pay, given that
around."
Bello had found someone willing to pay at or above the listing price just by asking Id
Berks'
Bello purportedly said that itwould be "in the best interests to sell without testing the
market."
Id
On June 30, 2014, the estate sold the property to a buyer represented by David Calabrese,
another Houlihan Lawrence agent. Id ¶ 289. The Berks executed a second New York statutory
disclosure form reflecting the fact that the transaction involved dual agency with designated sales
agents, with Gino Bello appointed to represent the sellers and David Calabrese appointed to
represent the buyers. Berry Aff., ¶ 6, Ex. D.
The Complaint alleges that Bello priced the listing well below other three bedroom
homes he had recently sold in the same area, and that Zillow now (over four years later)
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$614,341.4
estimates the market value at Houlihan Lawrence earned a 5% sales commission for
190 Davis Avenue, as stated in the listing contract, which the Berks paid. Halpern Aff., Ex. A,
Compl. 1307.
HL Buyer Plaintiff #2: Paul Benjamin.
In March 2016, Paul Benjamin alleges that he was looking for a home in or around
Bedford, New York. Id. ¶ 310. He contacted Brian Murray, who he alleges was then manager of
Houlihan Lawrence's Chappaqua office, to assist him in his transaction. Id Benjamin became
interested in the property at 16 Old Logging Road in Bedford. Id $311.
Benjamin called Murray to discuss submitting an offer. Id ¶ 313. Murray allegedly
informed Benjamin that the seller was prepared to accept an existing offer. Id 1314. The seller,
however, accepted Benjamin's $1.6 million cash offer. Id ¶¶ 314-15.
On April 20, 2016, Murray sent Benjamin a copy of the New York statutory disclosure
form. Id 1318. Benjamin signed and returned the form, which indicated Benjamin's consent to
dual agency with designated sales agents, with Angela Kessel representing the seller and Murray
representing Benjamin. See id, Ex. 143.
Plaintiffs'
IV. Asserted Causes of Action.
Plaintiffs assert four causes of action against Houlihan Lawrence: (1) breach of fiduciary
duty; (2) breach of Real Property Law Section 443; (3) breach of General Business Law Section
4
While not the subject of this Motion, it is worth noting that Zillow estimates are markedly
unreliable in estimating home values. Zillow's own website cautions that itsestimates for homes
"Fair" "Good"
in Westchester County are only (i.e., not or "Best"), with a significant margin of
error. See https://www.zillow.com/howto/DataCoverageZestimateAccuracyNY.htm, last visited
October 30, 2018. Moreover, even assuming the property records on Zillow are correct, the
Complaint fails to note that each of the three listings it identifies have more bathrooms and
greater square footage than 190 Davis Avenue. Indeed, the property that sold closest in time to
190 Davis Avenue, 111 Grandview Avenue, actually sold for $30/square foot less than 190
Davis Avenue based on Zillow records despite having an additional bathroom.
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Plaintiffs'
349; and (4) unjust enrichment. breach of fiduciary duty claim, alleging that Plaintiffs
Plaintiffs'
did not consent to Houlihan Lawrence's dual agency, as well as other claims, fail as a
matter of law.
ARGUMENT
I
THE BURDEN OF PROOF
In considering a motion to dismiss based upon the pleadings, "the sole criterion is
whether . . . from [the pleading's] four comers factual allegations are discerned which taken
law."
together manifest any cause of action cognizable at Guggenheimer v. Ginzburg, 43 N.Y.2d
268, 275, 372 N.E.2d 17, 20 (1977). Although the court presumes that pleaded facts are true, it
conclusions."
affords no such deference to "bare legal Mayer v. Sanders, 264 A.D.2d 827, 828,
695 N.Y.S.2d 593, 595 (2d Dep't 1999). Nor does itafford such deference to "factual claims
record,"
flatly contradicted by the id., or by "documentary evidence,
1455 Washington Ave. Assocs. v. Rose & Kiernan Inc., 260 A.D.2d 770, 771, 687 N.Y.S.2d 791,
793 (3d Dep't 1999); WFB Telecomms., Inc. v. NYNEX Corp., 188 A.D.2d 257, 258-59, 590
N.Y.S.2d 460, 462 (1st Dep't 1992).
To be considered in connection with a motion to dismiss, documentary evidence outside
the pleadings must be unambiguous, of undisputed authenticity, and essentially unassailable.
Rabos v. R & R Bagels & Bakery, Inc., 100 A.D.3d 849, 851, 955 N.Y.S.2d 109, 112 (2d Dep't
2012). "Judicial records, as well as documents reflecting out-of-court transactions such as
mortgages, deeds, contracts, and any other papers, the contents of which are essentially
case."
undeniable, would qualify as documentary evidence in the proper Cives Corp. v. George
A. Fuller Co., Inc., 97 A.D.3d 713, 714, 948 N.Y.S.2d 658, 659-60 (2d Dep't 2012) (emphasis
added).
7
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On a motion to dismiss, "[w]hen the moving party offers evidentiary material, the courtis
required to determine whether the proponent of the pleading has a cause of action [in light of the
one."
documentary evidence], not whether she has stated Meyer v. Guinta, 262 A.D.2d 463,
464, 692 N.Y.S.2d 159, 161 (2d Dep't 1999) (emphasis added); see also Steiner v. Lazzaro &
Gregory, P.C., 271 A.D.2d 596, 597, 706 N.Y.S.2d 157, 158 (2d Dep't 2000).
The disclosure forms each Plaintiff signed, consenting to Houlihan Lawrence's dual
Plaintiffs'
agency, are undeniable documents, dispositive of breach of fiduciary duty claim based
on the alleged absence of such consent.
H
Plaintiffs'
A. Breach of Fiduciary Duty Claim Should Be Dismissed Because
Plaintiffs Consented to Hõüliliâñ Lawrence's Dual Agency with Designated
Sales Agents.
Plaintiffs'
first cause of action, breach of fiduciary duty, is based on their allegations that
agents'
they did not consent to Houlihan Lawrence representing both the buyer and the seller in
their respective transactions. Each Plaintiff's claim fails as a matter of law because each Plaintiff
executed the statutory disclosure form, demonstrating consent to Houlihan Lawrence's dual
agency. Plaintiff Goldstein's claim also fails because she had actual knowledge before making
an offer on the property that Bello represented the seller in her transaction and that Cezimbra, her
agent, worked with Bello at Houlihan Lawrence.
1. Goldstein's Advance Consent Reflected Her Consent to Dual Agency
with Designated Sales Agents, and Goldstein Had Actual Knowledge
that Houlihan Lawrence Agents Represented Both the Buyer and the
Seller.
The statutory disclosure form, on its face, states that the customer's execution of it
constitutes advance consent to dual agency with designated sales agents. After explaining that
8
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agents"
"dual agency with designated sales exists when two agents from the same brokerage firm
represent the seller and buyer separately, itprovides:
A seller or buyer may provide advance informed consent to dual agency with
designated sales agents by indicating the same on thisform.
Real Prop. Law § 443 (emphasis added).
Preview
FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER -----------------------------------------X PAMELA GOLDSTEIN, ELLYN & TONY BERK, MEMORANDUM OF LAW and PAUL BENJAMIN, on behalf of themselves and allothers similarly situated, Index No. 60767/2018 Plaintiffs, Hon. Linda S. Jamieson -against- HOULIHAN/LAWRENCE INC., Defendant. -- ----- ----------------------------------X MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT'S MOTION TO DISMI_SS 1 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 TABLE OF CONTENTS PRELIMINARY STATEMENT.................................................................................................... 1 ALLEGED FACTS......................................................................................................................... 2 ARGUMENT.................................................................................................................................. 7 I. THE BURDEN OF PROOF ....................................................................................................... 7 II. Plaintiffs' A. Breach of Fiduciary Duty Claim Should Be Dismissed Because Plaintiffs Consented to Houlihan Lawrence's Dual Agency with Designated Sales 8 Agents..................................................................................................................... 1. Goldstein's Advance Consent Reflected Her Consent to Dual Agency with Designated Sales Agents, and Goldstein Had Actual Knowledge that Houlihan Lawrence Agents Represented Both the Buyer and the Seller. ..8 2. The Berks Executed Both an Advance Consent and a Subsequent Form Consenting to Dual Agency with Designated Sales Agents..................... 12 3. Paul Benjamin Consented to Houlihan Lawrence's Role in the Transaction by Executing the Statutory Disclosure Form............................................ 13 Plaintiffs' B. Second Cause of Action, Alleging Violation of Section 443, Should Be Dismissed Because Section 443 Cannot Be Enforced Through Private Rights of Action.................................................................................................................... 14 Plaintiffs' C. Third Cause of Action Fails Because They Have Not Alleged Deceptive Acts That Caused Them Injury............................................................ 16 Plaintiffs' - - D. Fourth Cause of Action Unjust Enrichment Fails Because (1) the Buyer Plaintiffs Did Not Confer Any Benefit On Houlihan Lawrence and, (2) the Seller Plaintiffs Executed Contracts Concerning the Same Subject..................... 19 Plaintiffs' 1. The Buyer Unjust Enrichment Claims Fail Because They Did Not Confer a Benefit on Houlihan Lawrence........................................... 20 2. The Seller Plaintiffs Cannot Recover in Unjust Enrichment Because They Executed a Contract on the Same Subject. 22 ............................................... E. The Berks Lack Standing to Assert Claims in Their Individual Capacity............ 22 23 CONCLUSION............................................................................................................................. i 2 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 TABLE OF AUTHORITIES Cases Page(s) 1455 Washington Ave. Assocs. v. Rose & Kiernan Inc., 260 A.D.2d 770, 687 N.Y.S.2d 791 (3d Dep't 1999)................................................................7 2 Park Ave. Assocs. v. Cross & Brown Co., 36 N.Y.2d 286 15 (1975)........................................................................................................14, Abdale v. N. Shore Long Island Jewish Health Sys., Inc., 49 Misc. 3d 1027, 19 N.Y.S.3d 850 (N.Y. Sup. Ct. 2015)......................................................16 Canario v. Gunn, 300 A.D.2d 332, 751 N.Y.S.2d 310 (2d Dep't 2002)..............................................................17 Cives Corp. v. George A. Fuller Co., Inc., 97 A.D.3d 713, 948 N.Y.S.2d 658 (2d Dep't 2012)..................................................................7 Gaidon v. Guardian Life Ins. Co. of Am., 96 N.Y.2d 201, 750 N.E.2d 1078 (2001).................................................................................19 Goldman v. Simon Prop. Grp. Inc., 58 A.D.3d 208, 869 N.Y.S.2d 125 (2d Dep't 2008)................................................................15 Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 372 N.E.2d 17 (1977).......................................................................................7 Hammer v. Am. Kennel Club, 1 N.Y.3d 294, 771 N.Y.S.2d 493 14 (2003)...........................................................................13, Hodgins v. Zabel, 7 Misc.2d 484, 166 N.Y.S.2d 135 (N.Y. Sup. Ct. 1957).........................................................23 JP Morgan Chase Bank v. Orleans, No. 650006/2004, 2007 WL 6882391 (N.Y. Sup. Ct. 2007)...................................................22 Lebovits v. Bassman, 120 A.D.3d 1198, 992 N.Y.S.2d 316 (2d Dep't 2014)............................................................21 Mayer v. Sanders, 264 A.D.2d 827, 695 N.Y.S.2d 593 (2d Dep't 1999)................................................................7 Mazzaro de Abreu v. Bank of Am. Corp., 525 F. Supp. 2d 381 (S.D.N.Y. 22 2007)..........................................................................20, 21, Meyer v. Guinta, 262 A.D.2d 463, 692 N.Y.S.2d 159 (2d Dep't 1999)................................................................8 ii 3 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 Norcast S.ar.l. v. Castle Harlan, Inc., 147 A.D.3d 666, 48 N.Y.S.3d 95 (1st Dep't 21 2017)...........................................................20, People v. Kupprat, 6 N.Y.2d 88, 160 N.E.2d 38 (1959).........................................................................................10 Philips Int'l Invs., LLC v. Pektor, 117 A.D.3d 1, 982 N.Y.S.2d 98 (1st Dep't 2014)...................................................................20 Rabos v. R & R Bagels & Bakery, Inc., 100 A.D.3d 849, 955 N.Y.S.2d 109 (2d Dep't 2012)................................................................7 Rallis v. Brannigan, No. 6738-03, 2008 WL 227009 (N.Y. Sup. Ct. 2008).............................................................15 Sambrotto v. Bond New York Props. Brokerage, LLC, No. 109889/2011, 2013 WL 685223 (N.Y. Sup. Ct. 2013).....................................................15 Sheehy v. New Century Mortg. Corp., 690 F. Supp. 2d 51 (E.D.N.Y. 2010).......................................................................................17 Silverman v. Household Fin. Realty Corp. of New York, 979 F. Supp. 2d 313 (E.D.N.Y. 19 2013)...............................................................................17, Estate of Sonnelitter v. Estate of White, 115 A.D.3d 1160, 983 N.Y.S.2d 149 (4th Dep't 2014)...........................................................22 Stallsworth v. Stallsworth, 138 A.D.3d 1102, 30 N.Y.S.3d 661 (2d Dep't 23 2016)........................................................22, Steiner v. Lazzaro & Gregory, P.C., 271 A.D.2d 596, 706 N.Y.S.2d 157 (2d Dep't 2000)................................................................8 Teller v. Bill Hayes, Ltd., 213 A.D.2d 141, 630 N.Y.S.2d 769 (2d Dep't 18, 19 1995)..................................................17, Waverly Props., LLC v.KMG Waverly, LLC, 824 F. Supp. 2d 547 (S.D.N.Y. 2011)......................................................................................18 WFB Telecomms., Inc. v. NYNEX Corp., 188 A.D.2d 257, 590 N.Y.S.2d 460 (1st Dep't 1992)...............................................................7 Yellow Book Sales and Distribution Co., Inc. v. Hillside Van Lines, Inc., 98 A.D.3d 663, 950 N.Y.S.2d 151 (2d Dep't 2012)................................................................17 Statutes General Business Law § 19 349..........................................................................................6, 16, 17, iii 4 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 5 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 PRELIMINARY STATEMENT The unambiguous documents from each Plaintiff's transaction show they each consented Plaintiffs' to Houlihan Lawrence's dual agency with designated sales agents, contrary to breach of fiduciary duty claim. According to the New York legislature, a customer's advance written consent to a broker's dual agency with designated sales agents affirmatively establishes that consent.1 Here, all four named Plaintiffs executed and returned the statutory disclosure form, to Houlihan Lawrence's dual with designated sales agents - consenting agency i.e.,they consented to Houlihan Lawrence agents representing both the seller and the buyer in their ultimate real estate transactions - thus their breach of claims based on precluding fiduciary duty the absence of such consent as a matter of law, just as the New York legislature contemplated. Plaintiffs' - - second cause of action alleging violation of Section 443 should be dismissed for the additional, independent reason that Section 443 does not provide a private right of action for its enforcement and in relation to the the cause of action is time- because, Berks, barred. Plaintiffs' act" third cause of action fails because Plaintiffs have not pleaded a "deceptive that injured them and because the real estate transactions described in their Complaint are not "consumer-oriented." It isalso time-barred as to the Berks. Plaintiffs' unjust enrichment claim, the fourth cause of action of their Complaint, should also be dismissed. The buyer Plaintiffs did not pay the commission they seek to recoup and thus did not confer a benefit on Houlihan Lawrence. seek a windfall - to recover they Rather, they 1 Advance written consent is sufficient proof of the customer's consent, but it is not the only potential proof. That consent could have been communicated orally. Or, the customer may not have communicated anything but knew all relevant facts and consented to a dual agency transaction. The fact of customer consent is case and individual specific. That is one reason Plaintiffs' why breach of fiduciary claim cannot be maintained on a class basis. Common proof of consent is impossible and requires individual inquiries and individual trials. 6 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 commissions others paid to Houlihan Lawrence. That fact is fatal to their claim. The seller Plaintiffs signed a contract covering the same subject matter as their unjust enrichment claim, which bars their cause of action as a matter of law. In addition to the foregoing arguments, which apply to each of the named Plaintiffs, the Berks' claims separately fail under CPLR § 3211(a)(3) because they do not have standing to bring suit in their individual capacity. Plaintiffs' For each reason, Complaint should be dismissed with prejudice. FACTS2 ALLEGED L Buyer Plaintiff #1: Pamela Goldstein. On March 23, 2017, a home located at 6 Wellington Terrace, White Plains, New York ("6 Wellington Terrace") went on the market. See Philip Halpern Aff., Ex. A, Compl. ¶ 239. Gino Bello, with Houlihan Lawrence, was the listing agent. Id. ¶ 241. On March 25, Goldstein called Bello and left a message expressing interest in the 6 Wellington Terrace property. Id. Later that morning, Daniel Cezimbra, a different Houlihan Lawrence agent from Bello's office, called Goldstein in response to her voice message. Id. ¶ 242. Cezimbra told Goldstein that he worked with Bello, the listing agent. Id. Goldstein reiterated her interest in 6 Wellington Terrace and asked Cezimbra if she could "see itas soon as possible." Id. ¶ 243. Houlihan Lawrence recites the facts alleged in the Complaint as if true for purposes of this Motion only and reserves all rights to contest the Complaint's allegations. Because this Motion Plaintiffs' is directed at the allegations in Complaint, it does not address certification issues, including that absent putative class members signed arbitration agreements that preclude their participation in the alleged class. Houlihan Lawrence is separately negotiating a stipulation on Plaintiffs' that issue with counsel. Houlihan Lawrence reserves all rights to raise arguments concerning arbitration, class certification and the purported claims of the putative class, which are not yet properly before the Court, at a later time. 2 7 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 On March 26, Goldstein viewed 6 Wellington Terrace with Cezimbra. Id. ¶ 244. That evening, around 8 p.m., Goldstein advised Cezimbra that "she was prepared to make an offer to Terrace." purchase 6 Wellington Id. ¶ 245. The following day, Cezimbra forwarded Goldstein offers" an e-mail from Bello explaining that the seller had received "multiple to purchase 6 Wellington Terrace and "would be going to highest and best Wednesday, March 29th no later 5PM." than Id. ¶ 246. Cezimbra's email to Goldstein identified Cezimbra as from Houlihan Lawrence. Id, Ex. 106. The forwarded email from Bello identified Bello as from Houlihan Lawrence and the listing agent. Id. At 4:20 p.m. on March 29, Goldstein emailed Cezimbra her decision to offer to purchase 6 Wellington Terrace for $635,000, with a 25% down payment, "contingent on an inspection and financing." Id. at 247. Cezimbra acknowledged receipt and confirmed he would present her offer to the seller. Id. Cezimbra's email again identified him as an agent with Houlihan Lawrence. Id, Ex. 107. Shortly thereafter, on March 29, Nicole Corrado from Bello's team provided Goldstein with, among other things, the disclosure form required by Section 443. Id., Ex. 108. The cover page to the provided disclosure documents identified Corrado as "Executive Assistant to The Team" Homes." Gino Bello Homes Sales and included a logo for "Gino Bello Id. The statutory disclosure form that Goldstein received identified Cezimbra as affiliated agent." with Houlihan Lawrence and indicated that he was representing Goldstein as "Buyer's Id. The disclosure form also requested Goldstein's advance informed consent to Houlihan Lawrence's dual agency with designated sales agents. Id Goldstein executed and faxed the Section 443 disclosure form back to Bello's office on March 29, which included her consent to Houlihan Lawrence's dual agency with designated 3 8 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 sales agents. Id, Ex. 112. Corrado filled in Bello's and Cezimbra's names on the executed form to reflect their designations as buyer and seller representatives, respectively. Id ¶ 250. Due to competition for 6 Wellington Terrace, Goldstein "authorized Cezimbra to make behalf[.]" an improved offer on her Id. ¶ 253. On March 30, 2017, Cezimbra informed Goldstein by email that "[t]he sellers on 6 Wellington Terrace have accepted our offer of down!" $637,000 with 30% Id, Ex. 107. That email again identified Cezimbra as from Houlihan Lawrence. Id 258.3 On May 22, 2017, Goldstein closed on her purchase of 6 Wellington Terrace. Id ¶ The Purchase Agreement Goldstein executed identified both Bello and Cezimbra as affiliated with Houlihan Lawrence. See Nicole Corrado Aff. ¶ 5, Ex. 2. The sellers, not Goldstein, paid Houlihan Lawrence's commission. See id. ¶ 6, Ex. 3 ¶ 3. Goldstein contends that Cezimbra did not inform her that Houlihan Lawrence agents represented both her and the seller and did not obtain her consent to that fact or explain to her the rights, limitations, obligations or consequences of Houlihan Lawrence agents representing both the seller and the buyer in her transaction. Halpern Aff., Ex. A, Compl. ¶¶ 275-76. IL Seller Plaintiffs: Tony and Ellyn Berk. Tony and Ellyn Berk's parents owned 190 Davis Avenue in the Highlands area of White Berks' Plains. Id. ¶ 283. In September 2013, the mother passed away. Id The property at 190 Davis Avenue became part of her estate. Id ¶ 285. Tony and Ellyn (collectively, the "Berks"), in their role as administrators of Winifred's estate, listed the property with Gino Bello at Houlihan Lawrence. Id 3 Plaintiffs did not include Goldstein's executed Purchase Agreement in the Complaint's 143 exhibits, despite its centrality to Goldstein's claims. 4 9 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 The estate's undated listing agreement provided for a $469,900 sale price and that Bello was to submit the listing "to the Hudson Gateway Multiple Listing Service, Inc. ('HGMLS'), for Participants." dissemination to its Id ¶ 285, Ex. 116. The estate was to pay a 5% commission with 2% offered to the buyer's agent. Id In the two-page listing agreement, the estate consented in advance to Houlihan Lawrence's dual agency. Id In addition to the Exclusive Right to Sell agreement, the Berks signed the New York statutory disclosure form, evidencing their advance consent to Houlihan Lawrence's dual agency and dual agency with designated sales agents. Id. ¶ 302; Geoff Berry Aff., ¶ 5, Ex. C. Bello allegedly marketed the property only through his personal network. Halpern Aff., Ex. A, Compl. ¶ 287. Through that marketing, he secured two buyers for the property. Id ¶¶ financing." 288-89. The first buyer was "unable to obtain Id ¶ 288. Bello then found a second buyer at $479,000 - $10,000 more than the price. Id Ellyn claims to have "asked Bello listing if they should put the house on the MLS to see what others would be willing to pay, given that around." Bello had found someone willing to pay at or above the listing price just by asking Id Berks' Bello purportedly said that itwould be "in the best interests to sell without testing the market." Id On June 30, 2014, the estate sold the property to a buyer represented by David Calabrese, another Houlihan Lawrence agent. Id ¶ 289. The Berks executed a second New York statutory disclosure form reflecting the fact that the transaction involved dual agency with designated sales agents, with Gino Bello appointed to represent the sellers and David Calabrese appointed to represent the buyers. Berry Aff., ¶ 6, Ex. D. The Complaint alleges that Bello priced the listing well below other three bedroom homes he had recently sold in the same area, and that Zillow now (over four years later) 5 10 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 $614,341.4 estimates the market value at Houlihan Lawrence earned a 5% sales commission for 190 Davis Avenue, as stated in the listing contract, which the Berks paid. Halpern Aff., Ex. A, Compl. 1307. HL Buyer Plaintiff #2: Paul Benjamin. In March 2016, Paul Benjamin alleges that he was looking for a home in or around Bedford, New York. Id. ¶ 310. He contacted Brian Murray, who he alleges was then manager of Houlihan Lawrence's Chappaqua office, to assist him in his transaction. Id Benjamin became interested in the property at 16 Old Logging Road in Bedford. Id $311. Benjamin called Murray to discuss submitting an offer. Id ¶ 313. Murray allegedly informed Benjamin that the seller was prepared to accept an existing offer. Id 1314. The seller, however, accepted Benjamin's $1.6 million cash offer. Id ¶¶ 314-15. On April 20, 2016, Murray sent Benjamin a copy of the New York statutory disclosure form. Id 1318. Benjamin signed and returned the form, which indicated Benjamin's consent to dual agency with designated sales agents, with Angela Kessel representing the seller and Murray representing Benjamin. See id, Ex. 143. Plaintiffs' IV. Asserted Causes of Action. Plaintiffs assert four causes of action against Houlihan Lawrence: (1) breach of fiduciary duty; (2) breach of Real Property Law Section 443; (3) breach of General Business Law Section 4 While not the subject of this Motion, it is worth noting that Zillow estimates are markedly unreliable in estimating home values. Zillow's own website cautions that itsestimates for homes "Fair" "Good" in Westchester County are only (i.e., not or "Best"), with a significant margin of error. See https://www.zillow.com/howto/DataCoverageZestimateAccuracyNY.htm, last visited October 30, 2018. Moreover, even assuming the property records on Zillow are correct, the Complaint fails to note that each of the three listings it identifies have more bathrooms and greater square footage than 190 Davis Avenue. Indeed, the property that sold closest in time to 190 Davis Avenue, 111 Grandview Avenue, actually sold for $30/square foot less than 190 Davis Avenue based on Zillow records despite having an additional bathroom. 6 11 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 Plaintiffs' 349; and (4) unjust enrichment. breach of fiduciary duty claim, alleging that Plaintiffs Plaintiffs' did not consent to Houlihan Lawrence's dual agency, as well as other claims, fail as a matter of law. ARGUMENT I THE BURDEN OF PROOF In considering a motion to dismiss based upon the pleadings, "the sole criterion is whether . . . from [the pleading's] four comers factual allegations are discerned which taken law." together manifest any cause of action cognizable at Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 372 N.E.2d 17, 20 (1977). Although the court presumes that pleaded facts are true, it conclusions." affords no such deference to "bare legal Mayer v. Sanders, 264 A.D.2d 827, 828, 695 N.Y.S.2d 593, 595 (2d Dep't 1999). Nor does itafford such deference to "factual claims record," flatly contradicted by the id., or by "documentary evidence, 1455 Washington Ave. Assocs. v. Rose & Kiernan Inc., 260 A.D.2d 770, 771, 687 N.Y.S.2d 791, 793 (3d Dep't 1999); WFB Telecomms., Inc. v. NYNEX Corp., 188 A.D.2d 257, 258-59, 590 N.Y.S.2d 460, 462 (1st Dep't 1992). To be considered in connection with a motion to dismiss, documentary evidence outside the pleadings must be unambiguous, of undisputed authenticity, and essentially unassailable. Rabos v. R & R Bagels & Bakery, Inc., 100 A.D.3d 849, 851, 955 N.Y.S.2d 109, 112 (2d Dep't 2012). "Judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially case." undeniable, would qualify as documentary evidence in the proper Cives Corp. v. George A. Fuller Co., Inc., 97 A.D.3d 713, 714, 948 N.Y.S.2d 658, 659-60 (2d Dep't 2012) (emphasis added). 7 12 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 On a motion to dismiss, "[w]hen the moving party offers evidentiary material, the courtis required to determine whether the proponent of the pleading has a cause of action [in light of the one." documentary evidence], not whether she has stated Meyer v. Guinta, 262 A.D.2d 463, 464, 692 N.Y.S.2d 159, 161 (2d Dep't 1999) (emphasis added); see also Steiner v. Lazzaro & Gregory, P.C., 271 A.D.2d 596, 597, 706 N.Y.S.2d 157, 158 (2d Dep't 2000). The disclosure forms each Plaintiff signed, consenting to Houlihan Lawrence's dual Plaintiffs' agency, are undeniable documents, dispositive of breach of fiduciary duty claim based on the alleged absence of such consent. H Plaintiffs' A. Breach of Fiduciary Duty Claim Should Be Dismissed Because Plaintiffs Consented to Hõüliliâñ Lawrence's Dual Agency with Designated Sales Agents. Plaintiffs' first cause of action, breach of fiduciary duty, is based on their allegations that agents' they did not consent to Houlihan Lawrence representing both the buyer and the seller in their respective transactions. Each Plaintiff's claim fails as a matter of law because each Plaintiff executed the statutory disclosure form, demonstrating consent to Houlihan Lawrence's dual agency. Plaintiff Goldstein's claim also fails because she had actual knowledge before making an offer on the property that Bello represented the seller in her transaction and that Cezimbra, her agent, worked with Bello at Houlihan Lawrence. 1. Goldstein's Advance Consent Reflected Her Consent to Dual Agency with Designated Sales Agents, and Goldstein Had Actual Knowledge that Houlihan Lawrence Agents Represented Both the Buyer and the Seller. The statutory disclosure form, on its face, states that the customer's execution of it constitutes advance consent to dual agency with designated sales agents. After explaining that 8 13 of 30 FILED: WESTCHESTER COUNTY CLERK 10/30/2018 08:57 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 343 RECEIVED NYSCEF: 10/30/2018 agents" "dual agency with designated sales exists when two agents from the same brokerage firm represent the seller and buyer separately, itprovides: A seller or buyer may provide advance informed consent to dual agency with designated sales agents by indicating the same on thisform. Real Prop. Law § 443 (emphasis added).