Log In   ·   Become A Member

How Do Courts Determine If the Broker Has Earned a Commission? The Answer Is in The Details

John A. Viteritti

Taylor Swift. (Photo: David Crotty /PMC)

To illustrate the point, let's contrast the findings in two court actions, both involving celebrities. The first, Sotheby's v. Donald Deutsch, a television celebrity, (see article here), and Elliman v. Firefly, involving celebrity entertainer, Taylor Swift.

For background on this article, I consulted with New York attorney Justin T. Kelton who wrote an article regarding Douglas Elliman v. Firefly that appeared in the New York Law Journal on February 22, 2019, and Geoffrey Castello, the attorney who represented Sotheby's in the Deutsch case.

To start with, both brokers were duly licensed in New York, and both the Sotheby's case and Firefly's motion to dismiss were brought before courts in New York. In neither case did the broker have a signed contract with the defendant.

In the first case, Sotheby's won and was awarded a commission in the amount of $1,207,000 plus interest retroactive from October 8, 2010 to October 21, 2014.

On January 24, 2019, the District Court granted Firefly's motion to dismiss Elliman's claim of a $1 million commission due. On January 30, 2019 Elliman filed an appeal with the U.S. Circuit Court of Appeals for the Second Circuit. According to Justin T. Kelton, author of the NYLJ article, the results of the appeal may take up to one year or more before the court rules on the appeal.

What were some of the differences? The Sotheby's case was tried in the New York Supreme Court and the decision was held up by the Appellate Division of the New York Supreme Court and the New York Court of Appeals. The Elliman claim went before the U.S. District Court of the Southern District of New York by request of the Defendant, who was not a resident of the State of New York.

Another difference, in the case of Sotheby's, they filed suit against the seller. In the Elliman case, Elliman brought an action against the buyer.

In the Sotheby' case, although no written contract between the broker and seller existed, the court did conclude that there was a contract, at least expressed or implied, between the parties. In the Elliman case, the court concluded there was no contract between the parties, written, oral, or implied, merely an email which did not include terms essential to constitute a legally binding contract. In New York, a contract, unless otherwise required by the New York Statute of Frauds, need not be in writing to be enforceable. An express contract may be written or oral. An implied contract need not be either. It's based upon conduct between the parties.

In the Sotheby's case, the broker expected a 4 percent commission, which the court considered below the industry standard. In Elliman, there was no statement regarding the amount of commission, and the court refused to apply the industry standard which may vary depending upon a variety of factors.

In the Sotheby's case, the court found that the broker was able to demonstrate a chain of events that led to the sale of the property, and therefore, entitled to the commission. In Elliman, the court ruled that the broker merely called the property to the attention of the buyer which was not enough to demonstrate "procuring cause."

Finally, the defendant first contacted Douglas Elliman in December 2016. After February 2017 there was no further contact between the parties. In October 2017 the defendant bought the property through another broker who was paid a commission. Elliman filed a suit against that broker for "tortious interference" with an existing contract but did not prevail since the court concluded that there was no contract between Elliman and Firefly.

So, what's the point of this article? Whether a court will find in favor or against a broker making a claim for a commission depends on the details of the transaction. We won't have the final word on this case until the Circuit Court rules on the appeal.

John is a St. John's University graduate, licensed Real Estate broker, DOS Certified Instructor, lecturer, teaches real estate license classes at Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. He previously taught at LIU and NYU. www.johnaviteritti.com

Related Articles:

Be the first to comment on this article. (Just fill out the form below)

Submit Your Comment

Please note, you are not currently logged in. Your comment will be submitted as a guest.
To submit your comment as a member, please click here.
Your Name:
* Comments will be reviewed and posted in a timely fashion
* All fields are required
Please type the word 'water'
(For spam prevention, thanks)
Hamptons Carpet One Floor & Home
We pay less,and so do you.With over 1,000 stores in our buying group, we can get the lowest prices from the best flooring manufacturers — and pass the savings on to you.Visit our other locations: Hamptons Carpet One Floor & Home, 675 North Sea Road,Southampton, NY 11968

Hamptons luxury real estate specialist for 33 years, Andrea Ackerman offers outstanding expertise in the field.
Hamptons luxury real estate specialist for 34 years, Andrea Ackerman offers outstanding expertise in the field. Trusted, experienced and successful, Andrea has solidified herself as the go-to broker of the Hamptons and a wholehearted advocate for her clients. A pioneer in the real estate industry on the East End of Long Island, she is driven by her passion for the business. Andrea is based in the Bridgehampton office of Brown Harris Stevens as a licensed real estate associate broker and consultant. Formerly, a principal partner and Senior Director at Brown Harris Stevens, Andrea now assists in developing their corporate strategy for the Hamptons region, advising other brokers and sales associates, as well as being one of the top producers and listors.

Southrifty Drug 54 Jagger Lane, Southampton Village
Southrifty Drug is a small, neighborhood pharmacy with limited shelf space, and we have to be very selective about which over-the-counter items we carry. As a result you'll find a no nonsense concentration of very effective, high quality and useful products on our shelves. In this new section, we feature a number of these products that we feel are especially worthy of your consideration.

Burner Law Group, P.C.
Burner Law Group, P.C. are full service elder law attorneys concentrating in the areas of Estate Planning, Trust and Estate Administration and Litigation, Special Needs Planning, Guardianship and Elder Law. Offices in East Setauket‚ NY, Westhampton Beach, NY, and New York, NY.

Calissa is Mykonos in the Hamptons.
Our menu focuses on seafood and Greek dishes such as salt baked fish, seafood pasta and Mediterranean mezze. Our wine list has been awarded The Award of Excellence from Wine Spectator and boasts the largest selection of rosé in the Hamptons. The name Calissa is derived from the brightest constellation in the summer sky.Our sister restaurants in New York are Amali and Bar Marseille, opening 2020 in the Rockaways. Calissa offers private dining spaces for groups from 10 to 300 people. To plan your next wedding, corporate event or gathering, please email events@calissahamptons.com. 1020 MONTAUK HIGHWAY, WATER MILL

SGF Acupuncture, PLLC. Is owned and operated By Sandra Geehreng Foster.
SGF Acupuncture, PLLC. Is owned and operated By Sandra Geehreng Foster. Her treatments are based on five element acupuncture. She also offers Far Infrared Sauna treatments. PEMF cellular excerise.