CBRE, Inc. v. The Pace Gallery of New York, Inc.

Background

CBRE sued The Pace Gallery of New York, Inc. and The Pace Gallery LLC, doing business as Pace Gallery, seeking an unpaid real-estate commission. CBRE relied primarily on a March 2014 agreement giving it the exclusive right to find, negotiate, and secure premises for Pace, and alternatively on a November 2014 agreement. Pace leased space in a new building at 534 West 25th Street from Wenat Realty Associates, Pace’s landlord. Neither Pace nor Wenat paid CBRE a commission.

CBRE asserted breach-of-contract claims and claims for payment based on the value of its services. Pace asserted counterclaims and defenses concerning CBRE’s communications with Lisa Weinberg, one of Wenat’s owners, including claims involving fiduciary duty, contract duties, good faith and fair dealing, and fraud. Both sides moved for summary judgment, which asks whether the evidence shows that no reasonable jury could find for the opposing party on a disputed issue.

Rulings on the Agreements

The court rejected Pace’s argument that the March 2014 agreement was not binding because CBRE did not deliver a signed copy. The agreement’s language about exchanging signatures did not create a condition that had to occur before the agreement became binding. The court also held that the cited New York regulation did not require CBRE to deliver a copy bearing CBRE’s own signature. CBRE’s motion was granted on this issue, and Pace’s motion was denied.

The court did not decide whether the November 2014 agreement replaced the March 2014 agreement. The November agreement contained a merger clause stating that it superseded prior understandings, but CBRE presented evidence that the wrong form may have been used and that both parties may have mistakenly included language concerning the acquisition of new space. That evidence created a factual dispute about mutual mistake and which agreement controlled, so summary judgment was denied on that issue.

The court held that both agreements were exclusive-right agreements, not merely exclusive-agency agreements. As a result, CBRE did not have to prove that it was the cause that produced Pace’s leases with Wenat in order to establish its right to a commission under the agreements. CBRE’s motion was granted on that issue, and Pace’s motion was denied.

The court also held that the agreements were not unenforceable merely because they did not state a specific commission amount. Under the applicable New York law, the commission could be determined as a fair and reasonable amount based on the customary rate. CBRE’s motion was granted on this issue, and Pace’s motion was denied.

Pace’s Claims and Defenses

The court granted CBRE summary judgment concerning the REBNY Ethics Guidelines and CBRE’s website, ruling that they were not part of the parties’ agreements. The court did not decide whether those materials could be used as evidence concerning Pace’s fiduciary-duty claim.

The court denied both sides’ motions concerning the faithless-servant doctrine and breach-of-fiduciary-duty claims. That doctrine can prevent an agent who was disloyal in performing services from recovering compensation. The court found that the evidence about CBRE’s disclosure of market information to Lisa Weinberg could support a decision for either side. The court also denied both sides’ motions on Pace’s claim that CBRE breached the duty of good faith and fair dealing because the evidence could support either side’s position about whether CBRE acted in bad faith.

The court treated Pace’s fraud claim, Count IV, as abandoned because Pace did not move for summary judgment on it or address it in its briefing, and the court dismissed that count. The court also treated Pace’s defenses and counterclaims concerning retaliation, misuse of corporate titles, and the automatic-renewal provision as abandoned because Pace did not address CBRE’s arguments about them. Summary judgment was granted to CBRE on those matters.

Additional Premises and Cooperation

The March 2014 agreement required Pace to pay CBRE a full market commission if Pace renewed its lease or took additional premises at 534 West 25th Street and the landlord refused to pay CBRE. The court held that the phrase “take additional premises at 534 West 25th Street” unambiguously included Pace’s lease of the new building at that address. Pace’s evidence about alleged industry custom did not create a factual dispute. CBRE’s motion was granted on that issue, and Pace’s motion was denied.

The agreement also required CBRE to look to the landlord for its commission if Pace honored its exclusivity obligation and cooperated in obtaining a written commission agreement. The court found that Pace clearly told CBRE that it did not believe CBRE was entitled to a commission from the Wenat leases and therefore communicated that it would not cooperate. The court held that this was an anticipatory breach—a clear statement or act before performance was due showing that a party will not perform. Because of that breach, CBRE was relieved of its duty to seek a commission from Wenat. CBRE’s motion was granted on this issue, and Pace’s motion was denied.

Disposition

CBRE’s motion for partial summary judgment was granted in part and denied in part. Pace’s motion for summary judgment was denied. The court granted CBRE summary judgment on the specific issues identified above, dismissed Pace’s abandoned fraud claim, and otherwise denied the parties’ motions where factual disputes remained.