Wednesday, January 30, 2013

Panarello v. Segalla case brief

Panarello v. Segalla
6 A.D.3d 515 (2004)
775 N.Y.S.2d 360 (April 12, 2004)

-June 1995, D entered into agreement with Vinchiarella (V, the second defendant), in which V agreed to use best efforts to find a buyer for Segalla Country Club which included 700 acres of land in Dutchess County. 
-Agreement provided V would be paid 5% of gross selling price.
-V approached P, a real estate agent, and inquired if he had any clients interested to purchase the property.
-P introduced V to Zarro, a potential purchaser.
-V then introduced Zarro to D and his attorney.
-D and Zarro entered into real estate purchase and sale contract.
-Ownership of 640 acres, including country club, was transferred to Zarro for $14,250,000.
-V and P agreed to split $500,000 fee, instead of a percentage of sale price.
-D, however, withheld payment from V and P.
-P commenced action against V and D (both defendants) to recover his real estate commission.
-V brought a cross claim against Segalla for breach of agreement, seeking to recover his consultant's fee.   (This cross claim is the subject of this appeal)

-lower court granted cross claim, awarded V judgement of $500,000.
-lower court found that transfer of real estate upon which country club located was not the dominant feature of the transaction.  As such, V, who was not a real estate broker, was entitled to the fee.

What is a Real Estate Broker?
-A real estate broker as anyone who "lists for sale, sells exchanges, buys or rents, or offers or attempts to negotiate a sale or interest in real estate."
Look at the DOMINANT FEATURE of the transaction.
-Where the dominant feature of the transaction at issue is the transfer of real property, one who does not have a real estate broker's license is barred from collecting a fee for endeavors in the nature of brokerage services.

The court states that the dominant feature of the transaction was not the sale of the country club business, but instead the transfer of valuable real estate.
-Real estate was the PRIMARY ASSET involved in the transaction.
-"the contract of sale itself neither makes any specific reference to the sale of a business, nor does it apportion any part of the total purchase price for sale of the Country Club business."
-The sale was brought to fruition based on how many acres were being sold. 

-Since the dominant feature of the sale under review was its real estate, and since V was not a licensed real estate broker, V was not entitled to recover a fee for his services.

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