: Ye s N o. Cross-Motion: YORK COUNTY SUPREME COURT OF THE STATE OF NEW YORK - NEW. PRESENT: Hon. ;. NON-FINAL DISPOSITION.

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1 SUPREME COURT OF THE STATE OF NEW YORK - NEW PRESENT: Hon. p.gq$l! g g$$ & ; & 5.i ~u?j.~;::g i #MS&~ CL. _ Justice YORK COUNTY PART_a INDEX NO. MOTION DATE The following papers, numbered 1 to were read on this motion to/for J APERS NUMBERED Notice of Motion/ Order to Show Cause - Affidavits - Exhibits... Answering Affidavits - Exhibits Replying Affidavits Cross-Motion: : Ye s N o Upon the foregoing papers, it is ordered that this motion Check one: FINAL DISPOSITION ;. NON-FINAL DISPOSITION 1

2 SUPREME COURT OF THE STATE OF NEW YORK' COUNTY OF NEW YORK: IAS PART _ _;-: X KENNEDY CAPITAL LLC, Plaintiff, Index No /98 -against- AMERICAN INTERNATIONAL GROUP, INC., AIG FRENCH PROPERTY FUND B.V., and FRANCONOR S.A., Defendants X Herman Cahn, J.: This is an action for breach of contract and quantum meruit by plaintiff Kennedy Capital LLC ("Kennedy Capital") in connection with an alleged oral agreement by defendant Franconor S.A. ("Franconor"). The claimed agreement was for Franconor to pay a finder's fee to Kennedy Capital for introducing investors to Franconor and defendants American International Group, Inc. ("AIG") and AIG French Property Fund B.V. ("AIG Fund"). AIG and the AIG Fund move, pursuant to CPLR 3211(a) (7), for an order dismissing the complaint for failure to state a cause of action. For the purposes of this motion the facts alleged in the complaint will be deemed true. (Internationale Nederlanden (U.S.) Capital Corp. v. Bankers Trust Co., 261 AD2d 117). According to the complaint, Kennedy is a New York company principally engaged in representing developers and investors in Europe and the United States by raising capital for real estate

3 investments. AIG is a large insurance company. The AIG Fund is an investment fund sponsored by AIG. Franconor is a French corporation doing business as a real estate broker, property asset manager and financial advisor. The complaint states that in January of 1997, AIG was in the process of sponsoring the AIG Fund, which invests in office, industrial and retail real estate in France. In order to raise money to finance the AIG Fund, AIG retained Franconor to solicit investors, act as AIG's investment advisor and manage any property purchased through the AIG Fund. As part of a world-wide effort to find investors, Franconor's president, Robert Waterland ("Waterland"), visited New York on several occasions in January of On one or more of those visits, Waterland met with Kennedy Capital's president, Neil Kennedy ("Kennedy"), to discuss whether Kennedy knew of any potential investors for the AIG Fund. Kennedy and Waterland had known each other for many years. Kennedy states that sometime in January of 1997, he told Waterland that he might know of a potential investor, TIAA the "Teachers Pension Fund" ("Teachers"), one of the largest pension funds in the world. Earlier that month, Kennedy had spoken with a representative of Teachers, who told Kennedy of its investment criteria and that it was interested in European investment 2

4 opportunities. Based on this information, Kennedy and Waterland began to discuss, through letters and meetings, whether Teachers might be interested in investing in the AIG Fund. According to Kennedy, on one of Waterland's visits to New York, Waterland reiterated to Kennedy that AIG urgently needed investors for the AIG Fund. He asked Kennedy to promote the AIG Fund by referring potential investors, in addition to Teachers, to AIG or to Franconor. In return for referring investors, Waterland, as agent for AIG and the AIG Fund, orally agreed to compensate Kennedy Capital. Specifically, Waterland agreed that Kennedy Capital would receive a finder's fee based on participation in the AIG Fund by any investors introduced, referred or identified to the AIG Fund by Kennedy Capital. The fee would be calculated at 2% of the monies invested in the AIG Fund by the referred entity, less any amount paid to Franconor by AIG or the AIG Fund, relative to the investment. In no event was Kennedy Capital to receive a fee less than 1% of the amount invested by anyone that it referred. Kennedy states that in furtherance of this agreement, he referred Teachers to Waterland as a potential investor in the AIG Fund. Thereafter, with Kennedy's approval, AIG contacted Teachers directly, in an effort to induce Teachers to invest in the AIG Fund. Eventually, Kennedy ascertained that Teachers had invested between $25,000,000 and $40,000,000 in the AIG Fund. Kennedy Capital then made a demand on Franconor and AIG for payment of a finder's fee 3

5 based on the introduction of Teachers as an investor. That demand was refused and, eventually, this act,ion was commenced. AIG and the AIG Fund now move for an order dismissing the complaint for failure to state a cause of action. Initially, defendants argue that the complaint must be dismissed because oral agreements to pay finder's fees are unenforceable under the Statute of Frauds. (See, General Obligations Law 5-701[a] [lo]). However, since Kennedy is a licensed real estate broker, he is thus specifically exempted from the requirements of the Statute of Frauds. (Fidelity Business Brokers, Inc. v. Gamaldi, 190 AD2d 709; Blake-Veeder Realty v. Cravford, 110 AD2d 1007, 1008; GOL 5-701[a][lO]). Therefore, neither the cause of action for breach of contract, nor the quantum meruit claim, are precluded by the absence of a signed writing. (Fidelity Business Brokers, Inc. v. Gamaldi, supra). Defendants also assert that the complaint fails to adequately allege facts demonstrating that Franconor entered into the finder's fee agreement with Kennedy Capital on behalf of AIG, i.e. as AIG's agent. However, "[iit is long settled that in a contract action the fact of agency need not be pleaded in the complaint." (Federated Adiustment Co., Inc. v. Sobie, 90 AD2d 806; see, Kelly Masonry Corp. V. Presbyterian Hospital, 160 AD2d 192). Instead, Il[t]he plaintiff may plead the legal effect of the agent's acts as being the act of 4

6 the principal." (Federated Adiustment.Co., Inc. v. Sobie, supra, citations omitted). Although the plaintiff must ultimately submit * ~ proof in support of the alleged agency, on a motion to dismiss the court is only concerned with whether the complaint pleads a valid cause of action against the alleged principal. (a. at ). Here, the complaint adequately alleges that Franconor, as AIG's agent, entered into a finder's fee agreement with Kennedy Capital on behalf of AIG. The complaint further alleges that Kennedy Capital referred an investor, Teachers, to AIG and that Teachers did in fact invest in the AIG Fund. Finally, the complaint alleges that AIG breached the agreement by failing to pay a fee to Kennedy Capital. Based on these allegations, the complaint adequately states a cause of action against movants. Defendants also argue that the finder's fee agreement is too vague to be enforced. Specifically, they argue that the agreement is deficient because it does not set forth: 1) exactly when it was formed; 2) what Kennedy Capital's duties were under the agreement; 3) how Kennedy Capital's performance was to be judged; and 4) when payment was due to Kennedy Capital and from which party. While it is true that the complaint does not set forth the exact date on which the agreement was formed, the complaint and Kennedy's affidavit clearly set forth that it was formed sometime in January of 1997, which is sufficient for the purposes of this 5

7 motion. Determination of the exact date and other details of the claimed agreement can be obtained by defendant in discovery, CPLR 3041, In any event, Kennedy Capital's papers do set forth many details as to the agreement. For example as to the nature of its duties under the agreement, i.e the introduction, referral or identification of potential investors to AIG and an actual investment in the AIG Fund by the referred party. After such an investment was made, Kennedy Capital's compensation would be calculated as 2% of the monies invested in the AIG Fund by the referred entity, less any amount paid to Franconor by AIG or the AIG Fund, relative to the investment. In no event would Kennedy Capital receive a fee less than 1% of the amount invested by anyone that it referred. The complaint sufficiently sets forth the elements of a finder's fee agreement. Defendants also argue that Kennedy Capital has failed to allege that it fulfilled its obligations under the agreement because it fails to demonstrate that it acted in any way to bring AIG and Teachers together, other than to mention Teachers to Waterland as a potential investor. However, the complaint alleges that Kennedy identified and referred Teachers to Waterland as a potential investor in the AIG Fund, as contemplated by the finder's fee agreement. Moreover, in a letter dated January 24, 1997, Waterland acknowledged to Kennedy that he wanted to work with Kennedy in 6

8 connection with Teachers, and asked Kennedy WhetherTeachers would be interested in participating in "a, USA. led opportunity fund for the French market." That opportunity was apparently the AIG Fund. In a response dated the same day, Kennedy informed Waterland that he would be open to discussing various investment opportunities with Teachers on Franconor's behalf. Several days later, Waterland wrote to Kennedy that he would be "delighted to progress the contact". Therefore, although the exact nature of Kennedy's interaction with defendants and Teachers awaits further discovery, Kennedy has adequately pleaded that it did more than merely mention the name of a potential investor to Waterland as asserted by defendants. Defendants also argue that the finder's fee agreement is unenforceable because an oral agreement cannot be based on past consideration. (See, Transamerica Realty Ltd. v. Winokur, 248 AD2d 250; GOL ). Defendants argue that Kennedy had already identified Teachers to Waterland before the parties agreed that Kennedy Capital would be compensated for referring investors to Franconor or AIG. However, the complaint specifically alleges that Kennedy referred Teachers to Waterland as a potential investor in furtherance of the finder's fee agreement, i.e. after it was executed, rather than before it was executed. Thus, the cause of action has sufficiently been pleaded. Finally, defendants seek to dismiss Kennedy Capital's claim for quantum meruit. "In order to state a claim in quantum meruit, the 7

9 plaintiff must assert: the performance. of services in good faith; the acceptance of those services by the entity to which they were,. rendered; an expectation of compensation therefor; and the reasonable value of the services." (Lehrer McGovern Bovis, Inc. v. New York Yankees, 207 AD2d 256, 259, citations omitted). Here, Kennedy Capital has asserted that it provided a service to defendants and that the service was accepted by defendants. Specifically, the complaint alleges that Kennedy introduced Teachers to defendants and defendants were then able to induce Teachers to invest in the AIG Fund. Moreover, the complaint alleges that Kennedy Capital had an expectation of compensation for that service, based on the alleged oral finder's fee agreement. Therefore, this cause of action is adequately stated. Accordingly, it is ORDERED that defendants' motion to dismiss the complaint is denied; and it is further ORDERED that defendants are directed to serve their answers to the complaint within ten (10) days after service of a copy of this order with notice of entry. DATED: February, 2000 ENTER:. J.S.C.