MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER...-... X HOULIHAN/LAWRENCE INC., Index No. 71209/2015 -against- Plaintiff/Petitioner, RAYMOND LIENAU and PATRICIA L. LIENAU, D efendants/respondents. RAYMOND LIENAU and PATRICIA LIENAU, X Third-Party Plaintiffs, -against- KATHRYN FINELLI, Third-Party Defendant....-...X MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT OXMAN LAW GROUP, PLLC Attorneys for Defendants/Third-Party Plaintiffs Raymond Lienau and Patricia Lienau 120 Bloomingdale Road, Suite 100 White Plains, New York 10605 (914) 422-3900 (914) 422-3636 (Fax) 1 of 10

Defendants / Third-Party Plaintiffs Raymond and Patricia Lienau submit the instant memorandum of law in support of their motion for summary judgment against Plaintiff Houlihan/Lawrence Inc., and Third-Party Defendant Kathryn Finelli. For the reasons set forth herein and in the accompanying affidavit and affirmation, this Court should grant Defendants motion and dismiss Plaintiff Houlihan/Lawrence s breach of contract claim. Additionally, this Court should grant summary judgment in favor of the Lienaus on their breach of fiduciary duty claims against FIoulihan/Lawrence and Kathryn Finelli and set down these claims for trial for an assessment of damages. PRELIMINARY STATEMENT This is a Tale of Two Contracts by and between the parties. The first is instructive as to how a standard real estate broker s agreement should read and apply. The second, to the contrary, exemplifies how a real estate agency and broker can abuse the trust of a client. For the reasons set forth herein, this Court should find the second contract between the parties unenforceable, and grant summary judgement in favor of Defendants on their breach of fiduciary duty claims. * * * In June 2014, the Lienaus listed their Katonah, New York home for sale with real estate broker Houlihan/Lawrence Inc. and sales agent Kathryn Finelli. That listing agreement contained a Dual Agency Disclosure signed by the Lienaus. It expired in six months, on December 17, 2014. No sale occurred, and Defendants removed the property from the market. Months after the expiration of the June 2014 listing agreement, the Lienaus entered into a second listing agreement with Houlihan/Lawrence and Finelli dated April 15, 2015. That second 2 of 10

listing agreement differed from the first in several material respects. Most importantly, the Lienaus did not knowingly consent to dual agency and did not sign any Dual Agency Disclosure. Shockingly, without the knowledge or consent of the Lienaus, Ms. Finelli copied the signed June 2014 Dual Agency Disclosure, whited out the original date, wrote in the date of the April 2015 contract below the existing June 2014 signature of the Lienaus, and attached this new Dual Agency Disclosure to the April 2015 listing agreement. Ms. Finelli never sought or obtained the Lienaus consent to do this, and did not inform the Lienaus that she had done so. Ms. Finelli did not counsel the Lienaus concerning dual agency or inform them that the Second Contract purportedly incorporated their prior consent to dual agency. A potential buyer was found, but that buyer was also represented by Houlihan/Lawrence thereby requiring the Lienaus consent to dual agency, which they never gave. Ultimately, the deal fell apart. Now, Plaintiff Houlihan/Lawrence seeks substantial commission fees pursuant to the April 2015 agreement, even though no sale occurred, and the potential buyer procured by Plaintiff and Ms. Finelli was in fact represented by another Houlihan/Lawrence agent, thereby requiring the Lienaus consent to dual agency. As explained more fully herein, not only to the actions of Houlihan/Lawrence violate specific provisions of the New York Property Law relating to dual agency disclosure, but they are in direct contravention of ethical standards universally adopted by the real estate industry. The rules and regulations of the National Association of Realtors as well as those of the Houlihan/Lawrence agency specifically and unequivocally require the precise type of dual agency disclosure that was withheld from Defendants. Exacerbating the culpability of Houlihan/Lawrence and Ms. Finelli is the fact that they not only withheld dual agency disclosure, but in fact they willfully and intentionally falsified Mr. and Mrs. Lienaus consent to the dual agency by illegally taking a consent form previously executed 2 3 of 10

by them, forging a new date, and attaching it to the listing agreement that is the basis of the Complaint herein. These actions render the listing agreement void and unenforceable as a matter of both law and public policy. RELEVANT FACTS On June 18, 2014, the Lienaus entered into a written Exclusive Right to Sell Agreement with Houlihan/Lawrence and Kathryn Finelli, listing their Katonah, New York home for sale at a price of $1,080,000.00 (the First Contract ). (Affidavit of Raymond Lienau dated March 9, 2017 ( Lienau Aff ), Ex. A). The First Contract incorporated a Dual Agency Disclosure, signed and dated by the Lienaus on June 18, 2014. The First Contract expired as of December 17, 2014, with no sale. (Lienau Aff. ]j 4). At that time, the Lienaus decided to remove their home from the market. (Lienau Aff. ]f 5). On April 15, 2015, the Lienaus entered into a second Exclusive Right to Sell Agreement (the Second Contract ). (Lienau Aff, Ex. B). The Second Contract differed from the First Contract in several material respects, including price, Tor-Sale' sign authorization, and rental options. Most importantly, the Lienaus never signed a Dual Agency Disclosure with respect to the Second Contract, nor did they consent to dual agency with respect to the Second Contract. (Lienau Aff. 8-9, 13). By e-mail dated August 9, 2015, Ms. Finelli sought the Lienaus signature on a second Dual Agency Disclosure. (Lienau Aff, Ex. C). The Lienaus did not sign or otherwise consent to the dual agency arrangement. (Lienau Aff. fflf 11, 13). Shockingly, instead of obtaining the Lienaus consent for dual agency, Ms. Finelli instead took the June 18, 2014 Dual Agency Agreement, whited-out the original date below the Lienaus signatures, and 3 4 of 10

wrote in the date of the Second Contract, April 15, 2015. (Affirmation of Marc S. Oxman dated March 9, 2017 ("Oxman Aff. ), Ex. 4 at 29, 31-32, 41, 53). Ms. Finelli never obtained the Lienaus consent to do this, and did not inform the Lienaus that she had done so. (Lienau Aff. 8, 9, 10, 13). Ms. Finelli herself testified that she did not inform the Lienaus that she had changed the Dual Agency Disclosure in this way, or even that the Second Contract incorporated the prior consent to dual agency. (Oxman Aff, Ex. 4 at 29, 31-32, 41, 53). On or about September 2015, the Lienaus agreed to sell their home to Mr. and Mrs. Gentile. (Lienau Aff. 14). However, the Gentiles were also represented by a Houlihan/Lawrence agent, Heather Sari Monachelli. (Oxman Aff, Ex. 4 at 48). Accordingly, for the sale contract to be valid, Defendants would have had to consent to dual agency, which they never did. Because of sharply-disputed factual circumstances between the parties herein, the deal with the Gentiles never closed and the Lienaus did not sell their home. (Compare Complaint fflf 36-54 with Lienau Aff. fflf 16-18). Now, Houlihan/Lawrence unjustifiably seeks substantial commissions pursuant to the Second Contract. Not only is the Second Contract unenforceable, but both Houlihan/Lawrence and Ms. Finelli breached their fiduciary duties to the Lienaus by not obtaining their consent to dual agency, falsifying a Dual Agency Disclosure, and then attempting to sell the home to potential buyers who were represented by Houlihan/Lawrence. 4 5 of 10

ARGUMENT A. Houlihan/Lawrence and Kathryn Finelli Breached Their Fiduciary Duties To The Lienaus And Are Thus Not Entitled To Fees Pursuant To the Second Contract It is well-established that a real estate broker is a fiduciary with a duty of loyalty and an obligation to act in the best interests of the principal. See Precision Glass Tinting Co. v. Long, 293 A.D.2d 594 (2d Dept. 2002). If this duty is breached, the broker forfeits his or her right to a commission, regardless of whether damages were incurred. Douglas Elliman LLC v. Tretter, 84 A.D.3d 446, 448 (1st Dept. 2011) (emphasis added).1 New York s real estate agency disclosure statute, Real Property Law 443, was enacted specifically to address dual agency situations and to educate consumers about this utmost duty of loyalty: [t]he lack of a requirement that the information be provided in writing and in a uniform manner... resulted in uneven disclosure which too often... failed to eliminate confusion on the part of the buyers or sellers as to the loyalties and duties of agents with whom they [were] dealing. (Assembly Mem. in Support, Bill Jacket, L. 1991, eh. 726, at 16). That statute mandates that brokers and agents provide customers with the very Dual Agency Disclosure form attached to the First Contract herein prior to entering into the listing agreement. It is undisputed that Houlihan/Lawrence and Finelli did not provide the Lienaus with the Dual Agency Disclosure prior to the April 2015 Second Contract. Section 443 specifically states, in no uncertain terms: A listing agent shall provide the disclosure form set forth in subdivision four of this section to a seller or landlord prior to entering into a listing agreement... and shall obtain a signed acknowledgement from the seller 1 Houlihan/Lawrence is a broker as defined by New York Real Property Law 440(1). 5 6 of 10

or landlord... N.Y. Real Prop. 443(3)(a) (emphasis added). See also Restatement [Second] of Agency 389 ( Unless otherwise agreed, an agent is subject to a duty not to deal with his principal as an adverse party in a transaction connected with his agency without the principal s knowledge. ). The statute goes on to state that, in the event a seller or buyer refuses to sign the Dual Agency Disclosure, the agent must state as much in a written declaration under oath. 443(e). The National Association of Realtors Code of Ethics and Standards of Practice likewise states that full disclosure and consent is required before any transaction in which a realtor / broker represents both the seller and purchaser in a transaction. (Oxman Aff, Ex. 5, Std. of Practice 1-5). There is absolutely no dispute here that Houlihan/Lawrence and Finelli did obtain the Lienaus signature on a Dual Agency Disclosure relating to the Second Contract. In fact, Ms. Finelli falsified an existing disclosure form by copying it, whiting out the original date, and writing in a new date relating to the Second Contract, all without the knowledge and consent of the Lienaus. Given these facts, Houlihan/Lawrence breached its fiduciary duty to the Lienaus and is not entitled to any commission and/or compensation relating to the failed deal with the Gentiles. See Douglas Holly, Inc. v. Rice, 161 A.D.2d 560 (2d Dept. 1990) (affirming seller s refusal to pay commission and holding, a broker who secretly represents both parties to a transaction cannot recover compensation from the party kept in ignorance of the dual employment ); see also Precision Glass, 293 A.D.2d at 595 (conflicting deposition testimony regarding whether broker and agent obtained consent to assignment precluded summary judgment dismissing breach of fiduciary duty claim). 6 7 of 10

B. The Second Contract Is Unenforceable Independently, the Second Contract is materially incomplete and unenforceable because the Dual Agency Disclosure form was never attached or consented-to. It is well established that a contract is unenforceable where there is no meeting of the minds between the parties thereto regarding a material element thereof. Brands v. Urban, 182 A.D.2d 287, 289 (2d Dept. 1992). Courts look to the basic elements of the offer and the acceptance to determine whether there is an objective meeting of the minds sufficient to give rise to a binding and enforceable contract. See Silber v. New York Life Ins. Co., 92 A.D.3d 436, 439 (1st Dept. 2012). Here, not only is the Dual Agency Disclosure, required by statute, missing, in fact, it appears that an earlier disclosure was falsified and attached to the Second Contract. Moreover, the proposed buyers, the Gentiles, were also Houlihan/Lawrence clients, thereby requiring the Lienaus consent to dual agency. Given these facts, there was no meeting of the minds and the Second Contract is void. See Singh v. Kur, 64 A.D.3d 697, 698 (2d Dept. 2009) ( Since the contract was not signed by the defendants... it was void as against them pursuant to the statute of frauds ); Brands, 182 A.D.2d at 290 (no meeting of minds on material term invalidates contract). C. Even If The Second Contract Was Enforceable, Questions Of Fact Preclude Summary Judgment in Houlihan/Lawrence s Favor Finally, even if the Second Contract constitutes a valid, enforceable agreement (which it does not), considerable questions of fact would preclude summary judgment in Plaintiffs favor including: (1) Plaintiffs and Defendants conflicting factual accounts of why the Gentile deal 7 8 of 10

fell through; and (2) whether the conduct of Houlihan/Lawrence and/or Ms. Finelli fell below the fiduciary standard applicable to real estate brokers and agents. Summary judgment is a drastic remedy and should not be granted where there is any doubt as to the existence of a triable issue. Miceli v. Purex Corp., Ltd,, 84 A.D.2d 562 (2d Dept. 1981). Here, the Complaint alleges that the Lienaus sabotaged the Second Contract, and iterates a list of supposed bad acts, including abusive language and behavior by Mr. Lienau and his purported lies concerning the condition of the property. (Complaint 36-59). Mr. Lienau, on the other hand, denies this alleged malfeasance and affirms, under penalty of perjury, that the Gentiles walked away from the deal of their own accord. (Lienau Aff. ^ 15). Given this conflicting testimony, summary judgment is unwarranted. See Brunetti v. Miisallcim, 11 A.D.3d 280, 281 (1st Dept. 2004) (reversing grant of summary judgment where conflicting factual accounts existed); Mitchell v. Parks, 54 A.D.2d 895 (2d Dept. 1976) (affirming denial of summary judgment because there still remains a question of fact as to whether defendant s conduct fell below any permissible standard of due care ). 9 of 10

CONCLUSION For the reasons set forth herein, together with those in the accompanying affirmation and affidavit, Defendant/Third-Party Plaintiffs Raymond and Patricia Lienau respectfully request that the Court: (a) grant their motion for summary judgment dismissing Plaintiffs breach of contract claim; (b) grand judgment on their First Counterclaim and First Third-Party Claim and hold that Plaintiff and Third-Party Defendant breached their fiduciary duties as a matter of law; and (c) set Defendants breach of fiduciary duty claims down for trial for an assessment of damages. Dated: White Plains, New York March 9, 2017 OXMAN LAW GROUP, PLLC Attorneys for Defendants/Third-Party Plaintiffs By: MARC S. OXMAN,rtisq. 120 Bloomingdale Road, Suite 100 White Plains, New York 10605 (914)422-3900 (914) 422-3636 (Fax) 9 10 of 10