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Adam Leitman Bailey, P.C. Wins $1.2 Million Judgment on Behalf of Small Brokerage Firm, Wins on Appeal, and Gets the Judgment Paid in Full Within Months

Abraham Lincoln once said, “Capital is only the fruit of labor, and never could have existed if labor has not first existed. Labor is the superior of capital, and deserves much the higher consideration.” In this case, Adam Leitman Bailey, P.C. successfully fought on behalf of a small business that performed all of the labor in procuring the purchase of a large commercial building at a prime location in Manhattan, while some very wealthy and powerful defendants attempted to deny our client the commission that they duly earned.

Adam Leitman Bailey, P.C. was retained by a boutique commercial real estate brokerage firm that was defrauded of its duly earned commission through an elaborate scheme by several defendants. In 2009, a prospective buyer (called the “first buyer” in this study) used our client’s brokerage services and received confidential information concerning a large commercial building in Midtown Manhattan. The first buyer was and is a major hotelier who specializes in a particular type of hotel, and needed a suitable building to develop. An offer was submitted by Adam Leitman Bailey, P.C.’s client on behalf of the first buyer, which was rejected, and it appeared that the prospective buyer was no longer interested. Later in 2009, a second potential buyer entered into a confidentiality agreement with Adam Leitman Bailey, P.C.’s client and was shown the property. This contract required the second buyer to pay Adam Leitman Bailey, P.C.’s client $750,000 upon the purchase of the property. Unbeknownst to Adam Leitman Bailey, P.C.’s client, the second buyer conspired with his girlfriend to create an entirely new company in her name (not a party to the contract for the $750,000 commission), so that he could submit offers on behalf of her and avoid paying a brokerage commission to Adam Leitman Bailey, P.C.’s client. The second potential buyer claimed that it would be the developer on this “new” deal, not the purchaser.

Months later, the first potential buyer later entered into a partnership with the second buyer whereby they paid a brokerage commission that was $550,000 less than what was owed to Adam Leitman Bailey, P.C.’s client under the terms of the confidentiality agreement. Adam Leitman Bailey, P.C.’s client caught a break when the broker who represented the seller, during a telephone call, accidentally tipped off Adam Leitman Bailey, P.C.’s client that the second buyer was in a deal to buy the property.

Adam Leitman Bailey, P.C.’s client, as a small business, was truly in a terrible situation. Additionally, the scheme to defraud them out of their duly earned brokerage commission was extensive, difficult to prove, and executed by sophisticated individuals. The truth is, in litigation, people with money and power, like the defendants here, usually have the advantage of endurance to prolong litigation.

Adam Leitman Bailey, P.C. commenced a lawsuit against both sets of buyers asking for $750,000 in damages plus interest. Both sets of buyers refused to settle for a reasonable amount. Instead, they dragged the case out, attempted to bleed Adam Leitman Bailey, P.C.’s client dry on legal fees, and sought to force Adam Leitman Bailey, P.C.’s client to settle for a small fraction of the $750,000 they were owed. Adam Leitman Bailey, P.C. attorneys are accustomed to all types of litigation strategies, and the one employed by these defendants was nothing new to Adam Leitman Bailey, P.C. The firm’s attorneys relentlessly attacked the defendants with discovery demands aimed at connecting the dots of the conspiracy between them to defraud Adam Leitman Bailey, P.C.’s client. Adam Leitman Bailey, P.C. poured through thousands of pages of discovery that was produced by the defendants and discovered that, bizarrely, there were no emails produced between two of the defendants who were the most likely to communicate. As expected, the defendants refused/failed to comply when Adam Leitman Bailey, P.C. demanded the production of electronic information and documents which would have illustrated the connections between them. The defendants’ non-compliance resulted in several orders from the court authorizing the plaintiff to move for sanctions.

When one of the defendants failed to appear for a court appearance, Adam Leitman Bailey, P.C. attorneys conducted checks of hospitals and jails to locate them. As the lead attorney from Adam Leitman Bailey, P.C. was a former prosecutor with the Manhattan District Attorney’s office, he quickly got to the bottom of this. Adam Leitman Bailey, P.C. found the “missing” defendant, who it found out had been arrested. The firm pulled the criminal court file related to the arrest and discovered that this missing defendant was put in jail by a judge because he failed to appear for his trial on a real estate extortion scheme. Adam Leitman Bailey, P.C. further discovered that a search warrant was executed in that case whereby the New York City Police Department seized hard drives, cell phones, and laptops from the defendants’ business address. One of the defendants, however, had testified, under oath, in this action, that these same computers were put into storage and destroyed in a flood. Because of this, Adam Leitman Bailey, P.C. had a defendant nailed on lying under oath about discovery.

Adam Leitman Bailey, P.C. attorneys brought a motion for discovery sanctions, which resulted in the defendants’ pleadings being stricken from the case. They made a motion to vacate that decision, but Adam Leitman Bailey, P.C. pushed back, demonstrating that the defendants had no meritorious defense or reasonable excuse for their discovery failures.

Ultimately, the defendants’ strategy of dragging the case out came back to haunt them. After a hearing on damages, the court ruled that our client was entitled to $750,000, plus interest from the date of the closing. The total amount was $1,235,651 – seven times what our client was originally offered by the defendants to settle.

The defendants still did not give up. They attempted to appeal from two prior orders, but Adam Leitman Bailey, P.C. quickly enlisted the New York City Sheriff to sell the very hotel that was the subject of the action and concurrently filed a motion to dismiss the appeals. In a unanimous decision, the Appellate Division First Department agreed with our motion and dismissed the defendants’ appeals. Instead of facing the sale of this now very successful hotel, the defendants paid Adam Leitman Bailey, P.C.’s clients the amount of the judgment almost immediately.

In the end, Adam Leitman Bailey, P.C.’s client’s judgment was $500,000 greater than what their maximum commission would have been at the time of the closing.

John M. Desiderio and an attorney of Adam Leitman Bailey, P.C. prosecuted this action.

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