The Real Deal New York

Marcus & Millichap triumphs over DSA Realty in commission suit

Appellate court rules that DSA's Lifshitz can't take split as he was unlicensed at the time

June 03, 2015 02:50PM
By Tess Hofmann

680 St. Nicholas Avenue in Hamilton Heights (inset: Arik Lifshitz, left, Seth Glasser, right)

680 St. Nicholas Avenue in Hamilton Heights (inset: Arik Lifshitz, left, Seth Glasser, right)

When Marcus & Millichap was hired by landlord Gili Haberberg to market a 112-unit apartment building in Hamilton Heights, the brokerage reached out to DSA Management, a company that manages over 1,000 units in New York City, as a potential buyer. But little did they realize they were creating a potential rival for the commission fee.

Instead of buying the property themselves, DSA referred Marcus & Millichap to another potential buyer, Zev Hendeles of Pembroke Cos., who ended up buying the building at 680 St. Nicholas Avenue with partner AREA Property Partners for $24 million. The deal was brokered by Marcus & Millichap’s Peter Von Der Ahe, Scott Edelstein and Seth Glasser.

DSA then requested a 50 percent commission split with Marcus & Millichap, claiming it served as the liaison. When the brokerage refused to pay, DSA sued.

Last week, Marcus & Millichap won an appeal in the New York Appellate Division First Department, with the court finding that the firm is not entitled to split its commission as DSA chair Arik Lifshitz, who allegedly made the introduction, was unlicensed to act as a real estate broker at the time of the transaction.

DSA attempted to downplay Lifshitz’s specific role in its arguments, and claimed that he only acted in a clerical fashion, making a phone call on behalf of DSA president Jesse Rhinier, who was licensed at the time.

But Marcus & Millichap used a letter from Lifshitz to Glasser as evidence that Lifshitz’s status was specifically relevant. In the letter, Lifshitz wrote, “all parties concerned are in agreement that I introduced you to [the purchaser] and thus earned my fee.”

Glasser’s affidavit reveals his side of the story. “The entire substance of my discussion with Mr. Lifshitz… centered on whether Mr. Lifshitz’s company, DSA Management, was interested in purchasing the property. At no point was there any discussion at all regarding Mr. Lifshitz’s intent to co-broker the property with Marcus & Millichap.”

DSA’s claims are an “after-the-fact fabrication of lies,” according to Glasser. Neither Lifshitz nor his counsel responded to The Real Deal‘s requests for comment.

In February of last year, the New York State Supreme Court rejected Marcus & Millichap’s attempt to dismiss the suit, giving credence to DSA’s arguments that Lifshitz was acting on behalf of Rhinier.

However, the reversal by the appellate division last week called this argument “unavailing.”

Marcus & Millichap senior vice president J.D. Parker told TRD that DSA “tried to collect a substantial commission based on its claim that it ‘introduced’ Marcus & Millichap to the buyer.  In reality, we had an existing relationship with this buyer and had already offered this property to the buyer by email before the plaintiff alleges to have made the oral introduction.”

“We encourage competition that results in the seller getting the highest possible price,” Parker continued, “and, for this reason, we are always willing to co-broke with another licensed firm, as long as they approach us with a qualified buyer and represent themselves accordingly.”

A lawyer for Marcus & Millichap, Michael Paneth, said: “By precluding non-licensees and their employers from collecting commissions, the courts continue to ensure that buyers and sellers of real property, as well as the brokers who worked hard to obtain their licenses and earn their commissions, are protected from non-licensed individuals who claim to be owed a commission based on an undocumented oral agreement.”

In April, The Real Deal reported that New York State is in the process of opening an investigation into unlicensed brokers at Nest Seekers International, where 81 agents may have been inaccurately representing their status.