A pair of brokers who were cheated out of commission on a $28 million contract got paid off — with interest — after a six-year battle.
Herb Hirsch, who now leads the commercial team at Berkshire Hathaway HomeServices, and Bloom Real Estate Group’s Michael Burak received a $1.2 million commission after interest accrued for years on a 2009 contract, according to the brokers’ attorney. The two were originally owed a $750,000 commission for a contract on a Murray Hill property that investors flipped to hotel kingpin Richard Born.
“Too many times the smaller brokerages are bullied out of money and do not have the courage to fight the giants,” said attorney Adam Leitman Bailey, who represented Hirsch and Burak. “This case should serve as an example of why the smaller brokers should never ever give up.”
The case stretches back to 2009, when Hirsch and Burak, then at the firm CitySites Commercial Group, were representing Salvation Army in its sale of 145 East 39th Street, court records show. The team provided Born with information on the property, but the hotelier’s offer for the site was rejected.
A few months later, investor Michael Yanko entered into an agreement with the brokers to view the property. Hirsch and Burak claimed that Yanko and his business partner, Kerry Wellington — both of whom work at real estate development firm WY Management — created a new LLC designed to go around the brokers and submitted a winning bid for the property.
Yanko and Wellington, who could not be reached for comment, then flipped the contract to Born, who purchased the site for $27.8 million in 2010 and converted it into his POD 39 hotel.
A representative for Born declined to comment on the suit, except to point out that the hotelier had been indemnified from the other defendants.
Hirsch and Burak filed a lawsuit in 2011 seeking their commission on the sale. During the discovery phase of the case, Yanko claimed that the records Bailey’s firm was seeking had been stored on computers that were destroyed in a flood. But attorney David Smith found an unrelated criminal case in which authorities seized those computers from Yanko.
Upon learning this, the judge overseeing the commission dispute awarded a default judgement favor of Hirsch and Burak in November 2015.
“I consider the behavior of the defendants in this case … to be frankly a snub in this court’s eye and I consider that behavior to be totally, totally wrong,” Supreme Court Justice Eileen Bransten said, according to a court transcript.
Yanko and Wellington appealed the case, and earlier this month an appellate court ruled against them. But Bailey said they still refused to pay up, and it was only when the attorneys got the sheriff’s department to schedule an auction for the property that they finally decided to pay the commission.
“You can do everything right in this business — and I did — and if someone wants to fuck you, they will fuck you,” Burak told The Real Deal. “You’ve got to fight them with fire.”