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New Capital Solutions, LLC v. KOSL Properties, LLC
NEW CAPITAL SOLUTIONS, LLC v. KOSL
PROPERTIES, LLC, ET AL.
(AC 47721)
Clark, Westbrook and Flynn, Js.
Syllabus
New York Real Property Law (§ 442-d) provides that a person not duly licensed as a real estate broker in the state of New York may not maintain an action to recover compensation for real estate brokerage services rendered in any place in which the statute is applicable.
The plaintiff, a brokerage firm with a principal place of business in Connecticut, appealed from the trial court’s judgment for the defendants, a New York limited liability company, K Co., and its managing member, B, on the plaintiff’s breach of contract claim. The plaintiff and K Co. contracted for the plaintiff to find a lender willing to make a loan to K Co., to be guaranteed by B, for the purpose of refinancing a mortgage on real property in New York. The plaintiff claimed, inter alia, that the court erred in applying § 442-d in the absence of proper notice from the defendants in accordance with the rule of practice (§ 10-3), which requires notice that sufficiently apprises an opposing party that it intends to rely on a particular statute. Held:
The trial court did not improperly engage in a choice of law analysis, as the plaintiff had adequate notice, pursuant to Practice Book § 10-3, that the choice of law issue and the applicability of New York Real Property Law § 442-d were before the court, and the plaintiff had a full and fair opportunity to address those issues.
The trial court properly determined that New York Real Property Law § 442-d barred the plaintiff’s claims, as there was no dispute that the plaintiff did not hold a New York real estate broker license and, although physically located in Connecticut, acted as an agent for K Co., its New York principal, and, through electronic means, performed real estate brokerage services on K Co.’s behalf by soliciting, negotiating with, and ultimately applying for a loan with a lender that was at all relevant times in New York, to be secured by K Co.’s New York real property, and the plaintiff’s representative traveled to New York to attend a meeting with the defendants.
Argued October 16, 2025—officially released June 23, 2026
Procedural History
Action to recover damages for breach of contract, and
for other relief, brought to the Superior Court in the
judicial district of Stamford-Norwalk and tried to the
court, Golger, J.; judgment for the defendants, from
which the plaintiff appealed to this court. Affirmed.
New Capital Solutions, LLC v. KOSL Properties, LLC
Matthew C. Mason, for the appellant (plaintiff).
Peter V. Lathouris, with whom, on the brief, was Elizabeth Nesheiwat, for the appellees (defendants).
Opinion
CLARK, J. The plaintiff, New Capital Solutions, LLC,
appeals, following a court trial, from the judgment rendered by the trial court in favor of the defendants, KOSL
Properties, LLC (KOSL), and Bobby Ben-Simon. The
court concluded that the plaintiff’s claims for breach
of contract were governed by New York law and were
barred by the provisions of New York Real Property Law
§ 442-d, which provides that a person not duly licensed
as a real estate broker in the state of New York may not
maintain an action to recover compensation for real
estate brokerage services rendered in any place in which
that statute is applicable. On appeal, the plaintiff claims that the trial court erred by (1) applying New York law
in the absence of proper notice from the defendants in
accordance with Practice Book § 10-3 (b) and (2) concluding that § 442-d barred its claims where, according to the plaintiff, the plaintiff provided the services in question from its Connecticut office. We affirm the judgment of
the trial court.
The following facts, as found by the trial court or as
otherwise undisputed by the parties, and procedural
history are relevant to the resolution of this appeal. The plaintiff is a national commercial mortgage advisory
and brokerage firm with a principal place of business in
Greenwich. KOSL is a New York limited liability company located in Mamaroneck, New York. Ben-Simon is
the managing member of KOSL and resides in New York.
The plaintiff and Ben-Simon, as the managing member
of KOSL, entered into a loan origination fee agreement
(agreement) dated July 15, 2019. Upon execution of the
agreement, KOSL paid the plaintiff $5000. Under the
agreement, the plaintiff promised to use its best efforts
to find a lender willing to loan KOSL $4,225,000, to be
secured by property located at 875 Mamaroneck Avenue,
New Capital Solutions, LLC v. KOSL Properties, LLC
Mamaroneck, New York, so that KOSL could refinance an
existing mortgage on that property. In exchange, KOSL
agreed to pay the plaintiff an origination fee of 1 percent from the loan proceeds. Ben-Simon guaranteed KOSL’s
obligations under the agreement. The agreement was for
an initial six month term from the date of execution and
could not be cancelled by either party during this period. Thereafter, the agreement automatically extended for
additional six month terms until the loan was funded or
it was determined that the loan was not fundable.
William Horty is the plaintiff’s managing director.
Following the execution of the agreement, Horty initially
contacted numerous lenders, including Connecticut Community Bank, N.A., and Putnam County Savings Bank,
but none of those initial efforts resulted in a loan agreement. In September 2019, Horty contacted Paul Balanikas, vice president at M&T Bank, regarding a potential
loan to KOSL. Horty eventually would submit to M&T
Bank a complete loan application on KOSL’s behalf. Balanikas’ office was located in New York. On December 10,
2019, on behalf of M&T Bank, Balanikas emailed KOSL
a term sheet with respect to the proposed loan.
On December 11, 2020, Ben-Simon emailed Horty
stating that he would “not extend the agreement upon
the expiration date of January 15, 2020,” because the
plaintiff had yet to produce a loan per the origination
fee agreement. Horty testified that he nevertheless continued to work on behalf of KOSL up until closing as
the “agreement was still in full force” because KOSL
had accepted the financing proposal and was proceeding
with the loan. On December 16, 2019, M&T Bank issued
an initial commitment letter to KOSL for a commercial
mortgage loan to be secured by the Mamaroneck property.
On January 28, 2020, after having issued several
revised commitment letters to KOSL, M&T Bank issued
a final commitment letter, which Ben-Simon signed
on behalf of KOSL. On March 4, 2020, M&T Bank and
KOSL entered into rate lock agreements. On March 30,
2020, upon learning that KOSL would be closing on the
New Capital Solutions, LLC v. KOSL Properties, LLC
loan with M&T Bank, the plaintiff issued a settlement
statement to Ben-Simon and M&T Bank indicating a
balance due at the closing of the loan per the terms of the agreement. The settlement statement indicated that the
origination fee due to the plaintiff was $36,500, which
is equal to 1 percent of the final loan amount issued to
KOSL ($41,500) minus the payment paid by KOSL upon
signing of the origination fee agreement ($5000).
On or about April 6, 2020, M&T Bank and KOSL
entered into a term note for the principal amount of
$4,150,000 secured by a mortgage on the Mamaroneck
property. The closing documents were executed in New
York. The plaintiff’s fees as outlined in the settlement
statement were not paid out of the loan proceeds at the
loan closing.
In June 2020, the plaintiff commenced the present
action against the defendants by way of a two count
complaint sounding in breach of contract: count one
against KOSL for breach of the agreement and count
two against Ben-Simon for breach of his guarantee of the
agreement. In its complaint, the plaintiff alleged that it had satisfied its obligations under the agreement and that the defendants had breached their obligations by failing
to pay the balance of the origination fee. The defendants
filed an answer denying the plaintiff’s allegations that
it had satisfied its obligations under the agreement and
denying that they owed the plaintiff any money under
the agreement. The defendants further raised the special
defenses of unclean hands, unconscionability, and setoff,
and asserted a counterclaim alleging that the plaintiff
breached the agreement by failing to procure financing
in accordance with the terms of the agreement not later
than January 15, 2020.
On October 19, 2021, the plaintiff moved for summary
judgment, claiming that there was no genuine issue of
material fact and that it was entitled to judgment as
a matter of law on both counts of the complaint and
on the defendants’ special defenses and counterclaim.
The defendants objected to the motion, asserting that
New Capital Solutions, LLC v. KOSL Properties, LLC
there were genuine issues of material fact concerning
whether the plaintiff had procured financing in accordance with the terms of the agreement within the time
frame required under that agreement. At that time,
neither party raised or addressed the question of whether
Connecticut or New York law applied to the claims at
issue. The trial court, Kavanewsky, J., denied the motion
for summary judgment on June 24, 2022.
On June 22, 2023, the parties filed a joint trial memorandum. Trial was scheduled to commence on July 11,
2023. On July 6, 2023, the defendants filed a request
to amend their special defenses by adding a defense of
“choice of law.” In the proposed amended special defense,
the defendants alleged that New York law governed the
plaintiff’s claims and that those claims were barred by
New York law. See N.Y. Real Prop. Law § 442-d (McKinney Cum. Supp. 2026).1 Specifically, the defendants
alleged that “§ 442-d bars suit to recover unpaid fees when the suit fails to allege the plaintiff was a duly licensed real estate broker,” and that, because the plaintiff was not a
licensed real estate broker, § 442-d barred the plaintiff’s claims.2 The defendants’ July 6, 2023 request to amend
represented the first instance in which either party raised the choice of law question. Four days later, on July 10,
2023, the defendants also filed a request for the court
to take judicial notice of New Capital Solutions, LLC
v. Lawrence Woodmere Academy, United States District Court, Docket No. 3:20-cv-00408 (JCH) (D. Conn.
1
New York Real Property Law § 442-d provides: “No person, copartnership, limited liability company or corporation shall bring or maintain an action in any court of this state for the recovery of compensation for services rendered, in any place in which this article is applicable, in the buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed real estate broker or real estate salesperson on the date when the alleged cause of action arose.”
Although § 442-d was amended after the agreement was signed; see 2022 N.Y. Laws 1713; that amendment has no bearing on the merits of this appeal. For purposes of clarity and convenience, we refer to the current revision of the statute.
2
In their request to amend, the defendants also withdrew their unclean hands and setoff defenses.
New Capital Solutions, LLC v. KOSL Properties, LLC
January 19, 2021), in which the United States District
Court for the District of Connecticut dismissed without
prejudice claims brought by the plaintiff in the present
action against a different defendant for breach of a commercial origination fee agreement on the ground that
the plaintiff had failed to allege that it was a licensed
real estate broker in New York pursuant to § 442-d.3 On
that same date, the plaintiff filed a trial memorandum
that did not address the defendants’ request to amend
its special defenses.
On the following day, July 11, 2023, the same date
trial was scheduled to commence, the plaintiff filed an
objection to the defendants’ request to amend their special defenses. In its objection, the plaintiff argued that the request was untimely and prejudicial. The plaintiff
also argued, inter alia, that its claim was governed by
Connecticut law4 and that, even if New York law applied,
New York Real Property Law § 442-d did not bar its claim
because its brokerage services were rendered outside of
New York and, thus, not covered by the statute.
At the outset of the trial and before evidence commenced, the court heard argument on the defendants’
pending request to amend their special defenses. Prior to
ruling on the request and with respect to the choice of law question that the defendants had raised in their request,
the court asked counsel for the defendants whether there
were “any other ways that you can . . . achieve the same
goal other than to amend your special defense? I mean,
is it something that . . . you’ll be able to brief if the court 3
Although the court in the present case did not rule on the defendants’ request to take judicial notice of the decision in New Capital Solutions, LLC v. Lawrence Woodmere Academy, supra, United States District Court, Docket No. 3:20-cv00408 (JCH), the court referenced that decision in its memorandum of decision in this case.
4
Specifically, the plaintiff argued that Connecticut law applied because: (1) New York Real Property Law § 442-d only applies to actions brought in New York and the plaintiff brought this action in Connecticut, (2) the parties’ agreement contained a forum selection clause requiring any action relating to this agreement be brought in Connecticut, (3) the agreement was executed and performed in Connecticut, and (4) the plaintiff through its managing principal, Iliad Estrada, is a real estate broker or salesperson for the purposes of § 442-d.
New Capital Solutions, LLC v. KOSL Properties, LLC
takes notice of the decision?” The defendants responded
that it would be appropriate to address the issue in posttrial briefs.5 The plaintiff continued to object to the
request to amend, arguing to the court that allowing
the amendment would be “untimely and prejudicial.”
After hearing from the parties, the court denied
the request to amend on the ground that allowing the
amendment and opening the pleadings at that late stage
would cause a “postponement of trial . . . .” Following
the court’s ruling, however, counsel for the defendants
asked the court whether its denial of the request to amend amounted to “an affirmative ruling that [the court would]
be applying Connecticut law to [the] case.” The court
responded that it would “review everything . . . when
the matter is concluded. I’m going to issue a decision on
this after evidence is introduced, you know, but I’m not
going to allow your amendment.”
The evidentiary portion of the trial then commenced.
The plaintiff’s sole witness was William Horty. The
defendants presented testimony from Iliad Estrada,
managing principal of the plaintiff, and Ben-Simon.
Numerous exhibits also were admitted into evidence,
including but not limited to: (1) the agreement; (2) loan
proposals from Putnam County Savings Bank and Connecticut Community Bank, N.A.; (3) communications
between Balanikas, Ben-Simon, and Horty concerning
the M&T Bank loan and its terms; (4) communications
between Ben-Simon and Horty concerning the purported
cancellation of the agreement; (5) loan proposals to KOSL
from M&T Bank; (6) commitment letters for the loan
from M&T Bank to KOSL; (7) the plaintiff’s settlement
statement of fees; (8) the term note executed between
M&T Bank and KOSL; and (9) the transcript of Balanikas’ deposition.
On direct examination, Horty testified that the agreement included a provision stating that the plaintiff is a
“Connecticut based company . . . domiciled in the state
of Connecticut” and that “Connecticut law and courts is
[the plaintiff’s] forum” because the plaintiff “originate[s] loans in many states around the country and . . . [is] not conversant in all of the civil practice laws in the various 5
Posttrial briefs were ordered.
New Capital Solutions, LLC v. KOSL Properties, LLC
states, so . . . [it] mandate[s] that the forum and the law be the state of Connecticut.” The defendants moved
to strike that testimony, arguing that the origination
fee agreement “speaks for itself . . . [and] . . . doesn’t say anything about the law being the state of Connecticut.” The court denied the request stating that, “[u]ltimately, there’s going to have to be a decision made on the law . . . .”6
A substantial portion of the defendants’ cross-examination of Horty was devoted to questions pertaining to
the choice of law issue that the defendants had raised
in the requests to amend and to take judicial notice.
The defendants’ counsel asked Horty whether he or the
plaintiff held a real estate broker’s license in New York. Horty testified that he did not, but that Estrada, the
managing principal of the plaintiff, held a mortgage
origination license in New York at the times relevant to
the origination fee agreement. He further testified that
the plaintiff could “gladly produce [Estrada’s mortgage
origination license] number because she’s sitting in the
courtroom.” The defendants then asked Horty about BenSimon’s residency and KOSL’s place of incorporation.
Horty testified that he communicated with Ben-Simon
over the phone and that he did not know whether BenSimon was a resident of New York or whether KOSL was
a New York company. The questioning then turned to
whether the other lenders Horty contacted were located
in New York. Horty testified that Putnam County Savings Bank, a bank he had contacted regarding a proposed
loan to KOSL, was headquartered in New York and that
the representative who generated the proposal “has an
office . . . somewhere in White Plains [New York].” The
plaintiff eventually objected to this line of questioning
on relevance grounds, arguing that “it’s only relevant
if the proposed special defense is part [of the case].” The 6
The agreement, which was admitted into evidence and attached as an exhibit to the complaint, includes a forum selection clause requiring any action relating to the agreement to be brought in Connecticut, but does not include a choice of law provision. On appeal, the plaintiff does not argue that the agreement includes a choice of law provision.
New Capital Solutions, LLC v. KOSL Properties, LLC
court responded that the evidence all “went in, I can’t
strike it all.”
The defendants’ counsel continued to ask Horty about
matters pertaining to the choice of law issue. Horty testified that he did not think that Ben-Simon ever came
to the plaintiff’s office in Greenwich. He testified that
Balanikas worked for M&T Bank, that Balanikas’ office
was in New York, and that he met with both Ben-Simon
and Balanikas at the Mamaroneck property in New York.
He agreed that M&T Bank’s initial commitment letter
for the commercial mortgage loan to KOSL indicated
that M&T Bank’s offices were located in New York.
The plaintiff objected again to this line of questioning
on relevance grounds. The defendants argued that the
questioning was relevant to show that “Ben-Simon,
his company, his property, the loan all originate out
of the state of New York. The state of New York is the
governing law . . . .” The court noted that the choice of
law issue was “a question of law for the court” and that
“questioning the witness on the legal issue of choice of law probably is not appropriate.” The court ruled, however,
that the defendant could “question him on the document,7
it’s in evidence,” but should “limit [the questioning] to
the contents [of the document].” (Footnote added.) The
defendants proceeded to ask Horty about the term note
that KOSL and M&T Bank eventually executed, which
stated that “this note has been delivered to and accepted
by the bank and will be deemed to be made in the state
of New York . . . .”
On redirect, the plaintiff’s counsel asked Horty about
his meeting with Balanikas and Ben-Simon at the Mamaroneck property in New York. Horty testified that, during
that meeting, he “merely provided the introduction of
. . . Balanikas” and then “sat there as an observer.” In
response to additional questions from the plaintiff’s
counsel, Horty further testified that he performed his
work out of the plaintiff’s Greenwich office and that
7
The document in question was the M&T Bank commitment letter to KOSL dated December 16, 2019.
New Capital Solutions, LLC v. KOSL Properties, LLC
“[t]he entire loan production . . . [a]ll email communications, phone calls, loan packaging, analysis, everything
was done at 32 Field Point Road in Greenwich, Connecticut.”
Following Horty’s testimony, the plaintiff rested,
and the defendants called Estrada as their first witness. The plaintiff objected to Estrada being called as a
witness because she was not on the defendants’ witness
list. The defendants countered that they were allowed to
call Estrada as a rebuttal witness because the plaintiff’s witness, Horty, had testified that Estrada held “the key
license that the [plaintiff] needs in order to survive under either New York or Connecticut law.” The court overruled
the plaintiff’s objection and allowed Estrada to testify.
Estrada testified that she held a loan origination license in the state of New York during all relevant times and
that a loan origination license “is a residential mortgage license underneath the consumer financial protection
bureau.” She agreed that a mortgage loan originator
license is different than a real estate broker license, which she did not hold. On cross-examination, Estrada testified that the work that she performed pursuant to the
origination fee agreement with KOSL, such as “sign[ing]
the fee agreement” and discussing the fee agreement and
the loan application with Horty, was performed “[i]n [the
plaintiff’s] office . . . .”
The defendants next called Ben-Simon as a witness.
Ben-Simon testified that KOSL is incorporated in New
York and that both his and KOSL’s business address is
875 Mamoroneck Avenue, Mamaroneck, New York. The
defendants then offered KOSL’s articles of incorporation as an exhibit. The plaintiff objected on relevance
grounds, but the court ultimately allowed the defendants
to introduce the articles of incorporation “as an exhibit
showing that [KOSL is] incorporated in New York . . . .”
Ben-Simon further testified that he personally resided
in Scarsdale, New York during the time period from
when KOSL and the plaintiff entered into the agreement
through the date when the loan closed.
New Capital Solutions, LLC v. KOSL Properties, LLC
The defendants then asked Ben-Simon about other
transactions or checking or savings accounts he had
with M&T Bank and where those accounts were opened.
The plaintiff objected on relevance grounds and the following exchange occurred in which the court ultimately
sustained the objection:
“The Court: I think I understand. It seems to me you
can almost stipulate to the facts in this case, just that
you have different conclusions from them. I’m not suggesting you do that, but it seems pretty clear the factual underpinnings, but I don’t understand the relevance as
to these other transactions. I’ll sustain the objection.
“[The Defendants’ Counsel]: That’s fine. . . .
“The Court: I mean, am I incorrect that the plaintiff
put on a case—alleging that we provided certain services
and you’re defending it in part by saying regardless of
whether those services were provided we’re not indebted
to him for that amount because of our status in New York
and your status in Connecticut.
“[The Defendants’ Counsel]: Our point is you don’t
hold a real estate broker’s license which is the nexus to
this transaction, but for a New York note and mortgage
they’re not entitled to a fee and if they can’t then, yes, it is New York law that applies. Ms. Estrada just testified
that [n]either herself nor [the plaintiff] held the license that was appropriate so, yeah, I mean, we could stipulate
to that and cut through the rest of it.
“The Court: I think that’s the dispute here and that’s
more something for briefing rather than facts if, you
know, based on what I’ve heard so far, but . . . I don’t
know. [Counsel for the plaintiff], do you have a view on
that? I mean, are you in disagreement on the facts here?
“[The Plaintiff’s Counsel]: No, I think it’s—this is
all new to me this any personal stuff. But I don’t think
there’s any doubt that KOSL was in New York, the building was in New York and the loan was made to [KOSL]
from M&T Bank which is a national bank but was located
New Capital Solutions, LLC v. KOSL Properties, LLC
in New York . . . that those are facts. I also think and we included this objection that New York case law says . . .
if the services are provided outside of New York it . . .
doesn’t matter.
“The Court: [I] understand. I read it. I understand you
have a different view of the law. . . .
“[The Plaintiff’s Counsel]: Right. But I would agree
with you it’s a briefing issue.
“The Court: Yes.”
The defendants’ counsel then continued with his direct
examination of Ben-Simon, who testified that he never
went to the plaintiff’s office in Connecticut. He also
corroborated Horty’s testimony that he had met with
Balanikas and Horty at the 875 Mamaroneck Avenue
property in New York.
Following the close of evidence, the parties filed their
posttrial briefs on September 25, 2023. Both parties’
briefs addressed the choice of law issue and the applicability of New York Real Property Law § 442-d.8 Argument
on the posttrial briefs occurred on December 11, 2023.
Also on December 11, 2023, the defendants filed a motion
to dismiss, arguing that the plaintiff lacked standing to
prosecute the action because it was not a licensed real
estate broker as required by § 442-d.9
On April 3, 2024, the court issued its memorandum
of decision and rendered judgment for the defendants
on the ground that the plaintiff’s claims were governed,
and barred, by New York law. With respect to its decision to apply New Yok law, the court explained that,
although the defendants did not give notice in their
8
In their posttrial brief, the defendants also withdrew their counterclaim against the plaintiff.
9
On February 26, 2024, the court heard argument on the defendants’ motion to dismiss. In its objection to the motion to dismiss, the plaintiff again argued that New York Real Property Law § 442-d was inapplicable. The court, Golger, J., ultimately denied the defendants’ motion to dismiss in its April 3, 2024 memorandum of decision addressing both that motion and its judgment on the merits.
New Capital Solutions, LLC v. KOSL Properties, LLC
initial pleadings of their intent to rely on New York
law, they nevertheless “gave sufficient notice of their
claims concerning New York law through their request
to amend their special defenses before trial, their request for the court to take judicial notice, the statements made at trial, the evidence introduced, their posttrial memorandum and their motion to dismiss.” The court further
noted that “there is no dispute as to the facts at issue in this matter and the plaintiff cannot claim prejudice in
addressing what is primarily a legal claim.” The court
then went on to perform a choice of law analysis and
determined that, “even though the plaintiff in the present case was located in Connecticut for the majority of
the relevant time, the dispute . . . is about a loan secured by property located in New York and fees owed by KOSL,
a New York company, and guaranteed by Ben-Simon, a
New York resident. As such, New York law, and [New
York Real Property Law] § 442-d, apply to the present
case.”
On April 23, 2024, the plaintiff filed a motion to
reargue/reconsider, which requested “reargument/
reconsideration of the court’s conclusion that the plaintiff’s claims are barred by New York Real Property Law
§ 442-d,” and argued that “the court overlooked or failed
to properly consider or address the issue of whether the
plaintiff, which performed all of its services in Connecticut, performed brokerage services in New York
for purposes of . . . § 442-d” and “overlooked controlling New York precedent . . . .” On May 23, 2024, the court,
Golger, J., summarily denied that motion.
On November 26, 2024, the plaintiff filed a motion for
articulation asking the trial court to more fully articulate the factual and legal basis for its April 3, 2024 decision. Specifically, the plaintiff asked for an articulation of the “specific services, if any, the court found that the plaintiff provided in New York” and to “[e]xplain the legal
reasoning underlying the conclusion that [New York Real
Property Law] § 442-d applies to this case . . . .” The court issued an articulation on December 17, 2024, in which
New Capital Solutions, LLC v. KOSL Properties, LLC
it stated: “The plaintiff transmitted emails (including
loan summaries and proposals) and telephone calls to
these New York entities in furtherance of the services it
provided to the defendants in New York. The plaintiff’s
managing director traveled to the state of New York to
meet with the defendants to discuss possible loan terms
with proposed lenders. [KOSL’s] loan approval was issued
in New York, and the loan documents were executed in
New York. The plaintiff was not a licensed broker and
performed these services in New York. All of these factors provide a basis for determining that . . . § 442-d applies and the plaintiff is precluded from recovering damages
for the services rendered.” This appeal followed. Additional facts will be set forth as necessary.
I
The plaintiff does not challenge on appeal the merits
of the court’s choice of law analysis. Instead, the plaintiff claims that the trial court improperly engaged in a
choice of law analysis in the first instance because, in its view, the defendants did not comply with Practice Book
§ 10-3 (b). We disagree.10
“The interpretation of the rules of practice presents
a question of law, over which our review is plenary.”
Gilbert v. Beaver Dam Assn. of Stratford, Inc., 85 Conn.
App. 663, 671, 858 A.2d 860 (2004), cert. denied, 272
Conn. 912, 866 A.2d 1283 (2005). Practice Book § 10-3
(b) provides: “A party to an action who intends to raise
an issue concerning the law of any jurisdiction or governmental unit thereof outside this state shall give notice in his or her pleadings or other reasonable written notice.”
Although there is no appellate authority concerning
what constitutes reasonable notice under § 10-3 (b), there is extensive appellate authority discussing a similar
requirement that is set forth in subsection (a) of the
10
The plaintiff presented this issue as the second issue in its brief. We address it first because the question of whether the court properly applied New York law is a threshold issue, which, if decided in the plaintiff’s favor, would obviate the need to address the other issue it has raised on appeal.
New Capital Solutions, LLC v. KOSL Properties, LLC
same rule of practice. That subsection provides: “When
any claim made in a complaint, cross complaint, special
defense, or other pleading is grounded on a statute, the
statute shall be specifically identified by its number.”
Practice Book § 10-3 (a). Notwithstanding the use of the
word “shall” in § 10-3 (a), “our courts repeatedly have
recognized that the rule embodied in . . . § 10-3 [(a)] is directory and not mandatory . . . [and that] notice is the critical consideration in such instances. As this court
has observed, [a]s long as the defendant is sufficiently
apprised of the nature of the action . . . the failure to
comply with the directive of . . . § 10-3 (a) will not bar recovery.” (Citations omitted; internal quotation marks
omitted.) Michalski v. Hinz, 100 Conn. App. 389, 394,
918 A.2d 964 (2007).
Because Practice Book § 10-3 (b) uses the same terminology as § 10-3 (a) and serves a similar purpose—notice
to the parties and the court of an intent to rely on a particular statute or the law of a foreign jurisdiction—we
conclude that the rule embodied in § 10-3 (b), like the rule embodied in § 10-3 (a), is directory and not mandatory
and that notice is the critical consideration. We further
conclude that the case law interpreting and applying
§ 10-3 (a) is instructive when considering whether a party had sufficient notice of an opposing party’s intention to
rely on the law of a foreign jurisdiction.
Courts have interpreted Practice Book § 10-3 (a) as
requiring notice that sufficiently apprises an opposing
party that it intends to rely on a particular statute. A
party is sufficiently apprised if the notice given provides the other party with a fair opportunity to fully litigate
the issues that the invocation of a particular statute
raises. In Spears v. Garcia, 66 Conn. App. 669, 670–71,
785 A.2d 1181 (2001), aff’d, 263 Conn. 22, 818 A.2d 37
(2003), for instance, the plaintiffs appealed from the
judgment of the trial court granting summary judgment
in favor of the defendants on the ground of governmental
immunity. The plaintiffs argued that their failure to
plead the statute abrogating that immunity was not fatal
New Capital Solutions, LLC v. KOSL Properties, LLC
to their cause of action because the defendants “were
sufficiently apprised”; id., 672; in accordance with the
requirements of Practice Book § 10-3 (a) that the plaintiffs intended to rely on General Statutes § 52-557n11 to
abrogate the defendants’ governmental immunity. Id.,
670–73. This court agreed and reversed the summary
judgment rendered for the defendants. In so doing, the
court reasoned that, although the plaintiffs failed to
plead § 52-557n in their complaint, they sufficiently
apprised the defendants that the plaintiffs were relying on § 52-557n because they “relied on the statute in
their memorandum of law in opposition to the motion
for summary judgment and in oral argument before the
trial court.” Id., 676; see also Burton v. Stamford, 115
Conn. App. 47, 65–66, 971 A.2d 739 (despite failure to
allege reliance on § 52-557n to abrogate governmental
immunity, plaintiff sufficiently apprised defendant he
was proceeding under statute by referring to statute at
outset of trial and several times thereafter; “[a]s long as the defendant is sufficiently apprised of the nature of
the action . . . the failure to comply with the directive of Practice Book § 10-3 (a) will not bar recovery” (internal
quotation marks omitted)), cert. denied, 293 Conn. 912,
11
General Statutes § 52-557n provides in relevant part: “Liability of political subdivision and its employees, officers and agents. Liability of members of local boards and commissions. (a) (1) Except as otherwise provided by law, a political subdivision of the state shall be liable for damages to person or property caused by: (A) The negligent acts or omissions of such political subdivision or any employee, officer or agent thereof acting within the scope of his employment or official duties; (B) negligence in the performance of functions from which the political subdivision derives a special corporate profit or pecuniary benefit; and (C) acts of the political subdivision which constitute the creation or participation in the creation of a nuisance; provided, no cause of action shall be maintained for damages resulting from injury to any person or property by means of a defective road or bridge except pursuant to section 13a-149. (2) Except as otherwise provided by law, a political subdivision of the state shall not be liable for damages to person or property caused by: (A) Acts or omissions of any employee, officer or agent which constitute criminal conduct, fraud, actual malice or wilful misconduct; or (B) negligent acts or omissions which require the exercise of judgment or discretion as an official function of the authority expressly or impliedly granted by law. . . .”
New Capital Solutions, LLC v. KOSL Properties, LLC
987 A.2d 1108 (2009); Ramondetta v. Amenta, 97 Conn.
App. 151, 163–64, 903 A.2d 232 (2006) (finding notice
of statute of limitations defense insufficient pursuant to Practice Book § 10-3 (a) “[b]ecause the plaintiffs failed at any time to identify the applicable statute on which they
relied [and, thus] the court properly treated their defense as waived”); Gilbert v. Beaver Dam Assn. of Stratford,
Inc., supra, 85 Conn. App. 670–72 (concluding that
trial court erred in refusing to consider statutory claim
because defendants received sufficient notice of claim
where plaintiffs referenced statute in pretrial brief and
discussed it during course of trial).
Ultimately, Practice Book § 10-3 (a) concerns notice
and “[t]he concept of notice concerns . . . fundamental fairness,” which requires that parties be afforded
“the opportunity to be apprised when their interests
are implicated in a given matter.” (Internal quotation
marks omitted.) Michalski v. Hinz, supra, 100 Conn.
App. 399. Our appellate case law pertaining to § 10-3 (a)
indicates that notice of the statutory basis for a claim is sufficient when the defendant is given the opportunity
to respond to the claim even if the statute is not identified in the pleadings. See Gilbert v. Beaver Dam Assn.
of Stratford, Inc., supra, 85 Conn. App. 671 (opposing
party received notice at relevant time “when they could
have responded to the allegations”).
It matters not, therefore, that the defendants in this
case did not give notice in their initial pleadings that
they intended to rely on the law of New York to defend
against the plaintiff’s claims. The key consideration is
whether the plaintiff was sufficiently apprised that the
defendants intended to pursue that issue. In its memorandum of decision, the court concluded that, although the
defendants did not give notice in their initial pleadings
of their intent to rely on New York law, they nevertheless “gave sufficient notice of their claims concerning
New York law through their request to amend their
special defenses before trial, their request for the court to take judicial notice, the statements made at trial, the
New Capital Solutions, LLC v. KOSL Properties, LLC
evidence introduced, their posttrial memorandum and
their motion to dismiss.” We agree.
First, before trial commenced, the defendants’ requests
to amend their special defenses and for the court to take
judicial notice remained pending. The plaintiff, therefore, had notice that there was at least a possibility that the choice of law issue would have to be addressed at trial.
Second, although prior to the presentation of evidence,
the court ultimately denied the request to amend special
defenses due to its concern that opening the pleadings
might result in additional pleading and motion practice
that could delay the trial,12 the court also indicated at
several points that it was going to need to decide the
choice of law issue. For example, immediately after the
court denied the defendants’ request to amend special
defenses, counsel for the defendants asked the court
whether its denial of the request to amend amounted to
“an affirmative ruling that [the court would] be applying Connecticut law to [the] case.” The court responded
that it would “review everything . . . when the matter
is concluded. I’m going to issue a decision on this after
evidence is introduced, you know, but I’m not going to
12
We note that, under New York law, New York Real Property Law § 442-d is not a special defense that a defendant must plead in an action seeking to recover compensation for real estate brokerage services. Rather, any plaintiff seeking to recover compensation for such services must allege, and ultimately prove, that it held such a license at the time the cause of action accrued. See N.Y. Real Prop. Law § 442-d (McKinney Cum. Supp. 2026) (“[n]o person, copartnership, limited liability company or corporation shall bring or maintain an action in any court of this state for the recovery of compensation for services rendered, in any place in which this article is applicable, in the buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed real estate broker or real estate salesperson on the date when the alleged cause of action arose” (emphasis added)); see also Kreuter v. Tsucalas, 287 App. Div. 2d 50, 54, 734 N.Y.S.2d 185 (2001) (§ 442-d “requires any individual or entity seeking compensation for services rendered in connection with the sale or leasing of real estate, or negotiating a loan upon any real estate, to plead and prove that such person or entity was a duly-licensed real estate broker or sales[person] on the date when the alleged cause of action arose” (internal quotation marks omitted)).
New Capital Solutions, LLC v. KOSL Properties, LLC
allow your amendment.” The court also addressed the
plaintiff directly during the presentation of evidence and asked its counsel’s view on whether it would be appropriate for the parties to address the choice of law issue
and the applicability of New York Real Property Law
§ 442-d in posttrial briefing because the facts were not
in dispute. The plaintiff’s counsel agreed with the court
that the parties have a different “view of the law” and
also agreed that it was a “briefing issue.”
Third, and as set forth more fully previously in this
opinion, the plaintiff clearly had the opportunity to
present evidence on the choice of law issue and the applicability of New York Real Property Law § 442-d at trial.
Indeed, a substantial portion of the evidence that was
introduced by the parties at trial was devoted to that very question. The plaintiff’s sole witness, Horty, explained
that the plaintiff is a Connecticut company domiciled in
Connecticut. Horty also testified that he performed all
of his work in connection with the agreement from his
Connecticut office, that he met with both Ben-Simon and
Balanikas in New York, and that the managing principal
of the plaintiff, Estrada, held a mortgage loan originator license in New York.13 All of this testimony was relevant
solely with respect to the choice of law issue and the
applicability of § 442-d.
The testimony of the two defense witnesses at trial,
whom the plaintiff cross-examined, also focused on the
choice of law issue and the applicability of New York Real Property Law § 442-d. Estrada testified to the license she held and that she performed all of her services in connection with the origination fee agreement in the plaintiff’s Greenwich office. Ben-Simon’s testimony focused on his
New York residency, his New York business address, and
KOSL’s incorporation in New York. He further testified
that he never went to the plaintiff’s Connecticut office
but did meet with Horty and Balanikas in New York.
13
Estrada, when called as a witness, later conceded that the mortgage loan originator license is not the required license under New York Real Property Law § 442-d and that she did not hold a real estate broker’s license in New York.
New Capital Solutions, LLC v. KOSL Properties, LLC
Thus, the choice of law issue and the applicability of
§ 442-d clearly were litigated at trial. Indeed, those issues were the primary focus of the testimony offered during
the course of the trial.
Fourth, and contrary to what the plaintiff argues on
appeal, the court did not unfairly mislead or confuse the
plaintiff about whether it would engage in a choice of law analysis by virtue of its evidentiary rulings concerning
the relevance of evidence pertaining to the choice of law
issue or the applicability of New York Real Property
Law § 442-d. For example, when the defendants’ counsel
questioned Horty about the Putnam County Savings
Bank loan proposal and whether it was generated out of a
New York office, the plaintiff’s counsel objected because
“the line of inquiry” was only relevant to the proposed
special defense. The court responded that it all “went
in” and that it could not “strike it all.” The plaintiff’s counsel, again, objected on relevance grounds when the
defendants’ counsel asked Horty: “If Mr. Ben-Simon
testified that he never came to the state of Connecticut . . . would you have any reason to refute that?” Although
the court sustained that objection, it also noted that
“it’s also speculation” and that “I’m sure that defense
counsel is going to call his own witness on these questions anyways, so I’ll sustain the objection.” When the
plaintiff’s counsel objected again on relevance grounds
to questions the defendants’ counsel posed to Horty
about whether the M&T Bank commitment letter to
KOSL indicated where M&T Bank’s offices were located,
the court allowed the questioning on the document and
specifically stated again regarding the choice of law issue: “That’s a question of law for the court though, right?”
Although the court sustained counsel’s objection to the
question the defendants’ counsel asked Horty about
whether Horty would agree “that the M&T Bank loan
was made in conformity with New York law,” it did so
on the ground that it called for a legal conclusion. When
the plaintiff’s counsel objected to the introduction of
KOSL’s articles of incorporation, stating “I . . . have a
standing objection to the relevance of any of this,” the
New Capital Solutions, LLC v. KOSL Properties, LLC
court allowed the evidence “as an exhibit showing that
[KOSL is] incorporated in New York.” Contrary to the
plaintiff’s claims on appeal, therefore, the court permitted both parties to introduce evidence with respect to the choice of law question and the applicability of § 442-d
and did not make evidentiary rulings that misled or
prejudiced the plaintiff with respect to whether it would
consider those issues.
Lastly, the parties thoroughly addressed both the
choice of law issue and the applicability of New York
Real Property Law § 442-d after the trial concluded.
Specifically, the parties addressed the issue in their
posttrial briefs to the court, their arguments regarding
the defendants’ posttrial motion to dismiss, and again in
the plaintiff’s motion for reargument/reconsideration.14
In its brief, the plaintiff argues that it was prejudiced
by the defendants’ late notice that they intended to rely
on New York law because it “was deprived of the opportunity to utilize Connecticut procedural tools, such as
filing a request to revise or a motion to strike, to conduct discovery and develop a full factual record, thoroughly
research the merits of the defense (however baseless it
is), identify necessary witnesses including possible expert witnesses, documents, or additional evidence for trial,
and otherwise prepare for this newly introduced defense.”
The plaintiff fails to identify with particularity, however, precisely what evidence it would have introduced
had it known sooner that the defendants would argue that
New York law applied. It does not claim, for instance,
that it would have produced a witness to testify that the
plaintiff or its representatives held the requisite New
York license or that it was deprived of the opportunity to prove that it performed the services in question outside
New York. Likewise, the plaintiff fails to elaborate on its claim that it would have engaged in additional pleading
practice or how doing so would have been beneficial. Nor
14
We also note that the plaintiff was a party to the action in New Capital Solutions, LLC v. Lawrence Woodmere Academy, supra, Docket No. 3:20-cv-00408 (JCH), in which New York Real Property Law § 442-d also was at issue.
New Capital Solutions, LLC v. KOSL Properties, LLC
does the plaintiff explain why expert testimony would
have been permissible or necessary.
Once the defendants raised the claim that New York
law applied, the only additional questions for the court to consider were the nature of the services that the plaintiff performed (a question that was largely uncontested at
trial and that remains uncontested on appeal), where
the services were performed, and whether the plaintiff
or its representatives held a New York real estate broker’s license. Moreover, if the defendants were correct
that New York law applied, there would be no need for
further pleading practice because, under New York Real
Property Law § 442-d, the onus is on the plaintiff to
plead and prove that it held the proper license when its
cause of action accrued. See footnote 12 of this opinion;
see also J. L. Kislak, Inc. v. Carol Management Corp.,
7 App. Div. 2d 428, 431, 184 N.Y.S.2d 315 (concluding
that “the transaction in suit falls within [§] 442-d” and, therefore, “the complaint must be dismissed for failure to allege [the] plaintiff is a real estate broker duly licensed in the [s]tate of New York”), appeal dismissed, 7 N.Y.2d
719, 162 N.E.2d 636, 193 N.Y.S.2d 456 (1959), and
appeal dismissed, 7 N.Y.2d 705, 162 N.E.2d 753, 193
N.Y.S.2d 1026 (1959).
For all of these reasons, we are not convinced that the
plaintiff was insufficiently apprised of the defendants’
contention that the plaintiff’s claims were barred by
New York Real Property Law § 442-d. On the day of trial,
the defendants’ request to amend their special defenses
and for the court to take judicial notice were both pending. The court clearly stated several times throughout
trial that the choice of law issue was one that the court
would have to decide. The parties presented evidence on
the choice of law issue and the applicability of § 442-d at trial. They also addressed the choice of law issue and the applicability of § 442-d in posttrial briefs and motions.
At trial, the plaintiff even agreed with the court that
the issue of whether New York law applied was a briefing
issue for the court. Under these circumstances, the record
New Capital Solutions, LLC v. KOSL Properties, LLC
is clear that the plaintiff had adequate notice that the
choice of law issue and the applicability of § 442-d were
before the court and that the plaintiff had a full and fair opportunity to address those issues.
Accordingly, we conclude that the trial court did not
improperly engage in a choice of law analysis.
II
The plaintiff also claims that the court erred in concluding that New York law precluded the plaintiff from
recovering compensation for the services it rendered.
We begin our analysis with two observations about what
the plaintiff does not claim on appeal. First, the plaintiff does not claim that it held a New York real estate
broker’s license when its cause of action arose. Second,
the plaintiff does not claim that the types of services
it provided, had they been performed in New York, are
the kinds of services that do not require such a license.
Instead, the plaintiff contends that, even assuming arguendo that the court properly applied New York law to its
claims, New York Real Property Law § 442-d does not bar
recovery because the services at issue were performed by
representatives of the plaintiff who were at all relevant
times physically located in Connecticut. We disagree
and conclude that the court properly determined that
§ 442-d bars the plaintiff’s claims.
We begin by setting forth the standard of review. “The
interpretation of a statute, as well as its applicability to a given set of facts and circumstances, involves a question
of law and our review, therefore, is plenary.” (Internal
quotation marks omitted.) Russell v. Russell, 91 Conn.
App. 619, 629, 882 A.2d 98, cert. denied, 276 Conn.
925, 888 A.2d 92 (2005), and cert. denied, 276 Conn.
924, 888 A.2d 92 (2005).
Section 442-d of New York Real Property Law provides: “No person, copartnership, limited liability company or corporation shall bring or maintain an action in
New Capital Solutions, LLC v. KOSL Properties, LLC
any court of this state15 for the recovery of compensation for services rendered, in any place in which this article
is applicable, in the buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed
real estate broker or real estate salesperson on the date
when the alleged cause of action arose.” (Emphasis added;
footnote added.) Section 440 (1) of New York Real Property Law , in turn, provides in relevant part that “ ‘real estate broker’ means any person, firm, limited liability
company or corporation, who, for another and for a fee,
commission or other valuable consideration, lists for sale, sells, at auction or otherwise, exchanges, buys or rents,
or offers or attempts to negotiate a sale, at auction or
otherwise, exchange, purchase or rental of an estate or
interest in real estate, or collects or offers or attempts to collect rent for the use of real estate, or negotiates or
15
Although the statute by its terms prohibits actions brought or maintained in any New York state court, the plaintiff does not claim on appeal that the statute does not apply because this action was commenced in a Connecticut state court. As a result, we have no occasion to address any such claim in this appeal. Nevertheless, we note that other courts have concluded that New York Real Property Law § 442-d does, in fact, apply in an action commenced in a court other than a New York state court. See, e.g., Backar v. Western States Producing Co., 382 F. Supp. 1170, 1173–74 (W.D. Tex. 1974) (The court rejected a claim that § 442-d did not apply because the action was commenced in federal court rather than a New York state court, reasoning that “[t]he logical extension of this untenable argument is that a federal court sitting in the Southern District of New York could not apply the statute because it is not a court of (New York) state. . . . [T]his position . . . if applied would result in diametrical outcomes depending upon whether an action is brought in state or federal court. That result would be violative of both the letter and the spirit of Erie [Railroad Co.] v. Tompkins [304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938)] and its progeny. Moreover, since New York is proud that it affords foreign principals the greatest degree of protection against the unfounded claims of brokers and finders, it is paradoxical to argue that the intention of the New York legislature was to draft a statute that could be evaded simply by filing suit in a neighboring state or in federal court.” (Footnotes omitted; internal quotation marks omitted.)), aff’d, 547 F.2d 876 (5th Cir. 1977); see also Meltzer v. Crescent Leaseholds, Ltd., 442 F.2d 293, 295 (2d Cir. 1971) (implicitly rejecting such reading of § 442-d in affirming district court’s grant of summary judgment on ground that § 442-d barred claim brought by unlicensed broker to recover commission).
New Capital Solutions, LLC v. KOSL Properties, LLC
offers or attempts to negotiate, a loan secured or to be
secured by a mortgage, other than a residential mortgage
loan . . . .” (Emphasis added.) N.Y. Real Prop. Law § 440
(1) (McKinney Cum. Supp. 2026).16
It is clear, therefore, that, under New York law, one
must be a duly licensed real estate broker in the state
of New York to recover compensation for the types of
services that the plaintiff seeks to recover in this case. Specifically, New York law requires such a license for
anyone who negotiates a loan upon real estate. The plaintiff does not dispute that it provided such services to the defendants and that it did not hold such a license. Nevertheless, it claims that it did not provide those services in New York because it performed those services from
its office in Connecticut. The trial court rejected that
argument and concluded that New York Real Property
Law § 442-d applied because “the plaintiff transmitted
emails (including loan summaries and proposals) and
telephone calls to . . . New York entities in furtherance
of the services it provided to the defendants in New
York. The plaintiff’s managing director traveled to the
state of New York to meet with the defendants to discuss possible loan terms with the proposed lenders. The
defendant’s loan approval was issued in New York, and
the loan documents were executed in New York.”
On the basis of our review of the record, we conclude
that the trial court reached the proper conclusion. The
services for which the plaintiff seeks compensation in the present case included acting as the exclusive agent for
KOSL, a New York borrower, for purposes of soliciting
and applying to a New York lender for a loan on terms
acceptable to KOSL, which loan would be secured by
KOSL’s New York real property. In September 2019,
the plaintiff, through its managing director, Horty,
contacted Balanikas of M&T Bank via email about the
proposed loan to KOSL. Thereafter, Horty and Balanikas
16
Although New York Real Property Law § 440 (1) was amended after the agreement was signed; see 2022 N.Y. Laws 1703; that amendment has no bearing on the merits of this appeal. For purposes of clarity and convenience, we refer to the current revision of the statute.
New Capital Solutions, LLC v. KOSL Properties, LLC
engaged in electronic communications regarding the
potential loan to KOSL, and Horty submitted a loan
application and additional information requested by
Balanikas regarding the property and Ben-Simon’s financials. During this time, Horty also communicated with
Ben-Simon regarding the loan application to M&T Bank.
Both KOSL and M&T Bank were New York business
entities whose representatives were at all relevant times
physically within the state of New York. Although most
of the communications that the plaintiff transmitted to
KOSL and M&T Bank were transmitted electronically
from the plaintiff’s Connecticut office, those communications were transmitted into New York to both KOSL and
M&T Bank. In addition, the trial court found that, on at
least one occasion, the plaintiff’s representative traveled to the state of New York to meet with Ben-Simon and
M&T Bank to discuss possible loan terms.
The purpose of the licensing requirement under New
York Real Property Law § 442-d “is to protect the public
from inept, inexperienced, or dishonest persons who
might perpetrate or aid in perpetration of fraud . . . .”
Kavian v. Vernah Homes Co., 19 App. Div. 3d 649, 650,
799 N.Y.S.2d 75 (2005). The statutory licensing provisions for real estate brokers, which regulate the activities of real estate brokers and requires them to be licensed,
are penal in nature and, thus, are to be strictly construed. See Kreuter v. Tsucalas, 287 App. Div. 2d 50, 55,
734 N.Y.S.2d 185 (2001); see also Copellman v. Rabinowitz, 208 Misc. 274, 278, 143 N.Y.S.2d 496 (1955)
(“[C]ourts have construed [New York Real Property
Law §§ 440-a and 442-d] strictly. In some instances they
have said that a broker who, while unlicensed, engaged
in a single act prohibited by the statute . . . is guilty of a misdemeanor. . . . It seems clear that the [l]egislature has seen fit to preclude a recovery in the courts of this
[s]tate by unlicensed brokers who negotiate within the
[s]tate.” (Citations omitted; internal quotation marks
omitted.)); Baird v. Hine, 253 App. Div. 65, 66–67,
300 N.Y.S. 1171 (1937) (broker license was required
under § 440-a where part of negotiations took place in
New Capital Solutions, LLC v. KOSL Properties, LLC
city where licensing was required, even when owner of
real property and property itself were located in city that did not require broker license).
Notwithstanding the clear purpose of the statute,
which is to protect New York borrowers from inexperienced or inept brokers, and the strict construction
afforded the statute, the plaintiff contends that the statute does not apply when an unlicensed broker performs
brokerage services for a New York borrower through
electronic communications from its offices outside New
York. The plaintiff also maintains that this is true even
when the New York lender and its representatives are
at all relevant times physically within New York, the
loan is secured by New York real property, and the loan
is closed in New York. It further contends that Horty’s
travel to New York to introduce the borrower to the
lender for the purpose of discussing loan terms was de
minimis and therefore not sufficient by itself to support
the court’s conclusion that it performed its services in
New York. We are not persuaded.
The plaintiff’s proffered interpretation of New York’s
licensing scheme would permit unlicensed real estate
brokers to perform services that clearly would be covered
by New York Real Property Law § 442-d had the broker
been present physically within New York so long as they
perform those same services from a physical location outside New York through electronic communications with
a New York borrower and New York lender. In today’s
modern world of technology and communications, such
an interpretation would permit anyone interested in
performing real estate brokerage services for New York
borrowers seeking to borrow from a New York lender
for the purchase of or loan upon New York real estate to
evade New York’s licensing requirements by establishing a physical office outside New York and performing
brokerage services electronically. That interpretation,
if accepted, would completely undermine the purpose
of New York’s licensing scheme by exposing New York
borrowers to unlicensed real estate brokers who perform
New Capital Solutions, LLC v. KOSL Properties, LLC
brokerage services within New York from a physical
location outside New York. It also would run contrary to
New York’s strict construction of that licensing regime.
The plaintiff cites no authority to support such an interpretation.
We also find unconvincing the plaintiff’s claim that
Horty’s travel to New York for the purpose of meeting
with Ben-Simon and Balanikas, even in combination with
its electronic communications to each of them in New
York, was insufficient evidence for the court to have
concluded that it performed real estate brokerage services in New York. The plaintiff argues that Horty merely
traveled to New York for the purpose of introducing BenSimon and Balanikas and challenges as clearly erroneous the court’s finding that “[t]he plaintiff’s managing
director traveled to the state of New York to meet with
the defendants to discuss possible loan terms with the
proposed lenders.” We reject that claim for two reasons.
First, New York courts have held that New York Real
Property Law § 442-d applies and bars recovery of a
finder’s fee even if a plaintiff merely “introduced the
lender and borrower and was otherwise uninvolved in
negotiating any of the deals.” Cooper v. Arbor Realty
Trust, Inc., 239 App. Div. 3d 566, 566, 234 N.Y.S. 3d
103 (2025), citing Futersak v. Perl, 84 App. Div. 3d 1309, 1311, 923 N.Y.S.2d 728 (2011), leave denied, 18 N.Y.3d
943, 967 N.E.2d 690, 944 N.Y.S.2d 466 (2012), and
Minichiello v. Royal Business Funds Corp., 18 N.Y.2d
521, 527, 223 N.E.2d 793, 277 N.Y.S.2d 268 (1966),
cert. denied, 389 U.S. 820, 88 S. Ct. 41, 19 L. Ed. 2d
72 (1967). Consequently, even if we accept as true the
plaintiff’s contention that Horty traveled to New York
solely for the purpose of introducing Ben-Simon and
Balanikas, we are not persuaded that such a service was
de minimis for purposes of determining whether the
plaintiff performed brokerage services within New York.
Second, “[w]e review questions of fact under the clearly
erroneous standard. Therefore, the court’s finding will be overturned only on a showing that there is no evidence in
New Capital Solutions, LLC v. KOSL Properties, LLC
the record to support it . . . .” (Internal quotation marks omitted.) Angrave v. Oates, 90 Conn. App. 427, 429,
876 A.2d 1287 (2005). On the basis of our review of the
record, we conclude that the court’s finding that Horty
traveled to New York to discuss possible loan terms with
Ben-Simon and Balanikas is not clearly erroneous because
there was evidence in the record supporting that finding. Specifically, the record includes: (1) an email from
Horty to Balanikas regarding a potential loan from M&T
Bank to KOSL, a subsequent email from Balanikas to
Horty suggesting that they and Ben-Simon meet at the
Mamaroneck property, and an email from Balanikas to
Horty following that meeting stating that “it was a great
pleasure meeting with you and [Ben-Simon] yesterday . . .
[w]e’re excited to get working on this opportunity . . .
[and] [a]s mentioned, I checked the file and will need just a few more items so I can schedule a screen for this”; (2) the transcript of Balanikas’ deposition, which was admitted
with the plaintiff’s designations, in which he states that he met with Horty and Ben-Simon at the Mamaroneck
property, which was consistent with his normal practice
in evaluating potential loans; and (3) testimony from both Horty and Ben-Simon at trial stating that Horty traveled to meet Ben-Simon and Balanikas at the property
to provide an introduction.
The plaintiff also points to a number of decisions in
which New York courts held that New York Real Property
Law § 442-d did not apply to real estate brokerage services that were rendered outside the state of New York. None of
those cases stands for the broad proposition that § 442-d
does not apply whenever a real estate broker performs
most of its brokerage services while physically outside of New York through the transmission of electronic communications addressed to and received by a New York
borrower and New York lender whose representatives
remained at all relevant times within the state of New
York. Instead, the decisions upon which the plaintiff
relies have emphasized that the proper inquiry is not
the location of the property or where the contract was
executed, but where the services at issue are performed.
New Capital Solutions, LLC v. KOSL Properties, LLC
In Manshion Joho Center Co., Ltd. v. Manshion Joho
Center, Inc., 24 App. Div. 3d 189, 806 N.Y.S.2d 480
(2005), for instance, the case upon which the plaintiff
principally relies in its brief, the plaintiff, a Japanese corporation, brought an action against the defendants
to recover a commission in connection with a purchase
and sale and commission agreement for condominiums
located in New York. Id., 190. Pursuant to the purchase
and sale agreement, the plaintiff sold the condominiums
to the defendants and agreed that, following the sale, it
would market the condominiums to prospective renters
in Japan. See Manshion Joho Center Co., Ltd. v. Nomura
Suzuki Properties, Ltd., Docket No. 0114143/1999, 2004
WL 5510352 (N.Y. Sup. September 9, 2004). The trial
court found that the unlicensed plaintiff could recover
a commission for the rental marketing services, emphasizing the “significance of where the broker’s services
are performed” for purposes of whether New York Real
Property Law § 442-d applied. Id., *4. The trial court
reasoned that, even though the parties executed their
agreement in New York and the defendants and the
condominiums themselves were located in New York,
the “plaintiff established that it found renters in Japan, made reservations there and took deposits there . . . .”
Id., *3. As a result, the court concluded that § 442-d
did not bar the action because the “services were performed solely in Japan, notwithstanding the fact that
[the plaintiff] faxed information about rentals to New
York . . . .” Id. On appeal, the Appellate Division of the New York Supreme Court affirmed, concluding that the
defendants could not avail themselves of the protections
of § 442-d because “it does not apply to real estate brokerage services rendered outside of New York” and the
“evidence at trial established that plaintiff, a Japanese
corporation, performed services only in Japan, and thus
it is inconsequential that the property marketed was in
New York.” Manshion Joho Center Co., Ltd. v. Manshion
Joho Center, Inc., supra, 190.
Manshion Joho Center Co., Ltd. v. Nomura Suzuki
Properties, Ltd., supra, 2004 WL 5510352, is easily
New Capital Solutions, LLC v. KOSL Properties, LLC
distinguishable from the present case. The services at
issue in that case constituted the solicitation and marketing of a New York property to prospective renters in
Japan. Id., *2. The plaintiff performed those services
while in Japan. Id., *3. The court did not find that the
plaintiff, while in Japan, marketed the property to prospective renters in New York through electronic means.
Nor did that court find that the plaintiff had traveled to New York to meet with prospective New York renters.
Here, by contrast, there is no dispute that the plaintiff, while physically located in Connecticut, acted as an agent for KOSL and, through electronic means, performed real
estate brokerage services on KOSL’s behalf by soliciting,
negotiating with, and ultimately applying for a loan with
a lender that was at all relevant times in New York. In
addition, and, unlike the mere incidental faxes that the
plaintiff in Nomura Suzuki Properties, Ltd., transmitted
to New York, the plaintiff’s representative in this case
actually traveled to New York to attend a meeting at
which Ben-Simon met with the lender that the plaintiff
solicited on the defendants’ behalf.
The plaintiff’s reliance on Mitra v. Global Financial
Corp., Docket No. 09-CV-4387 (DLI) (RLM), 2010 WL
1529264 (E.D.N.Y. April 15, 2010), is no more availing.
In that case, a resident of New York brought an action
to enjoin the enforcement of an arbitration judgment
requiring them to pay the defendant a commission for
brokerage services on the ground that it would violate
New York Real Property Law §§ 440-a and 442-d because
the defendant was not licensed to act as a mortgage
broker in New York. Id., *1. The United States District
Court for the Eastern District of New York granted
the defendant’s motion to dismiss the complaint on res
judicata grounds, but also observed that, even if the
action was not barred by res judicata, “this action must
still be dismissed because . . . §§ 440-a [and] 442-d only apply to services rendered in the state of New York. . . . [The] [p]laintiff’s complaint contains no allegation
that [the] defendant performed its brokerage services
in New York. While his sur reply letter points out that
New Capital Solutions, LLC v. KOSL Properties, LLC
the defendant participated in multiple communications
concerning the transaction while [the] plaintiff was in
New York, these contacts are de minimus at best. The
record indicates that the overwhelming majority of the
services were performed by [the] defendant from its office in Florida.” (Citations omitted.) Id., *2.
Although it is clear from Mitra that the borrower was
located in New York, the subject hotel was located in New
York, and the broker was located outside of New York; see
Mitra v. Global Financial Corp., Docket No. 09-CV-4387
(DLI), 2010 WL 5095797 (E.D.N.Y. October 6, 2010);
what is unclear from that decision is where the lender was located, where and through what means the negotiations
with that lender occurred, or the extent to which any of
that factored into the court’s determination. Moreover,
and unlike the contacts at issue in Mitra, the contacts
between the plaintiff, the defendants and M&T Bank in
this case were anything but de minimis. The plaintiff in
this case transmitted extensive communications to the
defendants and M&T Bank in New York. Those communications, in combination with the meeting that took place
in New York among Horty, Ben-Simon and Balanikas,
constitute a substantial share of the services for which
the plaintiff seeks compensation in this case.
As a result, and for all of the foregoing reasons, we
conclude that the trial court did not err in concluding
that New York Real Property Law § 442-d barred the
plaintiff from recovering on its claims.
The judgment is affirmed.
In this opinion the other judges concurred.