Reisenfeld & Co. v. The Network Group, Inc

277 F.3d 856 (6th Cir. 2002)

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Nature of the Case

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Facts

BSI (D1) contracted with the Network Group (D), a commercial real estate broker, to assist D1 in either selling or subleasing closed K Mart stores. Ds entered a 'commercial listing agreement' under which D agreed to act as broker for a number of D1 properties. In June 1994, D entered a commission agreement with P, an Ohio licensed real estate broker that represented Dick's Clothing & Sporting Goods ('Dick's'), which eventually subleased two stores in Ohio from D1. The commission agreement P and D stated that if a deal was concluded between Dick's and D1, D would pay P a commission of $1 per square foot. In November 1994, Dick's and D1 executed assignment and assumption agreements for the Ohio properties. In the agreements, D1 stated that it would pay a commission to D and that D would pay a portion of that commission to P 'pursuant to a separate written agreement between D and P.' There was no agreement between D1, and P. D's sole shareholder was defrauding D1 in various ways. D defrauded the company by taking commissions from both sides in some of the subleases and accepting below-market subleases on D1's behalf. Aronds, the sole shareholder of D was convicted of several criminal charges stemming from his actions. As a result, the district court ordered D to disgorge any commissions received from D1 and relieved D1 of the duty to pay any additional commissions owed to D. P sued in Ohio state court, alleging non-payment of $160,320 in commissions due from the Dick's/D1 sublease. In addition to suing D as the party from whom the commission was immediately due, P also sued D1, alleging that it was jointly and severally liable along with D for the commission. The case was removed to federal district court based on diversity of citizenship. The district court granted summary judgment to P against D and summary judgment to D1 against P. Unable to collect from D, P filed a timely appeal to this court.