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KASSATLY v. YAZBECK

March 19, 1990

RICHARD KASSATLY, Plaintiff,
v.
JOSEPH A. YAZBECK, et al., Defendants



The opinion of the court was delivered by: REVERCOMB

 GEORGE H. REVERCOMB, UNITED STATES DISTRICT JUDGE

 This action arises out of the lease and possible sale of The Grand Hotel by Joseph Kaempfer and his various real estate partnerships *fn1" to Joseph Yazbeck and his businesses ("the Yazbeck defendants"). *fn2" Plaintiff Richard Kassatly, a former confidant of Joseph Yazbeck, brings this diversity action alleging that he is entitled to a finder's fee for the transaction.

 Plaintiff's motion to dismiss Kaempfer's real estate partnerships as defendants is GRANTED in light of the Supreme Court's recent decision in C.T. Carden v. Arkoma, 494 U.S. 185, 108 L. Ed. 2d 157, 58 U.S.L.W. 4243, 110 S. Ct. 1015 (1990). *fn3" At bar are defendant Kaempfer's motion for summary judgment and plaintiff/counter-defendant's motion to dismiss the counterclaim.

 I. Background.

 The essential facts of this case are undisputed. In the early 1980's, a limited partnership in which Mr. Kaempfer is a general partner, developed the block on the south side of M Street between 23rd and 24th Streets, N.W. Defendant Kaempfer and his various real estate partnerships built two projects on the site -- the Regent Hotel (now The Grand Hotel) *fn4" and an office building ("2300 M Street"). Financing of the projects was secured through cross-collateralized loans.

 In late 1983, plaintiff Kassatly, a Maryland resident, became friends with Joseph Yazbeck, a Lebanese businessman who wanted to acquire a "five star hotel" in the District of Columbia. Plaintiff agreed to help Yazbeck in his hotel search and to advise Yazbeck about conducting business "in the American way."

 Plaintiff purportedly discovered that Kaempfer wanted to sell the Hotel and, after two years of negotiations (1984-1986), Yazbeck and Kaempfer consummated a "lease and option to buy." The lease agreement transferred the Hotel's management responsibilities to the Yazbeck defendants, effective October 1, 1986. Under the option agreement, Yazbeck could acquire a 70% interest in the Hotel after September 1, 1993 with the right to purchase the Hotel at any time Kaempfer offered it to a third party. In addition, the parties agreed to indemnify each other against any claims asserted by a real estate broker or agent claiming a fee.

 When the Yazbeck group took over the Hotel, plaintiff became Yazbeck's salaried employee, responsible for hotel insurance, licensing, regulatory compliance, labor relations and other matters. He also served as Yazbeck's "general assistant." Eventually, the Kassatly-Yazbeck relationship soured in the Spring of 1987.

 Plaintiff Kassatly now sues the Yazbeck group and Joseph Kaempfer for breach of oral contracts. Plaintiff alleges that by reason of these contracts the Yazbeck defendants owe him $ 50,000 per year effective October 1, 1986; that each defendant group owes him a 2.5% finder's fee upon sale of the Hotel; and, that Kaempfer owes him an additional 2.5 % commission upon sale of the adjacent office building. *fn5"

 Defendant Kaempfer contends that plaintiff Kassatly acted as a "real estate broker," *fn6" who for lack of a license as such, is statutorily barred from bringing an action to collect his commission. See D.C.Code $ S 45-1926(c) (1986). Plaintiff, on the other hand, asserts that he acted as a "finder" or "business chance broker" *fn7" and was exempt from the licensing requirement.

 The District of Columbia's statutory definition of "real estate broker" does not exclude the possibility that a "finder" or "business chance broker" may be deemed a "real estate broker," at least in some situations. Indeed, the title of the relevant regulations, "Real Estate and Business Chance Licenses," suggests that the District meant to require the licensing of "business chance brokers" involved in real estate transactions. *fn8" However, neither the text of the definitional provision nor its legislative history yields any significant clue one way or the other, and the District of Columbia courts have never construed the provision. Left without guidance by local law, this Court may consult other jurisdictions for assistance. See Brown v. Herman Miller, 281 U.S. App. D.C. 326, 890 F.2d 443, 445 (D.C.Cir. 1989).

 As generally defined, a real estate broker is an agent who, for a commission or fee, is employed by a principal to negotiate the sale, purchase, lease or exchange of real property to a third party. A broker is an intermediary or middleman whose function and duty is to bring together the buyer and seller or owner and lessee. A broker may be employed as a "finder," i.e., to find a prospective purchaser and introduce the parties. "Finders" may be exempt from real estate licensing requirements if none of the functions of a broker are performed. The distinction between a "broker" and "finder" depends on the individual's involvement in the transaction. If the "finder" takes any part in the negotiations, no matter how slight, he will be ...


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