An entrepreneur who said he was cut out of Compass in its early days will be allowed to pursue claims for unjust enrichment and breach of contract against the real estate broker's co-founder, a Manhattan Supreme Court judge has ruled.

Justice Andrea Masley late Tuesday denied Compass co-founder Robert Reffkin's motion for summary judgment on the remaining claims of a lawsuit brought by Avi Dorfman in 2014.

Dorfman, who had launched a startup aimed at decreasing costs for renters in New York City, claimed that he was instrumental in helping Compass get off the ground. According to court documents, Dorfman met with Reffkin in 2012 to discuss the potential purchase of Dorfman's company, as well as the creation of Compass, including building out the company's platform and helping to secure funding and employees.

Dorfman alleged in his complaint that Reffkin led him to believe he would be a co-founder in the firm, but said Reffkin instead used him for the proprietary information he possessed from his other ventures. Court documents indicated that Dorfman and Reffkin never entered a written agreement governing Dorfman's service to Compass, and emails between the two showed only a series of offers and counteroffers about how Dorfman would be compensated as a "founding team member," but not a company co-founder.

Supreme Court Justice Jeffrey K. Oing, however, in 2015 dismissed Dorfman's claims for fraudulent inducement, negligent misrepresentation and misappropriation of trade secrets, leaving just his contract and unjust-enrichment claims. The decision was later upheld on appeal to the First Department, which ruled that the claims would only be sustained for "services that went beyond the negotiation or consummation of a business opportunity."

On Tuesday, Masley said it was clear from the appellate ruling that Dorfman had met that mark, alleging that he had been involved in securing investor backing, recruiting engineers and developing aspects of Compass' software and apps.

"Thus this court is bound by the First Department's decision, and on this motion for summary judgment, Dorfman has submitted enough proof to show that he provided these types of services, that went beyond the negotiation of a business opportunity," she wrote in an 11-page ruling.

The issue of whether Dorfman was owed for his services, however, would ultimately turn on when Compass actually came to "fruition," an issue of fact that "cannot be resolved at this juncture," she said.

Arun Subramanian, a partner with Susman Godfrey, said Dorfman's team was "thrilled" with the ruling and "look[s] forward to trying the case going forward."

An attorney for Reffkin was not immediately available on Wednesday to comment.

Dorfman is represented by Subramanian, Stephen Susman, Shawn Rabin and Katherine Peaslee of Susman Godfrey and Jonathan Harris, Yonaton Aronoff and Megan Dubatowka of Harris, St. Laurent & Chaudhry.

Reffkin is represented by Sandra C. Goldstein, Atif N. Khawaja, John P. Del Monaco and Alexandra Strang of Kirkland & Ellis.

The case is captioned Dorfman v. Reffkin.

 

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