Fee-Splitting Agreement May Be Illegal, But Doctor Can Still Recover Fair Value, Says NY Court August 26, 2010

In Rosenberg v. Harris, an August 17 decision in a breach of contract case between two dentists – one of whom was renting office space and equipment from the other – a New York County court issued a fascinating ruling: the agreement between the two doctors, which called for the tenant to pay a portion of the fees he generated to the landlord constituted illegal fee-splitting, and was therefore void as against public policy.

But that wouldn’t be completely fair (or, in legal terms, “equitable”) to the doctor who lent out his space, equipment and space, would it?

So, despite holding that the contract was illegal, and therefore not a valid contract, the Court held that the plaintiff could still recover the fair rental value for the office space and equipment in quasi-contract,  because otherwise the defendant would be “unjustly enriched” by not having to pay for the benefits he received.

For additional information on this topic, you may wish to read “What You Can Do Under NY Law if You Don’t Have a Valid Contract” or “When Illegal Agreements Can Still Be Enforceable in New York.“

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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