Reference no: EM13858993

In April 2004, Main Corp., a New York corporation engaged in the manufacturing of shoes, formed a subsidiary corporation, Sub Corp. and transferred to Sub Corp. title to Blackacre, in exchange for a $1,000,000 purchase money mortgage. Blackacre, a commercial building located in Westchester County, was occupied solely by Main Corp. Tom and Jerry were the officers, directors and sole shareholders of both Main Corp. and Sub Corp. The corporations maintained separate business records and bank accounts. Sub Corp. had no employees, held no board meetings, and had no letterhead. In June 2004, Main Corp. vacated Blackacre, and Sub Corp. entered into a written contract with Amy, a duly licensed real estate broker, to sell Blackacre. The contract set forth in pertinent part that if Amy procured a purchaser for Blackacre, Amy would be entitled to a 6% commission upon closing of title, but that if Sub Corp. found a purchaser on its own, no

Commission would be due to Amy. On the day the brokerage contract was signed, Tom orally agreed with Amy that even if Sub Corp. found a purchaser for Blackacre, Amy would-be entitled to a 2% commission on the sale. Over the summer, Amy spent at least 100 hours trying to procure a purchaser for Blackacre, but was unable to do so. In October 2004, Amy advised Tom that she had found a buyer ready, willing and able to buy Blackacre for $1,000,000. However, Tom told her that he had already found a buyer, to whom Sub Corp. had sold Blackacre. When Amy demanded that Sub Corp. pay her the 2% commission, Tom refused. Amy hired Lawyer to sue both Sub Corp. and Main Corp. to recover her commission. The written and signed retainer agreement between Amy and Lawyer set forth in pertinent part that Lawyer would receive a nonrefundable retainer of $10,000 against a rate of $200 per hour. Lawyer duly commenced an action against Sub Corp. and Main Corp. asserting causes of action against both defendants for breach of contract, or in the alternative, for recovery under the theory of quantum merit. In her complaint, Amy claimed, among other things, that (1) Main Corp. dominated Sub Corp. to such an extent that Main Corp. was the "alter ego" of Sub Corp. and was therefore liable under the contract as if it were a signatory, and that

 (2) The oral agreement between Tom and Amy was binding on both Sub Corp. and Main Corp. Amy became dissatisfied with Lawyer's representation, discharged Lawyer and demanded the return of her $10,000 retainer. Lawyer refused on the ground that pursuant to the express terms of the agreement, the retainer was "nonrefundable." At the time of Lawyer's discharge, Lawyer had provided ten hours of legal services on Amy's behalf.

(1) Can Amy's contract with Sub Corp. be enforced against Main Corp.?

(2) Can Amy recover against Sub Corp. (a) for breach of contract and/or (b) in quantum meruit?

(3) What are the ethical and monetary consequences of Lawyer's refusal to return the $10,000 retainer?