George Clift Enters., Inc. v. Oshkosh Feedyard Corp.

Decision Date14 August 2020
Docket NumberNo. S-19-700.,S-19-700.
Citation947 N.W.2d 510,306 Neb. 775
Parties GEORGE CLIFT ENTERPRISES, INC., a Texas corporation, doing business as Eslabon Properties, appellant and cross-appellee, v. OSHKOSH FEEDYARD CORPORATION, a Nebraska corporation, and Terry Jessen, appellees and cross-appellants, and Jeff Betley et al., appellees.
CourtNebraska Supreme Court

James R. Korth, of Reynolds, Korth & Samuelson, P.C., L.L.O., Ogallala, for appellant.

Sterling T. Huff, P.C., L.L.O., for appellees Oshkosh Feedyard Corporation and Terry Jessen.

David W. Pederson, of Pederson Law Office, for appellees Jeff Betley et al.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Freudenberg, J.

I. NATURE OF CASE

A real estate agency appeals from an order of summary judgment against it in an action brought against the seller and buyers for the alleged breach of an exclusive listing agreement and tortious interference with a contract, business relationship, or expectation. The sale at issue occurred both after the listing period and after the protection period of the agreement, and no commission was paid. All negotiations for the sale were conducted directly between the seller and buyers with the real estate agent's knowledge, and the defendants all denied any bad faith attempt to delay reaching an agreement or consummating the sale until after expiration of the exclusive listing agreement. On appeal, the real estate agency argues that the summary judgment hearing, held approximately 18 months after the action was filed, was premature because the agency had not yet conducted depositions. It also contests the court's determination that attorney fees were appropriate on the ground that the action was frivolous.

II. BACKGROUND

This action involves the sale of a feedyard formerly owned by Oshkosh Feedyard Corporation (Oshkosh Feedyard). Oshkosh Feedyard is owned 100 percent by the Jessen Family Limited Partnership. The Jessen Family Limited Partnership has three general partners, Terry Jessen (Jessen), Gwen Jessen, and Joni Cowan. Summer Parker and Mariah Preistle are limited partners. Jessen is the president of Oshkosh Feedyard and the managing partner of the Jessen Family Limited Partnership.

On July 15, 2013, Jessen, on behalf of Oshkosh Feedyard, entered into an exclusive listing agreement with George Clift Enterprises (GCE), through GCE's agent, Richard Bretz, for the sale of Oshkosh Feedyard.

1. EXCLUSIVE LISTING AGREEMENT

Under the agreement, the listing price was $4.5 million. The agreement was to be in effect for a period of time beginning on the effective date of the contract and continuing uninterrupted for 12 months. The agreement provided for both a "listing fee" and a "[b]rokerage [f]ee."

The listing fee was $4,000 payable immediately upon execution of the agreement, and there is no dispute that it was paid.

The brokerage fee was 4.5 percent of the sales price to be earned and was payable when the following conditions were met:

1. The sale of the property closes.
2. Owner defaults after Broker produces a ready, willing and able buyer agreeable to Owner's price and terms as stated herein or after signing by Owner and Buyer any letter, memorandum, or contract that contains agreements to convey the Property. The sale price under this clause shall be the lesser of the listing price or the sale price stated in any signed documents.
3. Buyer defaults and Owner retains any earnest money. The commission fee shall be calculated on the amount of earnest money received by the Owner.

The agreement also contained a protection period clause as follows:

PROTECTION PERIOD: Owner agrees to pay the Brokerage Fee under the same terms and conditions specified above if, within two months after termination of this agreement, the Property should be under contract, sold, transferred, exchanged or conveyed to: (1) any person(s) or entity to whom Broker submitted the Property and of whom Owner had actual knowledge and/or (2) any person(s) or entity to whom Broker submitted the Property and whose name shall be included on a list delivered to Owner by Broker within thirty (30) days after termination hereof or (3) any person(s) or entity who contacted Owner concerning the sale of the Property or to whom Owner submitted the Property for sale during the term hereof and whose name Owner either refused or failed to refer to Broker. Owner agrees to refer all prospective buyers to Broker and agrees not to negotiate with such prospective buyers.

A confidentiality provision stated, "Broker will perform its consulting role in a non-confidential manner, but will enter into a valid Confidentiality Agreement with interested parties prior to distributing financial or other proprietary information provided by Owner." The agreement was "the entire agreement of the Parties regarding the Property and may not be changed except by written agreement signed by the Parties."

2. PURCHASERS

In early 2014, Jeff Betley, Marc Braun, and Bill Matzke, all Wisconsin residents, discussed their mutual interest in purchasing a feedyard in the Kansas, Nebraska, or Colorado region. In April 2014, Betley contacted Bretz, informing him that Betley, Braun, and Matzke were looking for a feedyard for their dairy heifers.

Meanwhile, Jessen had become discontented with Bretz’ efforts at selling Oshkosh Feedyard. Bretz suggested to Betley several different feedyards that were for sale. Bretz mentioned Oshkosh Feedyard, but did not recommend it.

At the same time, a friend of Matzke's recommended Oshkosh Feedyard and told him to contact Jessen if he was interested. Matzke did so, and Jessen gave Betley, Braun, and Matzke a tour of the feedyard in May 2014. But Betley, Braun, and Matzke were clear that they were just getting started looking at different feedyards and were not yet in a position to make an offer. According to Jessen's uncontested averment, Jessen advised Bretz that he was communicating with Betley, Braun, and Matzke regarding a possible sale, and Bretz raised no objection.

In June 2014, Bretz was in contact with Braun by email, recommending a Kansas feedyard for them. In the email, Bretz also stated:

Regarding the Oshkosh yard, there is nothing that would help more in resolving the owner's and my challenge over the exclusive listing than getting the yard sold. Please continue forward on that project as long as it is viable to you. The owner and I will deal with the listing agreement.

Braun averred, "Bretz went on to tell me that Betley, Matzke and I should continue our discussions about the sale of ... Oshkosh Feedyard with Jessen, and that Bretz and Jessen would work things out." No evidence was submitted disputing this statement.

Sometime in the summer of 2014, Betley, Braun, and Matzke decided to try to purchase Oshkosh Feedyard. They negotiated with Jessen and eventually formed Oshkosh Heifer Development LLC, with Jessen as a member, on August 12 for that purpose. After further negotiations, Oshkosh Heifer Development finalized a purchase agreement with Oshkosh Feedyard in December. It was not until December 12 that Oshkosh Heifer Development had adopted a corporate resolution authorizing Braun to execute the purchase agreement, promissory note, and deed of trust on its behalf for the purchase of Oshkosh Feedyard.

The listing period of the exclusive listing agreement had expired on July 15, 2014, and the protection period had expired on September 15.

3. 2014 ACTION

On August 18, 2014, GCE filed a complaint against Oshkosh Feedyard alleging that Oshkosh Feedyard had breached the listing agreement by not referring to GCE "one or more prospective buyer(s)" with whom Oshkosh Feedyard or its agents had contact and by "engaging in negotiation with any prospective buyer(s)." As damages for GCE's lost opportunity to contact such prospective buyers and negotiate with such prospective buyers, GCE sought the amount of a $202,500 commission, based on the list price, plus $20,000 allegedly expended by GCE in efforts to market the property. On July 17, 2017, the court dismissed the action without prejudice for lack of prosecution. The court noted that nothing had been filed with the court since December 2014 to indicate the matter was being actively pursued and that responses to discovery had been delayed for an extended period of time. The court elaborated that although GCE had engaged new counsel in the 2014 action, it still had not moved appreciably forward.

4. SEPTEMBER 2017 COMPLAINT

On September 7, 2017, GCE filed a new complaint against Oshkosh Feedyard, Jessen, Betley, Braun, Matzke, and Oshkosh Heifer Development, alleging that pursuant to the terms of the exclusive listing agreement with Oshkosh Feedyard, it was entitled to a reasonable brokerage fee on the sale of the property. GCE alleged it had made a reasonable effort to market and procure a buyer for Oshkosh Feedyard. GCE alleged that Betley, Braun, and Matzke had sought information from GCE about Oshkosh Feedyard on or around April 29, 2014.

In its first cause of action, GCE alleged that Jessen, on behalf of Oshkosh Feedyard, breached the exclusive listing agreement by negotiating with and failing to refer to GCE prospective buyers during the period of the agreement, thereby causing GCE to lose the opportunity to contact and negotiate with prospective buyers. As in the prior 2014 action that was dismissed for lack of prosecution, GCE sought damages in the amount of $202,500, representing 4.5 percent of the list price of $4.5 million, plus $20,000 in expenses in advertising the listing.

In its second cause of action, GCE alleged a claim of tortious interference with a contract, business relationship, or expectation. In this regard, GCE alleged that all the defendants were aware of the exclusive listing agreement; that despite such knowledge, Betley, Braun, and Matzke contacted Jessen directly about purchasing Oshkosh Feedyard; and that Jessen failed to refer them to GCE. GCE alleged that Jessen, Betley, Braun, and Matzke...

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