Coldwell Banker v. O'Brien & Associates

• Decision Date: 24 April 1991
• Docket Number: Civ. No. 90-1577-A.
• Citation: 762 F. Supp. 131
• Court: U.S. District Court — Eastern District of Virginia
• Parties: COLDWELL BANKER RESIDENTIAL REAL ESTATE, Plaintiff, v. O'BRIEN & ASSOCIATES and Long & Foster Real Estate, Inc., Defendants.

762 F. Supp. 131

COLDWELL BANKER RESIDENTIAL REAL ESTATE, Plaintiff, v. O'BRIEN & ASSOCIATES and Long & Foster Real Estate, Inc., Defendants.

Civ. No. 90-1577-A.

United States District Court, E.D. Virginia, Alexandria Division.

April 24, 1991.

Freyvogel, William Thomas Adams, Porter & Radigan, Ltd., McLean, Va., for Coldwell Banker Residential Real Estate.

Williams, Geoffrey Thomas, Newlon & Williams, P.C., Fairfax, Va., for O'Brien & Associates, Inc.

Grad, John David, Grad & Logan, P.C., Alexandria, Va., for Christine Morgan.

Roche, Brien Anthony, Johnson & Roche, McLean, Va., for Long & Foster Real Estate, Inc.

ORDER

ELLIS, District Judge.

In this interpleader action, the claimants to the fund are two real estate brokers who claim entitlement to a $74,000 commission from the sale of a property. At issue is which of these brokers was the selling broker under Maryland law. Before the Court is defendant O'Brien & Associates' ("O'Brien's") Motion for Summary Judgment which is opposed by defendant Long & Foster Real Estate, Inc. ("Long & Foster"). Because the material undisputed facts establish that O'Brien was the selling broker, summary judgment in favor of O'Brien is warranted.

Summary judgment standards are well settled. "A motion for summary judgment must be granted if `there is no genuine issue as to any material fact' and `the moving party is entitled to judgment as a matter of law.'" Davis v. Thoman Motel Corp., 900 F.2d 28, 31 (4th Cir.1990), citing Rule 56(c), Fed.R.Civ.P.; Pachaly v. City of Lynchburg, 897 F.2d 723, 725 (4th Cir. 1990); De Leon v. St. Joseph Hospital, Inc., 871 F.2d 1229, 1233 (4th Cir.), cert. denied, ___ U.S. ___, 110 S.Ct. 87, 107 L.Ed.2d 52 (1989). "Such a burden may be met by use of `affidavits, exhibits, depositions, and other discovery materials.'" Pachaly, 897 F.2d at 725, quoting Barwick v. Celotex Corp., 736 F.2d 946, 958 (4th Cir.1984). The party opposing summary judgment is entitled to have the evidence of record and all reasonable inferences read in its favor. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970); Pachaly, 897 F.2d at 725 n. 3. But, "a party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). "The mere existence of a scintilla of evidence in support of the opposing party's position will be insufficient; there must be evidence on which the jury could reasonably find for the opposing party." Id. at 252, 106 S.Ct. at 2512. When the record evidence in this case and all inferences that could be drawn therefrom are read in the light most favorable to Long & Foster, it is clear that a jury could not reasonably find for Long & Foster and that O'Brien prevails as a matter of law.

The following material facts are of record and undisputed. The Nazareth Literary & Benevolent Institution (the "Institution") desired to sell a property it owned known as St. Mary's Academy located in St. Mary's County, Maryland ("the property"). The Institution hired Previews, Inc. of Washington, D.C. as its "listing broker." Previews in turn hired Ray Runco Realty to serve as its local representative with regard to the property. In partial fulfillment of its duties as listing broker, Previews prepared and distributed to brokers in 1981 a pamphlet describing the property and the commission that brokers would receive for finding a purchaser and successfully negotiating the offer to a conclusion. The commission was described as follows:

Owner authorizes 5% commission on the first $2,000,000, 2½% on the balance to the duly licensed broker who has negotiated the offer and brought the sale to a successful conclusion. Previews takes no part in this commission.¹

This pamphlet further informed brokers that inspection of the property was to be "by appointment only, through Previews/Washington." About the owner of the property, the pamphlet gave the following information: "OWNER: c/o Previews, Inc., ... Washington, D.C." Thus, the pamphlet directed all inquiries to Previews rather than to the actual owner of the property.

The property remained on the market for a considerable period of time after 1981. In March 1987, John Quade, a real estate agent working for O'Brien, began discussions concerning the purchase of the property with Casimir Szlendak, a principal of Jackson Realty, Inc. While the parties dispute whether Quade had previously spoken with Szlendak about purchasing the property, and also whether Christine Morgan, a Long & Foster real estate agent, spoke with Szlendak about the property prior to Quade's discussions with Szlendak, this dispute, as it happens, is not material. What is material is the undisputed fact that Quade took part in purchase negotiations among Jackson Realty, Previews and the Institution from March 1987 to February 1988. Long & Foster took no part in these negotiations. On February 16, 1988, the Institution and Jackson Realty executed an "Agreement of Sale." The Agreement identified Previews, Inc. and Quade and O'Brien as the brokers participating in the sale. Moreover, the Agreement included a provision in which the Institution and Jackson Realty warranted that they had not dealt with any brokers besides Previews and Quade, and further agreed to indemnify each other against any harm flowing from a breach of this warranty. Beyond this, Quade, acting on behalf of O'Brien, also executed the Agreement of Sale as the Escrow Agent. Quade and O'Brien acted as Escrow Agent during the following year until all payments due the Institution from Jackson Realty were made. On March 28, 1989, ownership finally passed from the Institution to Jackson Realty. Hence, indisputably established in the record is that for two years prior to the March 1989 transfer of ownership, Quade, representing O'Brien, performed the services of a selling agent. Long & Foster took no part in these negotiations. Furthermore, no evidence has been presented, and no averments made by Long & Foster, that any Long & Foster agent ever listed Szlendak or Jackson Realty with the Institution, Previews, or Ray Runco Realty. Moreover, the Agreement of Sale itself indicated that the seller and buyer viewed Quade as the selling agent and O'Brien as the selling broker.

At the close of negotiations, the Institution paid Previews $74,000 to be used to pay the selling broker. Subsequently, Coldwell Banker Residential Real Estate ("Coldwell") purchased Previews. Coldwell, fearing that conflicting claims to the $74,000 would embroil it in a law suit, interpled the funds at issue (now amounting to approximately $81,000).²

It is also undisputed that Christine Morgan, the sister of Szlendak, worked as an O'Brien real estate agent until May 1, 1986. On that date, she became an agent for Long & Foster. In support of Long & Foster's claim to the interpled funds, Morgan avers that in the latter part of 1986, while she was an agent for Long & Foster, she drove her brother around the St. Mary's Academy property on three occasions and made numerous telephone calls to her brother during which she suggested that he purchase the property. Morgan avers that this activity took place prior to any contact between Quade and her brother concerning the property. Moreover, Long & Foster maintains that Morgan's activity renders it the "procuring broker" under Maryland law and entitles it to the interpled commission funds. Whether Morgan or Quade first introduced Szlendak to the property is disputed. Yet this dispute is not material. Even assuming, arguendo, that Morgan was the first agent to introduce Szlendak to the property, Long & Foster is not entitled under Maryland law to the interpled funds.

Maryland provides by statute that a broker may recover a commission from a seller of property even absent an explicit contract provided certain conditions are met:

In the absence of a special agreement to the contrary, if a real estate broker employed to sell, buy, lease, or otherwise negotiate an estate, or a mortgage or loan secured by the property, procures in good faith a purchaser, vendor, lessor, lessee, mortgagor, mortgagee, borrower, or lender, as the case may be, and the person procured is accepted by the employer and enters into a valid, binding, and enforceable written contract, in terms acceptable to the employer, of a sale, purchase, lease, mortgage, loan, or other contract, as the case may be, and the contract is accepted by the employer and signed by him, the broker is deemed to have earned the customary or agreed commission. He has earned the commission regardless of whether or not the contract entered into is performed, unless the performance of the contract is prevented, hindered, or delayed by any act of the broker.

Maryland Code, Real Property Article § 14-105 (formerly Art. 21, § 14-105 (Md. Code, 1973 Repl.Vol.) and Art. 2, § 17 (Md. Code 1957)).

Maryland courts construing this statute and its predecessors have held that to recover under the statute a broker must make a two-fold showing: the broker "must not only show 1 that he was employed but 2 that he was the procuring cause of the sale." Steele v. Seth, 211 Md. 323, 127 A.2d 388, 391 (1956); see Weinberg v. Desser, 243 Md. 347, 221 A.2d 66, 70 (1966) (analyzing evidence as to whether the parties had "entered into a contract of employment" and the identity of "the procuring cause of the lease"); Davis v. Phase I, Limited, 30 Md.App. 691, 354 A.2d 473, 478 (Md.Ct.Spec.App.1976) ("threshold prerequisite to the application of the statute is an existing agreement between the broker and his employer") (emphasis in original). Thus, as Long & Foster concedes, to "establish its claim, it must be proved that: 1) Long & Foster was employed by the seller; and 2) Long & Foster...