Commercial Ventures v. Rex M. & Lynn Lea

• Decision Date: 07 January 2008
• Docket Number: No. 33139.,33139.
• Citation: 177 P.3d 955,145 Idaho 208
• Court: Idaho Supreme Court
• Parties: COMMERCIAL VENTURES, INC., Plaintiff-Appellant, v. The REX M. & LYNN LEA FAMILY TRUST, Lynn Lea, Trustee, Lynn Lea, an individual, Lea Electric, Inc., a dissolved Idaho corporation, Defendants-Third Party Plaintiffs-Respondents, and William R. Barnes, Garret James Longstreet, FR & L, Inc., an Idaho corporation, d/b/a Century 21 1st Place Realty, and Eric A. Wilde, Defendants-Third Party Defendants-Respondents.

177 P.3d 955

145 Idaho 208

COMMERCIAL VENTURES, INC., Plaintiff-Appellant, v. The REX M. & LYNN LEA FAMILY TRUST, Lynn Lea, Trustee, Lynn Lea, an individual, Lea Electric, Inc., a dissolved Idaho corporation, Defendants-Third Party Plaintiffs-Respondents, and William R. Barnes, Garret James Longstreet, FR & L, Inc., an Idaho corporation, d/b/a Century 21 1st Place Realty, and Eric A. Wilde, Defendants-Third Party Defendants-Respondents.

No. 33139.

Supreme Court of Idaho, Boise, December 2007 Term.

January 7, 2008.

Rehearing Denied February 15, 2008.

Perry Law, P.C., Boise, for appellant. Mark Bradford Perry argued.

Houst Law Office, Boise, for respondent Lea Family Trust. Henry Ernest Houst, Jr. argued.

Stephen James Lord, Boise, argued for respondents Barnes, Longstreet and FR & L.

Brassey, Wetherell, Crawford & Garrett, Boise, for respondent Wilde. John Nick Crawford argued.

BURDICK, Justice.

Appellant Commercial Ventures, Inc. (Commercial) appeals from the district court's grant of summary judgment to Respondents, the district court's' denial of Commercial's motion to reconsider, the district court's denial of Commercial's motion to amend its complaint, and the district court's award of attorney fees and costs to Respondents. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

After her husband's death, on July 8, 1998, Respondent Lynn Lea (Lynn) executed a Listing Agreement with Commercial, dba Arthur Berry & Co. The Listing Agreement covered the possible sale of Lea Electric, Inc.'s (Lea Electric) business assets and the real property associated with Lea Electric. The business assets were owned by Respondent Lea Electric, and the real property was owned by Respondent The Rex M. and Lynn Lea Family Trust (the Trust). Lynn is the sole shareholder of Lea Electric and the sole trustee of the Trust.

David Lamarque contacted Arthur Berry, the broker for the transaction, about purchasing commercial real estate. Berry told Lamarque that Lea Electric was for sale. On July 27, 1998, Lamarque entered into two agreements: a Business Assets Purchase Agreement (BAPA), regarding the business assets of Lea. Electric, and a Lease with Purchase Option (LPO), regarding the real estate. The BAPA covered the business assets of Lea Electric and was executed by Lamarque and Lea Electric; it contained no termination date. The LPO covered the real property and was entered into by Lamarque and the Trust. By its terms, the LPO expired on July 26 or 27, 2003; it also contained a formula for setting the purchase price.

In 2003 Lamarque decided to purchase the property, but wanted to pay only its current appraised value ($735,000) rather than the option purchase price ($780,000). He then formed Lamarque Properties, LLC. Lynn, on behalf of the Trust, agreed to the appraised value as a fair purchase price. Prior to the expiration of the LPO, Lynn became acquainted with Respondent Eric A. Wilde. Wilde worked as a real estate agent with Century 21 First Place Realty, and his broker was William R. Barnes. Also, prior to the expiration of the LPO, Barnes contacted Lamarque and asked him to defer the purchase of the property until the expiration of the LPO. After the expiration of the LPO, Lynn entered into a commission agreement with Barnes. The commission agreement provided for a commission lower than either the Listing Agreement or the BAPA. Also after the expiration of the LPO, Lamarque Properties, LLC and the Trust entered into a commercial real estate purchase and sale agreement. The sale of the property closed on July 31, 2003, and Barnes, Wilde and Mike Gamblin, another broker associated with Wilde, received a portion of the commission.

After learning of the sale sometime in April or May of 2004, Commercial filed a complaint seeking a 7% commission on the sale of the real property against Respondents Lynn, the Trust and Lea Electric (collectively "Lea Respondents"). Commercial later amended its complaint to include claims for: breach of the duty of good faith and fair dealing against the Lea Respondents; unfair competition against all the Respondents; tortious interference with contract and tortious interference with business relationships against Respondents Williain R. Barnes, Garrett James Longstreet and FR & L, Inc. (collectively "Century 21"), Wilde and Gamblin; statutory interference with real estate brokerage agreement against all Respondents; unjust enrichment against all Respondents, and; constructive fraud against all Respondents. Commercial then filed a motion for partial summary judgment and the Respondents filed motions for summary judgment. The district court granted the Respondents' motions and denied Commercial's motion. Commercial moved for reconsideration, which the district court denied. After some Respondents moved for costs and attorney fees, the district court awarded costs as a matter of right to the Lea Respondents, Century 21 and Wilde. It also awarded the Lea Respondents attorney fees. Commercial now appeals the grant of summary judgment to the Respondents, the denial of its motions to reconsider and to amend its complaint, and the award of costs and attorney fees.

II. STANDARDS OF REVIEW

When reviewing a motion for summary judgment, this Court uses the same standard employed by the trial court when deciding such a motion. Kolln v. St. Luke's Regl. Med. Ctr., 130 Idaho 323, 327, 940 P.2d 1142, 1146 (1997). "[I]f the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law" summary judgment is proper. I.R.C.P. 56(c). The burden is on the moving party to prove an absence of genuine issues of material fact. Evans v. Griswold, 129 Idaho 902, 905, 935 P.2d 165, 168 (1997). In addition, this Court views the facts and inferences in the record in favor of the nonmoving party. Id.

"The denial of a plaintiff's motion to amend a complaint to add another cause of action is governed by an abuse of discretion standard of review." Est. of Becker v. Callahan, 140 Idaho 522, 527, 96 P.3d 623, 628 (2004) (quoting Thomas v. Med. Ctr. Phys., P.A., 138 Idaho 200, 210, 61 P.3d 557, 567 (2002)). Likewise, the decision to grant or deny a motion for reconsideration is reviewed for an abuse of discretion. Jordan v. Beeks, 135 Idaho 586, 592, 21 P.3d 908, 914 (2001). Abuse of discretion is determined by a three part test which asks whether the district court "(1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it; and (3) reached its decision by an exercise of reason." Sun Valley Potato Growers, Inc. v. Texas Refinery Corp., 139 Idaho 761, 765, 86 P.3d 475, 479 (2004).

III. ANALYSIS

Commercial argues that it is entitled to a commission for the sale of the real property to Lamarque. It also argues that the district court erred in dismissing its tort claims on summary judgment, in not allowing it to amend its pleadings to include a claim for punitive damages, and in awarding costs and fees to the Respondents below. We will turn first to the issue of whether Commercial is entitled to a commission.

A. Commission

Commercial argues that the sale to Lamarque Properties, LLC was a closing in accordance with the terms of the Listing Agreement. In the alternative, Commercial also argues that it is due a commission under the terms of the BAPA and LPO, as these evidence the parties' intentions to pay Commercial a commission.

Prior to 1993, to earn a commission a real estate broker had only to procure a buyer who was ready, willing and able to purchase on terms acceptable to the seller. Bakker v. Thunder Spring-Wareham, LLC, 141 Idaho 185, 190, 108 P.3d 332, 337 (2005). However, this Court expressly adopted the rule from Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 236 A.2d 843 (1967). Margaret H. Wayne Trust v. Lipsky, 123 Idaho 253, 259-60, 846 P.2d 904, 910-11 (1993). Now, in addition to procuring a ready, willing and able buyer, the buyer must enter into a binding contract with the owner and the buyer must complete the transaction by closing title in accordance with the contract terms in order for the broker to earn a commission. Id. at 260, 846 P.2d at 911.

1. Listing Agreement

Commercial argues that it is entitled to a commission under the Listing Agreement. It argues the Listing Agreement does not require that a sale had to be "consummated within 90 days, only that a `transaction' had to be procured within 90 days." This, according to Commercial, is exactly what happened when Lamarque leased and then purchased the property; the substance and outcome of the transaction with Lamarque resulted in an effective change in full ownership, and thus, the district court erred in concluding the Listing Agreement did not provide Commercial a commission.

The district court determined that Commercial was not entitled to a commission based on the language of the Listing Agreement. On appeal, Commercial argues first that the Listing Agreement provides for a commission on the sale of the real property to Lamarque.¹ The Lea Respondents, Century 21 and Wilde all contend that the Listing Agreement expired unfulfilled, and therefore, Commercial cannot use the Listing Agreement as a basis for a commission from that sale.

When the language of a contract is clear and unambiguous, its interpretation and legal effect are questions of law. An unambiguous contract will be given its plain meaning. The purpose of interpreting a contract is to determine the intent of the contracting parties at the time the contract was entered. In determining the intent of the parties, this Court must view the contract as a whole. If a contract is found ambiguous, its interpretation is a question of fact. Whether a contract is ambiguous is a question of...