Daubman v. CBS Real Estate Co.

• Court: Nebraska Court of Appeals
• Writing for the Court: HANNON
• Citation: Daubman v. CBS Real Estate Co., 573 N.W.2d 802, 6 Neb.App. 390 (Neb. App. 1998)
• Decision Date: 20 January 1998
• Docket Number: No. A-96-734,A-96-734
• Parties: Allen E. DAUBMAN and Renee A. Daubman, husband and wife, Appellees, v. CBS REAL ESTATE CO., a Nebraska corporation, and Arlene Engelbert, Appellants.

Page 802

573 N.W.2d 802

6 Neb.App. 390

Allen E. DAUBMAN and Renee A. Daubman, husband and wife, Appellees, v. CBS REAL ESTATE CO., a Nebraska corporation, and Arlene Engelbert, Appellants.

No. A-96-734.

Court of Appeals of Nebraska.

Jan. 20, 1998.

Syllabus by the Court

1. Actions: Pleadings. Whether the nature of an action is legal or equitable is to be determined from its main object, as disclosed by the averments of the pleadings and relief sought.

2. Actions. Where none of the extraordinary powers of a court of equity are required in order to give either party the relief he seeks, and a court of law can afford complete relief, the action is one at law.

3. Actions: Appeal and Error. When a case presents an action at law, it will be reviewed as an action at law, notwithstanding the fact that the parties briefed the appeal as one in equity.

4. Judgments: Appeal and Error. When reviewing a bench trial in a law action, the trial court's factual findings have the effect of a jury verdict and will not be set aside on appeal unless they are clearly wrong.

5. Judgments: Appeal and Error. When reviewing a question of law, an appellate court reaches conclusions independent of the lower court's ruling.

6. Principal and Agent. Where an obligation is that of a principal, a court cannot enforce the obligation against the agent as long as he or she is merely acting as agent.

7. Appeal and Error. Although an appellate court ordinarily considers only those errors assigned and discussed in the briefs, the appellate court may, at its option, notice plain error.

8. Appeal and Error: Words and Phrases. Plain error exists where there is an error, plainly evident from the record but not complained of at trial, which prejudicially affects a substantial right of a litigant and is of such a nature that to leave it uncorrected would cause a miscarriage of justice or result in damage to the integrity, reputation, and fairness of the judicial process.

9. Brokers: Principal and Agent. A broker or agent owes his or her principal the following duties: (1) to utilize the skill necessary to accomplish the task undertaken, (2) to be honest and act in good faith, (3) to be loyal, (4) to disclose all material facts, (5) to possess no undisclosed adverse interests, and (6) to be obedient to the principal.

10. Contracts: Principal and Agent. The existence and extent of the duties of the agent to the principal are determined by the terms of the agreement between the parties, interpreted in light of the circumstances under which it is made.

11. Principal and Agent. Except when an agent is privileged to protect his or her own or another's interests, an agent is subject to a duty to the principal not to act in the principal's affairs except in accordance with the principal's manifestation of consent.

12. Brokers: Principal and Agent. If a broker performs unauthorized acts, he is liable to his principal for the loss or damage which results therefrom.

13. Contracts: Brokers: Real Estate. When a broker secures a prospective buyer who is ready, willing, and able to purchase the subject property, the person who hired the broker has received the service for which he or she has contracted.

14. Principal and Agent. An agent who has rendered an agreed upon service is entitled to be paid, absent a breach of trust.

15. Principal and Agent. An agent who is entitled to compensation for his services, has a lien upon the principal's goods or property which comes lawfully in his possession.

16. Principal and Agent. An agent who has earned a commission has a clear right to insist on being paid and refusal to waive such right cannot be held to be a violation of the agent's duties.

17. Contracts: Principal and Agent: Real Estate: Sales. When an agent is hired to sell a certain piece of property to a certain person, the attempt to get the designated buyer to purchase the property cannot be interpreted as an act in the interests of the prospective buyer. Attempts by the agent to close the sale within the terms of the listing agreement cannot be interpreted as an act in the interests of the agent simply because the agent will receive a commission upon closing.

Mark S. Dickhute, Omaha, for appellants.

Richard J. Rensch, of Raynor, Rensch & Pfeiffer, Omaha, for appellees.

HANNON, IRWIN, and INBODY, JJ.

HANNON, Judge.

Allen E. Daubman and Renee A. Daubman, husband and wife, brought suit against CBS Real Estate Co. (CBS), a Nebraska corporation, and Arlene Engelbert, an agent working for CBS, to recover the real estate commission CBS received for the sale of the Daubmans' home. The Daubmans allege that CBS, through Engelbert's actions, breached the fiduciary duty owed to the Daubmans as their real estate broker. After a bench trial, the court found that CBS and Engelbert had breached the fiduciary duty owed to the Daubmans in several respects and awarded a judgment against both CBS and Engelbert equal to the real estate commission received, plus prejudgment interest and costs. CBS and Engelbert appeal and allege the trial court erred in finding they breached their fiduciary duty to the Daubmans, in not finding the Daubmans had ratified their actions, and in awarding prejudgment interest. We conclude that the evidence does not establish that CBS and Engelbert materially breached any fiduciary duty they owed to the Daubmans. We therefore vacate the judgment and remand the cause with directions to dismiss.

FACTUAL BACKGROUND

The evidence in this case consists of a stipulation of the parties, oral testimony, and documents. As we are required to do, we review the evidence in the light most favorable to the Daubmans.

CBS is a licensed real estate broker, and Engelbert was the salesperson who primarily handled the sale of the Daubmans' house. Engelbert committed all of the acts which the Daubmans claim to be breaches of CBS' fiduciary duty to them. Her authority to act on behalf of CBS and its liability for her acts is not questioned. Allen Daubman (Daubman), a practicing attorney, actively participated in the transaction, and his authority to act for his wife is not questioned.

The Daubmans desired to sell their home in order to build a new one. On June 2, 1992, they contacted Engelbert to obtain a market analysis of their home. On June 9, Engelbert gave them her analysis, which the parties' stipulation shows a market value of $129,950. When the analysis was delivered, Engelbert encouraged the Daubmans to list the property for sale with CBS. The Daubmans refused to sign a listing agreement. Engelbert then informed the Daubmans that she was working with a couple, Thomas and Brenda Pedersen, who was looking for a house in the same location and price range as the Daubmans' residence and that the Pedersens had been "pre-approved" to buy a house in that price range. Engelbert offered to show the house to the Pedersens, if the Daubmans signed a listing. The Daubmans told Engelbert they would consider signing a listing. Daubman testified he understood that preapproved buyers had the financial ability to purchase the home and that financing would not be a problem. He testified that Engelbert repeated this assertion later and that these assertions induced the Daubmans to sign the purchase agreement.

On June 10, 1992, the Daubmans signed an authorization to sell, which gave CBS a 3-month exclusive right to sell their house for $139,950, "cash or as terms agreed." The parties added the handwritten sentence, "This is a one party taken for Tom & Brenda Pederson," at the end of the document. The parties stipulated this provision authorized CBS to sell the property only to the Pedersens. The authorization provided for a 7-percent commission for CBS, payable in the event a purchaser who was ready, willing, and able to buy the property at the listed price and terms was found.

After obtaining the listing, Engelbert showed the house to the Pedersens, and they requested that Engelbert prepare an offer to buy the Daubmans' house for $132,000, with a $1,000 earnest money deposit. The offer was to provide that the deposit would be refunded if the Pedersens were unable to obtain financing or the sale was canceled. The Daubmans rejected this offer.

The Daubmans countered with an offer to sell for $139,900, which was accepted by the Pedersens. On June 12, the Daubmans and the Pedersens signed a standard purchase agreement which provided for a sale price of $139,900, with a $2,000 earnest money deposit. The balance was due, in cash, at the closing of the sale. The sale was conditioned upon the Pedersens being able to obtain a conventional or "P.M.I." mortgage loan of $132,900 with initial monthly payments of not more than $1,022 plus taxes and insurance. The agreement provided that the Pedersens were to apply for the loan within 5 business days and that the agreement was void if the loan was not approved within 30 days. The agreement also provided: "However, if processing of the application for financing has not been completed by the lending agency within the above time, such time limit shall be automatically extended until the lending agency has, in the normal course of its business, advised either approval or rejection." The "[a]pproximate closing date" was July 29, 1992, and the possession date was July 31, subject to the availability of a mover acceptable to the Daubmans.

After signing the agreement, the Daubmans proceeded with their plans and entered into a contract to build their new home. On June 15, the Pedersens applied for financing with Residential Mortgage Services (RMS). Daubman admits to having received periodic reports over the "next several days" from Engelbert regarding the loan application. Engelbert told Daubman there was a problem with the loan application because "there was a history of a prior mortgage foreclosure." On July 9, RMS notified Engelbert that the Pedersens' loan application would probably be rejected. RMS recommended the loan be...