Davis v. Thoman Motel Corp.

• Decision Date: 04 April 1990
• Docket Number: No. 89-3298,89-3298
• Citation: 900 F.2d 28
• Parties: Charles E. DAVIS, III; Whitt Sessoms, III, Plaintiffs-Appellants, v. THOMAN MOTEL CORPORATION, Recreational Industries, Inc.; William A. Thoman, Jr.; John W. Dever, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 28

900 F.2d 28

Charles E. DAVIS, III; Whitt Sessoms, III, Plaintiffs-Appellants, v. THOMAN MOTEL CORPORATION, Recreational Industries, Inc. William A. Thoman, Jr.; John W. Dever Defendants-Appellees.

No. 89-3298.

United States Court of Appeals Fourth Circuit.

Argued Jan. 11, 1990.

Decided April 4, 1990.

John Webb Drescher, Karen Rye, on brief, Breit, Drescher & Breit, Norfolk, Va., for plaintiffs-appellants.

Maria Giovanna Krapf, Ober, Kaler, Grimes & Shriver, Baltimore, Md., for defendants-appellees. Neil J. Ruther, Melnicove, Kaufman, Weiner, Smouse & Garbis, Baltimore, Maryland; M. Wayne Ringer, Williams, Worrell, Kelly & Greer, Norfolk, Va., on brief.

Before POWELL, Associate Justice (Retired), United States Supreme Court, sitting by designation, and HALL and WILKINS, Circuit Judges.

POWELL, Associate Justice:

The question presented is whether the magistrate erred when he granted appellees' motion for summary judgment on appellants' claims for breach of contract and tortious interference with contract. We hold that the magistrate properly granted appellees' motion.

I

Appellants Charles G. Davis, III and Whitt Sessoms, III, and appellees Thoman Motel Corporation and Recreational Industries, Incorporated, signed an Employment Agreement on March 8, 1985, whereby appellants would sell condominium units in appellees' Wisp Condominium Resort and Conference Center ("Wisp Resort") in Deep Creek Lake, Maryland. Appellants were citizens of Virginia and were not licensed real estate brokers or salesmen in the state of Maryland. See Joint Appendix ("J.A.") at 5, 82. Appellants were to receive a 6% commission on each sale. See id. at 11. Appellees agreed to furnish appellants with an office, secretary, telephone, and customary office furnishings and supplies and to pay all marketing and advertising expenses. See id. at 12. If appellants did not sell 107 of the 536 condominium units by September 15, 1985, appellees reserved the right to discharge appellants. Id. at 13.

Appellants failed to sell 107 units by September 15, 1985, and appellees discharged them. Appellants filed this suit, alleging that appellees' refusal to fund certain marketing and advertising expenses caused appellants to fail to meet the sales quota. They sought damages in Count I for breach of contract and in Count II for tortious interference with contract.

Appellees filed a motion for summary judgment, and the motion was referred to United States Magistrate Tommy E. Miller pursuant to 28 U.S.C. Sec. 636(c). The magistrate granted the motion, ruling that appellants were acting as real estate brokers without the proper license from the state of Maryland. As such, the magistrate held that section 228 of Article 56 of the Maryland Code ¹ barred recovery.

II

Appellants stipulated that they were not licensed as real estate brokers or salesmen in Maryland at the time they were selling condominium units at Wisp Resort. See J.A. at 82. They do not dispute that their activities pursuant to the Employment Agreement fall within the general definition of real estate brokerage requiring licensure. See Md.Ann.Code art. 56 Sec. 212(a) (1988). ² Rather, they argue that they fall within four statutory exceptions to the general definition of "real estate broker" and "real estate salesman."

Section 212(f) of Article 56 of the Maryland Code excepts from the general licensing provisions, inter alia:

(4) Owners or lessors of property in the management and sale of such property unless their principal and regular business is that of purchasing, selling, exchanging or trading in real estate and options and leases thereon; ...

(5) Investment home builders with respect to the sale or rental of houses constructed by them; ...

(7) Any person holding in good faith a duly executed power of attorney from the actual owner authorizing the sale and conveyance or leasing of any real estate, where only one such transaction is involved; ... [and]

(9) Designated agents of owners or licensed real estate brokers in the management of such property unless the designated agent's principal and regular business is that of purchasing, selling, exchanging, or trading in real estate and real estate options....

Maryland's real estate licensing provisions were enacted for the benefit of the public. See Smirlock v. Potomac Development Corp., 235 Md. 195, 200 A.2d 922 (1964). The statute clearly expresses the view of the Maryland legislature that the public will best be protected in most situations if those engaged in real estate brokerage in Maryland are licensed and regulated by the state. We agree with the view of the Maryland Attorney General that exceptions to the licensing requirements should be narrowly construed. See 58 Op.Att'y Gen. 597 (1972).

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 a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party opposing the motion for summary judgment cannot rest upon "mere allegations or denials," but must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Summary judgment is appropriate "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

In this case, appellants admit that their activities fell within the general definition of activities requiring a license. When appellees moved for summary judgment, the burden was on appellants to "set forth specific facts," by affidavits or otherwise, to establish a genuine issue of material fact as to whether appellants qualified for any of the exceptions in section 212(f). See Celotex, 477 U.S. at 323-24, 106 S.Ct. at 2553. Appellants set forth no specific facts to indicate that they fell within any of the exceptions. Appellees therefore were entitled to judgment as a matter of law, and the magistrate properly granted their motion for summary judgment. We review the absence of evidence on each of the exceptions in turn.

A

Appellants did not set forth specific facts to indicate that they would qualify for Exception 4. First, they did not present specific facts that they were "[o]wners or lessors of property in the management and sale of such property." In fact, appellants admit that they were not the owners or lessors of the Wisp Resort. Rather, appellants argue that they were acting as agents of a corporation that they contend would fall within Exception 4. Because this corporation can only act through its agents, appellants reason that an exception for the corporation must also except all of the corporation's agents. This argument ignores the fact that Exception 4 does not mention "agents" of owners or lessors. It refers only to the owners or lessors themselves. The Maryland legislature knew how to include "agents" within the statutory exceptions. It did so in Exception 9, which refers to "[d]esignated agents of owners." Exception 4 refers only to "[o]wners or lessors of property in the management and sale of such property." If an owner--whether an individual, corporation, or other entity--hires someone else to sell its property, Exception 4 does not apply.

Second, even if we were to accept appellants' agency theory, appellants failed to create a genuine issue of material fact as to whether appellee Thoman Motel Corporation would have been excused from licensure under Exception 4. Owners or lessors of property may be excepted under that provision "unless their principal and regular business is that of purchasing, selling, exchanging or trading in real estate and options and leases thereon." Appellants presented no evidence to indicate that the principal and regular business of Thoman Motel Corporation was not "purchasing selling, exchanging or trading in real estate and options and leases thereon."

B

Appellants cannot rely on Exception 5 for similar reasons. That provision refers to "[i]nvestment home builders with respect to the sale or rental of houses constructed by them." Appellants did not construct the Wisp Resort condominiums they were selling. Exception 5 does not refer to "agents" of investment home builders. Thus, Exception 5 does not apply to appellants. Furthermore, if Exception 5 were interpreted to include agents of investment home builders, this exception would swallow most of the rule of licensure. Under such an interpretation, almost any real estate broker hired by a developer to sell a new house or condominium built by that developer would fall within Exception 5, even if that broker's "principal and regular business" involved purchasing, selling, exchanging or trading in real estate and options and leases thereon. The Maryland legislature did not intend to leave unregulated such a significant portion of real estate sales in the state. See 58 Op.Att'y Gen. 597 (1972). Such a result would be inconsistent with both the general purposes of the real estate licensing provisions and the specific language of Exception 5, which does not refer to "agents."

In addition, even if Exception 5 covered agents of corporations, appellants produced "no evidence to show that this particular condominium project and its owners could properly be classified as 'investment home builders.' " J.A. at 114 (opinion of Magistrate Miller). The burden was on appellants to create a genuine issue of material fact. See Celotex, 477 U.S. at 323-24, 106 S.Ct. at 2553. They failed to meet this burden.

C

Exception 7 is the most clearly inapplicable of the exceptions appellants embrace. Leaving aside the question of whether the March 8, 1985, Employment Agreement was a "duly executed power of attorney," Exception 7 applies "where only one such transaction is involved." Unless it anticipates a single bulk sale, a contract to sell over...