Edmund J. Flynn Co. v. LaVay

• Decision Date: 13 May 1981
• Docket Number: No. 79-789.,No. 79-708.,79-708.,79-789.
• Citation: 431 A.2d 543
• Parties: EDMUND J. FLYNN COMPANY, Appellant, v. Gerard M. LaVAY, et al., Appellees. Gerard M. LaVAY, et al, Appellants, v. EDMUND J. FLYNN COMPANY, Appellee.
• Court: D.C. Court of Appeals

431 A.2d 543

EDMUND J. FLYNN COMPANY, Appellant, v. Gerard M. LaVAY, et al., Appellees.

Gerard M. LaVAY, et al, Appellants, v. EDMUND J. FLYNN COMPANY, Appellee.

No. 79-708.

No. 79-789.

District of Columbia Court of Appeals.

Argued March 20, 1980.

Decided May 13, 1981.

COPYRIGHT MATERIAL OMITTED

James C. Eastman, Washington, D. C., for appellant in No. 79-708 and appellee in No. 79-789.

Glenn A. Mitchell, Washington, D. C., with whom Richard A. Bussey and Catherine R. Baumer, Washington, D. C., were on the brief, for appellees in No. 79-708 and appellants in No. 79-789.

Before HARRIS, MACK and FERREN, Associate Judges.

HARRIS, Associate Judge:

Edmund J. Flynn Company, a real estate broker, appeals from the trial court's determination that it had no contract to serve as a commissioned sales agent for the developers of a condominium project in the District of Columbia.¹ In a cross-appeal, the defendants in the nonjury trial challenge the award to Flynn of $18,000 (with interest) as the reasonable value of services rendered under both implied and express agency agreements calling for the performance of presales services. We find no clear error in the trial court's findings of facts and conclusions of law. However, because the record does not reveal the extent to which an erroneous evidentiary ruling may have affected the outcome, we vacate the judgment and remand the case solely to permit reconsideration thereof in light of our treatment of the attorney-client privilege issue.

I

In early 1977, defendants Gerard M. La-Vay and Gerard M. LaVay Corporation, first by themselves and later as joint venturers with defendants Richard J. Donohoe and Donohoe Construction Company, commenced planning for a condominium development in the District of Columbia (at North Capitol Street and Michigan Avenue, N.E.) to be called Park Place. While the project was still in the formative stage, and before initiation of the joint venture, LaVay sought to assemble a group of specialists who would assist in the development and the marketing of Park Place. In that endeavor, LaVay contacted plaintiff's president in a February 1977 meeting at the latter's office. The trial court found that at that meeting, LaVay raised generally the prospects of Flynn's acting as sales agent for Park Place, but that the parties concluded no agreement and executed no writings.

Notwithstanding the absence of a written sales agency contract, LaVay (together with his joint venturers) subsequently invited Flynn to participate in certain meetings related to the sale of the envisioned units. There was no dispute at trial that Flynn attended those meetings, although Flynn offered substantial additional testimony, challenged by LaVay, regarding the extent and the value of the plaintiff's other activities on behalf of the defendants. The trial court resolved much of this conflict in awarding Flynn judgment for services it rendered to defendants.

Substantial evidence supports the other branch of the trial court's findings: While the parties intended originally to appoint Flynn the commissioned sales agent for Park Place, later disagreement over material terms regarding compensation and termination prevented formation of the contemplated contract. During the course of these ultimately fruitless sales agency negotiations. Flynn continued its participation in LaVay's meetings. Moreover, on March 21, 1978, LaVay delivered a written agreement to Flynn appointing Flynn its agent for the limited purpose of responding to initial inquiries from prospective buyers. That appointment noted that the parties contemplated, but had not entered into, a formal written agreement for Flynn to act as the sales agent for Park Place.

In its extensive findings of fact and conclusions of law, the trial court concluded that Flynn acted as a limited pre-marketing agent for appellees, first under an impliedin-fact agreement dating from the February 1977 meeting with LaVay, and later under the express March 21, 1978, limited agency appointment. Indicating that the pre-marketing agency relationship was of an indefinite duration and terminable at the will of either party, the trial court found that defendants revoked the agency agreement on September 21, 1978. Judgment for plaintiff in the amount of $18,000 plus interest was entered as compensation for Flynn's activities under that pre-marketing agency agreement.

II

At trial, plaintiff endeavored to cast itself as the beneficiary of a far more lucrative contract which purportedly retained Flynn to act as the exclusive commissioned sales agent for Park Place. In this effort, Flynn presented the testimony of Lipman Redman, an attorney for the defendants who had participated in what the trial court found to be aborted negotiations for just such a sales agency agreement. The import of Redman's testimony was that for a period of time defendants considered drafts of a sales agency contract which had been proposed by Flynn, but which they ultimately rejected.

In preparation for the development of this testimony, plaintiff conducted pretrial discovery, ostensibly exhaustive, which sought all materials relevant to negotiations over the draft agreement. The defendants refused disclosure of some of the requested documents, asserting that they had been communicated in confidence to or from attorney Redman, and hence that they were privileged.

On cross-examination of Redman at trial, however, defendants introduced over objection a memorandum from Redman reciting certain details of the sales agency contract negotiations. Flynn contended that the document fell within the scope of its prior discovery requests, which LaVay had refused with an assertion of the attorney-client privilege. Counsel for Flynn further argued that the introduction of the Redman memorandum into evidence had waived the previously invoked attorney-client privilege and entitled plaintiff to access to all formerly withheld material. The trial court refused the renewed disclosure request at that time and again when plaintiff made an unsuccessful motion for a new trial, claiming prejudice to its trial examination of Redman because of the denied disclosure of defendants' withheld documents.

II

Most of the controversy on these appeals stems from the trial court's resolution of factual disputes regarding the sales agency negotiations between the parties. Accordingly, we observe that we are obliged to treat the trial court's factual findings as presumptively correct unless they are clearly erroneous or unsupported by the record. See D.C.Code 1973, § 17-305(a). That presumption properly exists because the trial court heard the testimony and evaluated its credibility. See, e. g., In re A. B. H., D.C App., 343 A.2d 573, 575 (1975); Johnson & Jenkins Funeral Home, Inc. v. District of Columbia, D.C.App., 318 A.2d 596, 597 (1974); Lee Washington, Inc. v. Washington Motor Truck Transportation Employees Health and Welfare Trust, D.C.App., 310 A.2d 604, 606 (1973). Recognizing that limitation on our review function, we proceed to a consideration of the merits.

IV

Flynn contends that a sales commission contract existed between the parties, and therefore it is entitled to certain future commissions from the sale of Park Place units which it would have earned but for the breach of that contract by LaVay. 11 Williston on Contracts, § 1339 (3d ed. 1968). The trial court determined, however, that although the parties conducted negotiations in contemplation of such an agreement, no contract covering sales commissions ever was formed. The court stated:

From the evidence presented, the Court determines that the parties did not intend that the negotiations should amount to an agreement prior to the execution of the formal writing. The parties indicated that as late as March 21, 1978, in the agency appointment agreement, and, by the unsettled nature of the negotiations, especially regarding the question of the Flynn Company serving as the exclusive sales agent. A written contract embodying the completed contract was contemplated and the Court will give effect to this intention not to be bound. Accordingly, any claim for damages based on the loss of future commissions must be denied.

The record supports the conclusion that no sales commission contract was created because there never was any agreement on the material terms of compensation and termination² To be final, contract negotiations must include all of the terms which the parties intended to resolve; material terms cannot be left to future settlement. See Beck v. Bernstein, 198 Md. 244, 81 A.2d 608 (1951). Both parties agree that no formal sales commission agreement was signed. Since either party was at liberty to stop negotiations and not to complete the bargain, no contract existed. Beck v. Bernstein, supra, 198 Md. at 248, 81 A.2d at 609-10.

In evaluating contract formation, we also look closely at the parties' intention to be bound. In order to form a binding agreement, both parties must have the distinct intention to be bound; without such intent, there can be no assent and therefore no contract. Compare Smith v. Farrell, 199 Va. 121, 128, 98 S.E.2d 3, 7-8 (1957), with Coastland Corp. v. Third National Mortgage Co., 611 F.2d 969, 975 (4th Cir. 1979) (citation omitted). Defendant LaVay took no writing to the unscheduled February 1977 meeting, and no writing embodying the terms of oral discussions was executed at the meeting or at any time thereafter. Indeed, the subsequent negotiations about drafts of a written sales commission agreement reflect the parties' intention not to be bound until a formal writing was executed. Binder v. Benson, 225 Md. 456, 462, 171 A.2d 248, 250-51 (1961); Peoples Drug Stores v. Fenton Realty Corp., 191 Md. 489, 494, 62 A.2d 273, 275-76 (1948). There is no evidence indicating a meeting of the minds as to the variety of details usually present in a developer-broker contract.

The only writing executed by the...