Ford v. American Medical Intern., Inc., 86-247

• Decision Date: 15 April 1988
• Docket Number: No. 86-247,86-247
• Citation: 422 N.W.2d 67,228 Neb. 226
• Parties: Michael J. FORD, Appellant, v. AMERICAN MEDICAL INTERNATIONAL, INC., a Delaware Corporation, Appellee.
• Court: Nebraska Supreme Court

Page 67

422 N.W.2d 67

228 Neb. 226

Michael J. FORD, Appellant, v. AMERICAN MEDICAL INTERNATIONAL, INC., a Delaware Corporation, Appellee.

No. 86-247.

Supreme Court of Nebraska.

April 15, 1988.

Syllabus by the Court

1. Real Estate: Brokers: Words and Phrases. "Business brokers" are real estate brokers, as defined by Neb.Rev.Stat. § 81-885.01 (Reissue 1987), if the attempted sale or lease involves the transfer of any interest in real estate.

2. Summary Judgment. In considering a motion for summary judgment, the evidence is to be viewed in the light most favorable to the party against whom the motion is directed, giving to that party the benefit of all reasonable inferences which may be drawn from the evidence.

Thomas C. McGowan of McGrath, North, O'Malley & Kratz, P.C., Omaha, for appellant.

Lyman L. Larsen and Patricia A. Zieg of Kennedy, Holland, DeLacy & Svoboda, Omaha, for appellee.

HASTINGS, C.J., WHITE, and FAHRNBRUCH, JJ., and WOLF and McGINN, District Judges.

WHITE, Justice.

This is an appeal from an order of the district court for Douglas County sustaining defendant-appellee's motion for summary judgment.

Plaintiff-appellant, Michael J. Ford, filed an action against American Medical International, Inc. (AMI), seeking recovery of $380,000 in fees, which Ford alleges AMI agreed to pay him if the corporation acquired St. Joseph Hospital in Omaha.

According to Ford's petition, AMI, through its representative Kenneth Diamond, requested Ford's assistance in approaching the hospital about a possible acquisition or merger. It is further alleged that AMI orally agreed to pay Ford for his services in an amount equal to 1 percent of the consideration paid by AMI if the acquisition was consummated. "AMI stated that it would prepare a written contract confirming these terms ... and forward [it] to Ford." That written contract was never received by Ford.

Ultimately, a "lease and agreement" arrangement was entered into between AMI and the hospital. Ford alleges that despite repeated demands for payment of his fees, AMI has refused to pay the commission agreed to by the parties.

AMI moved for a summary judgment in the case based on the Nebraska Real Estate License Act, Neb.Rev.Stat. §§ 81-885.01 et seq. (Reissue 1987). Following a hearing where evidence was adduced by both parties, the district court sustained the motion for summary judgment based on §§ 81-885.01, 81-885.03, and 81-885.06. Ford appeals and alleges that the court erred in finding that he was a "broker" within the meaning of the statute because the transaction was for the acquisition of an ongoing business, not real estate, as defined by the Nebraska Real Estate License Act. His second assigned error alleges that the district court erred in adopting the so-called New Jersey rule announced in Kenney v. Paterson Milk & Cream Co., 110 N.J.L. 141, 164 A. 274 (1933).

The Nebraska Real Estate License Act requires that all persons who act as real estate brokers, as defined therein, in exchange for a fee, must be licensed by the State Real Estate Commission. Section 81-885.02 provides that

it shall be unlawful for any person, directly or indirectly, to engage in or conduct, or to advertise or hold himself or herself out as engaging in or conducting the business, or acting in the capacity, of a real estate broker ... within this state without first obtaining a license ... unless he or she is exempted from obtaining a license under section 81-885.04.

Section 81-885.01(1) defines real estate as follows: "Real estate shall mean and include condominiums and leaseholds, as well as any other interest or estate in land, whether corporeal, incorporeal, freehold, or nonfreehold, and whether the real estate is situated in this state or elsewhere." Subsection (2) provides in pertinent part that

[b]roker shall mean any person who for a fee, commission, or any other valuable consideration, or with the intent or expectation of receiving the same from another, negotiates or attempts to negotiate the listing, sale, purchase, exchange, rent, or lease or option for any real estate or improvements thereon, or assists in procuring prospects ... for the listing, sale, purchase, exchange, renting, leasing, or optioning of any real estate ... or holds himself or herself out as engaged in any of the foregoing.

Further, § 81-885.06 provides in part:

No action or suit shall be instituted, nor recovery be had, in any court of this state by any person for compensation for any act done or service rendered, the doing or rendering of which is prohibited under the provisions of sections 81-885.01 to 81-885.48, to other than licensed brokers, licensed associate brokers, or licensed salespersons.

At the hearing on the motion for summary judgment, and in this court, AMI contends that even if a fee agreement was entered into between Ford and AMI (a fact which AMI denies), such agreement was "entered into contrary to the laws of the State of Nebraska and the statutes simply bar any action."

Appellant, on the other hand, argues that the Nebraska Real Estate License Act is inapplicable in this case. Ford asserts that the transaction contemplated by AMI and St. Joseph Hospital was not a real estate transaction, but instead was for the acquisition of an ongoing business. This fact, Ford claims, puts his activities and the transaction related thereto outside the statutes, since any real estate transfer was merely incidental to the acquisition of the ongoing business. Given the clear language of the statutes involved, we cannot agree with appellant's characterization of events. For the following reasons, we hold that the order sustaining AMI's motion for summary judgment was proper.

The record discloses that Ford owned his own business, Michael J. Ford and Associates, which was a "consulting business primarily in the medical field." The "primary purpose of the corporation" was consulting and constructing surgical centers in Omaha and around the country. Neither Ford nor his corporation held a Nebraska real estate license during the years 1975 to 1985.

Ford's activities in 1983 relating to the AMI-St. Joseph Hospital transaction are described in the pleadings and his deposition as follows:

"[N]egotiating the terms ... on which Saint Joseph's Hospital would be willing to negotiate, i.e., it required my negotiating the terms that were subsequently in the contract."

"The contract [between AMI and Ford] said that I was to establish the ... contact with Saint Joseph's Hospital on behalf of AMI and for that I was to be paid a finder's fee."

"Ford ... was authorized to represent AMI in approaching St. Joseph's Hospital ... concerning a possible acquisition or merger."

"Ford expended considerable time, effort and expense, including numerous conversations and meetings" wherein he "negotiated the basic terms and conditions of the subsequent acquisition/merger of St. Joseph's Hospital by AMI."

"Ford arranged for [the initial] meeting ... between AMI and representatives of St. Joseph's Hospital at Ford's office.... Ford was present and assisted in negotiations and discussions throughout said meeting."

"Ford was the effective procuring cause of the acquisition...."

When the above-described activities are compared with the language of § 81-885.01, it seems clear that Ford is a "person who ... with the ... expectation of receiving [a fee] from another, negotiate[d] or attempt[ed] to negotiate the ... sale, purchase, ... or lease" of St. Joseph Hospital, and "assist[ed] in procuring prospects ... for the ... sale, purchase, [or] leasing" of said hospital. The final "lease and agreement" transaction between AMI and St. Joseph Hospital, allegedly procured by Ford's efforts, states that AMI agrees to lease "the Hospital" which is defined as a "fee simple interest in the Real Estate described on Exhibit A, attached hereto...." Exhibit A set forth in exhaustive detail the legal description of all such real estate leased. In addition, the leasehold included "[a]ll tangible personal property, fixtures and equipment ... upon the Real Estate...."

This transaction may be, in part, a lease of an "ongoing business." However, the enterprise of operating a hospital is not severable from the "real estate and improvements thereon." § 81-885.01(2). Our statutes prohibit any unlicensed person (aside from those explicitly excepted in § 81-885.04) from negotiating, attempting to negotiate, or assisting in procuring prospects for the sale or lease of "any real...