Goldman v. Fadell
| Decision Date | 04 May 1988 |
| Docket Number | Nos. 87-1456,87-1528,s. 87-1456 |
| Parties | George N. GOLDMAN, Plaintiff-Counter-Defendant-Appellant, Cross-Appellee, v. Steve C. FADELL, et al., Defendants-Counter-Plaintiffs-Appellees, Cross- Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Jay A. Canel, Jay A. Canel, P.C., Chicago, Ill., for plaintiff-counter-defendant-appellant, cross-appellee.
Steven W. Handlon, Handlon & Handlon, Portage, Ind., for defendants-counter-plaintiffs-appellees, cross-appellants.
Before COFFEY and KANNE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
This action involves an alleged breach of an exclusive real estate sales listing agreement to sell a mobile home park. The realtor brought this action against the park owners to collect the sales commission stipulated in the listing agreement. In the District Court, the jury rejected the realtor's breach of contract claim. The trial judge upheld this verdict, and denied the realtor's motion for judgment notwithstanding the verdict ("JNOV"). The defendants had filed a counterclaim, alleging that the realtor breached his fiduciary duties to them, and requesting compensatory and punitive damages. The jury awarded the defendants $100,000 in damages on this counterclaim. 1 The trial judge set aside this verdict, and granted the realtor's motion for JNOV on the counterclaim. The realtor appeals the denial of his motion for JNOV on his breach of contract claim. The defendants cross-appeal the District Court's grant of the realtor's motion for JNOV on their counterclaim. We affirm both rulings of the District Court.
George N. Goldman, an Illinois citizen, entered into a brokerage agreement with Steve C. Fadell, a citizen of Indiana, to sell a mobile home park located in Portage, Indiana. Fadell's two land development companies owned the park. The agreement, dated February 8, 1982, was an exclusive sales listing agreement whereby Goldman's realty firm, Goldman & Associates, had the exclusive right to sell the park for six months. After this time, the contract remained in effect until either party gave thirty days written notice. If neither party gave notice, the agreement terminated February 8, 1984, two years from the date of the agreement. The contract further stipulated that the property would be sold for $5.9 million, with $1.5 million to be paid in cash. The balance due was to be financed by either a land contract, or a wraparound mortgage to be amortized over thirty-five years with an interest rate of 10% per annum and a balloon payment in twenty years.
The listing agreement explicitly set forth the conditions under which Goldman & Associates would collect its sales commission of $236,000--four percent of the gross sales price. A commission would be due if the property was
sold, exchanged or rented during the term of this Agreement, or within six months after the expiration hereof, to any person or firm with whom, during the term of this Agreement, the Broker, Owner or other person may have negotiations, for the price, and upon the terms described ... or for a price and upon such terms as are acceptable to Owner.
The agreement provided that Goldman would earn his commission "upon execution of a contract" between the owner and purchaser. Another provision enabled the broker to purchase the property himself, and still collect the commission.
In May and July of 1982, the plaintiff, as broker for his own account, made two offers for the defendants' property. Both were rejected because they varied from the terms of sale required by the listing agreement. Apparently disenchanted with Goldman's services, Fadell sent one of Goldman's brokers a letter dated September 2, 1982, which terminated the listing agreement thirty days thereafter. On September 17, 1982, Goldman submitted another offer to purchase the park. Goldman offered the requested sales price of $5.9 million, with a down payment of $1.5 million and a wraparound mortgage. Although this purchase offer satisfied the minimal requirements outlined in the listing agreement, the parties continued to negotiate over other material terms. On February 18, 1983, Fadell signed a contract for sale of the property, and Goldman signed the contract on February 25, 1983. This sales contract superseded the sales commission provision of the listing agreement by making the commission payable upon close of escrow, instead of upon execution of the sales contract. The sales contract set forth additional requirements to which both parties agreed, but which both parties ultimately failed to satisfy. As a result, the sale never closed.
The major roadblock that the parties faced in closing the transaction concerned the new financing arrangements required by the contract. Fadell wanted to realize spendable cash through the sale, which the $1.5 million down payment required by the listing agreement could not provide. He expected to use the down payment to pay the income taxes from the sale, as well as to pay the existing variable-rate mortgages on the property. Goldman did not want to take the property with the existing variable-rate mortgages because of the rising interest rates.
Section 2.1 of the contract provided that the sale would be conditioned upon obtaining a loan of two million dollars, secured by a second lien on the park. The amortization period of the loan could not be less than twenty years, and the interest rate could not exceed 13 1/2% per annum. If Fadell failed to obtain such a loan, Goldman was to have thirty days to secure such a commitment. Section 2.3 of the contract stated that if such a loan was not obtained within the requisite time, "or if the proposed terms of the new mortgage [were] unacceptable to the purchaser this Agreement [would] be terminated and of no further force or effect and neither party [would] have any further liability to the other." Because neither Fadell nor Goldman obtained the desired loan, Fadell eventually sold the park to another purchaser on February 28, 1985, two years after the sales contract was executed and twenty months after loan negotiations had ceased.
On appeal, Goldman contends that the District Court erred in not granting his motion for directed verdict, or his motion for JNOV. Even though the final sales contract expressly conditions payment of the commission upon the close of escrow, he alleges that the defendants, Fadell and his two companies, breached the listing agreement by withholding the sales commission from him. Goldman also asserts that the District Court erred in instructing the jury on "abstract" legal terms and issues which were not supported by the evidence, and which he contends may have misled the jury. In their cross-appeal, the defendants allege that the District Court incorrectly granted Goldman's motion for JNOV on their counterclaim for damages. They contend that he breached his fiduciary duties to them, and that the $100,000 damages awarded to them by the jury should have been upheld. The District Court had diversity jurisdiction under 28 U.S.C. Sec. 1332, and we have final judgment jurisdiction under 28 U.S.C. Sec. 1291.
Goldman challenges the denial of his motion for JNOV on his contract claim. He contends that because his September 1982 offer to purchase the park conformed to the terms set out in the listing agreement, he produced a ready, willing and able buyer. Although he did not ultimately purchase the park, he claims that his offer and execution of the sales contract were sufficient to award him the commission.
In reviewing the District Court's denial of Goldman's motion for JNOV, we must apply the same standard used by the District Court. A motion for JNOV will be denied "where the evidence, along with all inferences to be reasonably drawn therefrom, when viewed in the light most favorable to the party opposing such motion, is such that reasonable men in a fair and impartial exercise of judgment may reach different conclusions." Kolb v. Chrysler Corp., 661 F.2d 1137, 1140 (7th Cir.1981), quoted in McKinley v. Trattles, 732 F.2d 1320, 1323-24 (7th Cir.1984). See also Estate of Davis v. Johnson, 745 F.2d 1066, 1070 (7th Cir.1984). In applying such a standard, we will not evaluate the credibility of the witnesses, or otherwise consider the weight of the evidence. See Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir.1970).
The trial court determined that Indiana law governed in this diversity case. Since neither party challenges this conclusion, we agree and will apply Indiana law here. The Indiana courts have clearly refused to interpret exclusive listing agreements as guaranteeing a sales commission to real estate brokers regardless of the circumstances surrounding the sale. See Brown v. Maris, 128 Ind.App. 671, 150 N.E.2d 760 (1958) (citing Thomas v. Hennes, 78 Ind.App. 275, 135 N.E. 392, 395 (1922)). Rather, the courts have looked to the particular language of the contract in order to determine the rights of the broker. See Brown v. Maris, 150 N.E.2d at 760. See also McKenna v. Turpin, 128 Ind.App. 636, 151 N.E.2d 303 (1958).
In order to determine the defendants' obligations to Goldman, we must consider both the listing agreement, as well as the terms of the superseding sales contract negotiated between the parties. In the absence of fraud, a written contract is merged with all prior and contemporaneous negotiations and contracts on the subject. See generally Vernon Fire & Casualty Ins. Co. v. Thatcher, 152 Ind.App. 692, 285 N.E.2d 660, 665 (1972); Guido v. Baldwin, 172 Ind.App. 445, 360 N.E.2d 842, 848 (1977). The terms of the listing agreement should be considered as merged with the sales contract because the sales contract was but an outgrowth of the listing agreement between the same parties. Even though Goldman's brokerage firm is referred to as "Goldman & Associates" in the listing agreement, and as "Goldman &...
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