Grommet v. Newman

• Citation: 2009 WY 150,220 P.3d 795
• Decision Date: 10 December 2009
• Docket Number: No. S-08-0148,S-08-0149.,S-08-0148
• Parties: Dean GROMMET, Malinda Grommet, husband and wife, and Michelle Costi, Appellants (Defendants), v. Blair NEWMAN, d/b/a Newman Realty, Appellee (Plaintiff). Blair Newman, d/b/a Newman Realty, Appellant (Plaintiff), v. Dean Grommet, Malinda Grommet, husband and wife, and Michelle Costi, Appellees (Defendants).
• Court: United States State Supreme Court of Wyoming

220 P.3d 795

2009 WY 150

Dean GROMMET, Malinda Grommet, husband and wife, and Michelle Costi, Appellants (Defendants), v. Blair NEWMAN, d/b/a Newman Realty, Appellee (Plaintiff).

Blair Newman, d/b/a Newman Realty, Appellant (Plaintiff), v. Dean Grommet, Malinda Grommet, husband and wife, and Michelle Costi, Appellees (Defendants).

Nos. S-08-0148, S-08-0149.

Supreme Court of Wyoming.

December 10, 2009.

COPYRIGHT MATERIAL OMITTED

Representing Dean and Malinda Grommet and Michelle Costi: Patrick J. Murphy of Williams, Porter, Day & Neville, P.C., Casper, Wyoming; and Thomas S. Peters of Peters Associates, LLC, Teton Village, Wyoming. Argument presented by Mr. Murphy.

Representing Blair Newman: Michael E. Warren of Sawyer & Warren, P.C., Torrington, Wyoming.

Before VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

HILL, Justice.

¶ 1 Blair Newman, dba Newman Realty (Newman), initiated this litigation by filing his complaint in the district court on June 19, 2006. Newman asserted that he was owed a real estate commission by Dean Grommet Grommet, in accordance with the terms of a real estate listing agreement between them.¹ Newman also sought an award of attorney's fees from Grommet as provided for in the listing agreement, if he was successful in his action. It enhances the clarity of our opinion to note at this juncture that the real estate sale at issue here affected a large ranch property owned by Grommet, and that the Wyoming National Guard (WNG) was the purchaser. That ranch was contiguous with existing WNG properties near Guernsey.

¶ 2 On April 8, 2008, the district court entered its judgment awarding Newman damages in the amount of $537,000.00, plus prejudgment interest of 7% per annum from July 10, 2006, until the judgment was entered, as well as post judgment interest of 10% per annum from the date the judgment was entered until it was paid in full. The district court declined to award attorney's fees in Newman's favor. In Case No. S-08-0148, we will affirm the district court's judgment with respect to the damages awarded to Newman. In Case No. S-08-0149, we reverse the district court's judgment insofar as it declined to award attorney's fees to Newman and we remand to the district court with directions that it award reasonable attorney's fees to Newman in accordance with the contract.

ISSUES

¶ 3 In Case No. S-08-0148, Grommet raises these issues:

A. Whether the district court erred when it found that Grommet acted in bad faith toward Newman where Grommet acted in full accordance with the parties' real estate contract.

B. Whether the district court denied Grommet procedural due process when it imposed liability for breach of the implied covenant of good faith and fair dealing after ruling, during trial, that this case was not being tried on the covenant of good faith and fair dealing.

C. Whether the district court erred when it ruled that the parties' real estate contract was not void and unenforceable for Newman's failure to provide and obtain the statutory brokerage disclosures.

D. Whether Newman committed fraud on Grommet and the Wyoming Real Estate Commission with his redacted 2003 disclosure statement.

E. Whether the district court erred when it failed to award Grommet any damages for Newman's wrongful filing of a Lis Pendens against Grommet's ranch.

F. Whether the district court erred in finding that Newman did not breach his fiduciary duties to Grommet where, as here, the undisputed evidence showed otherwise.

G. Whether the district court erred when it rejected Grommet's counterclaims, and whether Grommet is lawfully entitled to compensatory damages and his attorney's fees under the real estate contract and the common law.

Newman essentially conforms his statement of the issues to that articulated by Grommet for this appeal.

¶ 4 In his reply brief, Grommet asserted that these new issues were raised by Newman in his brief for this case:

A. Newman makes numerous misrepresentations and material omissions in his brief which must be corrected to avoid injustice.

B. Newman's misstatements, in his brief, as to the reasons he failed to obtain a signed brokerage disclosure from Grommet in August 2005, warrant reversal and entry of judgment for Grommet.

C. Sellers who honor the terms of their express contracts do not act in bad faith.

1. Grommet was permitted and authorized by his CONTRACT with Newman to hire subsequent brokers after expiration of Newman's listing period.

2. Newman cannot link Grommet's alleged prevention of Newman's performance to any of the proscribed conduct in Havens.²

3. Newman did not prove he was "plainly or evidently approaching success in his undertaking" when Grommet terminated Newman's services in late March 2006.

4. Grommet's desire to realize $8.5 million for his property — instead of $7.7 million — after Newman's listing period expired is never bad faith.

5. The district court's finding of bad faith imposes liability in the absence of any objective standard, or criteria, of bad faith.

D. None of the evidence supports a finding of an implied, extended contract after the 2/12/06 expiration of Newman's listing period.

E. The general and special Statutes of Fraud bar any commission for Newman.

H. Newman's receipt of Grommet's 3/25/06 letter on 3/30/06 does not affect or invalidate the 3/29/06 listing agreement of Brockman and Grommet.

G. The district court's revival of Newman's bad faith claim at trial, and the district court's imposition of bad faith liability under Scherer³ following trial, violated Grommet's right to due process.

H. Newman's other misstatements must be corrected.

¶ 5 We will set out the issues in case No. S-08-0149 in a separate section of this opinion.

FACTS AND PROCEEDINGS

¶ 6 At the outset we note that Grommet's appeal hinges on his contention that the district court resolved the issues in this case on "perceived equities," rather than the four corners of the governing contract. He also contends that the district court erred in applying this Court's decision in Scherer Construction, LLC v. Hedquist Construction, Inc., 2001 WY 23, 18 P.3d 645 (2001) rather than Havens v. Irvine, 61 Wyo. 309, 157 P.2d 570 (1945).

¶ 7 Newman was a real estate broker who operated his principal office in Goshen County. He sold real estate throughout Wyoming, including Platte County. Grommet owned real estate near Guernsey known as the Gray Rocks Ranch. In 1992, Grommet purchased the Gray Rocks Ranch for approximately $1,050,000.00, with Newman acting as the listing agent. Grommet listed that ranch for sale with Newman as the real estate broker (who was working for Garver Realty at that time) in 1998, for $4.9 million at a commission of 8%. Portions of the ranch were sold and various land purchases and trades were made in the intervening years which enlarged the ranch and made it contiguous to Camp Guernsey. Grommet worked with Newman in approximately 21 real estate transactions over the years. The ranch was taken off the market for a time, but Grommet again listed the ranch with Newman in December of 2003, by way of an exclusive listing contract that was to run through December of 2005. The listing price was $7.3 million for the ranch as a whole, but if the ranch were sold in two distinct parcels, the total would be $7.7 million. The final listing agreement between these parties supplanted that mentioned immediately above and was dated August 12, 2005, and was to expire on February 12, 2006. That contract set a price of $7.7 million for the entire ranch. Newman's commission was to be 6%, and he was to receive a $75,000 bonus if he sold the ranch for a full-price offer.

¶ 8 The evidence was that Newman advertised the ranch extensively and spent considerable money doing so. He contacted persons, entities, and other brokers. He showed the property on multiple occasions. Newman also distributed and otherwise made available literature regarding the ranch.

¶ 9 In the fall of 2004, Colonel Steve Mount of the Wyoming National Guard saw some of Newman's advertising literature regarding the Gray Rocks Ranch. Colonel Mount was immediately interested in the property since the property was adjacent to the WNG's existing lands and WNG wanted to expand Camp Guernsey. At that time, the asking price was $7.3 million. Newman showed the property to several members of the WNG. Major General Ed Wright, the Adjutant General of the Wyoming National Guard, met with the military affairs committee of the Wyoming State Legislature regarding funding to purchase the ranch. In July of 2005, a story appeared in the Casper Star Tribune that stated that the WNG wanted an appropriation of $8 million, which was to be used, in part to purchase the Gray Rocks Ranch. The WNG's intent and ability to purchase the ranch was contingent upon the legislature's appropriating the funds and the WNG obtaining an appraisal at least equal to the eventual purchase price. On August 12, 2005, when it became known that the WNG was seeking an $8 million appropriation, Grommet had Newman write a letter to the WNG stating that the new listing price was $7.7 million for the entire ranch. On September 22, 2005, WNG wrote back and stated that it was very interested in purchasing the property, but it had to wait for an appropriation from the legislature.

¶ 10 On September 27, 2005, General Wright met with Grommet and he expressed his interest in buying the property at $7.7 million. Grommet expressed his interest in selling the property to the WNG. From Grommet's point of view, a sale to the WNG would keep the property from being subdivided and allow him to lease the ranch back.

¶ 11 The WNG hired two appraisers to evaluate the ranch. Both appraisers were certified appraisers in the state of Wyoming. Jim Hastings appraised the Gray Rocks Ranch at $7.5 million, while John Pexton appraised the ranch at $7.95 million. Both appraisals were submitted on November 16, 2005. On November 19, 2005, another article appeared...