Harrison & Bates, Inc. v. Featherstone Associates Ltd. Partnership

• Decision Date: 18 April 1997
• Docket Number: No. 961318,961318
• Citation: Harrison & Bates, Inc. v. Featherstone Associates Ltd. Partnership, 484 S.E.2d 883, 253 Va. 364 (1997)
• Court: Virginia Supreme Court
• Parties: HARRISON & BATES, INC. v. FEATHERSTONE ASSOCIATES LIMITED PARTNERSHIP, et al. Record

Page 883

484 S.E.2d 883

253 Va. 364

HARRISON & BATES, INC. v.FEATHERSTONE ASSOCIATES LIMITED PARTNERSHIP, et al.

Record No. 961318.

Supreme Court of Virginia.

April 18, 1997.

Bruce E. Arkema(Cantor, Arkema & Edmonds, on briefs), Richmond, for appellant.

David D. Hopper(William A. DeVan; Mezzullo & McCandlish, on brief), Richmond, for appelleeFeatherstone Associates Limited Partnership.

Otto W. Konrad(Steven D. Delaney; Leclair, Ryan, on brief), Richmond, for appelleesPrincipalCommercial Advisors, Inc.; Steven D. Delaney, trustee; and Otto W. Konrad, trustee.

Virginia Association of Realtors(John G. Dicks, III; Alex Menendez, McLean; Mays & Valentine, Richmond, on brief), amicus curiae, for appellants.

Present: All the Justices.

KOONTZ, Justice.

In this appeal, we consider whether the Commercial Real Estate Broker's Lien Act, Code §§ 55-526and55-527(the Broker's Lien Act), permits a commercial real estate broker to record and enforce a lien against rents on property after the property has been transferred to a subsequent purchaser.

BACKGROUND

The parties stipulated the facts in the trial court.We summarize the chronology of events and commercial transactions that form the framework of the parties' differing assertions on appeal.In 1988, Featherstone Associates(Featherstone/Virginia), a Virginia general partnership, owned Featherstone Professional Center (the property), a commercial office complex in Chesterfield County.To obtain tenants for the property, Featherstone/Virginia entered into a written commission agreement with Bowers, Nelms & Fonville, Inc.(Bowers), a licensed commercial real estate broker.Under this agreement Bowers' brokerage fee was to be 4% of the rents paid over the term, including any renewal period, of leases procured by Bowers.

Harrison & Bates, Inc.(Harrison), a licensed commercial real estate broker, is the assignee of the agreement between Bowers and Featherstone/Virginia.Principal Commercial Advisors, Inc.(Principal), a subsidiary of the Principal Financial Group, is the successor of the original mortgage lender to Featherstone/Virginia on the property.Featherstone Associates Limited Partnership(Featherstone/New Mexico) is a New Mexico limited partnership and is unrelated to Featherstone/Virginia.

April 16, 1987 Featherstone/Virginia executes first Deed of Trust, Assignment of Leases and Security Agreement on the property in favor of Signet Bank.

June 1, 1988 Featherstone/Virginia and Bowers execute commission agreement.

October 11, 1988 Featherstone/Virginia executes second Deed of Trust and Assignment of Rents and Leases on the property in favor of Signet Bank.May 4, 1989 Bowers procures lease on a portion of the property with John Tyler Community College; Featherstone/Virginia begins paying commissions to Bowers on rents received under this lease.

August 4, 1989 Bowers procures lease on a portion of the property with Dr. Jonas B. Speigel; Featherstone/Virginia begins paying commissions to Bowers on rents received under this lease.

June 28, 1993 Signet Bank transfers interest in first and second Deeds of Trust and Assignments of Rents and Leases on the property to Principal.

January 14, 1994 Featherstone/Virginia agrees to transfer ownership of the property to Principal in lieu of foreclosure; deed placed in escrow with Signet Bank; Signet Bank continues paying commissions to Harrison as Bowers' successor-in-interest.

May 2, 1994 Deed released from escrow and recorded; last commission payment is made to Harrison by agent of Principal.

July 22, 1994 Principal informs Harrison that it will not continue commission payments.

January 24, 1995 Harrison files memorandum of commercial real estate broker's lien.

May 5, 1995 Principal deeds ownership of the property to Featherstone/New Mexico; Featherstone/New Mexico executes Deed of Trust and Assignment of Rents in favor of Principal.

June 12, 1995 Harrison requests unsuccessfully that tenants pay rent directly to Harrison under the lien.

July 31, 1995 Harrison files bill of complaint to enforce lien, naming as respondents Featherstone/New Mexico, Principal, the trustees under Featherstone/New Mexico's Deed of Trust in favor of Principal, and the two tenants.

In a letter opinion subsequently incorporated by reference in the final decree, the trial court initially determined that the language of the Broker's Lien Act is ambiguous with regard to when a broker's lien is created, and is, therefore, subject to judicial construction.The trial court then determined that the purpose of the Broker's Lien Act was to provide commercial real estate brokers with a lien to secure contractual obligations of the property owner without having to bargain for that right.The trial court further reasoned, with reference to the Virginia Recording Act, Code § 55-95, that recording requirements within the Broker's Lien Act were intended to provide purchasers and encumbrancers with notice of the existence of the lien.On that basis, the trial court concluded that "perfection of a lien subsequent to the transfer of property would be contrary to the clear legislative purpose behind" the Broker's Lien Act.Accordingly, the trial court found that the present lien is not enforceable.We awarded Harrison this appeal.

DISCUSSION

We first consider Harrison's assertion that the Broker's Lien Act is not ambiguous and, thus, should be applied according to the plain meaning and intent of its language.It is well established that "[t]he province of [statutory] construction lies wholly within the domain of ambiguity."Winston v. City of Richmond, 196 Va. 403, 408, 83 S.E.2d 728, 731(1954).When a statute is plain and unambiguous, a court may look only to the words of the statute to determine its meaning.Brown v. Lukhard, 229 Va. 316, 321, 330 S.E.2d 84, 87(1985).

The Broker's Lien Act consists of two code sections, the first of which defines the terms "commercial real estate" and "principal broker."Code§ 55-526.The dispositive portions of the Broker's Lien Act are contained in Code§ 55-527, which has two subparts.At the time Harrison filed its lien, Code§ 55-527 read, in pertinent part:

A.Any principal broker who ... has provided licensed services that result in the procuring of a tenant of commercial real estate upon the terms provided for in a written agreement signed by the owner thereof ... shall have a lien, in the amount of the compensation agreed upon by and between the principal broker and the owner, upon rent paid by the tenant of the commercial real estate, or by the successors or assigns of such tenant....

B.The lien provided by this chapter shall not attach or be perfected until a memorandum of such lien signed under oath by the broker and meeting the requirements of this subsection has been recorded in the clerk's office of the circuit court of the county or city where the commercial real estate is located.The memorandum of lien shall state the name of the claimant, the name of the owner of the commercial real estate, a description of the commercial real estate, the name and address of the person against whom the broker's claim for compensation is made, the name and address of the tenant paying the rent against which the lien is being claimed, the amount for which the lien is being claimed, and the real estate license number of the principal broker claiming the lien.The lien provided by this chapter and the right to rents secured by such lien shall be subordinate to all liens, deeds of trust, mortgages or assignments of the leases, rents or profits recorded prior to the time the memorandum of lien is recorded.

(Emphasis added.)

Nothing in the language of this statute is inherently difficult to comprehend, of doubtful import, or lacking in clarity and definiteness.Accordingly, it is not necessary to look beyond the plain language of the statute to ascertain its underlying legislative intent.SeeBrown, 229 Va. at 321, 330 S.E.2d at 87.

While we agree with Harrison that the trial court erred in ruling that Code§ 55-527 was ambiguous and required judicial construction, reversal of the judgment is not required."We do not hesitate, in a proper case, where the correct conclusion has been reached but the wrong reason given, to sustain the result and assign the right ground."Robbins v. Grimes, 211 Va. 97, 100, 175 S.E.2d 246, 248(1970);see alsoFirst Security Federal Savings Bank, Inc. v. McQuilken, 253 Va. 110, 114, 480 S.E.2d 485, 488(1997);RF & P Railroad v. Metro. Wash. Airports Auth.251 Va. 201, 214, 468 S.E.2d 90, 98(1996).As we shall demonstrate, this is such a case.

Relying on the plain language of the statute, Harrison asserts that an inchoate lien arises under § 55-527(A) upon the broker rendering...