Huang v. Ma
| Decision Date | 02 February 2023 |
| Docket Number | SJC-13325 |
| Parties | Biping HUANG & another v. Jing MA & another. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Charles G. Devine, Jr., Boston (Lei Zhao Reilley also present) for the plaintiffs.
John D. Leone, Arlington, for the defendants.
Stephen M. Perry, Boston, for Massachusetts Association of Realtors, amicus curiae, submitted a brief.
Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, & Georges, JJ.
Biping Huang and her wholly owned real estate brokerage firm, WinPlus Realty Group, LLC (collectively, Huang) sued two former clients, Xinhang Sun and Jing Ma (clients), for breach of contract. Huang alleges that she and the clients orally agreed in May 2016 that she would be the exclusive broker for one year for their purchase of a new home in Winchester and would receive a commission upon the purchase of the new home. In exchange, Huang promised to use "reasonable efforts" to help the clients find and purchase the home, including by "assist[ing] in locating properties, ... arrang[ing] showings, analyz[ing] financing alternatives, giv[ing] advice concerning real estate practices and procedures, assist[ing] in negotiations, arrang[ing] inspections ..., and coordinat[ing] activities throughout the process." The contract also provided that, as part of this exclusive arrangement, the clients would "refer" to Huang "all potentially acceptable real property" they identified and would "notify other real estate agents" of the arrangement.
Although Huang performed substantial services pursuant to this contract between May 2016 and February 2017, the clients identified a home on their own. Then, without referring Huang to the listing or notifying the selling broker of the exclusive buyer's arrangement, they purchased the home, using as their buyer's agent another agent of the brokerage firm that represented the seller. After the purchase, the clients terminated their relationship with Huang via e-mail, recognizing the work she did for them and sending her an Amazon gift card by way of apology.
The motion judge allowed the defendants’ motion for summary judgment, as there was no written agreement for brokerage services. The Appeals Court reversed, because there is an express exemption to the Statute of Frauds for real estate brokers. Huang v. RE/MAX Leading Edge, 101 Mass. App. Ct. 150, 151-152, 190 N.E.3d 518 (2022). As "Sun and Ma [did] not otherwise challenge the enforceability of the agreement, nor [did] they argue that Huang will be unable to prove breach and damages," the Appeals Court also "vacate[d] so much of the judgment as grant[ed] summary judgment to Sun and Ma on Huang's claim related to the buyer's agent agreement." Id. A dissenting justice disagreed, as he concluded that the case law provided that a broker may only recover as a matter of law on "such a claim for a commission if the contract on which [the broker relies] contains a clear statement that the broker is entitled to receive a commission ... regardless of whether the broker played any role in effecting the desired sale or purchase." Id. at 166, 190 N.E.3d 518 (Englander, J., dissenting in part). As the alleged contract did not contain such an express term, the dissent would have affirmed summary judgment. Id.
We granted further appellate review to clarify the law in cases involving breach of an exclusive real estate broker agreement.
Taking the facts in the light most favorable to Huang, we conclude that an enforceable contract was created, the clients committed a breach of it, and Huang was entitled to her expectation damages. Therefore, the judge should have denied summary judgment.3
Background. 1. Home search. Huang is a licensed real estate broker in Woburn. At the time that the events giving rise to this litigation began, the clients, a married couple, lived in a condominium in Winchester, but they were looking to sell their property and buy a house.
Huang alleges (and the clients dispute) that on May 22, 2016, she and the clients entered into an oral exclusive buyers’ agency agreement. According to Huang, she would provide the assistance described above, and upon the clients’ purchase of a new home, Huang would be entitled to two to 2.5 percent of the sale price, via a fifty percent split of the listing fee with the listing agent, or the clients’ direct payment of two percent of the sales price if there were no listing fee. As the agreement was exclusive, the clients also agreed to refer potential homes to Huang and to notify brokers of such homes of the exclusive agency relationship. The contract term was for one year.4
Huang showed the clients at least ten properties in Winchester between May 2016 and February 2017. She arranged the showings, assisted the clients with mortgage applications, and provided them market analyses and recommendations. The clients made offers on four homes but ultimately did not purchase any of the four. The parties also discussed Huang extending a bridge loan of around $100,000 to the clients to purchase one of the properties. Although Huang's husband prepared a cashier's check, the loan was never made.
On February 18, 2017, the clients made an offer on a home on Bridge Street in Winchester for $999,000, without notifying Huang. The offer was accepted the same day. RE/MAX Leading Edge (RE/MAX) represented both the sellers and the buyers through different agents. According to a RE/MAX representative, the RE/MAX agent asked the clients if they were working with a buyer's agent, and they informed her that they were not.
The clients terminated their relationship with Huang on February 20, 2017, sending her the following message in Chinese via e-mail:
The clients then closed on the new house on May 15, 2017, and sold their condominium on April 26, 2018.
2. Procedural history. On August 1, 2017, Huang sued the clients, alleging breach of the exclusive buyer's agency agreement.6 The clients moved for summary judgment on July 27, 2018. The judge granted the motion because there was no written agreement. The Appeals Court vacated the grant of summary judgment, recognizing that the Statute of Frauds has an express exemption for contracts involving compensation for real estate broker services.7
Huang, 101 Mass. App. Ct. at 154, 190 N.E.3d 518, citing G. L. c. 259, § 7. Thus, a written agreement was not required to create an enforceable contract. The Appeals Court further concluded that the remedy for breach of an exclusive real estate buyer's broker contract, like other contracts, is the payment of expectation damages -- in this case, the lost commission.
Huang, supra at 163, 190 N.E.3d 518. A dissenting justice disagreed on the ground that an exclusive brokerage agreement does not allow for recovery of a commission unless the contract contains a "clear statement" providing for recovery regardless of whether the broker played any role in bringing about the desired sale or purchase. Id. at 166, 190 N.E.3d 518 (Englander, J., dissenting in part).
This court granted the clients’ application for further appellate review, limited to the issue dividing the Appeals Court: what remedy is available for breach of an exclusive agency contract in these circumstances.
Discussion. "Our review of a decision on a motion for summary judgment is de novo." HSBC Bank USA, N.A. v. Morris, 490 Mass. 322, 326, 190 N.E.3d 485 (2022), quoting Berry v. Commerce Ins. Co., 488 Mass. 633, 636, 175 N.E.3d 383 (2021). The moving party is entitled to summary judgment if, viewing the evidence in the light most favorable to the nonmoving party, "there is no material issue of fact in dispute and the moving party is entitled to judgment as a matter of law." HSBC Bank USA, N.A., supra. As Huang is the nonmoving party, we present and review the facts in the light most favorable to her.
1. Contract formation and breach. When the facts are considered in the light most favorable to Huang, there is sufficient evidence to conclude that a contract was formed and that a breach occurred in the instant case, entitling Huang to her expectation damages. As a preliminary matter, and as recognized by both the majority and dissent of the Appeals Court, a real estate brokerage contract need not be in writing to be enforceable. The Statute of Frauds expressly states that it "shall not apply to a contract to pay compensation for professional services of ... a licensed real estate broker or real estate salesman acting in their professional capacity." G. L. c. 259, § 7. Thus, oral agreements with brokers are permitted.
In the instant case, according to Huang, the parties orally agreed that in return for providing various services to help the clients find and purchase a new home (including assistance in identifying, visiting, and inspecting the properties; negotiating the price and financing of the properties; understanding real estate practices and procedures; and coordinating other activities from the beginning to the end of the purchase process), Huang was to serve as the clients’ exclusive buyer's agent and was entitled to be paid a fee upon the ultimate purchase of a home.8 We thus have a reciprocal exchange of benefit and detriment constituting consideration, and therefore an enforceable contract. See Miller v. Cotter, 448 Mass. 671, 684 n.16, 863 N.E.2d 537 (2007), citing Marine Contrs. Co. v. Hurley, 365 Mass. 280, 286, 310 N.E.2d 915 (1974) (...
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