Lang McLaughry Spera Real Estate, LLC v. Hinsdale

• Decision Date: 28 April 2011
• Docket Number: No. 10–103.,10–103.
• Citation: 2011 VT 29,35 A.3d 100
• Parties: LANG MCLAUGHRY SPERA REAL ESTATE, LLC v. Clark W. HINSDALE, III, and Suzanne G. Hinsdale.
• Court: Vermont Supreme Court

2011 VT 29

35 A.3d 100

LANG MCLAUGHRY SPERA REAL ESTATE, LLC

v.Clark W. HINSDALE, III, and Suzanne G. Hinsdale.

No. 10–103.

Supreme Court of Vermont.

April 7, 2011.Motion to Correct Record Granted April 28, 2011.

Ross A. Feldmann of Gravel & Shea, Burlington, for Plaintiff–Appellee/Cross–Appellant.

James W. Runcie of Ouimette & Runcie, Vergennes, for Defendants–Appellants.

Present: REIBER ¹, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.DOOLEY, J.

¶ 1. Clark W. Hinsdale, III, and Suzanne G. Hinsdale appeal from the trial court's summary judgment decision in favor of Lang McLaughry Spera Real Estate, LLC (Lang), in this contract dispute. The Hinsdales argue that they did not agree to pay Lang a commission on the sale of their berry farm business and business-related personal property items, in addition to a commission on the sale of their real property. They also assert that Lang violated the Vermont Real Estate Commission Rules and committed numerous acts of consumer fraud. Lang cross-appeals, challenging the court's award of attorney's fees. We reverse and remand the court's decision regarding Lang's commission and the court's award of attorney's fees. We affirm the court's judgment on the remaining claims.

¶ 2. The Hinsdales owned a fifty-six-acre parcel of land in Charlotte, Vermont, which contained a two-family residence and berry fields. They sold their berries commercially under the business name “The Charlotte Berry Farm,” an unincorporated sole proprietorship. In 2007, the Hinsdales entered into an “Exclusive Right to Market Property Agreement” with Lang. The listing agreement described the property by its street address only. The property was listed at $1,250,000, and the Hinsdales agreed to pay Lang a commission of 6% of the “sale price.” In November 2007, the Hinsdales and a buyer entered into a purchase and sale agreement, which stated the total purchase price as $900,000. A December 2007 addendum broke down the total purchase price as follows: $725,000—81% of the price—for real estate; $100,000 for the business known as the “Berry Farm and Farm Stand”; and $75,000 for the business machinery, equipment, tools, fixtures, inventory and supplies.

¶ 3. At closing, Lang mistakenly calculated its commission as 5% of $900,000, or $45,000. The Hinsdales paid this amount, but refused to pay the remaining 1%, or $9000, after Lang found the mistake and requested the funds. The Hinsdales maintained that the listing agreement covered the sale of only their real estate, and not the sale of their business or business-related personal property. Since only 81% of the price was allocated to the real estate, and the Hinsdales had already paid 84% of the commission claimed by Lang, they argued that they had already paid more than was owed. Lang then sued the Hinsdales, seeking the remaining commission amount. The Hinsdales filed counterclaims, alleging that Lang breached the listing agreement, violated the Real Estate Commission Rules, and engaged in numerous acts of consumer fraud. The Hinsdales also raised Lang's alleged violation of the Vermont Real Estate Commission Rules as an affirmative defense to Lang's collection action.

¶ 4. The parties filed cross-motions for summary judgment, and in a December 2009 order, the court granted summary judgment to Lang. The court found the following facts to be undisputed. As noted above, the parties' listing agreement described the property by its street address only. Lang's analysis showed that the best way to market the property was as a country estate. The Hinsdales hoped that the buyer would continue the berry farm business, but this was not a condition of sale. In addition to the listing agreement, Lang contemporaneously prepared two multiple-listing-service (MLS) information sheets. These documents did not state that any equipment would be included as part of the property, although they described the property as a berry farm with various outbuildings and business opportunities. In mid-July 2007, Lang asked the Hinsdales what equipment might be included in the transaction, and the Hinsdales responded that it was negotiable. Clark Hinsdale stated his expectation that all of the Berry Farm specific supplies—such as scales, irrigation equipment, planters, rototillers, sprayers, and several tractors—would stay with the property. The Hinsdales also provided Lang with financial information about the business. The court found that Lang used all of this information to sell the property.

¶ 5. Lang also prepared marketing brochures for the property, which referred to the property as the “Charlotte Berry Farm.” The brochures stated that the “Farm” consisted of “a farmstand-store, farm outbuildings and infrastructure, a 2–family log home, 2 ponds with an irrigation system, and approximately 56 acres with amazing views.” They indicated that the “land produces blueberries, raspberries and strawberries in abundance,” and referenced other possibilities for expansion such as a Christmas tree farm and cross-country skiing trails. The brochures provided that financial information was available to qualified buyers upon inspection of the property.

¶ 6. Lang secured a buyer for the property, and a purchase and sale agreement was executed in November 2007. The agreement stated that the equipment in the farm stand and the equipment listed in an attachment to the agreement would be transferred with the real property. The agreement included a handwritten provision that “buyer and seller to review + clarify all items + questions as per addendum (to follow) from Randy Amis, atty—to be in agreement w/ both parties.” The parties then executed a December 2007 addendum, which imposed additional obligations upon the Hinsdales and allocated the purchase price between the real property, business, and equipment as set forth above.

¶ 7. With these facts in mind, the court examined the terms of the parties' agreement. Both parties argued that the term “sales prices” was unambiguous. According to the Hinsdales, the term referred only to the $725,000 allotted to the real property in the December addendum. Lang maintained that the term referred to the total price listed on the purchase and sale agreement. Looking to the plain language of the contract and the MLS forms, the court agreed with Lang. The court found that the circumstances surrounding the execution of the listing agreement reinforced its view that Lang had used its expertise to sell the “Charlotte Berry Farm,” including the real estate, business, and equipment, and that this was the parties' intent from the outset. The court thus concluded that the Hinsdales owed Lang $9000 under the contract.

¶ 8. The court next considered the Hinsdales' arguments regarding the Vermont Real Estate Commission Rules. The Hinsdales asserted that there was no written agreement covering the business or the equipment, and thus, Lang could not collect a commission, either in part or at all, on the sale of that property. See Vermont Real Estate Commission Rule 4.12(c) (“A brokerage firm may only receive the compensation provided in ... a written agreement signed by the firm and its client” and “shall not collect any compensation for brokerage services except as provided by these rules”).² They also argued that Lang had not included a clear description of the property in its listing agreement in violation of Rule 4.8(a)(2) (listing agreement must contain a “clear description of the property and its location”).

¶ 9. The court rejected these arguments. As an initial matter, it observed that the Hinsdales failed to clarify how rules governing real estate transactions could be interpreted to apply to and require written agreements concerning the sale of the business and equipment as part of a real estate transaction. Even if the rules were applicable, the court found this case distinguishable from those where there were no written agreements whatsoever and thus a “total deficiency” in meeting a rule's requirements. It explained that the parties here had used a form agreement created by the Vermont Association of Realtors, and while the business and equipment were not mentioned specifically, the agreement itself did not undermine the purpose of the rules, which was “to establish fair dealings between parties, standardize the procedure and practices in the real estate business and to prevent fraud.” Green Mountain Realty, Inc. v. Fish, 133 Vt. 296, 299, 336 A.2d 187, 189 (1975).

¶ 10. As to Rule 4.8(a)(2), the court found that the listing agreement made clear that a 6% commission would be paid on the sales price, which was initially set at $1,250,000. It concluded that the marketing of the property and the discussions between the parties regarding the Hinsdales' business and equipment demonstrated that Lang was selling the property as a working farm. Ultimately, the court found, Lang did procure the sale of the property as a whole, and even if the description of the property did not meet the requirements of the rule, this technical violation did not make it unfair for Lang to collect a commission on the sale. The court also granted summary judgment to Lang on the Hinsdales' consumer fraud claims, discussed in additional detail below. Based on its decision, the court awarded $29,333.03 in attorney's fees and expenses to Lang as the “prevailing party” pursuant to a provision in the parties' listing agreement. This appeal and cross-appeal followed.

¶ 11. We review the court's summary judgment decision de novo, applying the same standard as the trial court. Richart v. Jackson, 171 Vt. 94, 97, 758 A.2d 319, 321 (2000); see V.R.C.P. 56(c)(3) (stating that summary judgment appropriate where no genuine issue as to any material fact and any party entitled to judgment as a matter of law). We begin with the Hinsdales' arguments concerning the Vermont Real Estate Commission Rules because we find resolution of this argument dispositive. For purposes of this...