Mapes v. City Council of City of Walsenburg

• Decision Date: 13 July 2006
• Docket Number: No. 05CA0104.,05CA0104.
• Parties: Larry MAPES, d/b/a Reata Realty, Plaintiff-Appellant, v. CITY COUNCIL OF the CITY OF WALSENBURG, a Colorado municipal corporation, Defendant-Appellee.
• Court: Colorado Court of Appeals

151 P.3d 574

Larry MAPES, d/b/a Reata Realty, Plaintiff-Appellant, v. CITY COUNCIL OF the CITY OF WALSENBURG, a Colorado municipal corporation, Defendant-Appellee.

No. 05CA0104.

Colorado Court of Appeals, Div. V.

July 13, 2006.

Buxman Kwitek & Ohlsen, P.C., Mark A. Ohlsen, Pueblo, Colorado, for Plaintiff-Appellant.

Douglas R. Manley, LaJunta, Colorado; Rothgerber Johnson & Lyons, L.L.P., Justin D. Cumming, Colorado Springs, Colorado, for Defendant-Appellee.

Opinion by Judge LOEB.

In this case for recovery of a real estate brokerage commission, plaintiff, Larry Mapes, d/b/a Reata Realty, appeals the district court's order granting the motion to dismiss of defendant, the City Council of the City of Walsenburg. We reverse and remand for further proceedings.

Mapes, a real estate broker, and the City entered into an open listing contract for the sale of a ranch owned by the City. The contract provided for a listing price of $506,000, with a minimum earnest money deposit of $10,000, and a six percent sales commission.

Shortly after entering into the contract, Mapes located a buyer who made an offer of $510,000, with an earnest money deposit of $10,000, and no contingencies. However, some six weeks later, the City entered into a contract to sell the property to another party.

Mapes filed this action for breach of contract to recover his sales commission. The City filed a motion to dismiss for failure to state a claim upon which relief could be granted, pursuant to C.R.C.P. 12(b)(5). The district court entered an order granting the City's motion. Mapes's motion for amendment of findings and judgment was deemed denied by operation of law, pursuant to C.R.C.P. 59(j). This appeal followed.

Mapes contends that the district court erred in granting the City's motion to dismiss for failure to state a claim upon which relief can be granted. We agree.

We review a trial court's ruling on a motion to dismiss de novo. In doing so, we accept as true all averments of material fact contained in the complaint and view the allegations of the complaint in the light most favorable to the plaintiff. Brossia v. Rick Constr., L.T.D. Liab. Co., 81 P.3d 1126, 1129 (Colo.App.2003).

A C.R.C.P. 12(b)(5) motion to dismiss is looked upon with disfavor, and a complaint should not be dismissed unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his or her claim which would entitle him or her to relief. A complaint should not be dismissed for failure to state a claim so long as the plaintiff is entitled to some relief upon any theory of the law. Pub. Serv. Co. v. Van Wyk, 27 P.3d 377, 385-86 (Colo.2001).

This case turns on the interpretation of the parties' open listing contract. Mapes contends that the district court erred in concluding as a matter of law that the unambiguous terms of the open listing contract preclude any award to him even if he procured a ready, willing, and able buyer. The court found that, under the contract, a broker is not entitled to a commission if the seller decides to sell to a third-party buyer not procured by the broker. We agree that this ruling was error.

In reviewing a contract, our primary obligation is to effectuate the intent of the contracting parties according to the plain language and meaning of the contract. Albright v. McDermond, 14 P.3d 318, 322 (Colo. 2000). To determine the meaning of a contract, courts are guided by the general rules of contract construction and should seek to give effect to all provisions so that none will be rendered meaningless. Roberts v. Adams, 47 P.3d 690, 694 (Colo.App.2001). Any construction that would render any clause or provision unnecessary, contradictory, or insignificant should be avoided. Sulca v. Allstate Ins. Co., 77 P.3d 897, 899 (Colo. App.2003).

We evaluate the contract as a whole and construe the language in harmony with the plain and generally accepted meaning of the words employed. We will enforce the contract as written unless there is an ambiguity in the language. Allen v. Pacheco, 71 P.3d 375, 378 (Colo.2003).

In determining whether an ambiguity exists, we must ask whether the disputed provision is reasonably susceptible on its face of more than one interpretation. Allen v. Pacheco, supra. Written contracts that are complete and free from ambiguity will be found to express the intention of the parties and will be enforced according to their plain language. Albright v. McDermond, supra.

We now examine the parties' contract in light of these legal principles.

The open listing contract here is on a standardized form, the printed portions of which have been approved by the Colorado Real Estate Commission. With an open listing, a broker is not the exclusive agent for the sale of the property and is only entitled to compensation upon the sale of the property to a buyer whom the agent has introduced to the selling principal. Olsen v. Vail Assocs. Real Estate, Inc., 935 P.2d 975, 977 n. 2 (Colo.1997). The open listing is an offer for a unilateral contract creating in the broker the power of acceptance by procuring a purchaser ready, willing, and able to buy on the terms proposed by the owner. See Garrett v. Richardson, 149 Colo. 449, 369 P.2d 566 (1962); 1 Corbin on Contracts § 2.30, at 260-64 (J.M. Perillo, ed., rev. ed.1993); see also Thomas E. Schatzel, Colorado Real Estate Broker Listing Contracts, 35 U. Colo. L.Rev. 205, 207 (1963). The broker earns a commission by finding a ready, willing, and able purchaser before other agents or the owner finds such a purchaser, and before the owner revokes the offer. See Garrett v. Richardson, supra; Hodgin & Sharman v. Palmer, 72 Colo. 331, 211 P. 373 (1922); 1 Corbin, supra, at 264-65; see also Schatzel, supra.

Paragraph 1 of the contract here provides:

Agreement. Seller and Brokerage Firm enter into this contract as of the date set forth above. However, this Contract shall apply only to a Sale of the Property by Broker during the Listing Period . . . or upon Broker procuring a buyer who is ready, willing and able to complete the Sale as proposed by Seller (collectively, Broker Sale). In the case of any other Sale, this Listing Contract is null and void and of no effect.

Paragraph 3(e) defines a Sale as "the voluntary transfer or exchange of any interest in the Property or the voluntary creation of the obligation to convey any interest in the Property, including a contract or lease."

Paragraph 13, titled "Compensation to Brokerage Firm," provides, in pertinent part:

In the case of a Broker Sale, Seller agrees that any Brokerage Firm compensation which is conditioned on the Sale of the Property shall be earned by Brokerage Firm as set forth herein. . . .

Paragraph 13(b) provides, as pertinent here:

b. When Earned. Such commission shall be earned upon the happening of any of the following:

(1) Any Sale of the Property, if a Broker Sale, within the Listing Period;

(2) Broker finding a buyer who is ready, willing and able to complete the transaction as specified herein by Seller. . . .

The contract further provides in Paragraph 13(c) that the six percent commission is "payable at the time of the closing of the Sale as contemplated by subsection 13(b)(1) . . . or upon fulfillment of subsection 13(b)(2) where either the offer made by such buyer is defeated by Seller or by the refusal or neglect of Seller to consummate the Sale as agreed upon."

Neither party contends that the contract is ambiguous. Rather, each party proffers a different interpretation of the unambiguous terms of the contract. The City contends that Mapes cannot recover a commission under the open listing contract because he was not the procuring cause of the sale of the property and, pursuant to Paragraph 1, the contract was rendered null and void and of no effect when the City contracted to sell the property to a third party rather than to Mapes's potential buyer. Mapes contends that, reading all the pertinent provisions of the contract as a whole and accepting the truth of the allegations in his complaint, he is entitled to a commission because he was the first broker to procure a buyer ready, willing, and able to purchase the property on the City's terms, even if the City refused to enter into a purchase contract with his client and subsequently sold the property to a third party. We agree with Mapes.

Under the plain language of Paragraph 1 of the contract, a Broker Sale occurs when either (1) the property is sold by Mapes during the listing period, or (2) Mapes procures a buyer during that period who is ready, willing, and able to "complete the sale" as proposed by the City.

This provision follows the general rule that a real estate broker is entitled to receive a commission when he or she has procured for his or her client a party who is ready, willing, and able to enter into a contract with the seller on the terms that the latter has stipulated. See McCullough v. Thompson, 133 Colo. 352, 295 P.2d 221 (1956); Harding v. Lucero, 721 P.2d 695, 697 (Colo.App.1986); Daybreak Constr. Specialties, Inc. v. Saghatoleslami, 712 P.2d 1028, 1032 (Colo.App.1985); Mack v. McKanna, 687 P.2d 1326, 1328 (Colo.App.1984); see also Bossow v. Bowlway Lanes, Inc., 161 Ill. App.3d 983, 113 Ill.Dec. 27, 514 N.E.2d 809 (1987); Staubus v. Reid, 652 S.W.2d 293, 293-94 (Mo.Ct.App.1983)(open listing agreement awards sole commission to the first broker to produce a ready, willing, and able buyer, and who first notifies the seller that he or she has such a buyer).

If a seller does not perform once a qualified buyer is produced by the broker, the seller cannot thereby escape the payment of the agreed-upon commission. See City of Pueblo v. Leach Realty Co., 149 Colo. 92, 94, 368 P.2d 195, 196 (1962). The rule applies even if the seller refuses to consummate the transaction and the deal fails because of such refusal. See City of Pueblo v. Leach Realty Co., supra; Colo. Inv. Servs., Inc. v. Hager, 685 P.2d 1371, 1376...