Mid-America Real Estate Co. v. Iowa Realty Co.

• Decision Date: 06 May 2005
• Docket Number: No. 04-2354.,No. 04-2862.,04-2354.,04-2862.
• Citation: 406 F.3d 969
• Parties: MID-AMERICA REAL ESTATE COMPANY d/b/a Coldwell Banker Mid-America Group, Realtors, Appellee, v. IOWA REALTY COMPANY, INC.; First Realty, Ltd., Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 969

406 F.3d 969

MID-AMERICA REAL ESTATE COMPANY d/b/a Coldwell Banker Mid-America Group, Realtors, Appellee, v. IOWA REALTY COMPANY, INC.; First Realty, Ltd., Appellants.

No. 04-2354.

No. 04-2862.

United States Court of Appeals, Eighth Circuit.

Submitted: February 16, 2005.

Filed: May 6, 2005.

Richard Alan Duncan, argued, Des Moines, IA (Kimberly J. Walker, Craig S. Coleman, on the brief), for appellant.

Thomas O. Kuhns, argued, Chicago, IL (J. Robert Robertson, Andrew P. Bautista, on the brief), for appellee.

Before MORRIS SHEPPARD ARNOLD, BOWMAN, and GRUENDER, Circuit Judges.

MORRIS SHEPPARD ARNOLD, Circuit Judge.

Iowa Realty Company and First Realty, Ltd. (collectively "Iowa Realty") appeal from the district court's entry of a preliminary injunction against them in Coldwell Banker's action for breach of contract and breach of an implied covenant of good faith and fair dealing. (Coldwell Banker's complaint also claims that Iowa Realty violated federal antitrust laws, but the district court found that Coldwell Banker was not likely to succeed on these claims, and they are not a subject of this appeal.) We hold that the district court correctly decided that Coldwell Banker is likely to prevail on the merits of the breach-of-contract claim, erred as a matter of law when it concluded that Coldwell Banker is likely to prevail on the merits of the breach-of-implied-covenant claim, and abused its discretion in ruling that Coldwell Banker will suffer irreparable harm absent an injunction. We therefore dissolve the preliminary injunction.

I.

Iowa Realty is a real estate brokerage firm in Des Moines, Iowa. It holds a license which entitles it to exclusive use, in the Des Moines area, of a software system known as MLXchange. MLXchange is a database management system used to store, search, and communicate data on residential real estate listings. Coldwell Banker decided that the MLXchange system was better than the system it was using, so it approached Iowa Realty and asked for a sublicense to use the software. After some discussion, Iowa Realty assented and entered into a contract with Coldwell Banker. The parties dispute the precise terms of the arrangement, but agree that under it Iowa Realty granted Coldwell Banker a sublicense to use the software and guaranteed Coldwell Banker access to at least some of the listings that it (Iowa Realty) would store on the MLXchange system; Coldwell Banker promised, in return, to help fund a mailing advertisement and permit Iowa Realty to access at least some of the listings that it would store on the MLXchange software.

After the parties entered into this contract, Iowa Realty announced that it intended to launch a new home marketing program named Passport Plus. Passport Plus is an office-exclusive program, meaning that if a seller were to agree to sell his or her house pursuant to it, only Iowa Realty agents would be able to show and sell the house. (In other words, the listing would be an office-exclusive one.) Iowa Realty would offer incentives to sellers who join this program, to offset the fact that there could be a smaller pool of buyers. The benefit of the program for Iowa Realty would be that it would receive the whole of the sales commission; when two brokerages are involved in the sale of a house in the Des Moines area, they usually split the commission. Iowa Realty would store information about Passport Plus listings on a part of the MLXchange that would be inaccessible to Coldwell Banker.

Before Iowa Realty implemented the program, Coldwell Banker filed its complaint, which requests both preliminary and permanent injunctions. The complaint claims that implementation of the program would effect a breach of the contract and the implied covenant of good faith and fair dealing. The primary breach-of-contract claim is that the program would violate the provisions of the contract that entitle Coldwell Banker to access data that Iowa Realty stores on the MLXsystem. The breach-of-implied-covenant claim is that the Passport Plus program would deny Coldwell Banker the opportunity to receive the fruits of the contract, to wit, the opportunity to sell houses and share in the resulting sales commissions. Iowa Realty agreed not to initiate the program before the district court ruled on the request for a preliminary injunction.

The district court concluded that Coldwell Banker was likely to succeed on the merits of its contract and implied-covenant claims and suffer irreparable harm absent an injunction. It therefore issued a preliminary injunction. The court enjoined Iowa Realty from, among other things, denying Coldwell Banker access to information on the MLXchange database, "actively offering or soliciting exclusive listing contracts," refusing "to cooperate" with Coldwell Banker in the selling and buying of homes, and refusing to split commissions "in accordance with the established course of dealing."

We note that the court also initially enjoined Iowa Realty's conduct with respect to certain third parties, but later entered an order that partially eliminated this feature of the injunction. Iowa Realty insists that the court's modification order is invalid and that the original restrictions on third-party conduct thus remain in place. But we need not resolve this issue because our holding renders it moot: The allegedly overly-broad injunctive obligations (those involving the third parties) relate to claims on which Coldwell Banker cannot prevail.

II.

"A District Court's decision to grant a preliminary injunction will not be overturned absent a clearly erroneous factual determination, an error of law, or an abuse of discretion." Taylor Corp. v. Four Seasons Greetings, LLC, 315 F.3d 1039, 1041 (8th Cir.2003). Whether a preliminary injunction is appropriate depends on four considerations: the probability that the movant will succeed on the merits; the threat of irreparable harm to the movant should the court deny the injunction; the balance between this harm and the harm that granting the injunction will cause to the other litigants; and the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981) (en banc). A court should balance these considerations when deciding whether to issue an injunction. Taylor Corp., 315 F.3d at 1041. But an injunction cannot issue if there is no chance of success on the merits, Firefighters Local Union No. 1784 v. Stotts, 467 U.S. 561, 589, 104 S.Ct. 2576, 81 L.Ed.2d 483 (1984) (O'Connor, J., concurring); AM General Corp. v. DaimlerChrysler Corp., 311 F.3d 796, 804 (7th Cir.2002), and must be dissolved if the district court's findings of fact do not support the conclusion that there is a threat of irreparable harm. Cf. Dataphase Sys., 640 F.2d at 114 & n. 9.

III.

Iowa Realty contends that the district court erred in deciding that Coldwell Banker was likely to succeed on the merits of either of its claims. We turn first to the breach-of-contract claim. Section I.B.2 of the contract provides, "Coldwell users will have access to all application data in MLXchange Software," and § I.A.2 states, "Iowa Realty Group hereby grants to Coldwell a non-exclusive license to use the listing information ... that Iowa Realty Group shall enter into the MLXchange Software." As part of the Passport Plus program, Iowa Realty would store listing information on a part of the database that Coldwell Banker would not be able to access.

Iowa law governs the contract. The parties' intentions at the time that they executed the contract are the touchstone for determining its meaning. Hofmeyer v. Iowa Dist. Court, 640 N.W.2d 225, 228 (Iowa 2001). Unless the contract is ambiguous, we ascertain intentions from the language of the contract. Iowa Fuel & Minerals, Inc. v. Iowa State Bd. of Regents, 471 N.W.2d 859, 862 (Iowa 1991). Ambiguity need not exist before the court may consult extrinsic evidence, though, for we may look to extrinsic evidence to determine the meaning of language in the contract. Hofmeyer, 640 N.W.2d at 228. "Any determination of meaning or ambiguity must be made in light of all of the circumstances, including the relations of the parties, subject matter of the transaction, preliminary negotiations, usages of trade, and the course of dealing." Id. Extrinsic evidence may not be used, however, to alter the terms of the agreement. Financial Mktg. Servs., Inc. v. Hawkeye Bank & Trust of Des Moines, 588 N.W.2d 450, 457 (Iowa 1999).

Iowa Realty argues that the contract does not address office-exclusive listings and that extrinsic evidence proves that it would not need to provide Coldwell Banker access to office-exclusive listings that it might store on the MLXchange system. According to Iowa Realty's brief, the sections of the contract "which the district court cited as supporting Coldwell's right to access listing information [which are the sections cited in the first paragraph of this part of the opinion, along with another similar section] are limitations on Coldwell's rights under the agreement and not affirmative grants of access to information that the customer specifically directed to not be disseminated to other brokers." In light of this supposed contractual silence, Iowa Realty urges us to look to the parties' course of performance and to industry standards as aids in interpreting this agreement. These two considerations, it maintains, scotch the idea that the contract requires it to share office-exclusive listing information, as both demonstrate that such information is not to be disseminated.

We conclude that the district court correctly held that Coldwell Banker is likely to prevail on the merits of its breach-of-contract claim. The contract is not silent with respect to how office-exclusive listings can be stored on the MLXchange system. Rather, the broad provisions granting Coldwell Banker access to information stored on the system by Iowa Realty encompass office-exclusive listings as well as any...