Neary v. Mikob Properties Inc.

• Decision Date: 09 May 2011
• Docket Number: No. 05–09–01175–CV.,05–09–01175–CV.
• Citation: Neary v. Mikob Properties Inc., 340 S.W.3d 578 (Tex. App. 2011)
• Parties: Michael NEARY and St. Johns Holdings, Inc., Appellants,v.MIKOB PROPERTIES, INC., Comunidad Corporation, Allan Klein, Mitchell Kobernick, Individually and as General Partner of Mikob Ltd., Comunidad Balboa, LLC, Comunidad Capital LLC, Comunidad Harbortree LLC, Comunidad Stonehaven LLC, Comunidad Wisteria Gardens LLC, Comunidad Kensington Club II, LLC, Balboa Partners, Ltd., BP Apt. Management, L.C., KCP Management, L.C., O. Creek Management, Inc., Oaks of Brittany Management, Inc., Oaks of Brittany, Ltd., S. Haven Management, L.C., S. Haven Partners, Ltd., F. Court Management, L.C., F. Court Partners, Ltd., Harbortree Apartments, Ltd., Amherst Partners Ltd., AEP Management, L.C., Ashford Est. Partners, Ltd., Kensington Green (Mk), Inc., Kensington Green (Ak), Inc., Kensington Club Partners, Ltd., and Preston Affiliates, Inc., Appellees.
• Court: Texas Court of Appeals

340 S.W.3d 578

Michael NEARY and St. Johns Holdings, Inc., Appellants,

v.MIKOB PROPERTIES, INC., Comunidad Corporation, Allan Klein, Mitchell Kobernick, Individually and as General Partner of Mikob Ltd., Comunidad Balboa, LLC, Comunidad Capital LLC, Comunidad Harbortree LLC, Comunidad Stonehaven LLC, Comunidad Wisteria Gardens LLC, Comunidad Kensington Club II, LLC, Balboa Partners, Ltd., BP Apt. Management, L.C., KCP Management, L.C., O. Creek Management, Inc., Oaks of Brittany Management, Inc., Oaks of Brittany, Ltd., S. Haven Management, L.C., S. Haven Partners, Ltd., F. Court Management, L.C., F. Court Partners, Ltd., Harbortree Apartments, Ltd., Amherst Partners Ltd., AEP Management, L.C., Ashford Est. Partners, Ltd., Kensington Green (Mk), Inc., Kensington Green (Ak), Inc., Kensington Club Partners, Ltd., and Preston Affiliates, Inc., Appellees.

No. 05–09–01175–CV.

Court of Appeals of Texas, Dallas.

May 9, 2011.

Thomas V. Murto III, Mitchell Madden, The Law Offices of Mitchell Madden, Melissa A. Johnson, MaddenSewell, LLP, Dallas, TX, for Appellants.Michael W. Eaton, Eaton Law Firm, PLLC, Southlake, TX, Jeffrey Scott Lowenstein, Bell Nunnally & Martin, LLP, Dallas, TX, Mark Alan Sanders, Law Office of Mark A. Sanders, Houston, TX, for Appellees.Before Justices MURPHY, FILLMORE, and MYERS.

OPINION

Opinion By Justice FILLMORE.

In this suit to obtain a real estate brokerage commission, the trial court granted summary judgment in favor of appellees based on the statute of frauds provision of the Real Estate Licensing Act (RELA). See Tex. Occ.Code Ann. § 1101.806(c) (West 2004). In a single issue, appellants assert the trial court erred in granting appellees' motion for summary judgment. We affirm the trial court's judgment.

Background

Appellants Michael Neary and St. John's Holdings, Inc. (SJH),¹ brought suit to recover a brokerage fee in connection with the sale of eight apartment complexes to appellee Comunidad Corporation in December, 2003. The final purchase agreement did not include a provision awarding a real estate broker's fee. Neary is a licensed real estate broker, and held a valid license at all relevant times. SJH is a Texas corporation wholly owned by Neary, to which Neary had assigned his commissions. SJH did not hold a real estate broker's license at the time of the Comunidad transaction.

The appellees ² are individuals and entities connected with the 2003 transaction. As described by appellees, the buyer Comunidad Corporation is “a section 501(c)(3) non-profit tax exempt entity and is also tax exempt under the Texas Tax Code.” In their summary judgment evidence, appellees describe Comunidad Balboa, LLC, Comunidad Kensington Club II, LLC, Comunidad Harbortree, LLC, Comunidad Capital, LLC, Comunidad Stonehaven, LLC, and Comunidad Wisteria Gardens, LLC (collectively the “Comunidad entities”) as “Texas limited liability companies that were created to take ownership and title to the subject apartments as part of the sale to Comunidad Corp. that closed on December 29, 2003.” The Comunidad entities “are wholly owned by Comunidad Corp., in that Comunidad Corp. was and continues to be the sole member of these LLC's,” according to the summary judgment affidavit of appellee Mitchell Kobernick. Kobernick is the President of appellee Mikob Properties, Inc., a Texas corporation.

Certain limited partnerships owned by Kobernick and appellee Allan Klein were the sellers in the transaction; these seller entities are identified by the parties as appellees Balboa Partners, Ltd., BP Apt. Management, L.C., KCP Management, L.C., Oaks of Brittany Management, Inc., Oaks of Brittany, Ltd., S. Haven Management, L.C., S. Haven Partners, Ltd., F. Court Management, L.C., F. Court Partners, Ltd., Harbortree Apartments, Ltd., Amherst Partners Ltd., AEP Management, L.C., Ashford Est. Partners, Ltd., Kensington Green (Mk), Inc., Kensington Green (Ak), Inc., and Kensington Club Partners, Ltd. (collectively the “Seller entities”). Appellee O. Creek Management, Inc., ³ was “acting as trustee” for the Seller entities, according to appellees' brief. Appellee Preston Affiliates, Inc. was awarded the asset management contract for the apartments.

Appellants claim a document dated November 17, 2003, entitled “Term Sheet,” combined with several e-mail messages exchanged before and after the date of the Term Sheet, constitute a contract for a brokerage fee of one percent of the purchase price, and allege appellees breached the contract by failing to pay. Appellees asserted in their motion for summary judgment that the Term Sheet and other documents did not satisfy the requirements of section 1101.806(c) of RELA. Appellees also asserted that SJH was not licensed as a broker until November 1, 2007, and therefore could not file suit to recover a commission from the Comunidad transaction.

The Term Sheet is signed by Neary on behalf of Comunidad Corporation and by Kobernick on behalf of Mikob Properties, Inc.; however, in handwriting above the signature lines appears the sentence, “This term sheet is a guideline only, and is not binding.” The Term Sheet identifies the “Purchaser” as “A Texas limited liability company to be formed with 100% of the membership interest being owned by Comunidad Corporation, a Texas non-profit corporation (IRS 501 C–3).” Although the term “Seller” is used in the Term Sheet, no seller is identified. The “Property” is defined as “Those particular Apartment Communities commonly known as Harbortree, Balboa, Capital Estates, Wisteria Gardens, Oaks of Brittany, Kensington Club I & II, Stonehaven at the Galleria, and Fondren Court. A separate LLC shall be formed for the purchase of each property.” The Term Sheet also includes a paragraph entitled “Brokerage Fee” which provides:

St. Johns Holdings and Legacy Commercial Group and International Realty Concepts which will receive a commission (the “Commission”) equal to a total of 2.0% of the Purchase Price. One half of said commission will be paid to St. Johns and one quarter each to Legacy and International. These funds will be paid by Seller, after Seller has recovered its out of pocket expenses funded at closing, plus the loan assumption fee that Seller is obligated to pay. The commission amount shall bear the same rate of interest paid Seller, interest only, until Seller has recouped all of its “out of pocket expenses.” When Seller has recouped its expenses, Seller shall pay the Brokers the fee, amortized over 54 months, payable at the interest rate paid (not accrued) on the Vendor Debt, provided however, that in no event, will the brokerage fee paid in any given month be more than 30% of the Vendor lien payment actually received by Vendor. To the extent that payment is not available, the fee will accrue. Notwithstanding the foregoing, the Commission payments shall cease and no further payments shall be owed in the event that the ad valorem tax abatement shall cease to be in effect, or in the event that Seller forecloses on the property due to the failure of Communidad to maintain its non profit status, thereby forfeiting the tax abatement.

In addition to the Term Sheet, appellants rely on e-mail messages to satisfy the requirements of RELA. The e-mails were exchanged prior to and after the date of the Term Sheet. The first e-mail is dated Sunday, November 9, 2003, from Mike Neary to Mitch Kobernick. The subject line of the message reads, “Communidad.” ⁴ The text of the message is as follows:

John Martin and I have reviewed your counter proposal. We are going to try and reach you on most of your points. However, we truly need 1% commission to our side, and are indifferent as to what you propose to pay Joachim and Hendricks. If you choose to cut their commission, we will not be alarmed. Clearly we are doing all of the work, and feel that we can get Mr. Martin, close to your price and terms, if we are properly incentivized.

I will call you in the morning, to try and resolve all issues. I cancelled my out of town weekend to work on your deal, and hope to reach final resolution by noon tomorrow. I look forward to talking to you at your convenience.

Additional e-mails on which appellants rely are in a series dated November 13 and 14, 2003, between Neary and Kobernick. Kobernick first writes to Neary that he has “incorporated the full 2% commission” in the term sheet. Neary responds, “Mitch, we are not going to take a subordinate position to the other brokers. The payments will be 50% to St. Johns Holdings, Inc. and 25% to Joachim and 25% to Legacy.” Neary also addresses other issues including the asset management fee and the interest rate. Kobernick then responds, “The broker commission will need to be worked out between the brokers. I can split the 30% any way you all agree.” Kobernick's response includes a discussion of the interest rate and other unresolved matters. The last message in the series is Neary's response to Kobernick. Neary states that “I told Jerry and David about the fee, and they are fine with it.” He addresses several other issues, and concludes, “I can get this done for you, but on the terms I sent. Let me know if you want to proceed.” The Term Sheet is dated three days later.

Appellants also cite to e-mails dated March 9 and 10, 2004, from Kobernick to Neary. In the March 9 series of messages between Neary and Kobernick, Neary first complains about lack of communication from Kobernick and asks for a date “to resolve all issues or forget the dialogue all together.” Kobernick responds regarding the status of a draft agreement relating to payment of a broker's commission, stating in part:

The current draft has been greatly modified to deal with both your, and the other brokers' issues. We have given in on a lot of the things you wanted, so I think we have shown a great deal of good faith. I don't appreciate your threats. We have spent more time on the broker documents than on the deal itself, and we are still hammering it out....