Pc Carter Co. v. Miller

• Decision Date: 05 April 2011
• Docket Number: No. 29,785.,29,785.
• Citation: 2011 -NMCA- 052,253 P.3d 950,149 N.M. 660
• Parties: PC CARTER COMPANY, a Texas corporation, Plaintiff–Appellee/Cross–Appellant,v.Scott MILLER, Pinnacle Realty and Development, Inc., and Jane E. McGuire, Defendants–Appellants/Cross–Appellees.
• Court: Court of Appeals of New Mexico

149 N.M. 660

253 P.3d 950

2011 -NMCA- 052

PC CARTER COMPANY, a Texas corporation, Plaintiff–Appellee/Cross–Appellant,

v.Scott MILLER, Pinnacle Realty and Development, Inc., and Jane E. McGuire, Defendants–Appellants/Cross–Appellees.

No. 29,785.

Court of Appeals of New Mexico.

April 5, 2011.

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Angelo J. Artuso, Julia Broggi, Albuquerque, NM, for Appellee/Cross–Appellant.Adam D. Rafkin, P.C., Adam D. Rafkin, Ruidoso, NM, for Appellants/Cross–Appellees.Realtors Association of New Mexico, Ashley Strauss–Martin, Santa Fe, NM, for Appellants/Cross–Appellees, Amicus Curiae.

OPINION

VANZI, Judge.

{1} This appeal arises out of a dispute between foreign-licensed and New Mexico-licensed real estate agents and brokers over a commission. Pinnacle Realty and Development, Inc. (Pinnacle Realty), Scott Miller, and Jane E. McGuire (collectively, Defendants) appeal from the judgment of the district court awarding PC Carter Company (Plaintiff) a two-percent commission in the amount of $190,000 on the sale of real property located in New Mexico. Defendants raise several claims on appeal, including the claim that Plaintiff's cause of action was barred by NMSA 1978, Section 61–29–16 (2005) because Plaintiff was not licensed under the Real Estate Brokers and Salesmen Act (Act), NMSA 1978, Sections 61–29–1 to –29 (1959, as amended through 2008).

{2} We conclude that Plaintiff is barred from collecting a real estate commission because it was acting as a broker without a valid New Mexico broker's license or a written, foreign broker's agreement in violation of Section 61–29–16 and the regulations promulgated by the New Mexico Real Estate Commission (Commission). Accordingly, we reverse the judgment of the district court.

BACKGROUND

{3} In January 2006, Wesley and Cindy Smith (collectively, the Smiths) owned Lincoln Mesa Ranch (the ranch), which consisted of 1400 acres of land in Lincoln County, New Mexico. The Smiths were interested in selling the ranch and, therefore, Cindy Smith contacted Preston Carter, the President and qualifying broker for Plaintiff, to seek his advice regarding the ranch's value. Although both Carter and Plaintiff were licensed real estate brokers in the state of Texas, they did not hold a New Mexico real estate agent or broker's license.

{4} On January 24, 2006, the Smiths and Carter executed a letter of intent in which the Smiths agreed to sell, and Carter agreed to buy, the ranch for $8,000,000. Additionally, the Smiths agreed to pay Plaintiff a real estate commission in the amount of six percent of the purchase price. The letter of intent was not a contract, “but simply a non-binding [l]etter of [i]ntent subject to a formal written [c]ontract of [s]ale.”

{5} From late January to early May 2006, Carter conducted due diligence and negotiated the terms and conditions of a purchase agreement with the Smiths. During the due diligence period, Carter visited Lincoln County on multiple occasions, hired a surveyor and hydrologist, met with a Lincoln County Commissioner, and developed marketing materials related to the contemplated development and subdivision of the ranch. At trial, no evidence was presented as to the monetary value of Plaintiff's due diligence activities.

{6} In February 2006, Carter asked Miller and McGuire of Pinnacle Realty to assist him in conducting his due diligence. McGuire and Miller were licensed New Mexico real estate agents and Pinnacle Realty was a licensed New Mexico broker. Carter informed Miller and McGuire of his plan to develop and subdivide the ranch into smaller parcels of land and discussed the possibility of Pinnacle Realty acting as the exclusive listing agent for the subdivided lots. At some point, Miller offered to find a third party to purchase the ranch. Carter and Miller orally agreed that, if Miller found a third-party purchaser, then Carter would refrain from buying the ranch and, instead, would share equally in the commission on the purchase price.

{7} In May 2006, Cindy Smith informed Carter that she had decided not to sell the ranch to anyone who intended to subdivide it. At about the same time, Miller told Verde Heritage, Inc. (Verde Heritage) about the property. At Miller's direction, McGuire contacted Carter to inform him of Verde Heritage's interest in the ranch. Carter told McGuire that the Smiths no longer wished to sell the ranch for subdivision, but instructed McGuire to contact the Smiths anyway and inform them of Verde Heritage's interest. Carter asked McGuire to call him back with a status update.

{8} On May 17, 2006, Miller and McGuire showed the property to Verde Heritage. Even though Verde Heritage informed the Smiths that it intended to purchase the property for subdivision, the Smiths nonetheless agreed to sell the ranch for $9,500,000 on the condition that Miller and McGuire would “take care” of Carter. Miller and McGuire both agreed to the Smiths' condition. According to the terms of the purchase agreement, McGuire received a two-percent real estate commission as the seller's agent, and Miller received a two-percent real estate commission as the buyer's agent.

{9} McGuire called Carter to inform him of the sale and offer him a “referral fee” of one percent of the purchase price. Carter rejected the referral fee, indicating that he was entitled to fifty percent of a six-percent commission on the purchase price of the ranch pursuant to the terms of the parties' prior oral agreement.

{10} Thereafter, Plaintiff filed suit in the district court against Defendants, seeking damages for tortious interference with prospective contract, breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, breach of fiduciary duties, and unjust enrichment.¹ Although Plaintiff abandoned the tortious interference with prospective contract claim at trial, the remaining claims were submitted to the district court for adjudication. The district court found in favor of Plaintiff and awarded damages “equal to two percent ... of the $9,500,000 purchase price ( i.e. $190,000).” Additionally, the district court awarded “interest at the rate of 8 3/4% per annum.” This appeal followed.

STANDARD OF REVIEW

{11} The proper interpretation of the Act and its accompanying administrative regulations is a question of law, which we review de novo. Lion's Gate Water v. D'Antonio, 2009–NMSC–057, ¶ 18, 147 N.M. 523, 226 P.3d 622; State v. Willie, 2009–NMSC–037, ¶ 9, 146 N.M. 481, 212 P.3d 369. “In interpreting sections of the Administrative Code, we apply the same rules as used in statutory interpretation.” Id. (internal quotation marks and citation omitted).

Our primary goal is to ascertain and give effect to the intent of the Legislature. In doing so, we examine the plain language of the statute as well as the context in which it was promulgated, including the history of the statute and the object and purpose the Legislature sought to accomplish. We must take care to avoid adoption of a construction that would render the statute's application absurd or unreasonable or lead to injustice or contradiction.

State v. Nick R., 2009–NMSC–050, ¶ 11, 147 N.M. 182, 218 P.3d 868 (internal quotation marks and citations omitted).DISCUSSION

{12} The purpose of the Act is “to regulate and, thus, protect the public against abuses which can occur within the real estate business.” Amato v. Rathbun Realty, Inc., 98 N.M. 231, 232, 647 P.2d 433, 434 (Ct.App.1982). To this end, the Act makes it unlawful for a person to act “in the capacity of ... an associate broker or a qualifying broker within this state without a license issued by the [C]ommission.” Section 61–29–1. Additionally, Section 61–29–16 provides:

No action for the collection of a commission or compensation earned by any person as a qualifying broker or an associate broker required to be licensed under the provisions of [the Act] shall be maintained in the courts of the state unless such person was a duly licensed qualifying broker or associate broker at the time the alleged cause of action arose.

“There can be no doubt that what Section 61–29–16 means is that a judgment for recovery of a real estate commission without a finding that [the] plaintiff held either a broker's or salesman's license, when the cause of action arose, is erroneous.” Watts v. Andrews, 98 N.M. 404, 406, 649 P.2d 472, 474 (1982) (internal quotation marks and citation omitted).Whether Plaintiff Was Acting as a Broker

{13} Defendants and Amicus Curiae, the Realtors Association of New Mexico (RANM), claim that Section 61–29–16 bars Plaintiff from recovering a real estate commission on the sale of the ranch because Plaintiff was not a New Mexico licensed broker at the time the cause of action arose. Plaintiff responds that it “was not acting as a ‘broker’ or ‘qualifying broker’ in New Mexico during any time material to this lawsuit; and, therefore, Plaintiff's claims are not barred by Section 61–29–16.”

{14} The Act defines a “broker” or “qualifying broker” as

a person who for compensation or other consideration from another:

(a) lists, sells or offers to sell real estate; buys or offers to buy real estate; or negotiates the purchase, sale or exchange of real estate or options on real estate;

(b) leases, rents or auctions or offers to lease, rent or auction real estate;

(c) advertises or holds himself out as being engaged in the business of buying, selling, exchanging, renting, leasing, auctioning or dealing with options on real estate for others as a whole or partial vocation; or

(d) engages in the business of charging an advance fee or contracting for collection of a fee in connection with a contract under which the broker or qualifying broker undertakes primarily to promote the sale of real estate through its listing in a publication issued primarily for that purpose or for the purpose of referral of information concerning real estate to brokers, qualifying brokers or associate...