RESORT REALTY OF OUTER BANKS v. Brandt

• Citation: 163 NC App. 114,593 S.E.2d 404
• Decision Date: 02 March 2004
• Docket Number: No. COA03-464.,COA03-464.
• Court: North Carolina Court of Appeals
• Parties: RESORT REALTY OF THE OUTER BANKS, INC. t/a Resort Realty, Plaintiff, v. Volker BRANDT and Wife, Eva Brandt, Defendants.

593 S.E.2d 404

163 NC App. 114

RESORT REALTY OF THE OUTER BANKS, INC. t/a Resort Realty, Plaintiff, v. Volker BRANDT and Wife, Eva Brandt, Defendants.

No. COA03-464.

Court of Appeals of North Carolina.

March 2, 2004.

Gray & Lloyd, LLP, by E. Crouse Gray, Jr., for plaintiff-appellee.

Volker Brandt, M.D. and wife, Eva Brandt, defendants-appellants, pro se.

TYSON, Judge.

Resort Realty of the Outer Banks, Inc. ("Resort Realty") filed a verified complaint seeking payment of a commission due under an Exclusive Right to Sell Listing Agreement ("the listing agreement"). Dr. Volker Brandt ("Dr. Brandt") and his wife, Eva Brandt (collectively, "defendants"), appeal from the trial court's judgment finding that they had defaulted under their obligations in the listing agreement and ordering them to pay the commission due in the amount of $45,000.00. We affirm.

I. Facts

Defendants owned two adjacent oceanfront lots in Dare County, North Carolina ("the property"). After the property was condemned due of beach erosion, defendants decided to relocate to another oceanfront property. In September 1997, Dr. Brandt met with Resort Realty agent Charles Rocknak ("Rocknak") to discuss finding a replacement property. Prior to this meeting, Dr. Brandt had conversations with Billy Roughton, who had offered to buy the property for $290,000.00. Dr. Brandt informed Rocknak of this offer and Rocknak indicated that the offer was too low.

After several discussions, defendants entered into the listing agreement with Resort Realty on 19 September 1997. The listing agreement granted Resort Realty the exclusive right to sell the property for a period of six (6) months, or until midnight 19 March 1998, for a cash price of $450,000.00. Defendants also agreed to pay a commission if the property was sold during a "protection period" of sixty (60) additional days beyond the expiration of the listing period to any person who viewed the property during the exclusive listing period. The listing agreement specifically included a provision that stated, "[t]he sale of this property is subject to a 1031 Tax Free Exchange." See 26 U.S.C. § 1031 (2003).

Rocknak attempted to locate a replacement property to comply with the § 1031 Tax Deferred Exchange requirement ("exchange requirement"). He and Resort Realty also marketed the listed property and received numerous offers, all of which were submitted to defendants. After several offers and counteroffers, James M. Rose, Jr. ("Rose") made an offer at the listing price of $450,000.00. Defendants did not accept any of the offers. When Rose inquired of Rocknak regarding the reason for the rejections, he was informed that defendants were unable to find a § 1031 replacement property. Rose contacted Dr. Brandt personally and testified that Dr. Brandt would not directly negotiate with him while the listing contract with Resort Realty was in effect. Rose withdrew his offer on 3 December 1997.

On 12 March 1998, Rocknak received and transmitted to defendant by facsimile another full price offer to purchase from James and Sharon Haskell (the "Haskells"). Dr. Brandt testified that he did not respond to the Haskells' offer because the facsimile was illegible, and Rocknak had not located a suitable replacement property. Defendants began looking to purchase bay front property in Maryland.

The listing agreement expired on 19 March 1998. On 19 March 1998, Rocknak registered a list of interested parties and on 20 March 1998, demanded payment from defendants for the real estate commission. The protection period expired on 18 May 1998. In July 1998, Rose again contacted defendants directly. After negotiations, Rose purchased the property for $425,000.00. Dr. Brandt later completed the § 1031 tax deferred exchange. The replacement property was located in Fairfax County, Virginia, and was owned by a Virginia Corporation, V. Brandt MD, Ltd., Defined Benefit Plan. Dr. Brandt was the sole shareholder of this corporation. Following a bench trial, Judge Griffin entered judgment for Resort Realty for the $45,000.00 commission due from the sale of the property. Defendants appeal.

II. Issues

Defendants contend the trial court erred in concluding that: (1) Resort Realty produced a ready, willing, and able buyer despite the agreement's exchange requirement as a condition of sale and (2) Resort Realty originated a series of events, which resulted in the sale of the property.

III. Standard of Review for Non-Jury Trial

In an appeal from a judgment entered in a non-jury trial, our standard of review is whether competent evidence exists to support the trial court's findings of fact, and whether the findings support the conclusions of law. Sessler v. Marsh, 144 N.C.App. 623, 628, 551 S.E.2d 160, 163,disc. rev. denied, 354 N.C. 365, 556 S.E.2d 577 (2001). "The trial judge acts as both judge and jury and considers and weighs all the competent evidence before him." Williams v. Insurance Co., 288 N.C. 338, 342, 218 S.E.2d 368, 371 (1975). The trial court's findings of fact are binding on appeal as long as competent evidence supports them, despite the existence of evidence to the contrary. Id. When competent evidence supports the trial court's findings of fact and the findings of fact support its conclusions of law, the judgment should be affirmed in the absence of an error of law.

IV. Performance Under the Contract

A licensed real estate broker is entitled to recover a commission if a binding contract and performance under the contract is established. Thompson-McLean, Inc. v. Campbell, 261 N.C. 310, 313, 134 S.E.2d 671, 674 (1964). It is undisputed that the parties executed a valid listing agreement. To determine whether the trial court erred by awarding Resort Realty a commission, we must consider whether Resort Realty performed under the contract.

On appeal, defendants challenge the trial court's conclusion that they "conspired" with Rose to deprive Resort Realty of a commission pursuant to the listing agreement. A plaintiff need not prove a conspiracy not to pay a commission, but must show a breach of the principal's duty to act in good faith towards his agent, the broker. See Patrick K. Hetrick, Larry A. Outlaw, and Patricia A. Moylan, North Carolina Real Estate Manual, Chapter 8, Brokerage Relationships 227 (5th ed. 2004) ("The owner must cooperate with the broker and not do anything to hinder the broker's performance."); see also 12 Am.Jur.2d Brokers § 138 (2003) ("Under general agency principles, a principal is subject to a duty to perform the contract made with his or her agent, to exercise good faith toward the agent, and to refrain from unreasonably interfering with the agent's work, and the principal is liable to the broker for a failure to do so."); Campbell v. Sickels, 197 Va. 298, 89 S.E.2d 14, 19 (1955) ("A principal's contractual duty is to compensate his broker for services rendered in accordance with his contract of employment, and so long as the relation of principal and agent exists to exercise good faith toward him."). Because the issue of good faith is discussed within the other issues raised, we incorporate this assignment of error into that discussion.

A. Ready, Willing, and Able Buyer

Defendants argue the trial court ignored the exchange requirement when it concluded that Resort Realty produced a ready, willing, and able buyer. We disagree.

"The law is well settled in this jurisdiction that when a broker, pursuant to an agreement with the owner of land, procures a purchaser for his principal's land ready, able and willing to buy the land upon the terms offered, he is entitled to commissions or compensation for his services." Carver v. Britt, 241 N.C. 538, 542, 85 S.E.2d 888, 891 (1955).

When the broker's right to his commission is made to depend upon the satisfaction of any condition other than his production of a ready, willing and able purchaser, North Carolina courts require that such a variation from the general rule be clearly expressed. It is important in such situations that a distinction be made between language that imposes a condition which goes to the substance of a contract and language which relates only to its ultimate performance.

Tryon Realty Co. v. Hardison, 62 N.C.App. 444, 448, 302 S.E.2d 895, 898 (1983) (internal citations omitted).

"The term `ready, willing, and able' means that the prospective purchaser desires to purchase, is willing to enter into an enforceable contract to purchase, and has the financial and legal capacity to purchase within the time required on the terms specified by the seller." James A. Webster, Jr., Webster's Real Estate Law in North Carolina § 8-11, at 253 (Patrick K. Hetrick & James B. McLaughlin, Jr. eds., 5th ed.1999) (citing Hetrick and Outlaw, North Carolina Real Estate for Brokers and Salesmen, (4th Ed., 1994), Chapter 10, Agency Contracts and Related Practices). Further, "the purchaser indicates readiness and willingness by executing a valid offer to purchase that either complies with the seller's requirements as set forth in the listing contract or is accepted by the seller." Id. Since Rose entered into a contract with defendants and consummated the transaction by purchasing the property, the evidence supports the trial court's conclusion that Resort Realty produced Rose as a ready, willing, and able buyer. See Carolantic Realty, Inc. v. Matco Grp., Inc., 151 N.C.App. 464, 468, 566 S.E.2d 134, 137 (2002)

.

Defendants argue the trial court did not consider the exchange requirement in making this conclusion. The listing agreement at bar states in Paragraph Nine (9), "The sale of this property is subject to a 1031 Tax Free Exchange." Defendants contend the exchange requirement included in the listing agreement established a duty on Resort Realty to locate and secure a suitable replacement property before a commission could be earned. We disagree.

The inclusion of the exchange requirement in the listing agreement gave Resort Realty notice that defend...