Shinberg v. Bruk

• Decision Date: 01 March 1989
• Docket Number: No. 88-2002,88-2002
• Citation: 875 F.2d 973
• Parties: Ira H. SHINBERG, Plaintiff, Appellant, v. Paul BRUK, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 973

875 F.2d 973

Ira H. SHINBERG, Plaintiff, Appellant, v. Paul BRUK, Defendant, Appellee.

No. 88-2002.

United States Court of Appeals First Circuit.

Heard March 1, 1989.

Decided May 26, 1989.

Ira H. Shinberg, pro se.

Patrick J. Sharkey with whom Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Mass., was on brief, for defendant, appellee.

Before CAMPBELL, Chief Judge, BOWNES, Circuit Judge, and FUSTE, ^* District Judge.

BOWNES, Circuit Judge.

Plaintiff-appellant, Ira H. Shinberg, appeals from a summary judgment for defendant-appellee Paul Bruk. At issue is whether Shinberg is entitled to a trial on his claim that he is owed a finder's fee by Bruk. This involves questions of law relative to real estate brokers in New Hampshire and Massachusetts.

I. FACTS

Although there is little dispute as to the facts, we are mindful of our duty to review the record in the light most favorable to the party opposing the motion for summary judgment. Knight v. Mills, 836 F.2d 659, 664 (1st Cir.1987); Ismert & Associates v. New England Mut. Life Ins., 801 F.2d 536, 537 (1st Cir.1986). Shinberg is an attorney licensed to practice in both New Hampshire and Massachusetts. He is a resident of New Hampshire. Shinberg was not, at any relevant time, licensed as a real estate broker in either New Hampshire or Massachusetts.

In December of 1984, Shinberg and Bruk met in Massachusetts at Bruk's request. At the meeting, Bruk orally agreed that he would pay Shinberg a finder's fee of 10 percent of the purchase price of real estate that Shinberg found in New Hampshire suitable for a shopping mall development. Shinberg located a potential site in Plaistow, New Hampshire. He notified Bruk from New Hampshire of his find. Shinberg then met with the landowner, Milton Smith, in New Hampshire. Subsequent to this meeting, Shinberg introduced Bruk to Smith at Smith's office in New Hampshire. Shinberg did nothing further. After negotiations between Smith and Bruk, the land was purchased by Bruk for $2,615,000. Shinberg's demand for a finder's fee in the amount of $250,000 was rejected by Bruk.

II. PROCEDURAL HISTORY

Shinberg brought suit in the federal district court of Massachusetts. In addition to alleging that he was entitled to a finder's fee under the alleged oral contract (First Count), Shinberg also claimed a violation of Mass.Gen.L. ch. 93A, Secs. 2 and 11 (1984) (Second Count). Bruk moved for summary judgment asserting that even if there had been an oral agreement for a finder's fee, it was unenforceable under Mass.Gen.L. ch. 112, Sec. 87RR (1983). Shinberg responded to Bruk's motion for summary judgment and asserted that New Hampshire law should apply. The district court granted the motion for summary judgment. It did not directly address the choice of law question, finding that there could be no recovery under either New Hampshire or Massachusetts law. We affirm.

III. THE LAW

Both New Hampshire and Massachusetts have enacted legislation mandating the licensing of all real estate brokers, and prohibiting any person from acting as a broker without a broker's license. N.H.Rev.Stat.Ann. ch. 331-A:3 (1984); Mass.Gen.Laws Ann. ch. 112, Sec. 87RR (1983). Shinberg argues that neither statute applies to him because he acted as a finder and not as a broker.

A. Choice of Law

A federal court in an action based on diversity must resolve conflict of law issues by applying the conflict of law rules prevailing in the state in which it sits. Klaxon Co. v. Stentor Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); Computer Systems of America Inc. v. International Business Machines Corp., 795 F.2d 1086, 1091 (1st Cir.1986); Bi-Rite Enterprises, Inc. v. Bruce Miner Co., Inc., 757 F.2d 440, 442 (1st Cir.1985). We, therefore, turn to Massachusetts law. The leading Massachusetts choice of law case is Bushkin Associates, Inc., v. Raytheon Co., 393 Mass. 622, 473 N.E.2d 662 (1985). See Computer Systems of America, Inc., 795 F.2d at 1091; Bi-Rite Enterprises, Inc., 757 F.2d at 443. Bushkin dealt with issues certified to the Massachusetts Supreme Judicial Court by this Court. The choice of law issue was whether New York or Massachusetts law should determine the validity of an oral contract. 473 N.E.2d at 666. The court first stated that it "would not permit the choice of law question to turn on where the contract was made." Id., 473 N.E.2d at 668. It decided "not to tie Massachusetts conflicts law to any specific choice-of-law doctrine, but seek instead a functional choice-of-law approach that responds to the interests of the parties, the States involved, and the interstate system as a whole." Id. It determined "the choice-of-law question by assessing numerous choice-influencing considerations." Id. These included ones set forth in the Restatement (Second) of Conflict of Laws (1971). The court quoted from Sec. 188(2) and Sec. 6(2). Id., 473 N.E.2d at 669. It observed: "No simple and objective task can provide an acceptable choice-of-law answer in this case, nor should it." Id., 473 N.E.2d at 670. This remark is pertinent to the case before us. The court emphasized the choice-influencing factors in Sec. 6(2) of the Restatement. It also paid homage to the five considerations set forth in R.A. Leflar, American Conflicts Law Sec. 99 at 194-195 (3d ed. 1977). The court concluded that Massachusetts law should determine the validity of the alleged oral agreement at issue. Id., 473 N.E.2d at 671.

We have followed the path blazed by Bushkin and after balancing the factors set forth in the Restatement at Sec. 188(2), in light of the principles enunciated in Sec. 6(2) and bearing in mind Leflar's five considerations, we conclude that New Hampshire law probably applies. Since this is a judgment call, we think it advisable to examine Massachusetts law as well as that of New Hampshire.

B. Massachusetts Law

The definition of broker under Massachusetts law would seem to encompass Shinberg's activity as a finder. A real estate broker is defined, inter alia, as one who "assists or directs in the procuring of prospects or the negotiation or completion of any agreement or transaction which results or is intended to result in the sale, exchange, purchase, leasing or renting of any real estate...." Mass.Gen.Laws Ann. ch. 112, Sec. 87PP. ¹ We think that Shinberg's finding of the land for Bruk would come within the phrase, "procuring of prospects." The law of Massachusetts relative to real estate brokers' commissions has been summarized as follows:

Generally, the mere introduction of a prospect to a property does not earn a broker's commission. Whitcomb v. Bacon, 170 Mass. 479, 481, 49 N.E. 742 (1898). Bradley v. Donahue, 343 Mass. 774, 774-775, 178 N.E.2d 871 (1961). See Ebert v. Haskell, 217 Mass. 209, 210-211, 104 N.E. 556 (1914) (contrasts duty of middleman with broker). The evidence must go far enough to justify a finding that the broker's services were the efficient or effective means of bringing about the actual sale. Kacavas v. Diamond, 303 Mass. 88, 92, 20 N.E.2d 936 (1939). But if a broker introduces a seller to a customer who buys, or interests a buyer in a property which he thereafter buys, that may be the efficient or effective means of bringing about a sale if that is all the seller asks the broker to do, see, e.g., Sherman v. Briggs Realty Co., 310 Mass. 408, 412-413, 38 N.E.2d 637 (1941), or if the seller thereafter excludes the broker from subsequent negotiations, see McEvoy v. Ginsberg, 345 Mass. 733, 735, 189 N.E.2d 546 (1963), particularly in such fashion as to deceive the broker and to bar him from earning his commission. See Corleto v. Prudential Ins. Co. of America, 320 Mass. 612, 616-617, 70 N.E.2d 702 (1947); Chisholm v. McCarthy, 325 Mass. 72, 74, 88 N.E.2d 903 (1949). Turner v. Minasian, 358 Mass. 425, 429, 265 N.E.2d 371 (1970).

Bonin v. Chestnut Hill Towers Realty Co., 14 Mass.App. 63, 436 N.E.2d 970, 974 (1982), rev'd on other grounds, 392 Mass. 58, 466 N.E.2d 90 (1984).

We agree with the district court that since Shinberg was not licensed as a broker as required under Mass.Gen.Laws Ann. ch. 112, Sec. 87RR, he cannot collect a finder's fee from Bruk under the law of Massachusetts.

C. New Hampshire Law

The licensing requirement for real estate brokers in New Hampshire provides:

From and after March 1, 1960, it shall be unlawful for any person to engage in or conduct, directly or indirectly, or to advertise or hold himself out as engaging in or conducting the business, or acting in the capacity, of a real estate broker or real estate salesman within this state without first obtaining a license as such broker or salesman, as provided in this chapter.

N.H.Rev.Stat.Ann. ch. 331-A:3 (1960). This statute has been held by the New Hampshire Supreme Court to mean that it was not only "intended to subject the violator to the penalty which it provides but also to prohibit an unlicensed person to enter into such transactions by making them void and unenforceable." Coltin v. Manchester Savings Bank, 105 N.H. 254, 197 A.2d 208, 210 (1964).

The definition of real estate broker is:

II. The term "broker" shall mean any person who for a fee, commission or other valuable consideration, or with the intent or expectation of receiving the same, negotiates or attempts to negotiate the listing, sale, purchase, exchange or lease of any real estate or of the improvements thereon, or collects rents or attempts to collect rents, or advertises or holds himself out as engaged in any of the foregoing activities. The term "broker" also includes any person employed by or on behalf of the owner or owners of real estate to conduct the sale, leasing, or other disposition thereof at a salary or for a fee, commission or any other consideration; it also includes any person who engages in the business of charging an advance fee or contracting for collection of a fee in connection with any contract whereby he undertakes primarily to...