Sonday v. Dave Kohel Agency, Inc., 2004AP2322.

• Decision Date: 11 July 2006
• Docket Number: No. 2004AP2322.,2004AP2322.
• Parties: Mark SONDAY and Joyce Sonday, Plaintiffs-Appellants, v. DAVE KOHEL AGENCY, INC., Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 631

718 N.W.2d 631

2006 WI 92

Mark SONDAY and Joyce Sonday, Plaintiffs-Appellants, v. DAVE KOHEL AGENCY, INC., Defendant-Respondent.

No. 2004AP2322.

Supreme Court of Wisconsin.

Argued April 27, 2006.

Decided July 11, 2006.

COPYRIGHT MATERIAL OMITTED

For the plaintiffs-appellants, there were briefs by John L. DeStefanis, Catherine A. Goodman, and Fuchs, DeStefanis & Boyle, S.C., Milwaukee, and oral argument by John L. DeStefanis.

For the defendant-respondent, there was a brief by Susan J. Marguet, Brian Sajdak, and Weiss Berzowski Brady L.L.P., Delafield, and oral argument by Susan J. Marguet.

An amicus curiae brief was filed by Debra P. Conrad and Reese C. Phillips, Madison, on behalf of the Wisconsin Realtors Association.

¶ 1 LOUIS B. BUTLER, JR., J

This case comes to us on certification from the court of appeals. Mark and Joyce Sonday appeal from a summary judgment in favor of Dave Kohel Agency, Inc., with whom the Sondays listed two parcels of commercial property. The circuit court, Honorable Michael S. Fisher, Kenosha County, granted summary judgment in favor of Kohel and dismissed the Sondays' action seeking a declaration that Kohel did not have a right to a commission under its listing contract with the Sondays because the Sondays' properties were transferred as the result of a condemnation action. On appeal, the Sondays contend that Kohel is not entitled to a commission because a condemnation is not a "transaction" as the term is defined under Wisconsin law, nor as the term is used in the listing contract.

¶ 2 The court of appeals certified two questions to this court: 1) is a real estate broker entitled to a broker's commission under a listing contract when the listed real estate is condemned and acquired by a governmental agency during the listing; and 2) if the real estate listing contract permits recovery of a broker's commission in a condemnation, does public policy preclude such payment?

¶ 3 We conclude that the transfer of property by a condemnation action constitutes a sale under the terms of the contract in this case. We further conclude that the real estate broker is entitled to a 6 percent commission based on the jurisdictional award. We also conclude that public policy does not preclude Kohel from recovering a commission in this case. We therefore affirm the circuit court's grant of summary judgment. Because we conclude that the condemnation action constituted a sale under line 49 of the commission clause as opposed to a transaction under line 52, we reverse the amount of the judgment and remand the cause to the circuit court for further proceedings consistent with this opinion.

I

¶ 4 The parties stipulated to the following facts. Mark and Joyce Sonday ("the Sondays") owned two parcels of commercial property in the Village of Pleasant Prairie, Wisconsin ("Village"). The Sondays owned and operated a military museum on one of the parcels, and Sonday's Vans, an automotive repair, restoration, and customization business, on the other parcel.

¶ 5 On May 15, 2002, the Sondays contracted with the Dave Kohel Agency, Inc. ("Kohel") to list the two parcels.¹ Both Dave Kohel, Jr. and Dave Kohel, Sr. are licensed real estate brokers in Kenosha. The parties used the standard WB-5 commercial listing contract form approved by the Wisconsin Department of Regulation and Licensing. The contract provided a 6 percent commission and ran for a term of one year. Kohel listed the military museum parcel for $2,250,000, and the Sonday's Vans parcel for $800,000.

¶ 6 On May 28, 2002, David Kohel, Sr. met with Pleasant Prairie Village Administrator Michael Pollocoff. In an affidavit, David Kohel, Sr. stated that he met with Pollocoff "about Dave Kohel Agency, Inc.'s listing of the Sondays' and other properties and to discuss the Village's possible purchase and the properties' development potential." Affidavit of David Kohel, Sr., February 4, 2004. According to an affidavit by Pollocoff,

In the year 2002, I was approached by Mr. Dave Kohel regarding the properties of Mr. and Mrs. Joyce Sonday [sic].

Mr. Kohel suggested the Village of Pleasant Prairie purchase the Sondays' properties for an amount in the two million dollar range.

I advised Mr. Kohel that the Village of Pleasant Prairie was not interested in purchasing the Sondays' properties for two million dollars.

The Village of Pleasant Prairie did not negotiate with or through Dave Kohel Agency, Inc. for the purchase of the Sondays' properties at that time.

The Village of Pleasant Prairie has not since negotiated with or through Dave Kohel Agency, Inc. for the purchase of the Sondays' properties.

All actions for obtaining the Sondays' properties have been done under state statutes for eminent domain through the Community Development Authority and through HNTB.

Affidavit of Michael R. Pollocoff, March 15, 2004.

¶ 7 In early June 2002, the Village held a hearing to consider the possible condemnation of properties in the vicinity of I-94, State Highway 165, and County Highway Q ("Redevelopment Area"), which included the Sondays' properties. On June 17, 2002, the Village voted to establish a community development authority ("CDA") to implement a proposed "master land use plan" to eliminate blight and redevelop properties in the Redevelopment Area ("Redevelopment Plan").

¶ 8 In a letter from the Sondays' attorney, dated July 3, 2002, the Sondays instructed Kohel not to contact the Village on their behalf, and informed Kohel of their belief that Kohel would not be entitled to any commission under the listing contract if the Village acquired the properties by a condemnation action. The letter states, in relevant part:

It is our understanding that you induced Mr. Sonday to sign the contract by indicating that you had lined up a buyer to purchase the property for more than $2,000,000.

If you did have such a buyer available, you have not provided him; if you had the Village of Pleasant Prairie in mind because of your knowledge of the pending condemnation, it is our opinion that you would not be entitled to a commission based upon any funds paid to the Sondays by the Village. Mr. Sonday will honor the contract to the extent that you produce a buyer, other than the Village of Pleasant Prairie, willing to pay $2,500,000 for his land.

We are writing specifically to indicate that you do not have authority to negotiate on Mr. Sonday's behalf with the Village, are directed not to contact them, and you will not be compensated in any regard if the pending condemnation results in a negotiated purchase with the Village of Pleasant Prairie.

¶ 9 In response to this letter, Kohel recorded its intent to claim liens on the two properties with the Kenosha County Register of Deeds on September 19, 2002, and served notices of its intent to claim broker liens against the properties on September 26, 2002, in accordance with Wis. Stat. § 779.32(3) (2003-04).²

¶ 10 The CDA adopted by-laws and appointed Village Administrator Pollocoff as the Executive Director of the CDA on September 25, 2002. On December 4, 2002, the CDA met to consider a draft of the Redevelopment Plan. The CDA discussed, among other properties, the two parcels owned by the Sondays, examined photographs taken of the Sondays' properties, and referred to observations made previously by the CDA of the Sondays' properties on October 22 and November 22, 2002. The CDA concluded that the Sondays' use of the property was nonconforming with Village Zoning Ordinance requirements and that blight conditions existed. The CDA delivered a copy of a report to owners of property affected by the proposed Redevelopment Plan, which included the Sondays. On January 2, 2003, the CDA held a public hearing, allowing members of the public to comment on and ask questions about the proposed Redevelopment Plan. Mr. Sonday attended this meeting, and stated that he was offended by the CDA's description of his properties.³ Mr. Sonday also noted that he had no problem relocating his museum. At this hearing, there was no discussion regarding compensation for the property. The record reflects no further discussions between the Sondays and the CDA prior to the May 15, 2003, termination of the original contract.

¶ 11 The Village found the Redevelopment Area to be blighted on January 6, 2003. Resolution of the Village of Pleasant Prairie Board of Trustees No. 03-03, January 6, 2003. On February 12, 2003, the Village and the CDA approved the Redevelopment Plan. On April 16, 2003, the CDA approved an amended relocation order, permitting acquisition of the Redevelopment Area, including Sondays' properties.

¶ 12 On May 9, 2003, pursuant to lines 63-76 of the listing contract, Kohel served the Sondays with a notice of extension of the May 2002 listing contracts for one year with respect to "protected buyers" as defined in the contract. Kohel listed the Village, Panattoni Company, and Trammell Crow as protected buyers.

¶ 13 On June 3, 2003, the Sondays demanded Kohel remove its "intent to file lien" from the Sondays' title. Kohel responded on June 12, 2003, stating that the Sondays breached the listing contract by refusing to allow Kohel to negotiate on their behalf and attempting to terminate the listing contract as to the Village.

¶ 14 The CDA approved a second amended relocation order and plan permitting the acquisition of the Redevelopment Area on August 20, 2003. On October 27, 2003, the Sondays received an offer on behalf of the CDA to purchase the military museum parcel for $812,300. The offer was later increased to $850,000 on January 20, 2004. On December 4, 2003, the Sondays received an offer from the CDA to purchase the van business parcel for $532,000. The Sondays made no response to these offers.

¶ 15 On February 19, 2004, the Sondays received statutory jurisdictional offers, pursuant to Wis. Stat. § 32.05(3), on behalf of the CDA to purchase the military museum parcel for $850,000 and the van business parcel for...