Storch v. Ricker, 203

• Decision Date: 02 March 1984
• Docket Number: No. 203,203
• Citation: 57 Md.App. 683,471 A.2d 1079
• Parties: Hannah STORCH, et al. v. Thomas B. RICKER, et al. Sept. Term 1983.
• Court: Court of Special Appeals of Maryland

Page 683

57 Md.App. 683

471 A.2d 1079

Hannah STORCH, et al. v. Thomas B. RICKER, et al.

No. 203 Sept. Term 1983.

Court of Special Appeals of Maryland.

March 2, 1984.

Paul M. Nussbaum and David E. Grover, Greenbelt, with whom were Reichelt, Nussbaum & Brown, Greenbelt, on brief for appellants.

Gary R. Alexander, Oxon Hill, with whom were Haas & Alexander, Oxon Hill, on brief for cross-appellants.

Gary R. Alexander, Oxon Hill, with whom were Haas & Alexander, Oxon Hill, on the brief for appellees.

Paul M. Nussbaum and David E. Grover, Greenbelt, with whom were Reichelt, Nussbaum & Brown, Greenbelt, on brief for cross-appellees.

Argued before BLOOM, BISHOP and GARRITY, JJ.

BISHOP, Judge.

On November 4, 1982, the Circuit Court for Prince George's County entered judgment in favor of plaintiff/appellee, Thomas B. Ricker, a licensed Maryland real estate broker, against Hannah Storch for breach of contract to pay brokerage commissions. It also entered judgment against her brother, Eleazer Hirmes, for tortious interference with that contract. Storch and Hirmes were held liable for $63,113.00 and $5,000.00, respectively, and have appealed. Ricker has cross-appealed. ¹

I.

This case involves contracts for the sale of land from its original owner, Mrs. Storch, to an intermediate purchaser, the Rozansky and Kay Construction Company, who later contracted to sell the land to the ultimate purchaser, the KRB Development Company. Ricker was the seller's real estate broker in each contract. As Mrs. Storch's broker, he procured Rozansky and Kay as a purchaser. Later, as Rozansky and Kay's broker, he procured KRB as a purchaser. The gravamen of Ricker's claim is that Storch, with her brother's assistance, sold land to (1) Rozansky and Kay and (2) directly to KRB, without paying him brokerage commissions to which he was entitled.

A.

After her husband died on February 3, 1972, Hannah Storch acquired his undeveloped commercial property in an area known as Lanham-Seabrook in Prince George's County, Maryland. A tract of approximately 140 acres, zoned for family lots and townhouses, is referred to as the Storch property. Mrs. Storch retained an active role in her own business affairs, but authorized her brother, Eleazer Hirmes, to represent her in the disposition of the Storch property. Hirmes had provided his sister with business advice in the past.

On May 6, 1976, Mrs. Storch signed a real estate listing agreement for the Storch property with Thomas B. Ricker. As a result of Ricker's efforts, Rozansky and Kay Construction Company entered into a residential land purchase agreement (First Contract) with Storch on August 2, 1976, in which it agreed to purchase the property for 2.2 million dollars. The contract provided for settlement on parcels of the property after certain contingencies, "... but in no event later than August 1, 1979, on which date, if Purchaser is not then in default, either party to this Agreement may declare same to have been terminated and the deposit shall be released and returned to Purchaser." This contract provided that Storch would pay Ricker "a Brokerage of 7% of the purchase price in cash at the time of each settlement as settlements take place in accordance with this Agreement." The contract was assignable.

Shortly after entering into the First Contract, Rozansky and Kay requested that Ricker find a buyer to whom the company could resell the Storch Property. As a result of Ricker's efforts Rozansky and Kay entered into a Second Contract on November 9, 1976, in which it agreed to sell the Storch Property to KRB Development, Inc., for 2.5 million dollars. This resale price was three hundred thousand dollars more than Rozansky and Kay had agreed to pay Storch for the property. The Second Contract excused Rozansky and Kay Construction Company's performance if title to the Storch Property was withheld for any reason under the First Contract. The Second Contract also provided that Rozansky and Kay would pay Ricker a six percent brokerage commission at each settlement.

The resale of the land--known as "flipping--apparently displeased Storch and her brother, Hirmes, for at least two reasons. First, it gave Ricker an additional brokerage commission for obtaining a higher price than he obtained for Storch. Second, all settlements under the First Contract had to be completed by August 1, 1979, whereas the termination date of the Second Contract was December 31, 1980. Storch continually claimed that the Rozansky and Kay Construction Company was violating the First Contract by delaying settlements until parcels of the Storch property could simultaneously be transferred to KRB. All five of the conveyances made before the termination date under the First Contract were directly from Storch to KRB, with Rozansky and Kay receiving the difference between the price it was paying to Storch and the price it was receiving from KRB, and with Ricker receiving commissions from both sellers, as if two separate sales were occurring. Ricker received a six percent commission from Rozansky and Kay, and a seven percent commission from Storch until the November 14, 1978, settlement at which Storch failed to pay Ricker his commission of $2,464.00.

After the November 14 settlement, Ricker's dual commissions and the enhanced purchase price being paid to Rozansky and Kay exacerbated their already acrimonious relationship with Storch. On December 13, 1978, Rozansky and Kay Construction Company filed suit against Storch and Hirmes in the Circuit Court for Prince George's County, charging them with conspiring to oust Rozansky and Kay from its middleman position in order to sell the land directly to KRB Development Company.

In the event of an amicable settlement of the dispute under the two contracts, Rozansky and Kay could have benefited by recovering its $50,000 deposit and by possibly avoiding exposure to an additional $50,000 in liquidated damages and a possible loss of approximately $35,000 in escrow funds under the First Contract; it could also have avoided exposure to a possible multi-million dollar damage claim by KRB for its failure to settle under the terms of the Second Contract.

On August 2, 1979, Storch notified Rozansky and Kay in writing that she was exercising her right to terminate the First Contract as of August 1, 1979. Settlement negotiations ensued involving Storch, Rozansky and Kay, and KRB. Although Ricker tried to insert himself into the settlement negotiations through George A. Brugger, (attorney for Rozansky and Kay and a member of the firm that also represented Ricker) Storch's attorney refused to permit his involvement.

The negotiations led to a Third Contract of September 12, 1979, among the three parties. It provided that Storch would sell the rest of the property to KRB. The Third Contract also recited the existence of the First Contract and the Second Contract, and that the second depended for its performance upon the first. It further pointed out that Storch had "taken action to terminate the First Contract"; referred to the pending litigation regarding both contracts; and concluded in the recital the desires of the parties to settle all their differences and provide for the purchase of the balance of the Storch Property. In the Third Contract the parties agreed that the First Contract and the Second Contract "shall be null and void" provided that the parties performed under the Third Contract. The operative provision as to Rozansky and Kay provided:

"3. R & K hereby relinquishes any rights it may have under the First Contract or the Second Contract, to any deposits or other monies relating thereto and, in general, releases Storch and KRB from any and all claims and demands whatsoever arising out of or relating to the First Contract and the Second Contract. The relationship of seller and purchaser, as respects the Property, shall be solely between Storch as seller and KRB as purchaser. KRB hereby releases Storch and R & K, and Storch hereby releases R & K and KRB in the same manner and to the same extent as set forth above. It is agreed that Law No. 74,484 in the Circuit Court of Prince Georges County, Maryland, shall be forthwith dismissed with prejudice."

The Third Contract continues:

"4. KRB agrees to buy from Storch, and Storch agrees to sell to KRB the Property for the price and on the terms and conditions hereinafter stated. In addition, Storch grants to KRB and KRB accepts from Storch the sole and exclusive option to purchase the school site, or so much thereof as is available, as hereinafter stated."

With reference to Ricker, Paragraph 10 of the Third Contract provides:

"The parties acknowledge that Thomas B. Ricker, and corporations with which he is affiliated, may assert claims for commissions under the First Contract, the Second Contract, or otherwise. It is acknowledged that KRB is not assuming the responsibility for such commissions, if due or found to be due. It is agreed that if suit be brought by Ricker or his affiliates against KRB then, to the extent such defense may be conducted without an irreconcilable conflict of interest, Storch shall request her counsel (if KRB shall desire to utilize Storch's counsel) to defend KRB without charge to KRB."

The parties thus put an end to the First and Second Contracts, under which appellee, Ricker, was entitled to commissions. In place of these two contracts, they substituted the Third Contract, which Ricker had not brokered, and under which he was not entitled to commissions.

B.

Faced with a loss of expected commissions, Ricker filed a four-count declaration on November 8, 1979, in the Circuit Court for Prince George's County against KRB Development, Inc., KRB Development Company, Rozansky and Kay Construction Company (all Maryland corporations), Hannah Storch and Eleazer Hirmes.

Michael T. Rose, President of KRB, testified that Rozansky and Kay had tied their settlements with Storch under the First Contract to their...